| As filed with the Securities and Exchange Commission on October 13, 2015 |
Registration No. 333- |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Banco Santander, S.A.
Santander US Debt, S.A. Unipersonal
Santander Issuances, S.A. Unipersonal
(Exact Name of Registrant as Specified
in Its Charter)
Kingdom of Spain
(State or Other Jurisdiction of Incorporation
or Organization)
Not Applicable
(I.R.S. Employer Identification No.)
Ciudad Grupo Santander
28660 Boadilla del Monte (Madrid), Spain
+34 91 259 6520
(Address and Telephone
Number of Registrant’s Principal Executive Offices)
Banco Santander, S.A.
New York Branch
45 E. 53rd Street
New York, New York 10022
Attn: James H. Bathon, Legal Counsel
(212) 350-3500
(Name, Address and Telephone Number of
Agent for Service)
| |
| Please send copies of all communications to: |
|
Nicholas A. Kronfeld
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Tel. No.: (212) 450-4000 |
|
E. Mark Walsh
Sidley Austin
LLP
Woolgate
Exchange
25 Basinghall
Street
London EC2V
5HA
Tel. No.:
+44 20 7360 3600 |
Approximate date of commencement of
proposed sale to the public: From time to time after the effective date of this Registration Statement.
If the only securities being registered
on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check
the following box. x
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. o
If this Form is a registration statement
pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box. x
If this Form is a post-effective amendment
to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes
of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
| CALCULATION OF REGISTRATION FEE |
|
Title of Each Class
of Securities to be Registered |
Amount to be Registered/Proposed maximum offering per unit/Proposed maximum price(1) |
Amount of
registration fee(2) |
| Senior debt securities of Santander US Debt, S.A. Unipersonal |
Unspecified |
$0 |
| Subordinated debt securities of Santander Issuances, S.A. Unipersonal |
Unspecified |
$0 |
Banco Santander, S.A. Guarantees
Guarantees of senior debt securities of Santander US Debt, S.A. Unipersonal
Guarantees of subordinated debt securities of Santander Issuances, S.A. Unipersonal |
Unspecified |
$0 |
| Contingent convertible capital securities of Banco Santander S.A. |
Unspecified |
$0 |
| Ordinary shares of Banco Santander S.A. (3) |
Unspecified |
$0 |
| |
|
|
|
| (1) |
An unspecified initial offering price, aggregate number of, principal amount of, or liquidation preference of, the senior debt securities of Santander US Debt, S.A. Unipersonal and the subordinated debt securities of Santander Issuances, S.A. Unipersonal, the related guarantees of Banco Santander, S.A., the contingent convertible capital securities of Banco Santander, S.A. or the ordinary shares of Banco Santander, S.A., as the case may be, are being registered as may from time to time be offered at unspecified prices. Separate consideration may or may not be received for securities that are issuable on exercise, conversion or exchange of other securities or that are issued in units or represented by depositary shares. |
| (2) |
In accordance with Rules 456(b) and 457(r) under the Securities Act, the registrants are deferring payment of all of the registration fee. |
| (3) |
The ordinary shares are being registered in connection with issuances from time to time following the conversion of contingent convertible capital securities of Banco Santander, S.A. American Depositary Shares issuable upon deposit of the ordinary shares registered hereby have been registered under a separate Registration Statement on Form F-6 (Registration Statement No. 333-12274). |
PROSPECTUS
Banco Santander, S.A.
By this prospectus we may offer —
Contingent Convertible CAPital Securities
Ordinary Shares
Santander US Debt, S.A. Unipersonal
Santander Issuances, S.A. Unipersonal
By this prospectus we may offer —
DEBT SECURITIES
fully and unconditionally guaranteed by Banco Santander,
S.A.
Banco Santander, S.A. may use this prospectus
to offer from time to time contingent convertible capital securities and, solely in connection with the issuance of contingent
convertible capital securities, ordinary shares (including in the form of American Depositary Shares). Banco Santander, S.A.’s
American Depositary Shares, or ADSs, each representing the right to receive one share of capital stock of Banco Santander, S.A.,
are listed on the New York Stock Exchange under the symbol “SAN”. In addition, Banco Santander, S.A.’s ordinary
shares are listed on the Madrid, Barcelona, Bilbao and Valencia stock exchanges (the “Spanish Stock Exchanges”) and
quoted on the Automated Quotation System of the Spanish Stock Exchanges (the “Automated Quotation System”). Banco Santander,
S.A.’s ordinary shares are also listed on the London (in the form of CREST Depository Interests), São Paulo (in the
form of Brazil Depositary Shares), Milan, Lisbon, Buenos Aires, Warsaw and Mexico stock exchanges.
Santander US Debt, S.A. Unipersonal may
use this prospectus to offer from time to time senior debt securities. Such senior debt securities will be fully and unconditionally
guaranteed on a senior basis by Banco Santander, S.A.
Santander Issuances, S.A. Unipersonal may
use this prospectus to offer from time to time subordinated debt securities. Such subordinated debt securities will be fully and
unconditionally guaranteed on a subordinated basis by Banco Santander, S.A.
This prospectus describes the general terms
of these securities and the general manner in which we will offer these securities. We will provide the specific terms of any series
of these securities, and the manner in which they will be offered, in one or more supplements to this prospectus. Any supplement
may also add, update or change information contained, or incorporated by reference, into this prospectus. You should read this
prospectus and the applicable prospectus supplement carefully before you invest in our securities.
You should read both this prospectus and
the applicable prospectus supplement, together with the additional information described under the headings “Where You Can
Find More Information” and “Incorporation of Documents by Reference”, before investing in any of the securities
described in the prospectus. The amount and price of the offered securities will be determined at the time of the offering.
Investing in our securities involves
risks. See “Risk Factors” beginning on page 3.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined that this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
This prospectus may not be used to offer
or sell any securities unless it is accompanied by a prospectus supplement.
The date of this prospectus is October 13, 2015
Table
of Contents
About this
Prospectus
This prospectus is part of a registration
statement on Form F-3 that we filed with the Securities and Exchange Commission (“SEC”) using a “shelf”
registration or continuous offering process. Under this shelf process, we may sell the securities described in this prospectus
in one or more offerings of an unspecified amount in one or more foreign currencies or currency units.
This prospectus provides you with a general
description of the debt securities and contingent convertible capital securities (convertible into ordinary shares upon a trigger
event) we may offer, which we will refer to collectively as the “securities”. Each time we sell securities, we will
provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement
will provide information regarding certain tax consequences of the purchase, ownership and disposition of the offered securities.
The prospectus supplement may also add to, update or change information contained in this prospectus. If there is any inconsistency
between the information in this prospectus and any prospectus supplement, you should rely on the information in that prospectus
supplement. We will file each prospectus supplement with the SEC. You should read both this prospectus, the applicable prospectus
supplement and any related issuer free writing prospectus, together with the additional information described under the headings
“Where You Can Find More Information” and “Incorporation of Documents by Reference”.
The registration statement containing this
prospectus, including exhibits to the registration statement, provides additional information about us and the securities offered
under this prospectus. Statements contained in this prospectus and the applicable prospectus supplement about the provisions or
content of any agreement or other document are only summaries. If SEC rules require that any agreement or document be filed as
an exhibit to the registration statement, you should refer to that agreement or document for its complete contents. The registration
statement can be read at the SEC’s offices or obtained from the SEC’s website mentioned under the heading “Where
You Can Find More Information”.
Certain Terms
In this prospectus, the following terms
will have the meanings set forth below, unless otherwise indicated or the context otherwise requires
| · | “Banco Santander” means Banco Santander, S.A. and the term “Group” means Banco Santander, S.A. and
its consolidated subsidiaries; |
| · | “debt securities” refers to the senior debt securities and the subordinated debt securities; |
| · | “guarantee” refers to either of the senior guarantee or the subordinated guarantee, as applicable; |
| · | “relevant issuer” refers to Banco Santander, Santander US Debt or Santander Issuances, as applicable; |
| · | “Santander US Debt” means Santander US Debt, S.A. Unipersonal; |
| · | “Santander Issuances” means Santander Issuances, S.A. Unipersonal; |
| · | “securities” refers to the debt securities and the contingent convertible capital securities; |
| · | “senior debt securities” refers to the senior debt securities issued by Santander US Debt; |
| · | “senior guarantee” refers to a guarantee by Banco Santander of senior debt securities issued by Santander US Debt; |
| · | “subordinated debt securities” refers to the subordinated debt securities issued by Santander Issuances; |
| · | “subordinated guarantee” refers to a guarantee by Banco Santander of subordinated debt securities issued by Santander
Issuances; |
| · | “we”, “our” and “us” refer to each of Banco Santander, Santander US Debt and Santander
Issuances, as applicable, as issuer of the relevant securities; |
| · | “$”, “US$”, “U.S. dollars” and “dollars” refer to United States dollars; and |
| · | “€” and “euro” refer to euro. |
Use of Proceeds
Unless we have disclosed a specific plan
in the accompanying prospectus supplement, we will use the net proceeds from the sale of the securities offered by this prospectus
for general corporate purposes. The Group has raised capital in various markets from time to time and we expect to continue to
raise capital in appropriate markets as and when required.
Banco Santander,
S.A.
Banco Santander, S.A. is the parent bank
of the Group. The Group operates principally in Spain, the United Kingdom, other European countries, Brazil and other Latin American
countries and the United States, offering a wide range of financial products. In Latin America, the Group has majority shareholdings
in banks in Argentina, Brazil, Chile, Mexico, Peru and Uruguay.
Banco Santander, S.A. was established on
March 21, 1857 and incorporated in its present form by a public deed executed in Santander, Spain, on January 14, 1875. Banco Santander,
S.A. is incorporated under, and governed by, the laws of the Kingdom of Spain as a company with unlimited duration and with limited
liability (sociedad anónima).
Banco Santander, S.A. conducts business
under the commercial name “Santander”. The Group’s principal corporate offices are located in Ciudad Grupo Santander,
Avenida de Cantabria s/n, 28660 Boadilla del Monte, Madrid, Spain, and its telephone number is (011) 34-91-259-6520.
Santander
US Debt, S.A. Unipersonal
Santander US Debt, a wholly-owned subsidiary
of Banco Santander, was incorporated by a public deed executed on August 23, 2005, and registered in the Mercantile Registry of
Madrid on August 25, 2005 as a company with unlimited duration and with limited liability under the laws of Spain (sociedad
anónima). Santander US Debt is a financing vehicle for the Group and has no subsidiary companies. Other than the proceeds
of any issuance, which will be deposited with Banco Santander, Santander US Debt has no material assets. With the exception of
Spanish reserve requirements which must be met prior to the payment of dividends and provided that dividends may only be distributed
out of income for the previous year or out of unrestricted reserves and provided further that the net worth of Santander US Debt
must not, as a result of the distribution, fall below its paid-in share capital (capital social), there are no restrictions
on Banco Santander’s ability to obtain funds from the issuer through dividends, loans or otherwise. Spanish Law 10/2014 requires
that the net proceeds of the offering of the debt securities of any series be deposited with Banco Santander.
The principal office of Santander US Debt
is located in Banco Santander’s principal executive offices at Ciudad Grupo Santander, Avenida de Cantabria s/n, 28660 Boadilla
del Monte, Madrid, Spain, and its telephone number is (011) 34-91-257-2059.
Santander
Issuances, S.A. unipersonal
Santander Issuances, a wholly-owned subsidiary
of Banco Santander, was incorporated by a public deed executed on February 27, 2004, and registered in the Mercantile Registry
of Madrid on March 2, 2004 as a company with unlimited duration and with limited liability under the laws of Spain (sociedad
anónima). Santander Issuances is a financing vehicle for the Group and has no subsidiary companies. Other than the proceeds
of any issuance,
which will be deposited with Banco Santander,
Santander Issuances has no material assets. With the exception of Spanish reserve requirements which must be met prior to the payment
of dividends and provided that dividends may only be distributed out of income for the previous year or out of unrestricted reserves
and provided further that the net worth of Santander Issuances must not, as a result of the distribution, fall below its paid-in
share capital (capital social), there are no restrictions on Banco Santander’s ability to obtain funds from the issuer
through dividends, loans or otherwise. Spanish Law 10/2014 requires that the net proceeds of the offering of the debt securities
of any series be deposited with Banco Santander.
The principal office of Santander Issuances
is located in Banco Santander’s principal executive offices at Ciudad Grupo Santander, Avenida de Cantabria s/n, 28660 Boadilla
del Monte, Madrid, Spain, and its telephone number is (011) 34-91-257-2059.
RISK FACTORS
Prospective investors should consider
carefully the risk factors incorporated by reference into this prospectus and as set out below as well as the other information
set out elsewhere in this prospectus (including any other documents incorporated by reference herein) and reach their own views
prior to making any investment decision with respect to any of the securities described in this prospectus.
Set out below and incorporated by reference
herein are certain risk factors which could have a material adverse effect on Banco Santander’s and the Group’s business,
operations, financial condition or prospects and cause future results to be materially different from expected results. Banco Santander’s
and the relevant issuers’ results could also be affected by competition and other factors. These factors should not be regarded
as a complete and comprehensive statement of all potential risks and uncertainties that Banco Santander, the relevant issuers and
the Group face. Described are only those risks relating to Banco Santander’s and the Group’s operations or an investment
in the securities that Banco Santander and the relevant issuers consider to be material. There may be additional risks that Banco
Santander and the relevant issuers currently consider not to be material or of which they are not currently aware, and any of these
risks could have the effects set forth below. All of these factors are contingencies which may or may not occur and Banco Santander
and the relevant issuers are not in a position to express a view on the likelihood of any such contingency occurring. Investors
should note that they bear Banco Santander, the relevant issuers’ and the Group’s solvency risk. Each of the risks
highlighted below could have a material adverse effect on the amount of principal, interest, liquidation preference and distributions
which investors will receive in respect of the securities. In addition, each of the highlighted risks could adversely affect the
trading price of the securities or the rights of investors under the securities and, as a result, investors could lose some or
all of their investment. Holders of contingent convertible capital securities or debt securities should consult their own financial,
tax and legal advisers regarding the risks of an investment in the securities.
Each of Santander US Debt and Santander
Issuances is a finance vehicle established by Banco Santander for the purpose of issuing debt securities and on-lending the proceeds
within the Group, and each is a wholly-owned subsidiary of Banco Santander. Accordingly, the risk factors incorporated by reference
which relate to Banco Santander and the Group will also be of relevance to Santander US Debt and Santander Issuances.
Capitalized terms and certain other
terms used in this section “Risk Factors”, unless otherwise defined in this section, have the meanings assigned to
them in “Description of Debt Securities and Guarantees” and “Description of Contingent Convertible Capital Securities”
below.
Risks relating to Santander US Debt, Santander Issuances,
Banco Santander and the Group
For a description of the risks associated
with Santander US Debt, Santander Issuances, Banco Santander and the Group, see the section entitled “Risk Factors”
of Banco Santander’s Annual Report on Form 20-F for the year ended December 31, 2014, which is incorporated by reference
herein.
Risks Relating to the Securities
Holders of any series of securities may experience
a loss in their investment in the event Banco Santander becomes subject to a resolution process under Law 11/2015 (or in the event
that loss absorption is required by the FROB to avoid a resolution process).
Chapter VI of Law 11/2015, of June 18,
for the recovery and resolution of credit entities and investment firms, as amended from time to time (“Law 11/2015”),
regulates a set of measures targeted at ensuring that shareholders, subordinated creditors (including holders of securities) and
certain senior creditors bear losses through a burden sharing mechanism within the framework of resolution processes. These measures
could include the discharge of any indebtedness and a stay of payment in respect of any indebtedness imposed by the Fondo de
reestructuración ordenada bancaria (the “FROB”), even against the will or without the consent of those holding
the relevant securities. Measures include repurchases of the debt securities at a certain price determined by the FROB, write-downs
of the nominal value of preferred and debt securities or their exchange for other securities. Potential investors in the securities
of any series should consider the risk that a holder may lose all or part of its investment if Banco Santander became the subject
of a resolution process (or, in the case of investors in the subordinated debt securities or contingent convertible capital securities
of any series, in the event that loss absorption were required by the FROB to avoid a resolution process of Banco Santander) and
a loss absorption measure was taken with respect to the securities of such series in accordance with Chapter VI of Law 11/2015.
There is no active trading market for
the securities.
Securities issued pursuant to this prospectus
(other than Banco Santander’s ordinary shares) will be new securities which may not be widely distributed and for which there
is currently no active trading market and no active trading market may develop. If securities of any series are traded after their
initial issuance, they may trade at a discount to their initial offering price, depending on a number of factors, including: prevailing
interest rates, the number of holders of such series of securities, the market for similar securities, general economic conditions
and the financial condition of the relevant issuer and/or Banco Santander, as applicable, the relevant issuers’ and Banco
Santander’s credit ratings published by credit rating agencies, the interest of securities dealers in making a market for
such series of securities and the introduction of any financial transaction tax. Although Banco Santander may submit applications
to list any series of securities on recognized stock exchanges, there is no assurance that such applications will be accepted,
that any particular series of securities will be so admitted or that an active trading market will develop, or if developed, that
it will continue. If an active trading market does not develop or is not maintained in respect of a particular series of securities,
the market price and liquidity of the securities of such series, as applicable, may be adversely affected. In that case, holders
of the securities of such series may not be able to sell the securities of such series at a particular time or may not be able
to sell securities of such series at a favorable price.
The securities of any series are subject to
the subordination provisions of the Spanish Insolvency Law.
Law 22/2003 (Ley Concursal) dated
9 July 2003 (“Law 22/2003” or the “Spanish Insolvency Law”), which became effective on September 1, 2004
supersedes all pre-existing Spanish provisions which regulated the bankruptcy, insolvency (including suspension of payments) and
any process affecting creditors’ rights generally, including the ranking of its credits.
Law 22/2003 provides, among other things,
that: (i) any claim may become subordinated if it is not reported to the insolvency administrators (administradores concursales)
within one month from the last official publication of the court order declaring the insolvency, (ii) provisions in a contract
granting one party the right to terminate by reason only of the other’s insolvency will not be enforceable, and (iii) interest
(other than interest accruing under secured liabilities up to an amount equal to the value of the asset subject to the security)
shall cease to accrue as from the date of the declaration of insolvency and any amount of interest accrued up to such date (other
than any interest accruing under secured liabilities up to an amount equal to the value of the asset subject to the security) shall
become subordinated.
Law 11/2015 established a change in the
ranking of claims under Article 92.2 of the Spanish Insolvency Law for Spanish banking insolvency proceedings. According to such
change: (a) principal of subordinated debt securities qualifying
as Tier 2 instruments will rank (i) pari
passu among themselves and with the principal of any other contractually subordinated obligations of the relevant
debtor qualifying as Tier 2 instruments, (ii) senior to any principal of contractually subordinated obligations of the
relevant debtor qualifying as Additional Tier 1 instruments and (iii) junior to any principal of contractually subordinated
obligations of the relevant debtor not qualifying as Additional Tier 1 instruments or Tier 2 instruments, and (b) principal
of contingent convertible capital securities qualifying as Additional Tier 1 will rank (i) pari passu among themselves
and with the principal of any other contractually subordinated obligations of the relevant
debtor qualifying as Additional Tier 1, and (ii) junior to any principal of contractually subordinated obligations of the
relevant debtor not qualifying as Additional Tier 1.
Any
payments of interest in respect of debt securities, or Distributions in respect of contingent convertible capital securities,
will be subject to the subordination provisions of article 92.3 of the Spanish Insolvency Law.
The Spanish Insolvency Act, in certain
instances, also has the effect of modifying or impairing creditors’ rights even if the creditor, either secured or unsecured,
does not consent to the amendment. Secured and unsecured dissenting creditors may be written down not only once the insolvency
has been declared by the judge as a result of the approval of a creditors’ agreement, but also as a result of an out-of-court
restructuring agreement without insolvency proceedings having been previously opened (e.g., refinancing agreements which satisfy
certain requirements and are validated by the judge), in both scenarios (i) to the extent that certain qualified majorities are
achieved and unless (ii) some exceptions in relation to the kind of claim or creditor apply (which would not be the case for the
securities).
The majorities legal regime envisaged for
these purposes also hinges on (i) the type of the specific restructuring measure which is intended to be imposed (e.g., extensions,
debt reductions, debt for equity swaps, etc.) as well as (ii) on the part of claims to be written-down (i.e. secured or unsecured,
depending on the value of the collateral as calculated pursuant to the rules established in the Spanish Insolvency Act).
In no case shall subordinated creditors
be entitled to vote upon a creditors’ agreement during the insolvency proceedings, and accordingly, shall be always subject
to the measures contained therein, if passed.
Under the terms of the securities of any series,
holders of such securities shall have agreed to be bound by and consent to the exercise of any resolution tool by the relevant
resolution authority.
Notwithstanding any other term of the
securities of any series or any other agreements, arrangements, or understandings between the relevant issuer or Banco
Santander and any holder of the securities of any series, by its acquisition of the securities of any series, each holder
(which, for the purposes of this risk, includes each holder of a beneficial interest in the securities of any series)
acknowledges, accepts, consents and agrees to be bound by the effect of the exercise of any resolution tools (including the
sale of business tool, the bridge institution tool, and the asset separation tool) by the relevant resolution authority in
compliance with any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit
institutions and investment firms, as amended or superseded from time to time (the “Bank Recovery and Resolution Directive”
or “BRRD”), including but not limited to Law 11/2015, of June 18, for the recovery
and resolution of credit entities and investment firms, as amended from time to time (“Law 11/2015”), (ii) the
Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and
a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of the Single
Resolution Mechanism and the Single Resolution Fund and amending Regulation (EU) No. 1093/2010, as amended or superseded from
time to time (the “SRM Regulation”) and (iii) the instruments, rules and standards created thereunder.
The potential impact of any resolution
tool may include the total loss of value of the securities of any series, and under certain circumstances, the inability of the
relevant issuer to perform its obligations under its securities.
See “—Law 11/2015 enables
a range of actions to be taken in relation to credit institutions and investment firms considered to be at risk of failing. The
taking of any action under Law 11/2015 could materially affect the value of any debt securities” and “—Law
11/2015 enables a range of actions to be taken in relation to credit institutions and investment firms considered to be at risk
of failing. The taking of any action under Law 11/2015 could materially affect the value of any contingent convertible capital
securities” below for a further description of the range of actions which may be taken.
Because global securities will be held by or
on behalf of DTC, investors will have to rely on their procedures for transfer, payment and communication with the relevant issuer
and/or Banco Santander.
The securities of any series issued may
be represented by one or more global securities. Such global securities will be registered with Cede & Co. as a nominee of
the Depository Trust Company (“DTC”), and may be held through a DTC participant, including Euroclear and Clearstream.
Except in the circumstances described in the relevant global security, investors will not be entitled to receive definitive securities.
DTC will maintain records of the beneficial interests in the global securities. While the securities are represented by one or
more global securities, investors will be able to trade their beneficial interests only through DTC (or any other clearing system
that is a direct or indirect participant in DTC).
While the securities of any series are
represented by one or more global securities, the relevant issuer and Banco Santander will discharge their payment obligations
under the securities of such series by making payments to the common depositary or Principal Paying Agent for DTC for distribution
to their account holders. A holder of a beneficial interest in a global security must rely on the procedures of DTC, or if such
interest is held through a DTC participant, the procedures of such DTC participant, to receive payments under the relevant series
of securities. The relevant issuer and Banco Santander have no responsibility or liability for the records relating to, or payments
made in respect of, beneficial interests in the global securities.
Holders of beneficial interests in the
global securities will not have a direct right to vote in respect of the relevant series of securities. Instead, such holders will
be permitted to act only to the extent that they are enabled by DTC to appoint appropriate proxies. Similarly, holders of beneficial
interests in the global securities will not have a direct right under the global securities to take enforcement action against
the relevant issuer or Banco Santander in the event of a default under the relevant series of securities but will have to rely
upon their rights under the relevant indenture.
The relevant issuers are required to provide
certain information related to securities of any series to the Spanish tax authorities.
Article 44 of Royal Decree 1065/2007, as
amended (“Royal Decree 1065/2007”) sets out the reporting obligations applicable to preferred securities (participaciones
preferentes), such as the contingent convertible capital securities of any series, and debt instruments issued under Law 10/2014,
such as the debt securities. The procedures apply to income deriving from preferred securities and debt instruments to which Law
10/2014 refers, including debt instruments issued at a discount for a period equal to or less than twelve months.
According to the literal wording of Article
44.5 of Royal Decree 1065/2007, income derived from preferred securities or debt instruments to which Law 10/2014 applies originally
registered with the entities that manage clearing systems located outside Spain, and are recognized by Spanish law or by the law
of another Organisation for Economic Cooperation and Development (“OECD”) country (such as DTC), Euroclear or Clearstream,
Luxembourg), will be paid free of Spanish withholding tax provided that the Principal Paying Agent appointed by Banco Santander
submits, in a timely manner, a statement to Banco Santander, with the following information:
(i) identification of the securities;
(ii) income payment date (or refund
if the securities are issued at discount or are segregated);
(iii) total amount of income (or total
amount to be refunded if the securities are issued at discount or are segregated); and
(iv) total amount of the income corresponding
to each clearing system located outside Spain.
These obligations refer to the total amount
paid to investors through each foreign clearing house. For these purposes, “income” means interest and the difference,
if any, between the aggregate amount payable on the redemption of the securities of any series and the issue price of the securities
of such series.
In accordance with Article 44 of Royal
Decree 1065/2007, the relevant issuer and Principal Paying Agent should provide Banco Santander with the statement reflecting the
relevant position at the close of business on the
business day immediately prior to each
interest payment date. In the event that on such date, an entity obliged to provide the declaration fails to do so, Banco Santander
or the Principal Paying Agent on its behalf will make a withholding at the general rate of 19.0% (except the applicable withholding
tax rate will be 19.5% during the tax period 2015) on the total amount of the return on the relevant debt securities or contingent
convertible capital securities otherwise payable to their holders.
Notwithstanding the foregoing, in the event
that withholding tax were required by law due to the failure of the Principal Paying Agent to submit in a timely manner a duly
executed and completed certificate pursuant to Law 10/2014 and Royal Decree 1065/2007 and any implementing legislation or regulation,
Banco Santander will not pay any additional amounts with respect to any such withholding, as provided in “Description of
Debt Securities and Guarantees—Additional Amounts” and “Description of Contingent Convertible Capital Securities—Additional
Amounts” below.
In the event that the currently applicable
procedures are modified, amended or supplemented by, among other things, any Spanish law, regulation, interpretation or ruling
of the Spanish tax authorities, Banco Santander will notify the holders of the relevant series of securities, as applicable, of
such information procedures and their implications, as Banco Santander may be required to apply withholding tax on interest payments
or Distributions, as applicable, in respect of the relevant series of securities if the holders of such series of securities do
not comply with such information procedures.
Potential FATCA Withholding After December
31, 2018
Under certain provisions of the United
States Internal Revenue Code of 1986, as amended (commonly referred to as “FATCA”), and Treasury regulations promulgated
thereunder, as well as certain intergovernmental agreements between the United States and certain other countries (including Spain),
certain payments made in respect of the debt securities, contingent convertible capital securities, ADSs or Conversion Shares after
December 31, 2018 may be subject to withholding at a rate of 30% (“FATCA withholding”). Banco Santander (or a relevant
intermediary) may be required to impose FATCA withholding on payments in respect of the debt securities, contingent convertible
capital securities, ADSs or Conversion Shares to the extent that such payments are “foreign passthru payments,” made
after December 31, 2018 to non-U.S. financial institutions (including intermediaries) that have not entered into agreements with
the Internal Revenue Service pursuant to FATCA or otherwise established an exemption from FATCA, and other holders that fail to
provide sufficient identifying information to Banco Santander or any relevant intermediary. Under current guidance it is not clear
whether and to what extent payments on the debt securities, contingent convertible capital securities, ADSs and Conversion Shares
will be considered foreign passthru payments subject to FATCA withholding or the extent to which foreign passthru payment withholding
will be required under intergovernmental agreements and their implementing legislation or regulations. Payments on debt securities
that are issued on or before the date which is six months after the date on which final Treasury regulations defining the term
“foreign passthru payments” are filed with the Federal Register, and are not materially modified after such date, will
not be subject to passthru payment withholding under FATCA. Investors should consult their tax advisers as to how these rules may
apply to payments they receive on the debt securities, contingent convertible capital securities, ADSs or Conversion Shares.
Withholding under the EU Savings Directive
Under Council Directive 2003/48/EC on the
taxation of savings income (the “Directive”), Member States are required to provide to the tax authorities of other
Member States details of certain payments of interest or similar income paid or secured by a person established in a Member State
to or for the benefit of an individual resident in another Member State or certain limited types of entities established in another
Member State.
The Council Directive 2003/48/EC was amended
by the Council Directive 2014/48/EU which was adopted on March 24, 2014 and published on April 15, 2014 (the “Amending Directive”).
The Amending Directive broadens the scope of the requirements described above. Member States are required to apply these new requirements
from January 1, 2016. The changes will expand the range of payments covered by the Directive, in particular to include additional
types of income payable on securities. The Directive will also apply a “look through approach” to certain payments
where an individual resident in a Member State is regarded as the beneficial owner of that payment for the purposes of the Directive.
This approach will apply to payments made to or by, or secured for or by, persons, entities
or
legal arrangements (including trusts), where certain conditions are satisfied, and may in some cases apply where the person, entity
or arrangement is established or effectively managed outside of the European Union.
For a transitional period, Austria is required
(unless during that period it elects otherwise) to operate a withholding system in relation to such payments deducting tax at a
rate of 35%. The changes referred to above will broaden the types of payments subject to withholding in those Member States which
still operate a withholding system when they are implemented.
The end of the transitional period is dependent
upon the conclusion of certain other agreements relating to information exchange with certain other countries. A number of non-EU
countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland).
If a payment were to be made or collected
through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from
that payment, neither the relevant issuer nor the Principal Paying Agent (as defined in “Description of Debt Securities and
Guarantees”) nor any other person would be obliged to pay additional amounts with respect to any debt security as a result
of the imposition of such withholding tax.
The European Commission has proposed that
the Council Directive 2003/48/EC should be repealed generally with effect from January 1, 2016 or, in the case of Austria, from
January 1, 2017, in order to avoid overlap with Council Directive 2011/16/EU on administrative cooperation in the field of taxation
(as amended by Council Directive 2014/107/EU), pursuant to which Members States will be required to apply new measures on mandatory
automatic exchange of information. The proposal also provides that, if it proceeds, Member States will not be required to apply
the new requirements of the Amending Directive. Investors who are in any doubt as to their position should consult their professional
advisers.
The proposed financial transaction
tax (“FTT”)
On February 14, 2013, the European Commission
published a proposal (the “Commission’s Proposal”) for a Directive for a common FTT in Belgium, Germany, Estonia,
Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the “participating Member States”).
The Commission’s proposal has very
broad scope and could, if introduced, apply to certain dealings in the securities (including secondary market transactions) under
certain circumstances. The issuance and subscription for the securities should, however, be exempt.
Under the Commission’s Proposal,
the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally,
it would apply to certain dealings in the securities where at least one party is a financial institution, and at least one party
is established in a participating Member State. A financial institution may be, or be deemed to be, “established” in
a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating
Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State.
Joint statements issued by participating
Member States indicate an intention to implement the FTT by January 1, 2016. However, the Commission’s Proposal remains subject
to negotiation by the participating Member States and the scope of any such tax is uncertain. Additional Member States of the European
Union may decide to participate.
Prospective investors are advised to seek
their own professional advice in relation to FTT.
If introduced, certain dealings in the
securities may be subject to the FTT, in which case neither Banco Santander nor the relevant issuers nor the Principal Paying Agent
nor any other person would be obliged to pay additional amounts with respect to any security as a result of imposition of such
tax.
Risks Relating to the Debt Securities
Law 11/2015 enables a range of actions to be
taken in relation to credit institutions and investment firms considered to be at risk of failing. The taking of any action under
Law 11/2015 could materially affect the value of any debt securities.
On May 6, 2014, the Council of the European
Union adopted the BRRD. The BRRD was published in the official Journal of the EU on June 12, 2014 and is designed to provide authorities
with tools to intervene in unsound or failing credit institutions and investment firms (“institutions”) to ensure the
continuity of the institution’s critical financial and economic functions, while minimizing the impact of an institution’s
failure on the economy and financial system. On June 18, 2015, Spain approved Law 11/2015 to implement the BRRD in Spain.
Law 11/2015 contains four resolution tools
and powers which may be used alone or in combination where the relevant resolution authority considers that (a) an institution
is failing or likely to fail, (b) there is no reasonable prospect that any alternative private sector measures would prevent the
failure of such institution within a reasonable timeframe, and (c) a resolution action is in the public interest: (i) sale of business
- which enables resolution authorities to direct the sale of the firm or the whole or part of its business on commercial terms;
(ii) bridge institution - which enables resolution authorities to transfer all or part of the business of the firm to a “bridge
institution” (an entity created for this purpose that is wholly or partially in public control); (iii) asset separation -
which enables resolution authorities to transfer impaired or problem assets to one or more publicly owned asset management vehicles
to allow them to be managed with a view to maximizing their value through eventual sale or orderly wind-down (this can be used
together with another resolution tool only); and (iv) bail-in - which gives resolution authorities the power to write down certain
claims of unsecured creditors of a failing institution and to convert certain unsecured debt claims including senior debt securities
and subordinated debt securities to equity (the general bail-in tool), which equity could also be subject to any future application
of the general bail-in tool. Law 11/2015 provides that the general bail-in tool shall be applied from January 1, 2016 (until such
date only the subordinated debt securities of any series could be bailed-in pursuant to Law 9/2012).
Law 11/2015 also provides for the resolution
authority as a last resort, after having assessed and exploited the above resolution tools to the maximum extent possible while
maintaining financial stability, to be able to provide extraordinary public financial support through additional financial stabilization
tools. These consist of the public equity support and temporary public ownership tools. Any such extraordinary financial support
must be provided in accordance with the EU state aid framework.
An institution will be considered as failing
or likely to fail when: it is, or is likely in the near future to be, in breach of its prudential requirements or any other requirements
for continuing authorization; its assets are, or are likely in the near future to be, less than its liabilities; it is, or is likely
in the near future to be, unable to pay its debts as they fall due; or it requires extraordinary public financial support (except
in limited circumstances).
In addition to the general bail-in tool,
the relevant resolution authority has the further power to permanently write-down or convert into equity capital instruments such
as the subordinated debt securities of any series at or immediately prior to the point of non-viability and before any other resolution
action is taken (non-viability loss absorption). Any shares issued to holders of subordinated debt securities of such series upon
any such conversion into equity may also be subject to any application of the general bail-in tool.
The powers set out in Law 11/2015 will
impact how credit institutions and investment firms are managed as well as, in certain circumstances, the rights of creditors.
Holders of the debt securities of any series may be subject to write-down or conversion into equity on any application of the general
bail-in tool and, in the case of the subordinated debt securities of any series, non-viability loss absorption, which may result
in such holders losing some or all of their investment. The exercise of any power under Law 11/2015 or any suggestion of such exercise
could, therefore, materially adversely affect the rights of holders of the debt securities of any series, the price or value of
their investment in any series of debt securities and/or the ability of Banco Santander to satisfy its obligations under the relevant
guarantee.
Law 11/2015 establishes that the FROB shall
apply the bail-in tool in accordance with a specific preference order; in particular, the FROB is required to write-down or convert
debts in the following order: (i) Common Equity
Tier 1 instruments; (ii) Additional Tier
1 instruments, (iii) Tier 2 instruments; (iv) other subordinated claims that do not qualify as Additional Tier 1 instruments or
Tier 2 instruments; and (v) eligible senior claims.
In addition, in accordance with Article
64.1.(i) of Law 11/2015, the FROB has the power to alter the amount of interest payable under debt instruments subject to resolution
proceedings and the date on which the interest becomes payable under the debt instrument (including the power to suspend payment
for a temporary period).
Under the terms of the debt securities of any
series, holders of such securities shall have agreed to be bound by and consent to the exercise of any Spanish Bail-in Power by
the relevant resolution authority.
Pursuant to Article 46 of Law 11/2015,
which implements Article 55 of the BRRD, subject to limited exceptions, unsecured liabilities of an institution governed by the
laws of a third country (which include the debt securities of any series) must contain a contractual acknowledgment whereby the
holders recognize that such liability may be subject to the Spanish Bail-in Power (as defined below) and agree to be bound by the
exercise of those powers by the relevant resolution authority.
Notwithstanding any other term of the debt
securities of any series or any other agreements, arrangements, or understandings between the relevant issuer and any holder of
the debt securities of any series, by its acquisition of the debt securities of any series, each holder (which, for the purposes
of this clause, includes each holder of a beneficial interest in the debt securities of any series) acknowledges, accepts, consents
to and agrees to be bound by:
(a) the effect of the exercise of the Spanish
Bail-in Power by the relevant resolution authority, which exercise may include and result in any of the following, or some combination
thereof:
(i) the reduction of all, or a portion,
of the Amounts Due (as defined below) on the debt securities of such series;
(ii) the conversion of all, or
a portion, of the Amounts Due on the debt securities of such series into ordinary shares, other securities or other
obligations of the relevant issuer, Banco Santander or another person (and the issue to or conferral on the holder of the debt
securities of such series of such shares, securities or obligations), including by means of an amendment, modification or
variation of the terms of the debt securities of such series;
(iii) the cancellation of the debt securities
of such series;
(iv) the amendment or alteration of the
maturity of the debt securities of such series or amendment of the amount of interest payable on the debt securities of such series,
or the date on which the interest becomes payable, including by suspending payment for a temporary period; and
(b) the variation of the terms of the debt
securities of such series, if necessary, to give effect to the exercise of the Spanish Bail-in Power by the relevant resolution
authority.
For these purposes, the “Amounts
Due” are the principal amount of, premium, if any, together with any accrued but unpaid interest, and Additional Amounts,
if any, due on the debt securities of any series. References to such amounts will include amounts that have become due and payable,
but which have not been paid, prior to the exercise of the Spanish Bail-in Power by the relevant resolution authority.
For
these purposes, the “Spanish Bail-in Power” is any write-down, conversion, transfer, modification, or
suspension power existing from time to time under, and exercised in compliance with, any laws, regulations, rules or
requirements in effect in the Kingdom of Spain, relating to (i) the transposition of Directive 2014/59/EU establishing a
framework for the recovery and resolution of credit institutions and investment firms, as amended or superseded from time to
time, (“BRRD”), including but not limited to Law 11/2015, of June 18, for the recovery and resolution of
credit institutions and investment firms, as amended from time to time (“Law 11/2015”), and up to
31 December 2015 (inclusive), Law 9/2012, of 14 November, on restructuring and resolution of credit institutions, (ii) the
Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and a
uniform procedure for the resolution of credit institutions and certain investment firms in the framework of the Single
Resolution Mechanism and the Single Resolution Fund and amending Regulation (EU) No. 1093/2010, as amended or superseded from
time to time (the “SRM Regulation”) and (iii) the instruments, rules and standards created thereunder,
pursuant to which any obligation of a regulated entity (as defined below) (or other affiliate of such regulated entity) can
be reduced, cancelled, modified, or converted into shares, other securities, or other obligations of such regulated entity or
any other person (or suspended for a temporary period).
Any Spanish Bail-in Power may be exercised
in such a manner as to result in holders of debt securities of the relevant series losing the value of all or a part of their investment
in the securities of such series or receiving a
different security from the securities
of such series, which may be worth significantly less than the securities of such series and which have significantly fewer protections
than those typically afforded to those kinds of securities. Moreover, the relevant resolution authority may exercise its authority
to implement the Spanish Bail-in Power without providing any advance notice to the holders of the debt securities of such series.
For more information, see “Description of Debt Securities and Guarantees—Agreement and Acknowledgement with Respect
to the Exercise of the Spanish Bail-in Power.”
Holders of the debt securities of any
series are likely to have limited rights to challenge the exercise of the Spanish Bail-in Power by the relevant resolution authority.
Law 11/2015 contains certain safeguards
for creditors in respect of the application of the capital instruments write-down and conversion power and the bail-in tool. With
respect to the capital instruments write-down and conversion power, the relevant resolution authority will exercise such power
in accordance with the priority of claims under normal insolvency proceedings such that Common Equity Tier 1 items will be written
down before Additional Tier 1 and Tier 2 instruments, successively, are written down or converted into Common Equity Tier 1 instruments.
Other than respecting the creditor hierarchy as set out above, the capital instruments write-down and conversion power does not
include an express safeguard designed to leave no creditor worse off than in the case of insolvency.
With respect to the bail-in tool, the relevant
resolution authority must apply the bail-in tool in accordance with a specified preference order. In particular, the FROB is required
to write-down or convert debts in the following order: (i) Common Equity Tier 1 instruments; (ii) Additional Tier 1 instruments,
(iii) Tier 2 instruments; (iv) other subordinated claims that do not qualify as Additional Tier 1 instruments or Tier 2 instruments;
and (v) eligible senior claims. As a result, Additional Tier 1 instruments (including the contingent convertible capital securities
of any series) will be written down or converted before Tier 2 instruments or subordinated debt that does not qualify as Additional
Tier 1 or Tier 2 instruments (and any such Tier 2 instruments or subordinated debt would only be written down or converted if the
reduction of Additional Tier 1 instruments does not sufficiently reduce the aggregate amount of liabilities that must be written
down or converted and, accordingly, senior debt instruments would only be written down or converted if the reduction of subordinated
instruments does not sufficiently reduce the aggregate amount of liabilities that must be written down or converted). Unlike the
capital instruments write-down and conversion power, the bail-in tool contains an express safeguard designed to leave no creditor
worse off than in the case of insolvency.
Notwithstanding the above, there may be
limited protections, if any, that will be available to holders of securities subject to the Spanish Bail-in Power (including the
debt securities of any series) and to the broader resolution powers of the relevant resolution authority. Accordingly, holders
of debt securities of any series may have limited or circumscribed rights to challenge any decision of the relevant resolution
authority to exercise its Spanish Bail-in Power.
The circumstances under which the relevant
resolution authority would exercise its Spanish Bail-in Power are currently uncertain.
There remains uncertainty as to how or
when the Spanish Bail-in Power may be exercised and how it would affect the Group and the debt securities of any series. The determination
that all or part of the principal amount of the debt securities of any series will be subject to loss absorption is likely to be
inherently unpredictable and may depend on a number of factors which may be outside of Banco Santander’s control. Although
there are proposed pre-conditions for the exercise of the Spanish Bail-in Power, there remains uncertainty regarding the specific
factors which the relevant resolution authority would consider in deciding whether to exercise the Spanish Bail-in Power with respect
to the financial institution and/or securities issued or guaranteed by that institution. In particular, in determining whether
an institution is failing or likely to fail, the European Central Bank, the Bank of Spain and the FROB shall consider a number
of factors, including, but not limited to, an institution’s capital and liquidity position, governance arrangements and any
other elements affecting the institution’s continuing authorization. Moreover, as the final criteria that the relevant resolution
authority would consider in exercising any Spanish Bail-in Power is likely to provide it with discretion, holders of debt securities
of any series may not be able to refer to publicly available criteria in order to anticipate a potential exercise of any such Spanish
Bail-in Power. Because of this inherent uncertainty, it will be difficult to predict when, if at all, the exercise of any Spanish
Bail-in Power by the
FROB, as the relevant resolution authority,
may occur which would result in a principal amount write off or conversion to equity. The uncertainty may adversely affect the
value of holders’ investments in the debt securities of any series.
In addition, the preparation by the European
Banking Authority of certain regulatory technical standards and implementing technical standards to be adopted by the European
Commission and certain other guidelines is pending. These include guidelines on the treatment of shareholders in bail-in or the
write-down and conversion of capital instruments, and on the rate of conversion of debt to equity in bail-in.
In addition to the BRRD, it is possible
that the application of other relevant laws, the Basel Committee on Banking Supervision package of reforms to the regulatory capital
framework for internationally active banks designed, in part, to ensure that capital instruments issued by such banks fully absorb
losses before tax payers are exposed to loss (“Basel III Reforms”) and any amendments thereto or other similar regulatory
proposals, including proposals by the Financial Stability Board (“FSB”) on cross-border recognition of resolution actions,
could be used in such a way as to result in the debt securities of any series absorbing losses in the manner described above. Any
actions by the relevant resolution authority pursuant to the powers granted to it by Law 11/2015, or other measures or proposals
relating to the resolution of institutions, may adversely affect the rights of holders of the debt securities of any series, the
price or value of an investment in the debt securities of such series and/or the Group’s ability to satisfy its obligations
under the debt securities of such series.
Changes in law may adversely affect holders’
rights under the debt securities of any series or may adversely affect the Group’s business, financial performance and capital
plans.
Changes in law after the date hereof may
affect holders’ rights under the debt securities of any series as well as the market value of the debt securities of such
series. Such changes in law may include changes in statutory, tax and regulatory regimes during the life of the debt securities
of any series, or changes that could have a significant impact on the future legal entity structure, business mix (including a
potential exit of certain business activities) and management of the Group, and use of capital and requirements for loss-absorbing
capacity within the Group, which may have an adverse effect on an investment in the debt securities of such series.
Moreover, any change in law or regulation
that would cause the subordinated debt securities of any series to be fully excluded (or likely to be fully excluded) from Tier
2 Capital would trigger a Capital Disqualification Event, may entitle Santander Issuances to redeem the subordinated debt securities
of such series, in whole (but not in part) as more particularly described under “Description of Debt Securities and Guarantees—Redemption
and Repurchase—Redemption of Subordinated Debt Securities for a Capital Disqualification Event”. In addition, any change
in law or regulation that results in the relevant issuer having to pay additional amounts to holders of debt securities of any
series, or results in certain other tax consequences including (but not limited to) the relevant issuer not being entitled to claim
a deduction for Spanish tax purposes in respect of interest payments (or the value of such deduction to us being materially reduced),
could trigger a tax event, which may entitle the relevant issuer to redeem the debt securities of such series, in whole (but not
in part) as more particularly described under “Description of Debt Securities and Guarantees—Redemption and Repurchase—Early
Redemption for Taxation Reasons”.
It is not possible to predict whether or
not a change in the laws or regulations of Spain, Applicable Banking Regulations or the application or official interpretation
thereof, will occur and so lead to the circumstances in which the relevant issuer is able to elect to redeem the debt securities
of any series, and if so whether or not Banco Santander will elect to exercise such option to redeem the debt securities of such
series. There can be no assurances that, in the event of any early redemption, holders of debt securities of any series will be
able to reinvest the proceeds at a rate that is equal to the return on the debt securities of such series.
Such legislative and regulatory uncertainty
could also affect holders’ ability to accurately value the debt securities of any series and therefore affect the trading
price of the debt securities of such series given the extent and impact on the debt securities of such series that one or more
regulatory or legislative changes, including those described under “—The circumstances under which the relevant
resolution authority would exercise its Spanish Bail-in Power are currently uncertain” and “—Holders of
the debt securities of any series are likely to have limited rights to challenge the exercise of the Spanish Bail-in Power by the
relevant resolution authority”, could have on the debt securities of such series.
Credit ratings may not reflect all risks of
an investment in the debt securities and the relevant guarantees, and a downgrade in credit ratings, including as a result of changes
in rating agencies’ views of the level of implicit sovereign support for European banks, could adversely affect the trading
prices of the debt securities.
Banco Santander’s credit ratings
may not reflect the potential impact of all risks relating to the market values of the debt securities of any series and the relevant
guarantees. However, real or anticipated changes in the relevant issuers’ or Banco Santander’s credit ratings will
generally affect the market values of the debt securities of such series and the relevant guarantees. Credit rating agencies continually
revise their ratings for companies that they follow, including Banco Santander, and as such, the credit rating of Banco Santander
may be revised, suspended or withdrawn at any time by the assigning rating organization at their sole discretion. In addition,
one or more independent credit rating agencies may assign credit ratings to the debt securities of any series.
Any ratings downgrade could adversely affect
the trading prices of the debt securities of any series or the trading markets for the debt securities of any series to the extent
trading markets for the debt securities of such series develop, and any ratings improvement will not necessarily increase the value
of the debt securities of such series and will not reduce market risk and other investment risks related to the debt securities
of such series.
Credit ratings may not reflect the potential
impact of all risks related to structure and market of the debt securities of any series, and do not address the price, if any,
at which the debt securities of any series may be resold prior to maturity (which may be substantially less than the original offering
price of the debt securities of such series), and other factors that may affect the value of the debt securities of such series.
A credit rating is not a recommendation to buy, sell or hold the debt securities of any series and may be revised or withdrawn
by the rating agency at any time.
In general, European regulated investors
are restricted under Regulation (EC) No. 1060/2009 (as amended) (the “CRA Regulation”) from using credit ratings for
regulatory purposes, unless such ratings are issued by a credit rating agency established in the EU and registered under the CRA
Regulation (and such registration has not been withdrawn or suspended). Such general restriction will also apply in the case of
credit ratings issued by non-EU credit rating agencies, unless the relevant credit ratings are endorsed by an EU-registered credit
rating agency or the relevant non-EU rating agency is certified in accordance with the CRA Regulation (and such endorsement action
or certification, as the case may be, has not been withdrawn or suspended). Certain information with respect to the credit rating
agencies and ratings will be disclosed in the relevant prospectus supplement.
The debt securities may not be a suitable investment
for investors.
A prospective investor should determine
whether an investment in any series of debt securities is appropriate in his or her particular circumstances after carefully considering,
in conjunction with his or her legal, business and tax advisers, the consequences of an investment in the debt securities of such
series and the other information set out in this prospectus and the relevant prospectus supplement, to arrive at his or her own
evaluation of the investment. Neither the relevant issuers nor Banco Santander makes any recommendation as to whether any series
of debt securities are a suitable investment for any person.
The debt securities of any series may be redeemed
by the relevant issuer prior to maturity.
The debt securities of any series may be
redeemable at the relevant issuer’s option in certain circumstances as described in this prospectus and the relevant prospectus
supplement. The relevant issuer may choose to redeem the debt securities of such series at times when prevailing interest rates
may be relatively low. In such circumstances, an investor may not be able to reinvest the redemption proceeds in a comparable security
at an effective interest rate as high as that of the relevant debt securities.
In addition, the ability to redeem the
debt securities of any series is likely to limit the market value of the debt securities of such series. During any period when
the relevant issuers may elect to redeem the debt securities of any series, the market value of the debt securities of such series
generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption
period. See “Description of Debt Securities and Guarantees—Redemption and Repurchase” for more information on
the circumstances under which the relevant issuers may redeem the debt securities of any series.
The debt securities of any series are not bank
deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Deposit Insurance Fund, or any other
government agency.
The debt securities of any series are Banco
Santander’s and the relevant issuer’s obligations but are not bank deposits. In the event of Banco Santander’s
and the relevant issuer’s insolvency, the debt securities of any series will rank equally with Banco Santander’s and
the relevant issuer’s other unsecured obligations and will not have the benefit of any insurance or guarantee of the Federal
Deposit Insurance Corporation, the Deposit Insurance Fund, or any other government agency.
There is no restriction under the relevant
indentures on the amount or type of further securities or indebtedness which the relevant issuers or Banco Santander may incur.
There is no restriction under the relevant
indentures on the amount or type of further securities or indebtedness which the relevant issuers or Banco Santander may issue
or incur which ranks senior to, or pari passu with, the debt securities of any series. The incurrence of any such further
indebtedness may reduce the amount recoverable by holders of debt securities of any series on a liquidation, dissolution or winding-up
of Banco Santander in respect of the debt securities of such series and may limit the ability of the relevant issuer or Banco Santander
to meet its obligations in respect of the debt securities of such series, and result in a holder of the debt securities of such
series losing all or some of its investment in the debt securities of such series.
Risks Related to the Senior Debt Securities
The senior debt securities of any series are
unsecured and are effectively subordinated to Banco Santander’s and the relevant issuer’s secured indebtedness.
The senior debt securities of any series
are unsecured, will be effectively subordinated to all secured indebtedness Banco Santander and the relevant issuer may incur,
to the extent of the assets securing such indebtedness. The relevant indenture relating to Banco Santander’s and the relevant
issuer’s senior debt securities does not restrict Banco Santander’s and the relevant issuer’s ability to incur
secured indebtedness in the future. In the event of Banco Santander’s and the relevant issuer’s insolvency, bankruptcy,
liquidation, reorganization, dissolution or winding up, to the extent Banco Santander and the relevant issuer has granted security
over Banco Santander’s assets and the relevant issuer’s assets, the assets securing such indebtedness will be used
to satisfy the obligations under such indebtedness before Banco Santander and the relevant issuer can make payments on the senior
debt securities of any series. There may only be limited assets available to make payments on the senior debt securities of any
series in the event of an acceleration of the senior debt securities of such series and Banco Santander and the relevant issuer
may not have sufficient assets to pay amounts due on any or all of Banco Santander’s and the relevant issuer’s senior
debt securities of such series then outstanding.
Risks Related to the Subordinated Debt Securities
Santander Issuances’ obligations under
the subordinated debt securities of any series are subordinated to existing and future senior indebtedness.
Santander Issuances’ obligations
under the subordinated debt securities of any series will be unsecured and subordinated and will rank junior in priority of payment
to all unsubordinated obligations of Santander Issuances and to all subordinated obligations of Santander Issuances not qualifying
as Tier 1 or Tier 2 Capital. Although subordinated debt securities may pay a higher rate of interest than comparable debt securities
which are not subordinated, there is a risk that holders of the subordinated debt securities of any series will lose all or some
of their investment should Santander Issuances and Banco Santander become insolvent. The payment of principal and interest in respect
of the subordinated debt securities and all amounts due under the relevant indenture in respect of the subordinated debt securities
of such series will be unconditionally and irrevocably guaranteed by Banco Santander pursuant to the subordinated guarantee. Banco
Santander’s obligations under the subordinated guarantee will be unsecured and subordinated and will rank junior in priority
of payment to all unsubordinated obligations of Banco Santander and to all subordinated obligations of Banco Santander not qualifying
as Tier 1 or Tier 2 Capital.
Risks Relating to the Contingent Convertible Capital Securities
The contingent convertible capital securities
of any series are subject to certain provisions of the laws of the Kingdom of Spain and their official interpretation, which may
change and have a material adverse effect on the terms and market value of the contingent convertible capital securities of such
series.
Changes in the laws of Spain or their official
interpretation by regulatory authorities such as the Bank of Spain or the European Central Bank after the date hereof may affect
the rights and effective remedies of holders of any series of contingent convertible capital securities as well as the market value
of the contingent convertible capital securities of such series.
Such changes in law may include changes
in statutory, tax and regulatory regimes during the life of the contingent convertible capital securities of such series, which
may have an adverse effect on investment in the contingent convertible capital securities of such series. They could also include
the introduction of a variety of further statutory resolution, loss-absorption and bail-in measures and tools, which may affect
the rights of holders of obligations issued by Banco Santander, including the contingent convertible capital securities of any
series.
The CRD IV Directive and CRR are a set
of rules and regulations that imposes a series of new requirements, many of which will be phased in over a number of years. The
CRD IV Directive (which has been transposed into Spanish law by Royal Decree-Law 14/2013, Law 10/2014 and Royal Decree 84/2015)
and will be further developed by a circular of the Bank of Spain, a draft of which was published for public consultation on July
9, 2015, and CRR (which is directly effective in all EU Member States) leave a number of important interpretational issues to be
resolved through a number of binding technical standards that remain to be published and/or adopted in the future, and leaves certain
other matters to the discretion of the relevant regulator.
Any such changes (including those which
may result from the publication of the technical standards which interpret CRR) could impact the calculation of the CET1 ratio
or the CET1 Capital of Banco Santander or the Group or the Risk Weighted Assets Amount. Furthermore, because the occurrence of
the Trigger Event depends, in part, on the calculation of these ratios and capital measures, any change in Spanish law that could
affect the calculation of such ratios and measures could also affect the determination of whether the Trigger Event has actually
occurred.
Such calculations may also be affected
by changes in applicable accounting rules, the accounting policies of Banco Santander and the Group and the application by Banco
Santander and the Group of these policies. Any such changes, including changes over which Banco Santander or the Group has a discretion,
may have a material adverse impact on the reported financial position of Banco Santander or the Group and accordingly may give
rise to the occurrence of the Trigger Event in circumstances where such Trigger Event may not otherwise have occurred, notwithstanding
the adverse impact this will have for holders of any series of contingent convertible capital securities.
Furthermore, any change in the laws or
regulations of Spain, Applicable Banking Regulations or any change in the application or official interpretation thereof may in
certain circumstances result in Banco Santander having the option to redeem the contingent convertible capital securities of any
series in whole but not in part. In any such case, the contingent convertible capital securities of such series would cease to
be outstanding, which could materially and adversely affect investors and frustrate investment strategies and goals.
Such legislative and regulatory uncertainty
could affect an investor’s ability to value the contingent convertible capital securities accurately and therefore affect
the market price of the contingent convertible capital securities of such series given the extent and impact on the contingent
convertible capital securities of such series of one or more regulatory or legislative changes.
CRD IV introduces capital requirements that
are in addition to the minimum capital ratio. These additional capital requirements will restrict Banco Santander from making payments
of Distributions on the contingent convertible capital securities in certain circumstances, in which case Banco Santander will
cancel such Distributions, and holders of contingent convertible capital securities of any series may not be able to anticipate
whether or not Banco Santander will cancel such Distributions.
Under the CRR, institutions will be required
to hold a minimum amount of regulatory capital of 8% of risk-weighted assets (“RWA”) (“own funds”). In
addition to these so-called “own funds” requirements under the CRR, supervisory authorities may impose additional capital
requirements to cover other risks (thereby increasing the regulatory minimum required under the CRR). Banco Santander may also
decide to hold additional capital. The CRD IV Directive further introduces capital buffer requirements that are in addition to
the minimum capital requirement and are required to be satisfied with Common Equity Tier 1 capital. It introduces five new capital
buffers: (i) the capital conservation buffer, (ii) the institution-specific countercyclical buffer, (iii) the global systemically
important institutions buffer, (iv) the other systemically important institutions buffer and (v) the systemic risk buffer, which
will be phased in from 1 January 2016 and will become fully effective on 1 January 2019. Some or all of these buffers may be applicable
to Banco Santander and/or the Group as determined by the Regulator.
Under article 141 of the CRD IV Directive,
Member States of the European Union must require that institutions that fail to meet the “combined buffer requirement”
(broadly, the combination of the capital conservation buffer, the institution-specific counter-cyclical buffer and the higher of
(depending on the institution), the systemic risk buffer, the global systemically important institutions buffer and the other systemically
important institution buffer, in each case as applicable to the institution) will be prohibited from paying any “discretionary
payments” (which are defined broadly by the CRD IV Directive as payments relating to Common Equity Tier 1, variable remuneration
and payments on Additional Tier 1 capital instruments such as the contingent convertible capital securities of any series), until
it calculates its applicable restrictions and communicates them to the Regulator and, once done, such institution will be subject
to restricted “discretionary payments”.
The restrictions will be scaled according
to the extent of the breach of the “combined buffer requirement” and calculated as a percentage of the profits of the
institution since the last distribution of profits or “discretionary payment”. Such calculation will result in a “Maximum
Distributable Amount” in each relevant period. As an example, the scaling is such that in the bottom quartile of the “combined
buffer requirement”, no “discretionary distributions” will be permitted to be paid. As a consequence, in the
event of breach of the combined buffer requirement it may be necessary to reduce discretionary payments, including potentially
exercising Banco Santander’s discretion to cancel (in whole or in part) payments of Distributions in respect of the contingent
convertible capital securities of any series.
Articles 43 to 49 of Law 10/2014 and Chapter
II of Title II of Royal Decree 84/2015 implement the above provisions in Spain. In particular article 48 of Law 10/2014 and articles
73 and 74 of Royal Decree 84/2014 deal with restrictions on distributions.
Current regulatory proposals may also,
if adopted and once implemented, impose further restrictions on Banco Santander’s ability to make payments on the contingent
convertible capital securities of any series. For example, proposals made by the FSB recommend the adoption of total loss absorbing
capacity (“TLAC”) requirements for global systemically important banks (including us) in addition to existing minimum
regulatory capital requirements. The proposals currently contemplate that only CET1 Capital in excess of that required to satisfy
minimum RWA TLAC requirements may count towards regulatory capital buffers, such as those introduced under CRD IV or the additional
buffer requirements. As a result of these proposals, Banco Santander’s capital requirements, in particular requirements that
Banco Santander holds sufficient amounts of CET1 Capital, may be effectively increased. In addition to the capital requirements
under CRD IV, the BRRD introduces requirements for banks to maintain at all times a sufficient aggregate amount of own funds and
“eligible liabilities” (that is, relevant liabilities that are not excluded from the scope of the bail-in tool), known
as the minimum requirements for own funds and eligible liabilities (“MREL”). The aim is that the minimum amount should
be proportionate and adapted for each category of bank on the basis of their risk or the composition of their sources of funding.
In addition, in accordance with Article
64.1.(i) of Law 11/2015, the FROB has the power to alter the amount of distributions or interest payable under debt instruments
issued by banks subject to resolution proceedings and the date on which the distributions or interest becomes payable under the
debt instrument (including the power to suspend payment for a temporary period). In addition, the European Central Bank also has
the power under Article 68.2(i) of Law 10/2014 (implementing Article 104 of CRD IV) to impose in certain circumstances requirements
on Banco Santander, the effect of which will be to restrict or prohibit payments of Distributions by Banco Santander to holders
of the contingent convertible capital securities of any series, which is most likely to materialise if at any time Banco Santander
is failing, or is expected to fail, to meet its capital requirements.
Moreover, Banco Santander’s capital
requirements, are, by their nature, calculated by reference to a number of factors any one of which or combination of which may
not be easily observable or capable of calculation by investors. Investors may not be able to predict accurately the proximity
of the risk of discretionary payments on the contingent convertible capital securities of any series being prohibited from time
to time as a result of the operation of article 48 of Law 10/2014. There can be no assurance that any of the capital requirements
or capital buffer requirements applicable to Banco Santander will not be amended in the future to include new and more onerous
capital requirements, which in turn may affect Banco Santander’s capacity to make payments of Distributions on the contingent
convertible capital securities of any series. See “—Payments of Distributions on the contingent convertible capital
securities of any series are payable in Banco Santander’s sole and absolute discretion and Banco Santander may (and in certain
circumstances will have no choice but to) cancel any Distributions in whole or in part at any time. Unpaid Distributions are not
cumulative or payable at any time thereafter and holders of contingent convertible capital securities of such series shall have
no rights thereto.”
Law 11/2015 enables a range of actions
to be taken in relation to credit institutions and investment firms considered to be at risk of failing. The taking of any action
under Law 11/2015 could materially affect the value of any contingent convertible capital securities.
Law 11/2015 contains four resolution tools
and powers which may be used alone or in combination where the relevant resolution authority considers that (a) an institution
is failing or likely to fail, (b) there is no reasonable prospect that any alternative private sector measures would prevent the
failure of such institution within a reasonable timeframe, and (c) a resolution action is in the public interest: (i) sale of business
- which enables resolution authorities to direct the sale of the firm or the whole or part of its business on commercial terms;
(ii) bridge institution - which enables resolution authorities to transfer all or part of the business of the firm to a “bridge
institution” (an entity created for this purpose that is wholly or partially in public control); (iii) asset separation -
which enables resolution authorities to transfer impaired or problem assets to one or more publicly owned asset management vehicles
to allow them to be managed with a view to maximizing their value through eventual sale or orderly wind-down (this can be used
together with another resolution tool only); and (iv) bail-in - which gives resolution authorities the power to write down certain
claims of unsecured creditors of a failing institution and to convert certain unsecured debt claims including contingent convertible
capital securities to equity (the general bail-in tool), which equity could also be subject to any future application of the general
bail-in tool. Law 11/2015 provides that the general bail-in tool shall be applied from January 1, 2016 (until such date the contingent
convertible capital securities of any series could be bailed-in pursuant to Law 9/2012).
Law 11/2015 also provides for the resolution
authority as a last resort, after having assessed and exploited the above resolution tools to the maximum extent possible while
maintaining financial stability, to be able to provide extraordinary public financial support through additional financial stabilization
tools. These consist of the public equity support and temporary public ownership tools. Any such extraordinary financial support
must be provided in accordance with the EU state aid framework.
An institution will be considered as failing
or likely to fail when: it is, or is likely in the near future to be, in breach of its prudential requirements or any other requirements
for continuing authorization; its assets are, or are likely in the near future to be, less than its liabilities; it is, or is likely
in the near future to be, unable to pay its debts as they fall due; or it requires extraordinary public financial support (except
in limited circumstances).
In addition to the general bail-in tool,
the relevant resolution authority has the further power to permanently write-down or convert into equity capital instruments such
as the contingent convertible capital securities of any series at or immediately prior to the point of non-viability and before
any other resolution action is taken (non-
viability loss absorption). Any shares
issued to holders of contingent convertible capital securities of such series upon any such conversion into equity may also be
subject to any application of the general bail-in tool.
The powers set out in Law 11/2015 will
impact how credit institutions and investment firms are managed as well as, in certain circumstances, the rights of creditors.
Holders of the contingent convertible capital securities of any series may be subject to write-down or conversion into equity on
any application of the general bail-in tool and to non-viability loss absorption, which may result in such holders losing some
or all of their investment. The exercise of any power under Law 11/2015 or any suggestion of such exercise could, therefore, materially
adversely affect the rights of holders of the contingent convertible capital securities of any series, the price or value of their
investment in any series of contingent convertible capital securities.
Law 11/2015 establishes that the FROB shall
apply the bail-in tool in accordance with a specific preference order; in particular, the FROB is required to write-down or convert
debts in the following order: (i) Common Equity Tier 1 instruments; (ii) Additional Tier 1 instruments, (iii) Tier 2 instruments;
(iv) other subordinated claims that do not qualify as Additional Tier 1 instruments or Tier 2 instruments; and (v) eligible senior
claims.
Under the terms of the contingent convertible
capital securities of any series, holders of contingent convertible capital securities of such series shall have agreed to be bound
by the exercise of any Spanish Bail-in Power by the relevant resolution authority.
Pursuant to Article 46 of Law 11/2015,
which implements Article 55 of the BRRD, subject to limited exceptions, unsecured liabilities of an institution governed by the
laws of a third-country (which include the contingent convertible capital securities of any series) must contain a contractual
acknowledgment whereby the holders recognize that such liability may be subject to the Spanish Bail-in Power and agree to be bound
by the exercise of those powers by the relevant resolution authority.
Notwithstanding any other term of the contingent
convertible capital securities of any series or any other agreements, arrangements, or understandings between Banco Santander and
any holder of the contingent convertible capital securities of any series, by its acquisition of the contingent convertible capital
securities of any series, each holder (which, for the purposes of this clause, includes each holder of a beneficial interest in
the contingent convertible capital securities of any series) acknowledges, accepts, consents to and agrees to be bound by:
(a) the effect of the exercise of the Spanish
Bail-in Power by the relevant resolution authority, which exercise may include and result in any of the following, or some combination
thereof:
(i) the reduction of all, or a portion,
of the Amounts Due on the contingent convertible capital securities of such series;
(ii) the conversion of all, or a portion,
of the Amounts Due on the contingent convertible capital securities of such series into ordinary shares, other securities or other
obligations of Banco Santander or another person (and the issue to or conferral on the holder of the contingent convertible capital
securities of such series of such shares, securities or obligations), including by means of an amendment, modification or variation
of the terms of the contingent convertible capital securities of such series;
(iii) the cancellation of the contingent
convertible capital securities of such series;
(iv) the amendment or alteration of the
Liquidation Preference of the contingent convertible capital securities of such series or amendment of the amount of Distributions
payable on the contingent convertible capital securities of such series, or the date on which the Distributions becomes payable;
and
(b) the variation of the terms of the contingent
convertible capital securities of such series, if necessary, to give effect to the exercise of the Spanish Bail-in Power by the
relevant resolution authority.
For these purposes, the “Amounts
Due” are the Liquidation Preference, together with any accrued but unpaid Distributions, if any, and Additional Amounts,
if any, due on the contingent convertible capital securities of any series. References to such amounts will include amounts that
have become due and payable, but which have not been paid, prior to the exercise of the Spanish Bail-in Power by the relevant resolution
authority.
See “—Holders of any series
of securities may experience a loss in their investment in the event Banco Santander becomes subject to a resolution process under
Law 11/2015 (or in the event that loss absorption is required by the FROB to avoid a resolution process).”
For
these purposes, the “Spanish Bail-in Power” is any write-down, conversion, transfer, modification, or suspension
power existing from time to time under, and exercised in compliance with, any laws, regulations, rules or requirements in effect
in the Kingdom of Spain, relating to (i) the transposition of Directive 2014/59/EU establishing a framework for the recovery and
resolution of credit institutions and investment firms, as amended or superseded from time to time, (“BRRD”),
including but not limited to Law 11/2015, of June 18, for the recovery and resolution of credit institutions and investment firms,
as amended from time to time (“Law 11/2015”), and up to 31 December 2015 (inclusive), Law 9/2012, of 14 November,
on restructuring and resolution of credit institutions, (ii) the Regulation (EU) No. 806/2014 of the European Parliament and of
the Council of 15 July 2014, establishing uniform rules and a uniform procedure for the resolution of credit institutions and
certain investment firms in the framework of the Single Resolution Mechanism and the Single Resolution Fund and amending Regulation
(EU) No. 1093/2010, as amended or superseded from time to time (the “SRM Regulation”) and (iii) the instruments,
rules and standards created thereunder, pursuant to which any obligation of a regulated entity (as defined below) (or other affiliate
of such regulated entity) can be reduced, cancelled, modified, or converted into shares, other securities, or other obligations
of such regulated entity or any other person (or suspended for a temporary period).
Any Spanish Bail-in Power may be exercised
in such a manner as to result in holders of contingent convertible capital securities of the relevant series losing the value of
all or a part of their investment in the contingent convertible capital securities of such series or receiving a different security
from the contingent convertible capital securities of such series, which may be worth significantly less than the contingent convertible
capital securities of such series and which have significantly fewer protections than those typically afforded to debt securities.
Moreover, the relevant resolution authority may exercise its authority to implement the Spanish Bail-in Power without providing
any advance notice to the holders of the contingent convertible capital securities of such series. For more information, see “Description
of Contingent Convertible Capital Securities—Agreement and Acknowledgement with Respect to the Exercise of the Spanish Bail-in
Power”.
Holders of contingent convertible capital securities of
any series are likely to have limited rights to challenge the exercise of the Spanish Bail-in Power by the relevant resolution
authority.
Law 11/2015 contains certain safeguards
for creditors in respect of the application of the capital instruments write-down and conversion power and the bail-in tool. With
respect to the capital instruments write-down and conversion power, the relevant resolution authority will exercise such power
in accordance with the priority of claims under normal insolvency proceedings such that Common Equity Tier 1 items will be written
down before Additional Tier 1 and Tier 2 instruments, successively, are written down or converted into Common Equity Tier 1 instruments.
Other than respecting the creditor hierarchy as set out above, the capital instruments write-down and conversion power does not
include an express safeguard designed to leave no creditor worse off than in the case of insolvency.
With respect to the bail-in tool, the relevant
resolution authority must apply the bail-in tool in accordance with a specified preference order. In particular, the FROB is required
to write-down or convert debts in the following order: (i) Common Equity Tier 1 instruments; (ii) Additional Tier 1 instruments,
(iii) Tier 2 instruments; (iv) other subordinated claims that do not qualify as Additional Tier 1 instruments or Tier 2 instruments;
and (v) eligible senior claims. As a result, Additional Tier 1 instruments (including the contingent convertible capital securities
of any series) will be written down or converted before Tier 2 instruments or subordinated debt that does not qualify as Additional
Tier 1 or Tier 2 instruments (and any such Tier 2 instruments or subordinated debt would only be written down or converted if the
reduction of Additional Tier 1 instruments does not sufficiently reduce the aggregate amount of liabilities that must be written
down or converted). Unlike the capital instruments write-down and conversion power, the bail-in tool contains an express safeguard
designed to leave no creditor worse off than in the case of insolvency.
Notwithstanding the above, there may be
limited protections, if any, that will be available to holders of securities subject to the Spanish Bail-in Power (including the
contingent convertible capital securities of any series) and to the broader resolution powers of the relevant resolution authority.
Accordingly, holders of contingent convertible capital securities of any series may have limited or circumscribed rights to challenge
any decision of the relevant resolution authority to exercise its Spanish Bail-in Power.
The circumstances under which the relevant
resolution authority would exercise its Spanish Bail-in Power are currently uncertain.
There remains uncertainty as to how or
when the Spanish Bail-in Power may be exercised and how it would affect the Group and the contingent convertible capital securities
of any series. The determination that all or part of the Liquidation Preference of the contingent convertible capital securities
of any series will be subject to loss absorption is likely to be inherently unpredictable and may depend on a number of factors
which may be outside of Banco Santander’s control. Although there are proposed pre-conditions for the exercise of the Spanish
Bail-in Power, there remains uncertainty regarding the specific factors which the relevant resolution authority would consider
in deciding whether to exercise the Spanish Bail-in Power with respect to the relevant institution and/or securities, such as the
contingent convertible capital securities of any series, issued by that institution. In particular, in determining whether an institution
is failing or likely to fail, the European Central Bank, the Bank of Spain and the FROB shall consider a number of factors, including,
but not limited to, an institution’s capital and liquidity position, governance arrangements and any other elements affecting
the institution’s continuing authorization. Moreover, as the final criteria that the relevant resolution authority would
consider in exercising any Spanish Bail-in Power is likely to provide it with discretion, holders of contingent convertible capital
securities of any series may not be able to refer to publicly available criteria in order to anticipate a potential exercise of
any such Spanish Bail-in Power. Because of this inherent uncertainty, it will be difficult to predict when, if at all, the exercise
of any Spanish Bail-in Power by the FROB, as the relevant resolution authority, may occur which would result in a Liquidation Preference
write off or conversion to equity. The uncertainty may adversely affect the value of holders’ investments in the contingent
convertible capital securities of any series.
In addition, the preparation by the European
Banking Authority of certain regulatory technical standards and implementing technical standards to be adopted by the European
Commission and certain other guidelines is pending. These include guidelines on the treatment of shareholders in bail-in or the
write-down and conversion of capital instruments, and on the rate of conversion of debt to equity in bail-in. In addition to the
BRRD, it is possible that the application of other relevant laws, Basel III Reforms and any amendments thereto or other similar
regulatory proposals, including proposals by the FSB on cross-border recognition of resolution actions, could be used in such a
way as to result in the contingent convertible capital securities of any series absorbing losses in the manner described above.
Any actions by the relevant resolution authority pursuant to the powers granted to it by Law 11/2015, or other measures or proposals
relating to the resolution of institutions, may adversely affect the rights of holders of the contingent convertible capital securities
of any series, the price or value of an investment in the contingent convertible capital securities of such series and/or the Group’s
ability to satisfy its obligations under the contingent convertible capital securities of such series.
The contingent convertible capital securities
are irrevocably and mandatorily convertible into newly issued Common Shares in certain prescribed circumstances, and as a result,
holders of contingent convertible capital securities of any series could lose all or part of their investment in the contingent
convertible capital securities of such series.
Upon the occurrence of the Trigger Event,
the contingent convertible capital securities of any series will be irrevocably and mandatorily (and without any requirement for
the consent or approval of holders of the contingent convertible capital securities of such series) converted into newly issued
Common Shares. Because the Trigger Event will occur when the CET1 ratio of Banco Santander and/or the Group, as applicable, will
have deteriorated significantly, the resulting Trigger Event will likely be accompanied by a prior deterioration in the market
price of the Common Shares, which may be expected to continue after announcement of the Trigger Event.
Therefore, in the event of the occurrence
of the Trigger Event, the Current Market Price of a Common Share may be below the Floor Price, and investors could receive Common
Shares at a time when the market price of the Common Shares is considerably less than the Conversion Price. In addition, there
may be a delay in a holder of contingent convertible capital securities receiving its Common Shares following the Trigger Event,
during which time the market price of the Common Shares may fall further. As a result, the value of the Common Shares received
on conversion following the Trigger Event could be substantially lower than the price paid for the contingent convertible capital
securities at the time of their purchase.
Accordingly, an investor in the contingent
convertible capital securities of any series faces almost the same risk of loss as an investor in the Common Shares in the event
of the Trigger Event. See also “—Holders of the contingent convertible capital securities of any series will bear
the risk of fluctuations in the price of the Common Shares and/or movements in any ratio that could give rise to the occurrence
of a Trigger Event. Holders of the contingent convertible capital securities of any series will also bear the risk of changes
in the U.S. dollar and euro exchange rate. ” below.
A capital reduction may take place in accordance
with the Spanish Companies Law.
In accordance to article 418.3 of the Spanish
Companies Law, in the event that Banco Santander intends to approve a capital reduction by reimbursement of contributions (restitución
de aportaciones) to shareholders, holders of contingent convertible capital securities of any series will be entitled to convert
the contingent convertible capital securities of such series into Common Shares at the applicable Conversion Price prior to the
execution of such capital reduction. A resolution of capital reduction for the redemption of any Common Shares previously repurchased
by Banco Santander will not be considered a capital reduction for these purposes.
The circumstances that may give rise to the
Trigger Event are inherently unpredictable and may be caused by factors outside of Banco Santander’s control. Banco Santander
has no obligation to operate its business in such a way, or take any mitigating actions, to maintain or restore its CET1 ratio
to avoid a Trigger Event and any actions Banco Santander may take now or in the future could result in its CET1 ratio failing.
The occurrence of the Trigger Event is
inherently unpredictable and depends on a number of factors, many of which are outside of Banco Santander’s control. For
example, the occurrence of one or more of the risks described under “Risk Factors” in Banco Santander’s
Annual Report on Form 20-F for the year ended December 31, 2014, or the deterioration of the circumstances described therein, could
substantially increase the likelihood of the occurrence of the Trigger Event. Furthermore, the occurrence of the Trigger Event
depends, in part, on the calculation of the CET1 ratio, which can be affected, among other things, by the growth of the business
and future earnings of Banco Santander and/or the Group, as applicable; expected payments by Banco Santander in respect of dividends
and Distributions and other equivalent payments in respect of instruments ranking junior to the contingent convertible capital
securities of any series as well as other Parity Securities; regulatory changes (including possible changes in regulatory capital
definitions, calculations and risk weighted assets) and Banco Santander’s ability to actively manage the risk weighted assets
of Banco Santander and the Group. In addition, since the Regulator may require Banco Santander to calculate the CET1 ratio at any
time, the Trigger Event could occur at any time.
Due to the inherent uncertainty in determining
whether the Trigger Event may exist, it will be difficult to predict when, if at all, the contingent convertible capital securities
of any series will be converted into Common Shares. Accordingly, trading behavior in respect of the contingent convertible capital
securities of any series is not necessarily expected to follow trading behavior associated with other types of convertible or exchangeable
securities. Any indication that Banco Santander and/or the Group, as applicable, is trending towards the Trigger Event can be expected
to have an adverse effect on the market price and liquidity of the contingent convertible capital securities of such series and
on the price of the Common Shares. Under such circumstances, investors may not be able to sell the contingent convertible capital
securities of such series or at prices comparable to other similar yielding instruments. In addition, the risk of Trigger Conversion
could drive down the price of Banco Santander’s Common Shares and therefore have a material adverse effect on the market
value of any Common Shares received upon Trigger Conversion.
Holders of the contingent convertible capital
securities of any series will bear the risk of fluctuations in the price of the Common Shares and and/or movements in any ratio
that could give rise to the occurrence of the Trigger Event. Holders of the contingent convertible capital securities of any series
will also bear the risk of changes in the U.S. dollar and euro exchange rate.
The market price of the contingent convertible
capital securities of any series is expected to be affected by fluctuations in the market price of the Common Shares, in particular
if at any time there is a significant deterioration in any of the ratios by reference to which the determination of any occurrence
of the Trigger Event is made, and it is impossible to predict whether the price of the Common Shares will rise or fall. Market
prices of the Common Shares will be influenced by, among other things, the financial position of the Group, the results of operations
and political,
economic, financial and other factors.
Any decline in the market price of the Common Shares or any indication that a ratio is trending towards occurrence of the Trigger
Event may have an adverse effect on the market price of the contingent convertible capital securities of any series. The level
of each ratio specified in the definition of Trigger Event may also significantly affect the market price of the contingent convertible
capital securities of any series and/or the Common Shares.
Fluctuations in the market price of the
Common Shares between the Trigger Event Notice Date and the Conversion Settlement Date may also further affect the value to a holder
of any Common Shares delivered to that holder on the Conversion Settlement Date.
In addition, as Banco Santander’s
Common Shares are denominated and trade in euros, the market price of the contingent convertible capital securities of any series
may also be affected by fluctuations in the U.S. dollar and euro exchange rate due to the contingent convertible capital securities
of such being denominated in U.S. dollars. Upon a Trigger Conversion, the contingent convertible capital securities of such series
will convert into Common Shares, or if the holder elects, ADSs, at the Conversion Price. Because the Trigger Conversion will occur
when the CET1 ratio of Banco Santander will have deteriorated significantly, the resulting Trigger Conversion will likely be accompanied
by a prior deterioration in the market price of the Common Shares, which may be expected to continue after announcement of the
Trigger Conversion. Therefore, in the event of the occurrence of the Trigger Event, the Current Market Price of a Common Share,
translated into U.S. dollars at the Prevailing Rate, may be below the Floor Price, and investors could receive Common Shares at
a time when the market price of the Common Shares is considerably less than the Conversion Price. Fluctuations in the U.S. dollar
and euro exchange rate could therefore also affect the realizable value of the Common Shares.
Furthermore, there may be a delay in holders
of contingent convertible capital securities of any series receiving their Common Shares or ADSs, as applicable, following a Trigger
Event, during which time the market price of the Common Shares and/or ADSs (as the case may be) or the exchange rate of euro against
the U.S. dollar may further decline. No interest or other compensation is payable in the event of a loss by holders of contingent
convertible capital securities of any series due to foreign currency conversions.
The contingent convertible capital securities
of any series have no scheduled maturity and no fixed redemption date and holders of contingent convertible capital securities
of any series do not have the right to cause the contingent convertible capital securities of such series to be redeemed or otherwise
accelerate the repayment of the Liquidation Preference of the contingent convertible capital securities except in very limited
circumstances.
The contingent convertible capital securities
of any series are perpetual securities and have no fixed maturity date or fixed redemption date. Banco Santander is under no obligation
to redeem the contingent convertible capital securities of any series at any time and the holders of contingent convertible capital
securities of such series have no right to call for their redemption at any time. Although under certain circumstances as described
under “Description of Contingent Convertible Capital Securities—Redemption and Repurchase” Banco Santander may
redeem the contingent convertible capital securities of any series, Banco Santander is under no obligation to do so and holders
of contingent convertible capital securities of any series have no right to call for their redemption.
The contingent convertible capital securities
of any series may be redeemable at the option of Banco Santander.
The contingent convertible capital securities
of any series may be redeemable at the option of Banco Santander, in whole but not in part, subject to the prior consent of the
Regulator, on the dates to be specified in the relevant prospectus supplement, at the Redemption Price per contingent convertible
capital security and otherwise in accordance with Applicable Banking Regulations then in effect. Under the CRR, the Regulator will
give its consent to a redemption of the contingent convertible capital securities of any series in such circumstances provided
that either of the following conditions is met:
(i) on or before such redemption of
the contingent convertible capital securities of such series, Banco Santander replaces the contingent convertible capital securities
of such series with instruments qualifying as Tier 1 Capital of an equal or higher quality on terms that are sustainable for the
income capacity of Banco Santander; or
(ii) Banco Santander has demonstrated
to the satisfaction of the Regulator that its Tier 1 Capital and Tier 2 Capital would, following such redemption, exceed the capital
ratios required under CRD IV by a margin that the Regulator may consider necessary on the basis set out in CRD IV.
The contingent convertible capital securities
of any series are also redeemable on or after the relevant issue date at the option of Banco Santander in whole but not in part,
at any time, at the Redemption Price (subject to the prior consent of the Regulator and otherwise in accordance with Applicable
Banking Regulations then in force) if there is a Capital Event or a Tax Event.
It is not possible to predict whether or
not a change in the laws or regulations of Spain, Applicable Banking Regulations or the application or official interpretation
thereof, will occur and so lead to the circumstances in which Banco Santander is able to elect to redeem the contingent convertible
capital securities of any series, and if so whether or not Banco Santander will elect to exercise such option to redeem the contingent
convertible capital securities of such series. There can be no assurances that, in the event of any such early redemption, holders
of contingent convertible capital securities of any series will be able to reinvest the proceeds at a rate that is equal to the
return on the contingent convertible capital securities of such series.
In the case of any early redemption of
the contingent convertible capital securities of any series at the option of Banco Santander, Banco Santander may exercise this
option when its funding costs are lower than the Distribution Rate at which Distributions are then payable in respect of the contingent
convertible capital securities of such series. In these circumstances, the rate at which holders of contingent convertible capital
securities of such series are able to reinvest the proceeds of such redemption is unlikely to be as high as, and may be significantly
lower than, that Distribution Rate.
In addition, the redemption feature of
the contingent convertible capital securities of any series may affect their market value. During any period when Banco Santander
has the right to elect to redeem the contingent convertible capital securities of such series, the market value of the contingent
convertible capital securities of any series is unlikely to rise substantially above the price at which they can be redeemed. This
may also be true prior to such period.
Payments of Distributions on the contingent
convertible capital securities of any series are payable in Banco Santander’s sole and absolute discretion and Banco Santander
may (and in certain circumstances will have no choice but to) cancel any Distributions in whole or in part at any time. Unpaid
Distributions are not cumulative or payable at any time thereafter and holders of contingent convertible capital securities of
such series shall have no rights thereto.
The contingent convertible capital securities
of any series accrue Distributions as further described “Description of Contingent Convertible Capital Securities—Distributions”,
but Banco Santander may elect, in its sole and absolute discretion, to cancel the payment of any Distribution in whole or in part
at any time that it deems necessary or desirable, and for any reason and without any restriction on it thereafter. Payments of
Distributions in any financial year of Banco Santander shall be made only out of Available Distributable Items. To the extent that:
(i) Banco Santander has insufficient
Available Distributable Items to make Distributions on the contingent convertible capital securities of any series scheduled for
payment in the then current financial year and any equivalent payments scheduled to be made in the then current financial year
in respect of any other Parity Securities then outstanding, in each case excluding any portion of such payments already accounted
for in determining the Available Distributable Items; and/or
(ii) the Regulator, in accordance with
Applicable Banking Regulations, requires Banco Santander to cancel the relevant Distribution in whole or in part,
then Banco Santander will, without prejudice to the right above
to cancel the payment of all such Distributions on the contingent convertible capital securities of such series, make partial or,
as the case may be, no payment of the relevant Distribution on the contingent convertible capital securities of such series.
No Distribution will be made on the contingent
convertible capital securities of any series (whether by way of a repayment of the Liquidation Preference, the payment of any Distribution
or otherwise) if and to the extent that such
payment would cause the Maximum Distributable
Amount (if any) then applicable to Banco Santander to be exceeded. See Risk Factor “CRD IV introduces capital requirements
that are in addition to the minimum capital ratio. These additional capital requirements will restrict Banco Santander from making
payments of Distributions on the contingent convertible capital securities in certain circumstances, in which case Banco
Santander will cancel such Distributions, and holders of contingent convertible capital securities of any series may not be able
to anticipate whether or not Banco Santander will cancel such Distributions”.
There can, therefore, be no assurances
that a holder of contingent convertible capital securities of any series will receive payments of Distributions in respect of the
contingent convertible capital securities of such series. Unpaid Distributions are not cumulative or payable at any time thereafter
and, accordingly, if any Distribution (or part thereof) is not made in respect of the contingent convertible capital securities
of any series as a result of any requirement for, or election of, Banco Santander to cancel such Distributions then the right of
the holders of contingent convertible capital securities of such series to receive the relevant Distribution (or part thereof)
in respect of the relevant Distribution Period will be extinguished and Banco Santander will have no obligation to pay such Distribution
(or part thereof) or to pay any interest thereon, whether or not Distributions on the contingent convertible capital securities
of any series are paid in respect of any future Distribution Period.
No such election to cancel the payment
of any Distribution (or part thereof) or non-payment of any Distribution (or part thereof) will constitute an event of default
or the occurrence of any event related to the insolvency of Banco Santander or entitle holders to take any action to cause the
liquidation, dissolution or winding up of Banco Santander.
If, as a result of any of the conditions
set out above being applicable, only part of the Distributions under the contingent convertible capital securities of any series
may be paid, Banco Santander may proceed, in its sole discretion, to make such partial Distributions under the contingent convertible
capital securities of such series.
Notwithstanding the applicability of any
one or more of the conditions set out above resulting in Distributions under the contingent convertible capital securities of any
series not being paid or being paid only in part, Banco Santander will not be in any way limited or restricted from making any
distribution or equivalent payment in connection with any instrument ranking junior to the contingent convertible capital securities
of any series (including, without limitation, any CET1 Capital of Banco Santander or the Group) or in respect of any other Parity
Security.
Furthermore, upon the occurrence of the
Trigger Event, no further Distributions on the contingent convertible capital securities of any series will be made, including
any accrued and unpaid Distributions, which will be cancelled.
As a holding company, the level of Banco Santander’s
Distributable Items is affected by a number of factors, and insufficient Distributable Items may restrict Banco Santander’s
ability to make Distributions on the contingent convertible capital securities of any series.
As a holding company of other operating
companies, the level of Banco Santander’s Distributable Items is affected in part by a number of factors, including Banco
Santander’s ability to receive funds, directly or indirectly, from Banco Santander’s operating subsidiaries in a manner
which creates Distributable Items. Consequently, Banco Santander’s future Distributable Items, and therefore Banco Santander’s
ability to make payments of Distributions, are a function of Banco Santander’s existing Distributable Items, Banco Santander’s
future profitability and performance and the ability of Banco Santander’s operating subsidiaries to distribute or dividend
profits up the Group structure to Banco Santander. In addition, Banco Santander’s Distributable Items will also be reduced
by the redemption of equity instruments and the servicing of other debt and equity instruments and there are no restrictions on
Banco Santander’s ability to make payments on, or redemptions of, Parity Securities or junior securities even if that results
in Banco Santander’s Distributable Items not being sufficient to make a scheduled Distribution on the contingent convertible
capital securities of any series.
The ability of Banco Santander’s
subsidiaries to pay dividends and Banco Santander’s ability to receive Distributions and other payments from Banco Santander’s
investments in other entities is subject to applicable local laws and other restrictions, including their respective regulatory,
capital and leverage requirements, statutory
reserves, financial and operating performance
and applicable tax laws, and any changes thereto. These laws and restrictions could limit the payment of dividends, Distributions
and other payments to Banco Santander by Banco Santander’s subsidiaries, which could in time restrict Banco Santander’s
ability to fund other operations or to maintain or increase Banco Santander’s Distributable Items. The level of Banco Santander’s
Distributable Items may be further affected by changes to regulations or the requirements and expectations of applicable regulatory
authorities. In particular, local capital or ring-fencing requirements outside Spain could adversely affect Banco Santander’s
Distributable Items in the future.
Further, Banco Santander’s Distributable
Items may be adversely affected by the performance of Banco Santander’s business in general, changes in its organizational
structure, factors affecting its financial position (including capital and leverage), the economic environment in which it operates
and other factors outside of its control. Banco Santander shall not make a payment of Distributions on the contingent convertible
capital securities of any series on any Distribution Payment Date (and such Distribution shall therefore be deemed to have been
cancelled and thus shall not be due and payable on such Distribution Payment Date) if the level of Distributable Items is insufficient
to fund that payment. Distributions that are deemed cancelled shall not be due and shall not accumulate or be payable at any time
thereafter and holders of contingent convertible capital securities of any series shall have no right thereto. See “—Payments
of Distributions on the contingent convertible capital securities of any series are payable in Banco Santander’s sole and
absolute discretion and Banco Santander may (and in certain circumstances will have no choice but to) cancel any Distributions
in whole or in part at any time. Unpaid Distributions are not cumulative or payable at any time thereafter and holders of contingent
convertible capital securities of such series shall have no rights thereto.”
The contingent convertible capital securities
of any series do not contain events of default and the remedies available to holders under the convertible capital securities of
any series are limited.
Holders of convertible capital securities
of any series have no ability to require Banco Santander to redeem the convertible capital securities of such series. The terms
of the convertible capital securities of any series do not provide for any events of default. Banco Santander is entitled to cancel
the payment of any Distribution in whole or in part at any time (see “—Payments of Distributions on the contingent
convertible capital securities of any series are payable in Banco Santander’s sole and absolute discretion and Banco Santander
may (and in certain circumstances will have no choice but to) cancel any Distributions in whole or in part at any time. Unpaid
Distributions are not cumulative or payable at any time thereafter and holders of contingent convertible capital securities of
such series shall have no rights thereto”) and such cancellation will not constitute any event of default or similar
event or entitle holders of convertible capital securities of such series to take any related action against Banco Santander. If
Common Shares are not issued and delivered following the Trigger Event, then on a liquidation, dissolution or winding-up of Banco
Santander the claim of a holder of convertible capital securities of any series will not be in respect of the Liquidation Preference
of its contingent convertible capital securities of such series but will be an entitlement to receive out of the relevant assets
a monetary amount equal to that which holders of the contingent convertible capital securities of such series would have received
on any distribution of the assets of Banco Santander if such Trigger Conversion had taken place immediately prior to such liquidation,
dissolution or winding-up.
Holders of the contingent convertible capital
securities of any series only have a limited ability to cash in their investment in the contingent convertible capital securities
of such series.
Banco Santander has the option to redeem
the convertible capital securities of any series in certain circumstances (see “—The contingent convertible capital
securities of any series may be redeemable at the option of Banco Santander” above). The ability of Banco Santander to
redeem or repurchase the contingent convertible capital securities of any series is subject to Banco Santander satisfying certain
conditions as described under “Description of Contingent Convertible Capital Securities—Redemptions and Purchases”.
There can be no assurance that holders of convertible capital securities of any series will be able to reinvest the amount received
upon redemption and/or repurchase at a rate that will provide the same rate of return as their investment in the convertible capital
securities of such series.
Therefore, holders of the contingent convertible
capital securities of any series have no ability to cash in their investment, except:
(i) if Banco Santander exercises its
rights to redeem or repurchase the contingent convertible capital securities of any series in accordance with “Description
of Contingent Convertible Capital Securities—Redemption and Repurchase”; or
(ii) by selling the contingent convertible
capital securities of such series or, following the occurrence of the Trigger Event and the issue and delivery of Common Shares
or, if the holder elects, ADSs, in accordance with “Description of Contingent Convertible Capital Securities—Conversion
Upon Trigger Event”, their Common Shares or ADSs, provided a secondary market exists at the relevant time for the contingent
convertible capital securities of such series, the Common Shares or the ADSs.
Holders of the contingent convertible capital
securities of any series have limited anti-dilution protection.
The number of Common Shares to be issued
and delivered on Trigger Conversion in respect of each contingent convertible capital security of any series shall be determined
by dividing the Liquidation Preference of such contingent convertible capital security by the Conversion Price in effect on the
Trigger Event Notice Date. The Conversion Price will be, if the Common Shares are then admitted to trading on a Relevant Stock
Exchange, the higher of: (a) the Current Market Price of a Common Share, translated into U.S. dollars at the Prevailing Rate, (b)
the Floor Price and (c) the nominal value of a Common Share at the time of conversion, translated into U.S. dollars at the Prevailing
Rate, or, if the Common Shares are not then admitted to trading on a Relevant Stock Exchange, the higher of (b) and (c) above.
See “Description of Contingent Convertible Capital Securities—Conversion Price” regarding the Conversion Price.
The Floor Price will be adjusted in the
event that there is a consolidation, reclassification/redesignation or subdivision affecting the Common Shares, the payment of
any Extraordinary Dividends or Non-Cash Dividends, rights issues or grant of other subscription rights or certain other events
which affect the Common Shares, but only in the situations and to the extent provided in “Description of Contingent Convertible
Capital Securities—Anti-Dilution Adjustment of the Floor Price”. There is no requirement that there should be an adjustment
for every corporate or other event that may affect the value of the Common Shares or that, if a holder of contingent convertible
capital securities of any series were to have held the Common Shares at the time of such adjustment, the holder of the contingent
convertible capital securities of such series would not have benefited to a greater extent.
Furthermore, the relevant indenture does
not provide for certain undertakings from Banco Santander which are sometimes included in securities that convert into the ordinary
shares of an issuer to protect investors in situations where the relevant conversion price adjustment provisions do not operate
to neutralize the dilutive effect of certain corporate events or actions on the economic value of the Conversion Price. For example,
the relevant indenture contains neither an undertaking restricting the modification of rights attaching to the Common Shares nor
an undertaking restricting issues of new share capital with preferential rights relative to the contingent convertible capital
securities of any series.
Further, if Banco Santander issues any
Common Shares credited as fully paid to Shareholders by way of capitalization of profits or reserves (including any share premium
account or capital redemption reserve), where the Shareholders may elect to receive a Dividend in cash in lieu of such Common Shares
and such Dividend does not constitute an Extraordinary Dividend, no conversion price adjustment shall be applicable in accordance
with sub-paragraphs (b) and (c) of “Description of Contingent Convertible Capital Securities—Anti-Dilution Adjustment
of the Floor Price”, and therefore holders of contingent convertible capital securities of any series will not be protected
by anti-dilution measures.
Accordingly, corporate events or actions
in respect of which no adjustment to the Floor Price is made may adversely affect the value of the contingent convertible capital
securities of any series.
In order to comply with increasing regulatory
capital requirements imposed by applicable regulations, Banco Santander may need to raise additional capital. Further capital raisings
by Banco Santander could result in the dilution of the interests of the holders of contingent convertible capital securities of
any series subject only to the limited anti-dilution protections referred to above.
The obligations of Banco Santander under the
contingent convertible capital securities of any series are subordinated to unsubordinated obligations and subordinated obligations
senior in right of payment to the contingent convertible capital securities of any series and will be further subordinated upon
conversion into Common Shares.
The convertible capital securities of any
series will constitute unsecured and subordinated obligations of Banco Santander and rank (a) junior to (i) all liabilities of
Banco Santander including subordinated liabilities other than Parity Securities and (ii) instruments issued or guaranteed by Banco
Santander ranking senior to the convertible capital securities of such series, (b) pari passu with each other and with any
Parity Securities and (c) senior to the Common Shares or any other instruments issued or guaranteed by Banco Santander ranking
junior to the convertible capital securities of any series.
Subject to compliance with applicable regulatory
requirements, Banco Santander expects from time to time to incur additional indebtedness or other obligations that will constitute
senior and other subordinated indebtedness that will rank ahead of the contingent convertible capital securities of any series,
and the contingent convertible capital securities of any series do not contain any provisions restricting Banco Santander’s
ability or Banco Santander’s subsidiaries from incurring such senior or subordinated indebtedness. Although the contingent
convertible capital securities of any series may pay a higher rate of interest than other comparable securities which are not as
deeply subordinated, there is a risk that holders of contingent convertible capital securities of such series will lose all or
some of their investment should Banco Santander become insolvent since Banco Santander’s assets would be available to pay
such amounts only after all of Banco Santander’s senior creditors have been paid in full.
In addition, if Banco Santander were wound
up, liquidated or dissolved, Banco Santander’s liquidator would first apply the assets of Banco Santander to satisfy all
claims of holders of unsubordinated obligations of Banco Santander and other creditors ranking ahead of holders of convertible
capital securities of any series. If Banco Santander does not have sufficient assets to settle claims of prior ranking creditors
in full, the claims of the holders of convertible capital securities of any series will not be satisfied. Holders of convertible
capital securities of any series will share equally in any distribution of assets with the holders of any other Parity Securities
if Banco Santander does not have sufficient funds to make full payment to all of them. In such a situation, convertible capital
securities of such series could lose all or part of their investment.
Furthermore, if the Trigger Event occurs
but the relevant conversion of the convertible capital securities of any series into Common Shares is still to take place before
the liquidation, dissolution or winding-up of Banco Santander, the entitlement of holders of convertible capital securities of
any series will be to receive out of the relevant assets of Banco Santander a monetary amount equal to that which holders of convertible
capital securities of such series would have received on any distribution of the assets of Banco Santander if the Trigger Conversion
had taken place immediately prior to such liquidation, dissolution or winding-up.
Therefore, if the Trigger Event occurs,
each holder of convertible capital securities of any series will be effectively further subordinated from being the holder of a
subordinated debt instrument to being the holder of Common Shares and there is an enhanced risk that holders of convertible capital
securities of such series will lose all or some of their investment.
Holders of contingent convertible capital securities
of any series will have limited rights after the Trigger Conversion and the issuance of the Common Shares to the Settlement Shares
Depository (or to the relevant recipient in accordance with terms of the contingent convertible capital securities of the relevant
series) will constitute an irrevocable and automatic release of all of Banco Santander’s obligations in respect of the contingent
convertible capital securities of such series.
Following a Trigger Conversion, Banco Santander
will be obligated to issue the Common Shares to the Settlement Shares Depository (or to the relevant recipient in accordance with
the terms of the contingent convertible capital securities of the relevant series), which will hold the Common Shares on behalf
of holders of contingent convertible capital securities of such series. Once the Common Shares are delivered to the Settlement
Shares Depository (or to the relevant recipient in accordance with the terms of the contingent convertible capital securities of
the relevant series), all of Banco Santander’s obligations under the contingent convertible capital securities of such series
will be irrevocably and automatically released in consideration of such issuance to the Settlement Shares Depository (or to the
relevant recipient in accordance with the terms of the contingent convertible capital securities of such series), and under no
circumstances will such released obligations be reinstated and holders of contingent
convertible capital securities of such
series will not be entitled to any form of compensation in the event of Banco Santander’s potential recovery or change in
Banco Santander’s fully loaded CET1 ratio after the Conversion Settlement Date. With effect from the Conversion Settlement
Date, holders of contingent convertible capital securities of any series will have recourse only to the Settlement Shares Depository
for the delivery to them of Common Shares.
If Banco Santander does not deliver the
Common Shares to the Settlement Shares Depository (or to the relevant recipient in accordance with the terms of the contingent convertible
capital securities of the relevant series) following a Trigger Event, the only claim holders of contingent convertible capital
securities of any series will have against Banco Santander will be for specific performance to have such Common Shares issued and
delivered. Moreover, holders of contingent convertible capital securities of any series will not have any rights against Banco
Santander with respect to repayment of the Liquidation Preference of the contingent convertible capital securities of any series
or payment of Distributions or any other amount on, or in respect of, the contingent convertible capital securities of such series,
in each case that is not due and payable, which liabilities will be automatically released. Accordingly, the Liquidation Preference
of the contingent convertible capital securities will equal zero at all times from and after the Trigger Conversion and any Distributions
will be cancelled or deemed to have been cancelled at all times thereafter and will not be due and payable, including any interest
in respect of an interest period ending on any Distribution Payment Date falling between the date of a Trigger Event and the Trigger
Conversion.
In addition, Banco Santander has not yet
appointed a Settlement Shares Depository and may not be able to appoint a Settlement Shares Depository if a Trigger Conversion occurs.
In such case, Banco Santander will effect, by means Banco Santander deems reasonable under the circumstances (including, without
limitation, issuance of the Common Shares to another nominee or to holders of contingent convertible capital securities of any
series directly). Such arrangements may be disadvantageous to, and more restrictive on, holders of contingent convertible capital
securities of such series, such as involving a longer period of time before they receive ADSs or Common Shares than would be the
case under the arrangements expected to be entered into with a Settlement Shares Depository or the inability to deliver ADSs. Nevertheless,
such issuance also will irrevocably and automatically release all of Banco Santander’s obligations under the contingent convertible
capital securities of such series as if the Common Shares had been issued to the Settlement Shares Depository.
If a Delivery Notice is not duly delivered
by a holder of contingent convertible capital securities of any series, that holder will bear the risk of fluctuations in the price
of the Common Shares, and Banco Santander may, in its sole and absolute discretion, cause the sale of any Common Shares underlying
the contingent convertible capital securities of such series.
In order to obtain delivery of the relevant
Common Shares, or, if the holder elects, ADSs, upon conversion, the relevant holder must deliver a duly completed Delivery Notice
in accordance with the provisions set out under “Description of Contingent Convertible Capital Securities—Settlement
Procedures”. If a duly completed Delivery Notice is not so delivered, then such holder will bear the risk of fluctuations
in the price of the Common Shares that may further affect the value to that holders of any Common Shares subsequently delivered.
In addition, Banco Santander may, on the Notice Cut-off Date, in its sole and absolute discretion, elect to appoint a person (the
“Selling Agent”) to (save as provided below) procure that all Common Shares held by the Settlement Shares Depository
in respect of which no duly completed Delivery Notice has been delivered on or before the Notice Cut-off Date as aforesaid shall
be sold by or on behalf of the Selling Agent as soon as reasonably practicable.
Due to the fact that, in the event of the
Trigger Event, investors are likely to receive Common Shares at a time when the market price of the Common Shares may be low, the
cash value of the Common Shares received upon any such sale could be substantially lower than the price paid for the contingent
convertible capital securities of such series at the time of their purchase. In addition, the proceeds of such sale may be further
reduced as a result of the number of Common Shares offered for sale at the same time being much greater than may be the case in
the event of sales by individual holders of contingent convertible capital securities of any series.
Holders of contingent convertible capital securities
of any series may be obliged to make a takeover bid in case of the Trigger Event if they take delivery of Common Shares.
Upon the occurrence of the Trigger Event,
a holder of contingent convertible capital securities of any series receiving Common Shares may have to make a takeover bid addressed
to the shareholders of Banco Santander pursuant to Law 24/1988, of 28 July, on the Securities Market, as amended and Royal Decree-Law
1066/2007, of 27 July 2007, as amended on the legal regime of take-over bids, which have implemented Directive 2004/25/EC of the
European Parliament and of the Council of 21 April 2004, if its aggregate holding in Banco Santander exceeds 30% of the available
voting rights or if its aggregate holding in Banco Santander is less than 30% of such voting rights, but within 24 months of the
date on which it acquired that lower percentage, it nominates a number of directors that, when taken together with any directors
it has previously nominated, represent more than half of the members of Banco Santander’s management body, in each case as
a result of the conversion of the contingent convertible capital securities of any series into Common Shares.
Holders of contingent convertible capital securities
of any series may be subject to disclosure obligations and/or may need approval by Banco Santander’s Regulators and other
authorities under certain circumstances.
As the contingent convertible capital securities
of any series are convertible into Common Shares in certain circumstances, an investment in the contingent convertible capital
securities of any series may result in holders of the contingent convertible capital securities of such series, upon conversion
of the contingent convertible capital securities of such series into Common Shares, having to comply with certain approval and/or
disclosure requirements pursuant to Spanish and other laws and regulations. Non-compliance with such approval and/or disclosure
requirements may lead to the incurrence by holders of contingent convertible capital securities of such series of substantial fines
and/or suspension of voting rights associated with the Common Shares. Accordingly, each potential investor should consult its legal
advisers as to the terms of the contingent convertible capital securities of any series, in respect of its existing shareholding
and the level of holding it would have if it receives Common Shares following a Trigger Event.
There is no restriction under the contingent
convertible capital securities indenture on the amount or type of further securities or indebtedness which Banco Santander may
incur.
Except as provided under “Description
of Contingent Convertible Capital Securities—Subordination”, there is no restriction under the contingent convertible
capital securities indenture on the amount or type of further securities or indebtedness which Banco Santander may issue or incur
which ranks senior to, or pari passu with, the contingent convertible capital securities of any series. The incurrence of
any such further indebtedness may reduce the amount recoverable by holders contingent convertible capital securities of any series
on a liquidation, dissolution or winding-up of Banco Santander in respect of the contingent convertible capital securities of such
series and may limit the ability of Banco Santander to meet its obligations in respect of the contingent convertible capital securities
of such series, and result in a holder of the contingent convertible capital securities of such series losing all or some of its
investment in the contingent convertible capital securities of such series. In addition, the contingent convertible capital securities
of any series do not contain any restriction on Banco Santander issuing securities that may have preferential rights to the Common
Shares or securities ranking pari passu with the contingent convertible capital securities of such series and having similar
or preferential terms to the contingent convertible capital securities of such series.
Prior to the issue and registration of the
Common Shares to be delivered following the occurrence of the Trigger Event, holders of contingent convertible capital securities
of any series will not be entitled to any rights with respect to such Common Shares, but will be subject to all changes made with
respect to the Common Shares.
Any pecuniary rights with respect to the
Common Shares, in particular the entitlement to dividends, shall only arise and the exercise of voting rights and rights related
thereto with respect to any Common Shares is only possible after the date on which, following Trigger Conversion, as a matter of
Spanish law the relevant Common Shares are issued and the person entitled to the Common Shares is registered as a shareholder in
Iberclear and its participating entities in accordance with the provisions of, and subject to the limitations provided in, the
articles of association of
Banco Santander. Therefore, any failure
by Banco Santander to issue, or effect the registration of, the Common Shares after the occurrence of the Trigger Event would result
in the holders of contingent convertible capital securities of the relevant series not receiving any benefits related to the holding
of the Common Shares and, on a liquidation, dissolution or winding-up of Banco Santander, the entitlement of any such holders will
be an entitlement to receive out of the relevant assets of Banco Santander a monetary amount equal to that which holders of contingent
convertible capital securities of such series would have received on any distribution of the assets of Banco Santander if such
conversion had taken place immediately prior to such liquidation, dissolution or winding-up, as described in “Description
of Contingent Convertible Capital Securities—Liquidation Distribution”.
The contingent convertible capital securities
of any series are Banco Santander’s exclusive obligations.
The contingent convertible capital securities
of any series are Banco Santander’s exclusive obligations. Banco Santander is a holding company and conducts a substantial
portion of its operations through its subsidiaries. Banco Santander’s subsidiaries are separate and distinct legal entities,
and have no obligations to pay any amounts due on the contingent convertible capital securities of any series or to provide Banco
Santander with funds to meet any of its payment obligations. Banco Santander’s rights to participate in the assets of any
subsidiary if it is liquidated will be subject to the prior claims of the subsidiary’s creditors.
The contingent convertible capital securities
of any series may not be a suitable investment for all investors.
The contingent convertible capital securities
of any series are novel and complex financial instruments that involve a high degree of risk. As a result, an investment in the
contingent convertible capital securities of any series and the Common Shares issuable following a Trigger Event will involve certain
increased risks. Each potential investor in the contingent convertible capital securities of any series must determine the suitability
of that investment in light of its own circumstances. In particular, each potential investor may wish to consider, either on its
own or with the help of its financial and other professional advisers, whether it:
(i) has sufficient knowledge and experience
to make a meaningful evaluation of the contingent convertible capital securities of such series, the merits and risks of investing
in the contingent convertible capital securities of such series and the information contained or incorporated by reference in this
prospectus, taking into account that the contingent convertible capital securities of such series may only be a suitable investment
for professional or institutional investors;
(ii) has access to, and knowledge of,
appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the contingent
convertible capital securities of such series and the impact the contingent convertible capital securities of such series will
have on its overall investment portfolio;
(iii) has sufficient financial resources
and liquidity to bear all of the risks of an investment in the contingent convertible capital securities of such series, including
where the currency for payments in respect of the contingent convertible capital securities of such series is different from the
potential investor’s currency and the possibility that the entire Liquidation Preference of the contingent convertible capital
securities of any series could be lost, including following the exercise by the relevant resolution authority of any Spanish Bail-in
Power;
(iv) understands thoroughly the terms
of the contingent convertible capital securities of such series, including the provisions relating to the payment and cancellation
of Distributions and the Trigger Conversion of the contingent convertible capital securities of such series into Common Shares,
and is familiar with the behavior of financial markets, including the possibility that the contingent convertible capital securities
of any series may become subject to write down or conversion if the Spanish Bail-in Power is exercised; and
(v) is able to evaluate possible scenarios
for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
Sophisticated investors generally do not
purchase complex financial instruments that bear a high degree of risk as stand-alone investments. They purchase such financial
instruments as a way to enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A
potential investor should not invest in the contingent convertible capital securities of any series unless it has the knowledge
and expertise (either alone or with a financial advisor) to evaluate how the contingent convertible capital securities of such
series will perform under
changing conditions, the resulting effects
on the likelihood of the Trigger Conversion into Common Shares and the value of the contingent convertible capital securities of
such series, and the impact this investment will have on the potential investor’s overall investment portfolio. Prior to
making an investment decision, potential investors should consider carefully, in light of their own financial circumstances and
investment objectives, all the information contained in this prospectus and the prospectus supplement or incorporated by reference
herein.
The market value of the contingent convertible
capital securities of any series may be influenced by unpredictable factors.
Certain factors, many of which are beyond
Banco Santander’s control, will influence the value of the contingent convertible capital securities of any series and the
price, if any, at which securities dealers may be willing to purchase or sell the contingent convertible capital securities of
such series in the secondary market, including:
| · | Banco Santander’s creditworthiness from time to time; |
| · | supply and demand for the contingent convertible capital securities of such series; |
| · | economic, financial, political or regulatory events or judicial decisions that affect Banco Santander, the Group or the financial
markets generally, including the introduction of any financial transactions tax; and |
| · | the trading price of Banco Santander’s ordinary shares and/or ADSs. |
Accordingly, if holders sell
their contingent convertible capital securities of any series in the secondary market, they may not be able to obtain a price equal
to the Liquidation Preference of the contingent convertible capital securities of such series or a price equal to the price that
they paid for the contingent convertible capital securities of such series.
The contingent convertible capital securities
are not investment grade and are subject to the risks associated with non-investment grade securities.
The contingent convertible capital securities
of any series, upon issuance, will not be considered to be investment grade securities, and as such will be subject to a higher
risk of price volatility than higher-rated securities. Furthermore, deteriorating outlooks for Banco Santander or the Group, or
volatile markets, could lead to a significant deterioration in market prices of below-investment grade rated securities such as
the contingent convertible capital securities of any series.
Credit ratings may not reflect all risks associated
with an investment in the contingent convertible capital securities of any series.
Ratings may not reflect the potential impact
of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the
contingent convertible capital securities of any series.
Similar ratings assigned to different types
of securities do not necessarily mean the same thing and any rating assigned to the contingent convertible capital securities of
any series does not address the likelihood that Distributions or any other payments in respect of the contingent convertible capital
securities of such series will be made on any particular date or at all. Credit ratings also do not address the marketability or
market price of securities.
Any change in the credit ratings assigned
to the contingent convertible capital securities of any series may affect the market value of the contingent convertible capital
securities of such series. Such change may, among other factors, be due to a change in the methodology applied by a rating agency
to rating securities with similar structures to the contingent convertible capital securities of any series, as opposed to any
revaluation of Banco Santander’s financial strength or other factors such as conditions affecting the financial services
industry generally.
A credit rating is not a recommendation
to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time. Potential investors should not
rely on any rating of the contingent convertible capital
securities of any series and should make
their investment decision on the basis of considerations such as those outlined under “The contingent convertible capital
securities of any series may not be a suitable investment for all investors”.
In general, European regulated investors
are restricted under the CRA Regulation from using credit ratings for regulatory purposes, unless such ratings are issued by a
credit rating agency established in the EU and registered under the CRA Regulation (and such registration has not been withdrawn
or suspended), subject to transitional provisions that apply in certain circumstances whilst the registration application is pending.
Such general restriction will also apply in the case of credit ratings issued by non-EU credit rating agencies, unless the relevant
credit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating agency is certified in accordance
with the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn or suspended).
Certain information with respect to the credit rating agencies and ratings will be disclosed in the relevant prospectus supplement.
Legal investment considerations may restrict
certain investments.
The investment activities of certain investors
may be subject to law or review or regulation by certain authorities. Each potential investor should determine for itself, on the
basis of professional advice where appropriate, whether and to what extent (i) the contingent convertible capital securities of
any series are lawful investments for it, (ii) the contingent convertible capital securities of such series can be used as collateral
for various types of borrowing and (iii) other restrictions apply to its purchase or pledge of the contingent convertible capital
securities of any series. Financial institutions should consult their legal advisers or the appropriate regulators to determine
the appropriate treatment of the contingent convertible capital securities of any series under any applicable risk-based capital
or similar rules.
The contingent convertible capital securities
of any series may trade with accrued Distributions, but under certain circumstances described above, such Distributions may be
cancelled and not paid on the relevant Distribution Payment Date.
The contingent convertible capital securities
of any series may trade, and/or the prices for the contingent convertible capital securities of any series may appear in the relevant
trading systems with accrued Distributions. If this occurs, purchasers of contingent convertible capital securities of any series
in the secondary market will pay a price that reflects such accrued Distributions upon purchase of the contingent convertible capital
securities of such series. However, if a payment of Distributions on any Distribution Payment Date is cancelled or deemed cancelled
(either in whole or in part) as described herein and thus is not due and payable, purchasers of such contingent convertible capital
securities of such series will not be entitled to that Distribution (or cancelled portion thereof) on the relevant Distribution
Payment Date. This may affect the value of holders’ investment in the contingent convertible capital securities of any series.
Following a Trigger Conversion, the contingent
convertible capital securities of any series will remain in existence until the applicable Conversion Settlement Date for the sole
purpose of evidencing a holders’ rights to receive Common Shares or, if they elect, ADSs, as applicable, from the Settlement
Shares Depository (or the relevant recipient in accordance with the terms of the contingent convertible capital securities of such
series), and the rights of holders of contingent convertible capital securities of any series will be limited accordingly.
Following a Trigger Conversion, the contingent
convertible capital securities of any series will remain in existence until the applicable Conversion Settlement Date (at which
point the contingent convertible capital securities of any series will be cancelled) for the sole purpose of evidencing the right
of holders of contingent convertible capital securities of any series to receive Common Shares, or, if they elect, ADSs, as applicable,
from the Settlement Shares Depository (or the relevant recipient in accordance with the terms of the contingent convertible capital
securities of such series). If Banco Santander has been unable to appoint a Settlement Shares Depository, Banco Santander will effect,
by means Banco Santander deems reasonable under the circumstances (including, without limitation, issuance of the Settlement Shares
to another nominee or to the holders of the contingent convertible capital securities of any series directly), the issuance and/or
delivery of the Settlement Shares, or, if they elect, ADSs, as applicable, to them. See also “—Holders of contingent
convertible capital securities of any series will have limited rights after the Trigger Conversion and the issuance of the Common
Shares to the Settlement Shares
Depository (or to the relevant recipient
in accordance with terms of the contingent convertible capital securities of the relevant series) will constitute an irrevocable
and automatic release of all of Banco Santander’s obligations in respect of the contingent convertible capital securities
of such series”.
Although Banco Santander currently expects
that beneficial interests in the contingent convertible capital securities of any series will be transferable between the Trigger
Conversion and the Suspension Date and that any trades in the contingent convertible capital securities of any series would clear
and settle through DTC in such period, there is no guarantee that this will be the case. Even if the contingent convertible capital
securities of any series are transferable following the Trigger Conversion, there is no guarantee that an active trading market
will exist for the contingent convertible capital securities of any series following the Trigger Conversion. Accordingly, the price
received for the sale of any beneficial interest in any contingent convertible capital securities of any series during this period
may not reflect the market price of such contingent convertible capital securities or the Common Shares. Furthermore, transfers
of beneficial interests in the contingent convertible capital securities of any series may be restricted following the Trigger
Conversion. For example, if the clearance and settlement of transactions in the contingent convertible capital securities of any
series is suspended by DTC at an earlier time than currently expected, it may not be possible to transfer beneficial interests
in the contingent convertible capital securities of such series in DTC and trading in the contingent convertible capital securities
of such series may cease. The contingent convertible capital securities of any series may also cease to be admitted to the relevant
stock exchange before or after the Suspension Date.
In addition, Banco Santander has been advised
by DTC that it will suspend all clearance and settlement of transactions in the contingent convertible capital securities of any
series on the Suspension Date. As a result, holders of contingent convertible capital securities of any series will not be able
to settle the transfer of any contingent convertible capital securities of such series through DTC following the Suspension Date,
and any sale or other transfer of the contingent convertible capital securities of any series that holders may have initiated prior
to the Suspension Date that is scheduled to settle after the Suspension Date will be rejected by DTC and will not be settled through
DTC.
The contingent convertible capital securities
of any series may cease to be admitted to trading on any stock exchange on which the contingent convertible capital securities
of any series are then listed or admitted to trading after the Suspension Date.
Moreover, although holders of contingent
convertible capital securities of any series will have a right to obtain their pro rata share of Settlement Shares upon
the issuance of such Settlement Shares to the Settlement Shares Depository (or the relevant recipient in accordance with the terms
of the contingent convertible capital securities of any series), the Settlement Shares will be registered in the name of the Settlement
Shares Depository (or the relevant recipient in accordance with the terms of the contingent convertible capital securities of any
series), and holders will not be able to sell or otherwise transfer any Settlement Shares until such time as they are delivered
to them and registered in their name or to the account they specify.
Holders of contingent convertible capital securities
of any series will be responsible for any taxes following a Trigger Conversion.
Neither Banco Santander nor any member
of the Group will be liable for any taxes or duties (including, without limitation, any stamp duty, stamp duty reserve tax or any
other capital, issue, transfer, registration, financial transaction or documentary tax or duty) arising on conversion or that may
arise or be paid in connection with the issue and delivery of Common Shares following a Trigger Conversion. Holders of contingent
convertible capital securities of any series must pay any taxes and duties (including, without limitation, any stamp duty, stamp
duty reserve tax or any other capital, issue, transfer, registration, financial transaction or documentary tax or duty) arising
on conversion in connection with the issue and delivery of Common Shares to the Settlement Shares Depository on their behalf.
Limitations on gross-up obligation
under the contingent convertible capital securities of any series
Banco Santander’s obligation to
pay additional amounts in respect of any withholding or deduction in respect of taxes under the terms of the contingent convertible
capital securities of any series applies only to payments of distributions due and paid under the contingent convertible capital
securities of any series and not to payments of Liquidation Preference. As such, Banco Santander would not be required to pay
any additional amounts under the terms of the contingent convertible capital securities of any series to the extent any withholding
or deduction applied to payments of Liquidation Preference. Accordingly, if any such withholding or deduction were to apply to
any payments of Liquidation Preference under the contingent convertible capital securities of any series, holders of contingent
convertible capital securities of such series may receive less than the full amount due under the contingent convertible capital
securities of such series, and the market value of the contingent convertible capital securities of any series may be adversely
affected. In any case, increased payments to comply with gross-up obligations will only be made if and to the extent that they
do not exceed Distributable Items.
Description
of Debt Securities and guarantees
The following is a summary of the
general terms that will apply to (i) any senior debt securities that may be offered by Santander US Debt and guaranteed on a
senior basis by Banco Santander, and (ii) any subordinated debt securities that may be offered by Santander Issuances
and guaranteed on a subordinated basis by Banco Santander. Consequently, references to “debt securities” in this
prospectus refer to (i) the senior debt securities that may be issued by Santander US Debt, or (ii) the subordinated debt
securities that may be offered by Santander Issuances. The term “debt securities” does not include the
“contingent convertible capital securities” described under “Description of Contingent Convertible Capital
Securities”.
Each time that the relevant issuer issues
debt securities, Banco Santander and the relevant issuer will file a prospectus supplement and/or free writing prospectus with
the SEC, which you should read carefully. The prospectus supplement and/or free writing prospectus will summarize specific financial
terms of an investor’s security and may contain additional or different terms of those debt securities to those described
in this prospectus. All references in this prospectus to a prospectus supplement in respect of any series of securities include
references to a free writing prospectus if a free writing prospectus is filed to set forth any terms of such series. The terms
presented here, together with the terms contained in the prospectus supplement, will be a description of the material terms of
the debt securities, but if there is any inconsistency between the terms presented here and those in the prospectus supplement,
those in the prospectus supplement will apply and will replace those presented here. Therefore, the statements made below in this
section may not apply to each investor’s debt security. Investors should also read the indentures under which the relevant
issuers will issue the debt securities, which have been filed with the SEC as exhibits to the registration statement of which this
prospectus is a part.
Senior debt securities will be issued
by Santander US Debt under the senior debt securities indenture and will be fully and unconditionally guaranteed on a senior basis
by Banco Santander. Subordinated debt securities will be issued by Santander Issuances under the subordinated debt securities indenture
and will be fully and unconditionally guaranteed on a subordinated basis by Banco Santander. Each indenture is a contract between
Santander US Debt and Santander Issuances, as applicable, The Bank of New York Mellon, as trustee, and Banco Santander, as guarantor.
Each indenture has been filed with the SEC as an exhibit to the registration statement that includes this prospectus. The indentures
are substantially similar, except for certain provisions such as those relating to subordination, which are included only in the
subordinated debt securities indenture. None of the indentures limit the relevant issuers’ or Banco Santander’s ability
to incur additional indebtedness, including additional senior indebtedness.
In this description of debt
securities, the following expressions have the following meanings:
“Applicable Banking Regulations”
means at any time the laws, regulations, requirements, guidelines and policies relating to capital adequacy applicable to Banco
Santander and/or the Group including, without limitation to the generality of the foregoing, those regulations, requirements, guidelines
and policies relating to capital adequacy then in effect of the Regulator (whether or not such requirements, guidelines or policies
have the force of law and whether or not they are applied generally or specifically to Banco Santander and/or the Group).
“Business Day” means,
unless otherwise provided for in the applicable prospectus supplement, any day, other than Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive
order to close in the City of New York, London, Madrid or any other place or places where the principal of, or any premium or
interest on, or any Additional Amounts with respect to the debt securities of that series are payable.
“Calculation Agent” means
the trustee or such other person authorized by the relevant issuer as the party responsible for calculating the rate(s) of
interest and interest amount(s) and/or such other amount(s) from time to time in relation to any series of debt securities as
may be specified in the relevant prospectus supplement.
“CRR” means Regulation (EU)
No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on the prudential requirements for credit institutions
and investment firms and amending Regulation (EU) No. 648/2012 or such other regulation as may come into effect in place thereof.
“Principal Paying Agent” means
any Person (which may include the relevant issuer or the guarantor) authorized by the relevant issuer to pay the principal of,
or any premium or interest on, or any Additional Amounts with respect to, the debt securities of any series on behalf of the relevant
issuer. Unless otherwise specified in the applicable prospectus supplement, The Bank of New York Mellon acting through its London
Branch will act as the Principal Paying Agent in respect of the debt securities of any series.
“Person” means any individual,
company, corporation, firm, partnership, joint venture, association, organization, state or agency of a state or other entity,
whether or not having separate legal personality.
“Regulator” means the European
Central Bank, or such other or successor authority exercising primary bank supervisory authority, in each case with respect to
prudential matters in relation to Banco Santander and/or the Group.
“Tier 1 Capital” means at any
time, with respect to Banco Santander or the Group, as the case may be, the Tier 1 capital of Banco Santander or the Group, respectively,
as calculated by Banco Santander in accordance with Chapters 1, 2 and 3 (Tier 1 Capital, Common Equity Tier 1 Capital and Additional
Tier 1 capital) of Title I (Elements of own funds) of Part Two (Own Funds) of the CRR and/or Applicable Banking Regulations at
such time, including any applicable transitional, phasing in or similar provisions;
“Tier 2 Capital” means at any
time, with respect to Banco Santander or the Group, as the case may be, the Tier 2 capital of Banco Santander or the Group, respectively,
as calculated by Banco Santander in accordance with Chapter 4 (Tier 2 capital) of Title I (Elements of own funds) of Part Two (Own
Funds) of the CRR and/or Applicable Banking Regulations at such time, including any applicable transitional, phasing in or similar
provisions.
General
The debt securities are not deposits and
are not insured or guaranteed by the U.S. Federal Deposit Insurance Corporation or any other government agency of the United States,
Spain or any other jurisdiction.
The debt securities will be direct, unconditional
and unsecured debt obligations of the relevant issuer. The indentures do not limit the amount of debt securities that the relevant
issuers may issue. The relevant issuers may issue debt securities in one or more series. The relevant prospectus supplement and
any related issuer free writing prospectus for any particular series of debt securities will describe the terms of the offered
debt securities, including but not limited to, some or all of the following terms:
| · | whether Santander US Debt or Santander Issuances is the issuer of the relevant debt securities; |
| · | whether they are senior debt securities or subordinated debt securities; |
| · | the rank of such senior debt securities or subordinated debt securities if different from that set forth in this prospectus; |
| · | with respect to the subordinated debt securities, whether the payment of interest can be deferred, whether the payment of principal
can be deferred, the subordination terms, if different from those set forth in this prospectus, and the redemption terms and the
events of default applicable to each series of the subordinated debt securities, if different from those set forth in this prospectus; |
| · | their specific designation, authorized denomination and aggregate principal amount (and any limitations of such aggregated
principal amount); |
| · | the price or prices at which they will be issued; |
| · | the date or maturity of the debt securities; |
| · | the interest rate or rates, or how to calculate the interest rate or rates; |
| · | the date or dates from which interest, if any, will accrue or the method, if any, by which such date or dates will be determined; |
| · | whether payments are subject to certain conditions that relate to our financial condition, including our capital ratios; |
| · | the times and places at which any interest payments are payable; |
| · | any modifications or additions to mandatory or optional redemption, including the amount of any premium; |
| · | any modifications or additions to the events of default with respect to the debt securities offered; |
| · | any provisions relating to conversion or exchange for other securities issued by us; |
| · | the currency or currencies in which they are denominated and in which the relevant issuers will make any payments; |
| · | any index used to determine the amount of any payments on the debt securities; |
| · | any restrictions that apply to the offer, sale and delivery of the debt securities and the exchange of debt securities of one
form for debt securities of another form; |
| · | whether and under what circumstances, if other than those described in this prospectus, the relevant issuers will pay additional
amounts on the debt securities following certain developments with respect to withholding tax or information reporting laws and
whether, and on what terms, if other than those described in this prospectus, the relevant issuers may redeem the debt securities
following those developments; |
| · | the clearing system in which such debt securities will be settled and cleared; and |
| · | any listing on a securities exchange. |
Holders of debt securities shall have no
voting rights except those described under the heading “—Modification and Waiver” below.
Guarantee for Debt Securities Issued by Santander US Debt
and Santander Issuances
Banco Santander will
unconditionally and irrevocably guarantee to the holders of senior debt securities or subordinated debt securities issued by
Santander US Debt and Santander Issuances, as applicable, the due and punctual payment in full of all the sums expressed to
be payable under the applicable indenture. The guarantee is set forth in, and forms part of, the indentures under which
senior debt securities or subordinated debt securities, as applicable, will be issued by Santander US Debt and Santander
Issuances.
Senior Debt Securities
Banco Santander, as guarantor, will fully,
unconditionally and irrevocably guarantee the due and punctual payment in full to the holders of the senior debt securities of
any series of all amounts due and owing under the senior debt securities indenture, including as may be modified pursuant to the
exercise of the Spanish Bail-in Power under the relevant indenture, and payment in full of such amounts to the trustee. The senior
guarantee is set forth in, and forms part of, the senior debt securities indenture under which senior debt securities of any series
will be issued by Santander US Debt and may be affixed to the relevant senior debt security of any series. If, for any reason,
Santander US Debt does not make any required payment in respect of the senior debt securities of any series when due, Banco Santander
will cause the payment to be made to the trustee for the benefit of the holders. Holders of the senior debt securities of any series
issued by Santander US Debt may sue Banco Santander to enforce their rights under the senior guarantee without first suing any
other person or entity. Pursuant to the terms of the senior debt securities indenture, Banco Santander may, without the consent
of the holders of the senior debt securities of any series, assume all of Santander US Debt’s rights and obligations under
the senior debt securities of such series and upon such assumption, Santander US Debt will be released from its liabilities under
the senior debt securities indenture and the senior debt securities of such series.
The obligations of Banco Santander in respect
of senior debt securities of any series constitute direct, unconditional, unsubordinated and unsecured obligations of Banco Santander
and, upon the insolvency of Banco Santander (and unless they qualify as subordinated claims pursuant to Article 92 of Law 22/2003
(Ley Concursal) of 9 July 2003 (the “Spanish Insolvency Law” or “Law 22/2003”) or equivalent legal
provision which replaces it in the future, and subject to any applicable legal and statutory exceptions), rank pari passu
and rateably without preference
among such obligations of Banco Santander
in respect of senior debt securities and at least pari passu with all other unsubordinated and unsecured indebtedness and
monetary obligations involving or otherwise related to borrowed money of Banco Santander, present and future. In accordance with
article 92 of Law 22/2003, the following are subordinated claims:
1. Claims that, having been lodged late,
are included in the list of creditors by the insolvency administrators or that, not having been duly lodged, or having been lodged
late, are included on that list by subsequent notifications, or by a Spanish Court of Law when resolving the motion to challenge
it (article 92.1 Law 22/2003).
2. Claims that, under a contractual
arrangement, are subordinated in nature with regard to all the other claims against the debtor (article 92.2 Law 22/2003).
3. Interest claims of any kind, including
those for late payment, except for those claims with a security in rem, up to the sum of the respective guarantee (article 92.3
Law 22/2003).
4. Claims for fines and other monetary
penalties (article 92.4 Law 22/2003).
5. The claims held by any of the persons
especially related to Banco Santander as set forth in article 93 (article 92.5 Law 22/2003).
6. Claims in favour of whom the ruling
has declared be in bad faith in the act contested as a consequence of the insolvency revocation (article 92.6 Law 22/2003).
7. Claims arising from the contracts
with reciprocal obligations referred to in Articles 61, 62, 68 and 69 of Law 22/2003, when a Spanish Court of Law finds, following
the report by the insolvency administrators, that the creditor has repeatedly hindered fulfilment of the contract to the detriment
of the insolvency interests (article 92.7 Law 22/2003).
Subordinated Debt Securities
Banco Santander, as guarantor, will fully,
unconditionally and irrevocably guarantee the due and punctual payment in full to the holders of the subordinated debt securities
of any series of all amounts due and owing under the subordinated debt securities indenture, including as may be modified pursuant
to the exercise of the Spanish Bail-in Power under the subordinated debt securities indenture, and payment in full of such amounts
to the trustee. The subordinated guarantee is set forth in, and forms part of, the subordinated debt securities indenture under
which subordinated debt securities of any series will be issued by Santander Issuances and may be affixed to the relevant subordinated
debt security of any series. If, for any reason, Santander Issuances does not make any required payment in respect of the subordinated
debt securities of any series when due, Banco Santander will cause the payment to be made to the trustee for the benefit of the
holders. Holders of the subordinated debt securities of any series issued by Santander Issuances may sue Banco Santander to enforce
their rights under the subordinated guarantee without first suing any other person or entity. Pursuant to the terms of the subordinated
securities indenture, Banco Santander may, without the consent of the holders of the subordinated debt securities of any series,
assume all of Santander Issuances’s rights and obligations under the subordinated debt securities of such series and upon
such assumption, Santander Issuances will be released from its liabilities under the subordinated debt securities indenture and
the subordinated debt securities of such series.
The obligations of Banco Santander with
respect to any series of subordinated debt securities constitute direct, unconditional, subordinated and unsecured obligations
of Banco Santander which, upon the insolvency of Banco Santander (and unless they qualify as more subordinated claims pursuant
to the Spanish Insolvency Law or equivalent legal provision which replace them in the future, and subject to any applicable legal
and statutory exceptions) shall rank, under Article 92.2 of the Spanish Insolvency Law (or equivalent legal provisions which replace,
substitute or amend it in the future),
| (i) | senior to (1) contractually subordinated obligations of principal related to instruments qualifying as Tier 1 Capital
of Banco Santander, (2) those subordinated obligations which qualify as subordinated claims pursuant to Articles 92.3 to 92.7 of
the Spanish Insolvency Law or equivalent legal provisions which replace them in the future, and (3) any other subordinated
obligations which by law or their terms, and to the extent permitted by Spanish law, rank junior to Banco Santander’s obligations
under the subordinated guarantees; |
| (ii) | pari passu with all other contractually subordinated obligations of principal related to instruments qualifying as Tier
2 Capital of Banco Santander and any other subordinated obligations which by law and/or their terms, and to the extent permitted
by Spanish law, rank pari passu with Banco Santander’s obligations under the subordinated guarantee; and |
| (iii) | junior to any non-subordinated obligations of Banco Santander, any other subordinated obligations which by law and/or
their terms, and to the extent permitted by Spanish law, rank senior to Banco Santander’s obligations under the
subordinated guarantees (including contractually subordinated obligations of principal related to instruments not qualifying
as Tier 2 Capital or Tier 1 Capital of Banco Santander), and any claim on Banco Santander, that becomes subordinated as a
consequence of article 92.1º of the Spanish Insolvency Law. |
After payment in full of all unsubordinated
debts but before distributions to shareholders, under article 92 of the Spanish Insolvency Law, Banco Santander will pay or satisfy
subordinated credits (créditos subordinados) (as defined in the Spanish Insolvency Law) of Banco Santander in the
following order and pro rata within each class: (i) claims related to senior indebtedness that have been belatedly or inaccurately
communicated to the insolvency administrator or which, by administrative order or decision, are deemed to be included in those
claims that have been belatedly or inaccurately communicated to the insolvency administrator; (ii) contractually subordinated payments
of principal on subordinated credits (créditos subordinados) (as defined in the Spanish Insolvency Law) of Banco
Santander and any other payments in respect of subordinated credits (créditos subordinados) (as defined in the Spanish
Insolvency Law) of Banco Santander other than payments set forth in subparagraph (v) of this paragraph, to the extent they do not
qualify as Tier 2 Capital or Tier 1 Capital; (iii) contractually subordinated payments of principal on subordinated credits (créditos
subordinados) (as defined in the Spanish Insolvency Law) of Banco Santander qualifying as Tier 2 Capital (including any payment
in respect of principal of the subordinated debt securities of any series due under the relevant subordinated guarantee); (iv)
contractually subordinated payments of principal on subordinated credits (créditos subordinados) (as defined in the
Spanish Insolvency Law) of Banco Santander qualifying as Tier 1 Capital (including any payment in respect of the Liquidation Preference
of the contingent convertible capital securities of any series if no Trigger Event has occurred); (v) payments of interest of any
kind, including those for late payments (excluding interest on secured indebtedness to the extent secured); (vi) fines or any other
monetary penalties or sanctions; (vii) claims of creditors which are related to Banco Santander as set forth in article 93 of the
Spanish Insolvency Law; (viii) indebtedness arising from transactions set aside by the Spanish court overseeing the insolvency
proceeding (rescisión concursal) and in respect of which such court has determined that the relevant creditor has
acted in bad faith; and (ix) indebtedness arising from the contracts with reciprocal obligations referred to in Articles 61, 62,
68 and 69 of Law 22/2003, when the Court of Law finds, following the report by the insolvency administrators, that the creditor
has repeatedly hindered fulfilment of the contract to the detriment of the insolvency interests.
Banco Santander in the relevant subordinated
guarantees agrees with respect to any series of subordinated debt securities and each holder of subordinated debt securities of
any series, by his or her acceptance of a subordinated guarantee will be deemed to have agreed to the above described subordination
of the subordinated guarantee. Each such holder will be deemed to have irrevocably waived his or her rights of priority which would
otherwise be accorded to him or her under the laws of Spain, to the extent necessary to effectuate the subordination provisions
of
the subordinated guarantee. In addition,
each holder of subordinated debt securities of any series by his or her acceptance thereof authorizes and directs the applicable
trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the relevant
subordinated guarantee as provided in the subordinated indenture and as summarized herein and appoints the applicable trustee his
attorney-in-fact for any and all such purposes.
Payments of Interest
The relevant issuers will make any payments
of interest and principal on any particular series of debt securities on the dates and, in the case of payments of interest, at
the rate or rates, that the relevant issuers set out in, or that are determined by the method of calculation described in, the
relevant prospectus supplement. All payments in respect of the debt securities will be subject in all cases to any fiscal or other
laws and regulations applicable thereto in the place of payment (including FATCA, any regulations or agreements thereunder, any
official interpretation thereof, any intergovernmental agreements with respect thereto, or any law implementing an intergovernmental
agreement or any regulations or official interpretations relating thereto), but without prejudice to the provisions described in
“—Additional Amounts” below.
Status of the Debt Securities
Senior Debt Securities
Unless the relevant prospectus supplement
provides otherwise, the senior debt securities constitute direct, unconditional, unsubordinated and unsecured obligations of Santander
US Debt and, upon the insolvency of Santander US Debt (and unless they qualify as subordinated claims pursuant to Article 92 of
the Spanish Insolvency Law or equivalent legal provision which replaces it in the future, and subject to any applicable legal and
statutory exceptions), rank pari passu and ratably without preference among themselves and the payment obligations of Santander
US Debt under the senior debt securities of such series rank at least pari passu with all other unsecured and unsubordinated
indebtedness and monetary obligations involving or otherwise related to borrowed money of Santander US Debt, present or future.
Subordinated Debt Securities
Unless the relevant prospectus supplement
provides otherwise, the subordinated debt securities constitute direct, unconditional, subordinated and unsecured obligations of
Santander Issuances and, upon the insolvency of Santander Issuances (and unless they qualify as subordinated claims pursuant to
the Spanish Insolvency Law or equivalent legal provisions which replace them in the future, and subject to any applicable legal
and statutory exceptions) rank, under Article 92.2 of the Spanish Insolvency Law (or equivalent legal provisions which replace,
substitute or amend it in the future) pari passu without preference or priority among themselves and:
(i) senior to (1) those contractually
subordinated obligations of principal related to instruments qualifying as Tier 1 Capital of Banco Santander, (2) those subordinated
obligations which qualify as subordinated claims pursuant to Articles 92.3 to 92.7 of the Spanish Insolvency Law or equivalent
legal provisions which replace them in the future, and (3) any other subordinated obligations which by law or their terms, and
to the extent permitted by Spanish law, rank junior to the subordinated debt securities of such series;
(ii) pari passu with
all of Santander Issuances’s other contractually subordinated obligations of principal related to instruments qualifying
as Tier 2 Capital of Banco Santander; and
(iii) junior to any non-subordinated
obligations of Santander Issuances, any Senior Subordinated Obligations (as defined below) and any claim on Santander Issuances,
that becomes subordinated as a consequence of article 92.1º of the Spanish Insolvency Law.
“Senior Subordinated Obligations”
means any subordinated obligations of Santander Issuances which by law and/or their terms, and to the extent permitted by Spanish
law (including contractually subordinated obligations of principal related to instruments not qualifying as Tier 2 Capital or Tier
1 Capital of Banco Santander), rank senior to the subordinated debt securities of any series.
Santander Issuances agrees with respect
to any series of subordinated debt securities and each holder of subordinated debt securities of any series, by his or her acquisition
of a subordinated debt security, will be deemed to have agreed to the above described subordination. Each such holder will be deemed
to have irrevocably waived his or her rights of priority which would otherwise be accorded to him or her under the laws of Spain,
to the extent necessary to effectuate the subordination provisions of the subordinated debt security. In addition, each holder
of subordinated debt securities of any series by his or her acquisition of the securities authorizes and directs the applicable
trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the relevant
subordinated debt securities as provided in the subordinated indenture and as summarized herein and appoints the applicable trustee
his attorney-in-fact for any and all such purposes.
Additional Amounts
Unless otherwise specified in the relevant
prospectus supplement, all amounts payable (whether in respect of principal, redemption amount, interest or otherwise) in respect
of any series of debt securities and the related guarantees will be made free and clear of and without withholding or deduction
for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied
by or on behalf of the Kingdom of Spain or any political subdivision thereof or any authority or agency therein or thereof having
power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law.
In that event, the relevant issuer or Banco Santander, as the case may be, shall pay such additional amounts (“Additional
Amounts”) as will result in receipt by the holders of the debt securities of the particular series of such amounts as would
have been received by them had no such withholding or deduction been required.
Neither the relevant issuer nor Banco Santander
shall be required to pay any Additional Amounts in respect of any debt securities:
| (i) | to, or to a third party on behalf of, a holder if the holder or the beneficial owner of debt securities is liable for such
taxes, duties, assessments or governmental charges in respect of such debt securities by reason of his having some connection with
Spain other than the mere holding of such debt security; or |
| (ii) | to, or to a third party on behalf of, a holder in respect of whose series of debt securities the relevant issuer or Banco Santander
does not receive such information as may be required in order to comply with the applicable Spanish tax reporting obligations,
including but not limited to the receipt in a timely manner of a duly executed and completed certificate in accordance with Law
10/2014 and Royal Decree 1065/2007, as amended, and any implementing legislation or regulation; or |
| |
(iii) |
to, or to a third party
on behalf of, a holder of debt securities of any series if the holder or beneficial owner failed to make any necessary claim or
to comply with any certification, identification or other requirements concerning the nationality, residence, identity or connection
with the taxing jurisdiction of such holder or beneficial owner, if such claim or compliance is required by statute, treaty, regulation
or administrative practice of Spain as a condition to relief or exemption from such taxes; |
| (iv) | presented for payment (where presentation is required) more than 30 days after the Relevant Date, except to the extent that
the relevant holder would have been entitled to such Additional Amounts on presenting the same for payment on the expiry of such
period of 30 days; or |
| (v) | where the withholding or deduction is imposed pursuant to European Council Directive 2003/48/EC or any Directive amending,
supplementing or replacing such Directive or any law implementing or complying with, or introduced in order to conform to, such
Directive; or |
| (vi) | presented for payment (where presentation is required) by or on behalf of a holder who would have been able to avoid such withholding
or deduction by presenting the relevant debt security to another paying agent in a Member State of the European Union; or |
| (vii) | to, or to a third party on behalf of, individuals resident for tax purposes in the Kingdom of Spain; or |
| |
(viii) |
to, or to a third party
on behalf of, a Spanish-resident legal entity subject to Spanish corporation tax if the Spanish tax authorities determine that
the debt securities of such series do not comply with |
exemption requirements specified in the Reply
to a Consultation of the Directorate General for Taxation (Dirección General de Tributos) dated 27 July 2004 and
require a withholding to be made; or
| |
(ix) |
where the withholding
or deduction is required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections
1471 through 1474 of the Code (“FATCA”), any regulations or agreements thereunder, any official interpretations thereof,
any intergovernmental agreements with respect thereto (including the intergovernmental agreement between the United States and
Spain on the implementation of FATCA), or any law implementing an intergovernmental agreement or any regulations or official interpretations
relating thereto; or |
| |
(x) |
in the case of any combination
of items listed in (i) through (ix) above. |
Additional Amounts will also not be paid
with respect to any payment to a holder who is a fiduciary, a partnership, a limited liability company or person other than the
sole beneficial owner of that payment, to the extent that payment would be required by the laws of Spain (or any political subdivision
thereof) to be included in the income, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, a member of
that partnership, an interest holder in that limited liability company or a beneficial owner who would not have been entitled to
the Additional Amounts had it been the holder.
For the purposes of (iv) above, the “Relevant
Date” means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount
of the moneys payable has not been received by the trustee on or prior to such due date, it means the first date on which, the
full amount of such moneys having been so received and being available for payment to holders of debt securities, notice to that
effect shall have been duly given to the holders of the relevant series of debt securities in accordance with the indenture.
Unless the context otherwise requires,
any reference in this “Additional Amounts” section to “principal” shall include any premium payable, or
Redemption Amount and any other amounts in the nature of principal payable pursuant to the relevant indenture and “interest”
shall include all amounts payable described under “—Payments of Interest” above and any other amounts in the
nature of interest payable under the relevant indenture.
As used in this “Additional Amounts”
section, the term “Redemption Amount” means, as appropriate, the Maturity Redemption Amount, Early Redemption Amount
(Tax), Early Redemption Amount (Capital Disqualification Event), Early Redemption Amount (Call), Early Redemption Amount (Put)
and Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or determined in
accordance with the provisions of, the relevant prospectus supplement.
Except where the context requires otherwise,
any reference in the prospectus supplement to payment of principal of or interest on a debt security shall be deemed to include
any Additional Amounts payable with respect thereto.
Additional Issuances
The relevant issuers may, without the consent
of the holders of the debt securities of any series, issue additional debt securities of such series having the same ranking and
same interest rate, maturity date, redemption terms and other terms as the debt securities of such series described in the relevant
prospectus supplement except for the price to the public, original interest accrual date, issue date and first interest payment
date, provided however that such additional debt securities will not have the same CUSIP, ISIN or other identifying number as the
outstanding debt securities of the relevant series unless the additional debt securities are fungible with the outstanding debt
securities of the relevant series for U.S. federal income tax purposes. Any such additional debt securities, together with the
debt securities of the relevant series offered by the relevant prospectus supplement, will constitute a single series of securities
under the relevant indenture. There is no limitation on the amount of debt securities that the relevant issuers may issue under
the relevant indentures.
Redemption and Repurchase
Early Redemption for Taxation Reasons
Unless otherwise specified in the relevant
prospectus supplement, if, in relation to the debt securities of any series, (i) as a result of any change in the laws or regulations
of Spain or of any political subdivision thereof or any authority or agency therein or thereof having power to tax or in the interpretation
or administration of any such laws or regulations which becomes effective on or after the date of issue of the first issued debt
securities of such series or any earlier date specified in the relevant prospectus supplement, Banco Santander or the relevant
issuer shall determine that (a) the relevant issuer or the guarantor, as the case may be, would be required to pay additional amounts
as described in “—Additional Amounts” above or (b) the relevant issuer would not be entitled to claim a deduction
in computing tax liabilities in Spain in respect of any interest to be paid on the next interest payment date on such series of
debt securities or the value of such deduction to the relevant issuer would be materially reduced or (c) the applicable tax treatment
of the debt securities of such series changes and (ii) such circumstances are evidenced by the delivery by the relevant issuer
or Banco Santander, as the case may be, to the trustee of a certificate signed by two directors of the relevant issuer or Banco
Santander, as the case may be, stating that such circumstances prevail and describing the facts leading thereto, an opinion of
independent legal advisers of recognized standing to the effect that such circumstances prevail and, in the case of subordinated
debt securities, a copy of the Regulator’s consent to the redemption, the relevant issuer may, at its option and having given
no less than 30 nor more than 60 days’ notice (ending, in the case of debt securities which bear interest at a floating rate,
on a day upon which interest is payable) to the holders of the debt securities of such series in accordance with the terms described
under “—Notices” below (which notice shall be irrevocable), redeem in whole, but not in part, the outstanding
debt securities of such series (in the case of subordinated debt securities in accordance with the requirements of Applicable Banking
Regulations in force at the relevant time) at their early tax redemption amount (the “Early Redemption Amount (Tax)”)
(which shall be their principal amount or at such other Early Redemption Amount (Tax) as may be specified in or determined as described
in the relevant prospectus supplement), together with accrued interest (if any) thereon; provided, however, that (i) in the case
of (a) above, no such notice of redemption may be given earlier than 90 days (or, in the case of debt securities which bear interest
at a floating rate a number of days which is equal to the aggregate of the number of days falling within the then current interest
period applicable to the debt securities of such series plus 60 days) prior to the earliest date on which the relevant issuer or
Banco Santander, as the case may be, would be obliged to pay such additional amounts were a payment in respect of the debt securities
of such series then due and (ii) in the case of subordinated debt securities, redemption for taxation reasons may only take place
in accordance with Applicable Banking Regulations in force at the relevant time and is subject to the prior consent of the Regulator
with respect to the subordinated debt securities of such series.
Article 78(4) of the CRR provides that
the Regulator may only permit the redemption of subordinated debt securities of any series before the fifth anniversary of the
issue date of subordinated debt securities of such series for taxation reasons if, in addition to meeting one of the conditions
referred to in paragraphs (a) or (b) of Article 78(1) (as described below), there is a change in the applicable tax treatment of
the subordinated debt securities of such series and the institution demonstrates to the satisfaction of the Regulator that such
change is material and was not reasonably foreseeable at the issue date of subordinated debt securities of such series.
Early Redemption of Subordinated Debt
Securities for Capital Disqualification Event
Unless otherwise specified in the relevant
prospectus supplement, if, in relation to subordinated debt securities of any series, (i) there is a change in Spanish law, Applicable
Banking Regulations or any change in the application or official interpretation thereof that Banco Santander or Santander Issuances
determines results or is likely to result in the entire outstanding aggregate principal amount of subordinated debt securities
of such series ceasing to be included in, or counting towards, Banco Santander’s and/or the Group’s Tier 2 Capital
and (ii) such circumstances are evidenced by the delivery by Santander Issuances or Banco Santander, as the case may be, to the
trustee of a certificate signed by two directors of Banco Santander stating that the said circumstances prevail and describing
the facts leading thereto and a copy of the Regulator’s consent to the redemption, Santander Issuances may, at its option
and having given no less than 30 nor more than 60 days’ notice (ending, in the case of subordinated debt securities which
bear interest at a floating rate, on a day upon which interest is payable) to the holders of the subordinated debt securities of
such series in accordance with the terms described under “—Notices” below (which notice shall be irrevocable),
redeem in whole but not in part of the outstanding subordinated debt
securities of such series in accordance
with the requirements of Applicable Banking Regulations in force at the relevant time) at their early capital disqualification
event redemption amount (the “Early Redemption Amount (Capital Disqualification Event)”) (which shall be their principal
amount or such other Early Redemption Amount (Capital Disqualification Event) as may be specified in or determined in the relevant
prospectus supplement), together with accrued interest (if any) thereon; provided, however, that the Regulator consents
to redemption of the subordinated debt securities of such series.
Redemption for regulatory reasons is subject
to the prior consent of the Regulator and may only take place in accordance with Applicable Banking Regulations in force at the
relevant time.
Article 78(4) of the CRR provides that
the Regulator may only permit the redemption of subordinated debt securities of any series before the fifth anniversary of the
issue date of the subordinated debt securities of such series for regulatory reasons if, in addition to meeting one of the conditions
referred to in paragraphs (a) or (b) of Article 78(1) (as described below), there is a change in the regulatory classification
of the subordinated debt securities of such series that would be likely to result in their exclusion from own funds or reclassification
as a lower quality form of own funds, the Regulator considers such change to be sufficiently certain and the institution demonstrates
to the satisfaction of the Regulator that the regulatory classification was not reasonably foreseeable at the issue date of the
subordinated debt securities of such series.
Optional Early Redemption (Call)
Unless otherwise specified in the
relevant prospectus supplement, the relevant issuer may, upon the expiration of the appropriate notice (described below) and
subject to such conditions as may be specified in the relevant prospectus supplement (and subject, in the case of
subordinated debt securities to the prior consent of the Regulator) redeem in whole (but not, unless and to the extent that
the relevant prospectus supplement specifies otherwise, in part) the debt securities of such series at their call early
redemption amount (the “Early Redemption Amount (Call)”) (which shall be their principal amount or such other
Early Redemption Amount (Call) as may be specified in or determined in the relevant prospectus supplement), together with
accrued interest (if any) thereon.
In the case of subordinated debt securities,
redemption at the option of Santander Issuances is subject to the prior consent of the Regulator and may only take place in accordance
with Applicable Banking Regulations in force at the relevant time. In accordance with Article 63(j) of the CRR, subordinated securities
may not be called, redeemed or repurchased or repaid before five years after the date of issuance.
Article 78(1) of the CRR provides that
the Regulator will give its consent to a redemption of subordinated debt securities such circumstances provided that either of
the following conditions is met:
| (a) | on or before such redemption of the subordinated debt securities, the institution replaces the subordinated debt securities
with own funds instruments of an equal or higher quality on terms that are sustainable for the income capacity of the institution;
or |
| (b) | the institution has demonstrated to the satisfaction of the Regulator that its own funds would, following such redemption,
exceed the requirements laid down in Article 92(1) of the CRR and the combined buffer requirement as defined in point (6) of Article
128 of the CRD IV Directive by a margin that the Regulator may consider necessary on the basis of Article 104(3) of the CRD IV
Directive. |
“CRD IV Directive” means
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions
and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives
2006/48/EC and 2006/49/EC or such other directive as may come into effect in place thereof.
Partial Redemption
If the debt securities of any series are
to be redeemed in part only on any date in accordance with “—Optional Early Redemption (Call)” above,
the debt securities to be redeemed will be selected not more than 60 days nor less than 30 days prior to such redemption date by
the trustee pro rata to their principal amounts, or by lot or by such method as the trustee deems fair and
appropriate, provided that the
amount redeemed in respect of the debt securities of such series shall be equal to the minimum authorized denomination or
an integral multiple thereof, subject always to compliance with all applicable laws and the requirements of any clearing
system on which the debt securities of such series may be cleared and of any listing authority, stock exchange and/or
quotation system on which the debt securities of such series may be listed and/or quoted. In the case of debt securities
issued in global form, DTC shall select Book-Entry Interests in such debt securities as described under “—Form of
Securities; Book-Entry System” below. The trustee shall not be liable for selections made by it in accordance with this
paragraph or for selections made by DTC. No debt securities of $2,000 or less can be redeemed in part.
In the case of subordinated debt securities
partial redemption is subject to the prior consent of the Regulator and may only take place in accordance with Applicable Banking
Regulations in force at the relevant time.
Optional Early Redemption (Put) of Senior
Debt Securities
Unless otherwise specified in the relevant
prospectus supplement, Santander US Debt shall, upon the exercise of the relevant option by a holder of senior debt securities
of any series, redeem the senior debt securities of such series on the date or the dates specified in the relevant prospectus supplement
at the put early redemption amount (the “Early Redemption Amount (Put)”) (which shall be the principal amount or such
other Early Redemption Amount (Put) as may be specified in or determined in the relevant prospectus supplement), together with
accrued interest (if any) thereon. In order to exercise such option, the holder of the senior debt securities of such series must,
not less than 60 days before the date so specified (or such other period as may be specified in the relevant prospectus supplement),
deposit a duly completed redemption notice in the form which is available from the specified office of the trustee specifying the
aggregate principal amount in respect of which such option is exercised (which must be the minimum denomination specified in the
relevant prospectus supplement or an integral multiple thereof). Such notice must also be delivered in accordance with the requirements
of the applicable clearing system. No option exercised may be withdrawn (except as provided in the relevant indenture).
The Early Redemption (Put) shall not apply
in the case of subordinated debt securities of any series and holders of subordinated debt securities of any series may not redeem
the subordinated debt securities of such series prior to the maturity date of such series.
A holder of any series of senior debt securities
may not exercise such option in respect of any series of debt securities which is the subject of an exercise by Santander US Debt
of its option to redeem such series of senior debt securities under “—Early Redemption for Taxation Reasons”,
“—Early Redemption of Subordinated Debt Securities for Capital Disqualification Event” or “—Optional
Early Redemption (Call)” above.
Notice of Redemption
For purposes of this section “—Redemption
and Repurchase”, the appropriate notice to be given by the relevant issuer to the trustee and the holders of the debt securities
of such series, shall be signed by two duly authorized officers of the relevant issuer and shall specify:
| - | the series of debt securities subject to redemption; |
| - | whether such series of debt securities is to be redeemed in whole or in part only and, if in part only, the aggregate principal
amount of the debt securities series which is to be redeemed, except in the case of “—Early Redemption for Taxation
Reasons”, “—Early Redemption of Subordinated Debt Securities for Capital Disqualification Event”, which
must be redeemed in full; |
| - | the due date for such redemption which shall be a Business Day, which shall be not less than 30 days nor more than 60 days
(or such lesser period as may be specified in the relevant prospectus supplement) after the date on which such notice is validly
given and which is, in the case of debt securities which bear interest at a floating rate, a date upon which interest is payable;
and |
| - | the Early Redemption Amount (Tax), Early Redemption Amount (Capital Disqualification Event), Early Redemption Amount (Call)
or Early Redemption Amount (Put), as applicable, at which the debt securities of such series are to be redeemed. |
Any such notice shall be irrevocable, and
the delivery thereof shall oblige the relevant issuer to make the redemption therein specified (unless the Spanish Bail-in Power
is exercised by the relevant resolution authority before the occurrence of such redemption).
Repurchase of Debt Securities
Santander US Debt, Santander Issuances
and Banco Santander and any of their respective subsidiaries or any third party designated by any of them, may at any time repurchase
debt securities in the open market or otherwise and at any price.
In the case of subordinated debt securities
of any series, the repurchase of the subordinated debt securities of such series by Santander Issuances, Banco Santander or any
of its subsidiaries shall take place in accordance with Applicable Banking Regulations in force at the relevant time. Under the
current Applicable Banking Regulations, an institution requires the prior permission of the Regulator (Article 77(b) of CRR) to
effect the repurchase of Tier 2 instruments, and these may not be repurchased before five years after the date of issuance (Article
63(j) of CRR).
Modification and Waiver
Modification
The relevant issuer and the trustee may
make certain modifications and amendments of the applicable indenture with respect to any series of debt securities without the
consent of the holders of the debt securities of that series, including for, but not limited to, any of the following purposes:
| · | to evidence the succession of another corporation to the relevant issuer or the guarantor and the assumption by any such successor
of the covenants of the relevant issuer or the guarantor under the relevant indenture and in the debt securities of any series; |
| · | to add to the covenants of the relevant issuer or the guarantor for the benefit of the holders of all or any series of debt
securities (and, if such covenants are to be for the benefit of less than all series of debt securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to surrender any right or power conferred upon the relevant
issuer or the guarantor under the relevant indenture; |
| · | to add any additional Events of Default; |
| · | to change or eliminate any of the provisions of the relevant indenture, or any supplemental indenture, provided that any such
change or elimination shall become effective only when there is no outstanding debt security of any series created prior to the
execution of such supplemental indenture that is entitled to the benefit of such provision or as to which such supplemental indenture
would apply; |
| · | to secure the debt securities of any series; |
| · | to change any place of payment under certain circumstances, so long as a place of payment as required by the relevant indenture
is maintained; |
| · | to cure any ambiguity, to correct or supplement any provision in the relevant indenture which may be defective or inconsistent
with any other provision of the relevant indenture or in any supplemental indenture; |
| · | to evidence and provide for the acceptance of appointment under the relevant indenture by a successor trustee with respect
to the debt securities of one or more series and to add to or change any of the provisions of the relevant indenture as shall be
necessary to provide for or facilitate the administration of the trusts under the relevant indenture by more than one trustee,
pursuant to the requirements of the relevant indenture; |
| · | to change or eliminate any provision of the relevant indenture so as to conform with the current provisions or any future provisions
of the Trust Indenture Act; |
| · | with respect to any debt security (including a global security), to amend any such debt security to conform to the description
of the terms of such debt security in the prospectus, prospectus supplement, product supplement, pricing supplement or any other
similar offering document related to the offering of such debt security. |
In addition to the permitted amendments
described in the preceding paragraph, the relevant issuer and the trustee may amend or supplement the relevant indenture or the
debt securities of any series and the related supplemental indenture without the consent of any holders of the debt securities
of such series to conform the provisions of the relevant indenture to this “Description of Debt Securities and Guarantees”
section in this registration statement and the applicable prospectus supplement.
The relevant issuer may make other modifications
and amendments with the consent of the holder or holders of not less than a majority in aggregate outstanding principal amount
of the debt securities of the series outstanding under the indenture that are affected by the modification or amendment, voting
as one class. However, the relevant issuer may not make any modification or amendment without the consent of the holder of each
debt security affected that would:
| · | change the stated maturity of the principal amount of any subordinated debt security; |
| · | reduce the principal amount of or the interest rates, or any premium payable upon the redemption of, or any missed payments,
with respect to any debt security; |
| · | change our (or any successor’s) obligation to pay Additional Amounts; |
| · | change the currency of payment; |
| · | impair the right to institute suit for the enforcement of any payment due and payable; |
| · | reduce the percentage in aggregate principal amount of outstanding debt securities of the series necessary to modify or amend
the indenture or to waive compliance with certain provisions of the relevant indenture and any Senior Debt Security Event of Default
or Subordinated Debt Security Event of Default (as such terms are defined below and described in the relevant prospectus supplement); |
| · | modify the subordination provisions or the terms of our obligations in respect of the due and punctual payment of the amounts
due and payable on the debt securities in a manner adverse to the holders; or |
| · | modify the above requirements. |
In addition, material variations in the
terms and conditions of debt securities of any series, including modifications relating to subordination, redemption, a Senior
Debt Security Event of Default, Subordinated Debt Security Event of Default, (as those terms are defined under “—Events
of Default and Defaults; Limitations of Remedies” below), may require the non-objection from, or consent of, the Regulator
or its successor.
Events of Default and Defaults; Limitation of Remedies
Senior Debt Security Event of Default
Unless the relevant prospectus supplement
provides otherwise, a “Senior Debt Security Event of Default” with respect to any series of senior debt securities
shall result if:
| (i) | Non-payment: default is made in the payment of any interest or principal due in respect of the senior debt securities
of that series or any of them and such default continues for a period of seven days (or such other period as may be specified in
the relevant prospectus supplement); or |
| (ii) | Breach of other obligations: Santander US Debt or Banco Santander fails to perform or observe any of its other obligations
under or in respect of the senior debt securities of such series, the relevant guarantee or the senior debt securities indenture
and (except in any case where such failure is incapable of remedy when no such continuation as is hereinafter mentioned will be
required) the failure continues for a period of 30-days next following the service by the trustee on Santander US Debt or Banco
Santander, as applicable, of a notice requiring the same to be remedied; or |
| (iii) | Winding up: any order is made by any competent court or resolution passed for the winding up or dissolution of Santander
US Debt or Banco Santander (except in any such case for the purpose of reconstruction or a merger or amalgamation which has been
previously approved by the holders of at least a majority of the outstanding principal amount of the senior debt securities of
that series or a merger with another institution in this case even without being approved by holders of the senior debt
securities of such series, provided that any entity that survives or is created as a result of such merger is given a rating by
an internationally recognized rating agency at least equal to the then current rating of Santander US Debt or Banco Santander,
as the case may be, at the time of such merger); or |
| (iv) | Cessation of business: Santander US Debt or Banco Santander ceases or threatens to cease to carry on the whole
or a substantial part of its business, save for the purposes of a reorganization (except in any such case for the purpose of
reconstruction or a merger or amalgamation which has been previously approved by the holders of at least a majority of the
outstanding principal amount of the senior debt securities of that series or a merger with another financial institution in
such case even without being approved by holders of the senior debt securities of such series, provided that any entity that
survives or is created as a result of such merger is given a rating by an internationally recognized rating agency at least
equal to the then current rating of Santander US Debt or Banco Santander, as the case may be, at the time of such merger), or
Santander US Debt or Banco Santander stops or threatens to stop payment of, or is unable to, or admits in writing inability
to, pay, its debts (or any class thereof) as they fall due, or is deemed unable to pay its debts pursuant to or for the
purposes of any applicable law, or is adjudicated or found bankrupt or insolvent; or |
| (v) | Insolvency proceedings: (a) proceedings are initiated against Santander US Debt or Banco Santander under any applicable
liquidation, insolvency, composition, reorganization or other similar laws, or an application made for the appointment of an administrative
or other receiver, manager, administrator or other similar official, or an administrative or other receiver, manager, administrator
or other similar official is appointed, in relation to Santander US Debt or Banco Santander or in relation to the whole or a part
of the undertaking or assets of either of them, or an encumbrancer takes possession of the whole or a part of the undertaking or
assets of either of them, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued or
put in force against the whole or a part of the undertaking or assets or any of them and (b) in any case is not discharged within
14 days; or |
| (vi) | Arrangements with creditors: Santander US Debt or Banco Santander initiates or consents to judicial proceedings relating
to itself under any applicable liquidation, insolvency, composition, reorganization or other similar laws or makes a conveyance
or assignment for the benefit of, or enters into any composition or other arrangement with, its creditors generally (or any class
of its creditors); or |
| (vii) | Guarantee: the guarantee with respect to such series of senior debt securities ceases to be a valid and binding obligation
of Banco Santander or it becomes unlawful for Banco Santander to perform its obligations under such guarantee or such guarantee
is claimed by Santander US Debt or Banco Santander not to be in full force and effect. |
Under the terms of the senior debt securities
indenture, no exercise of a resolution tool by the relevant resolution authority or any action in compliance therewith shall constitute
an event of default.
If any Senior Debt Security Event of Default
shall occur in relation to any series of senior debt securities, the trustee or the holders of at least 25% in outstanding principal
amount of the senior debt securities of that series may at their discretion declare that the senior debt securities of such series
and all interest then accrued thereon shall be forthwith due and payable, whereupon the same shall become immediately due and payable
at its early termination amount (the “Early Termination Amount”) (which shall be its principal amount or such other
Early Termination Amount as may be specified in or determined
in accordance with the relevant prospectus supplement, together with all interest (if any) accrued thereon), without presentment,
demand, protest or other notice of any kind, all of which Santander US Debt will expressly waive, anything contained in the senior
debt securities of such series to the
contrary notwithstanding, unless, prior thereto, all Senior Debt Security Events of Default
in respect of the senior debt securities of such series shall have been cured.
Notwithstanding the preceding
paragraph, under Spanish law, interest on debt instruments accruing after commencement of insolvency proceedings against the
issuer may not be declared as due and payable after the commencement of insolvency proceedings against the issuer.
Notwithstanding any contrary provisions,
nothing shall impair the right of a holder, absent the holder’s consent, to sue for any payments due but unpaid with respect
to the senior debt securities.
Subordinated Debt Securities Event of
Default
Unless the relevant prospectus supplement
provides otherwise, subject to the conditions described below, if any of the following events occurs and is continuing with respect
to the subordinated debt securities of any series it shall constitute a “Subordinated Debt Security Event of Default”:
| (i) | Non-payment: default is made in the payment of any interest or principal due in respect of the subordinated debt
securities of that series or any of them and such default continues for a period of seven days (or such other period as may
be specified in the relevant prospectus supplement). |
| (ii) | Winding up: any order is made by any competent court or resolution passed for the winding up or dissolution of Santander
Issuances or Banco Santander (except in any such case for the purpose of reconstruction or a merger or amalgamation which has been
previously approved by the holders of at least a majority of the outstanding principal amount of the subordinated debt securities
of that series or a merger with another institution in this case even without being approved by holders of the subordinated debt
securities of such series, provided that any entity that survives or is created as a result of such merger is given a rating by
an internationally recognized rating agency at least equal to the then current rating of Santander Issuances or Banco Santander,
as the case may be, at the time of such merger). |
Under the terms of the subordinated debt
securities indenture, no exercise of a resolution tool by the relevant resolution authority or any action in compliance therewith
shall constitute an event of default.
If a Subordinated Debt Security Event of
Default occurs as set forth in paragraph (i) above, then the trustee or the holders of at least 25% in outstanding principal amount
of the subordinated debt securities of that series may institute proceedings for the winding up or dissolution of Santander Issuances
or Banco Santander but may take no further action in respect of such default.
If a Subordinated Debt Security Event of
Default occurs as set forth in paragraph (ii) above, then the trustee or the holders of at least 25% in outstanding principal amount
of the subordinated debt securities of that series may declare the subordinated debt securities of such series immediately due
and payable whereupon the subordinated debt securities of such series shall, when permitted by applicable Spanish insolvency law,
become immediately due and payable at their Early Termination Amount together with all interest (if any) accrued thereon.
Without prejudice to paragraphs (i) and
(ii) above, the trustee or the holders of at least 25% in outstanding principal amount of the subordinated debt securities of any
series may at their discretion and without further notice, institute such proceedings against Santander Issuances or Banco Santander
as they may think fit to enforce any obligation, condition or provision binding on Santander Issuances or Banco Santander under
the subordinated debt securities of such series, provided that, except as provided in (ii) winding up above, neither Santander
Issuances nor Banco Santander shall as a consequence of such proceedings be obliged to pay any sum or sums representing or measured
by reference to principal or interest in respect of the subordinated debt securities of such series sooner than the same would
otherwise have been payable by it or any damages.
Notwithstanding any contrary provisions,
nothing shall impair the right of a holder, absent the holder’s consent, to sue for any payments due but unpaid with respect
to the subordinated debt securities of any series.
Events of Default and Defaults - General
The holder or holders of not less than
a majority in aggregate principal amount of the outstanding debt securities of any series may waive any past Senior Debt Security
Event of Default or Subordinated Debt Security Event of Default, except a Senior Debt Security Event of Default or Subordinated
Debt Security Event of Default in respect of the payment of interest, if any, or principal of (or premium, if any) or payments
on, any debt security or a covenant or provision of the applicable indenture which cannot be modified or amended without the consent
of each holder of debt securities of such series.
Subject to the provisions of the applicable
indenture relating to the duties of the trustee, if a Senior Debt Security Event of Default or Subordinated Debt Security Event
of Default occurs and is continuing with respect to the debt securities of any series, the trustee will be under no obligation
to any holder or holders of the debt securities of the series, unless they have offered indemnity satisfactory to the trustee in
its sole discretion. Subject to the indenture provisions for the indemnification of the trustee, the holder or holders of a majority
in aggregate principal amount of the outstanding debt securities of any series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the
trustee with respect to the series, if the direction is not in conflict with any rule of law or with the applicable indenture and
the trustee does not determine that the action would be unjustly prejudicial to the holder or holders of any debt securities of
any series not taking part in that direction. The trustee may take any other action that it deems proper which is not inconsistent
with that direction.
The indentures provide that the trustee
will, within 90 days after the occurrence of a Senior Debt Security Event of Default or Subordinated Debt Security Event of Default
with respect to the debt securities of any series, give to each holder of the debt securities of such series notice of the Senior
Debt Security Event of Default or Subordinated Debt Security Event of Default of which the Trustee has received written notice,
unless the Senior Debt Security Event of Default or Subordinated Debt Security Event of Default has been cured or waived. However,
the trustee shall be protected in withholding notice if it determines in good faith that withholding notice is in the interest
of the holders.
Substitution of Issuer
Banco Santander or the relevant issuers
may, without the consent of the holders of any of the debt securities of any series, consolidate or amalgamate with, merge into
any other corporation or convey or transfer or lease Banco Santander’s or the relevant issuer’s properties and assets
substantially as an entirety to any person, provided that (a) any successor corporation formed by any such consolidation, amalgamation
or merger, or any transferee or lessee of such assets, is a company organized under the laws of any part of the European Union
that assumes, by a supplemental indenture, Banco Santander’s or the relevant issuer’s obligations on the debt securities
of such series and under the applicable indenture, and such supplemental indenture is executed by the relevant issuer and such
successor entity, if applicable, and delivered to the trustee, in form satisfactory to the trustee; (b) immediately after giving
effect to such consolidation, amalgamation, merger, conveyance or transfer, no Event of Default and no event which, after notice
or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; (c) the relevant issuer shall
have delivered to the trustee an officer’s certificate and an opinion of counsel stating that such consolidation, amalgamation,
merger, conveyance or transfer and such supplemental indenture, as the case may be, comply with the indenture and all conditions
precedent have been complied with; and (d) if the successor entity is not Banco Santander, Banco Santander shall, by amendment
to the relevant indenture, unconditionally guarantee all of the obligations of such successor entity under the debt securities
of such series and the relevant indenture as so modified by such amendment.
Banco Santander or any wholly-owned subsidiary
of Banco Santander may assume the obligations of the relevant issuer under the debt securities, subject to the prior consent of
the European Central Bank, if required, with respect to any series of subordinated debt securities, without the consent of the
holders of the any series of debt securities, provided that (a) the successor entity shall expressly assume such obligations by
an amendment to the relevant indenture, executed by the relevant issuer and such successor entity, if applicable, and delivered
to the trustee, in form satisfactory to the trustee, and if the successor entity is not Banco Santander, Banco Santander shall,
by amendment to the relevant indenture, unconditionally guarantee all of the obligations of such successor entity under the debt
securities of such series and the relevant indenture as so modified by such amendment; (b)
immediately after giving effect to such
assumption of obligations, no Event of Default and no event which, after notice or lapse of time or both, would become an Event
of Default, shall have occurred and be continuing; and (c) the relevant issuer shall have delivered to the trustee an officer’s
certificate and an opinion of counsel in such forms as are required in the relevant indenture. Any series of debt securities so
assumed, except if assumed by Banco Santander, will have the benefit of the related debt security guarantees. In the event of an
assumption of the obligations of a relevant issuer by Banco Santander, the subordination provisions of the subordinated guarantee
will apply to the subordinated debt securities of such series so assumed and the subordination provisions of the subordinated debt
securities of such series will no longer apply.
In the event of any assumption, Additional
Amounts under the debt securities of any series will be payable for taxes imposed by the jurisdiction of incorporation or tax residence
of the assuming entity (subject to exceptions equivalent to those that apply to the obligation to pay Additional Amounts for taxes
imposed by the laws of Spain) rather than taxes imposed by Spain. Additional Amounts for payments of interest or principal due
prior to the date of the assumption will be payable only for taxes imposed by Spain. The assuming corporation will also be entitled
to redeem the debt securities of any series in the circumstances described above under the section “—Early Redemption
for Taxation Reasons” for any change or amendment to, or change in the application or official interpretation of, the laws
or regulations of the assuming entity’s jurisdiction of incorporation or tax residence, which change or amendment must, in
the case of a substituted issuer, occur subsequent to the date of such assumption if the assuming entity is not incorporated or
tax resident in Spain. Upon such assumption, the relevant issuer will be released from all its obligations under the applicable
debt securities and indentures.
An assumption of the obligations of
a relevant issuer under any series of debt securities might be considered for U.S. federal income tax purposes to be an exchange
by the holders of the debt securities of such series for new debt securities, resulting in recognition of taxable gain or loss
for these purposes and possible other adverse tax consequences for such holders. Holders should consult their tax advisors regarding
the U.S. federal, state and local income tax consequences of an assumption.
Governing Law
The debt securities, the guarantees and
the indentures will be governed by and construed in accordance with the laws of the State of New York (without giving effect to
the choice of law provisions), except that the authorization and execution by Banco Santander, Santander US Debt and Santander
Issuances of the indentures, the debt securities and the guarantees, and certain provisions of the subordinated debt securities
and the subordinated indenture related to the subordination of the subordinated debt securities shall be governed by and construed
in accordance with Spanish law.
Agreement and Acknowledgement With Respect to the Exercise
of the Spanish Bail-in Power
Notwithstanding any other term of the debt
securities of any series or any other agreements, arrangements, or understandings between the relevant issuer and any holder of
the debt securities of any series, by its acquisition of the debt securities of any series, each holder (which, for the purposes
of this clause, includes each holder of a beneficial interest in the debt securities of any series) acknowledges, accepts, consents
to and agrees to be bound by:
(a) the effect of the exercise of the Spanish
Bail-in Power by the relevant resolution authority, which exercise may include and result in any of the following, or some combination
thereof:
(i) the reduction of all, or a portion,
of the Amounts Due on the debt securities of such series;
(ii) the conversion of all, or
a portion, of the Amounts Due on the debt securities of such series into ordinary shares, other securities or other
obligations of the relevant issuer, Banco Santander or another person (and the issue to or conferral on the holder of the debt
securities of such series of such shares, securities or obligations), including by means of an amendment, modification or
variation of the terms of the debt securities of such series;
(iii) the cancellation of the debt securities
of such series;
(iv) the amendment or alteration of the
maturity of the debt securities of such series or amendment of the amount of interest payable on the debt securities of such series,
or the date on which the interest becomes payable, including by suspending payment for a temporary period; and
(b) the variation of the terms of the debt
securities of such series, if necessary, to give effect to the exercise of the Spanish Bail-in Power by the relevant resolution
authority.
For these purposes, the “Amounts
Due” are the principal amount of, premium, if any, together with any accrued but unpaid interest, and Additional Amounts,
if any, due on the debt securities of any series. References to such amounts will include amounts that have become due and payable,
but which have not been paid, prior to the exercise of the Spanish Bail-in Power by the relevant resolution authority.
For these purposes, the “Spanish Bail-in Power”
is any write-down, conversion, transfer, modification, or suspension power existing from time to time under, and exercised in compliance
with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of Directive
2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, as amended or
superseded from time to time, (“BRRD”), including but not limited to Law 11/2015, of June 18, for the recovery
and resolution of credit institutions and investment firms, as amended from time to time (“Law 11/2015”), and up
to 31 December 2015 (inclusive), Law 9/2012, of 14 November, on restructuring and resolution of credit institutions, (ii) the Regulation
(EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and a uniform procedure
for the resolution of credit institutions and certain investment firms in the framework of the Single Resolution Mechanism and
the Single Resolution Fund and amending Regulation (EU) No. 1093/2010, as amended or superseded from time to time (the “SRM
Regulation”) and (iii) the instruments, rules and standards created thereunder, pursuant to which any obligation of a
regulated entity (as defined below) (or other affiliate of such regulated entity) can be reduced, cancelled, modified, or converted
into shares, other securities, or other obligations of such regulated entity or any other person (or suspended for a temporary
period).
A reference to a “regulated entity”
is to any entity to which Law 11/2015 applies as provided under article 1.2 of Law 11/2015, as amended from time to time, which
includes, certain credit institutions, investment firms, and certain of their parent or holding companies.
A reference to the “relevant resolution
authority” is to the Spanish Fund for the Orderly Restructuring of Banks (the “FROB”), the European
Single Resolution Mechanism, as the case may be, according to Law 11/2015, and any other entity with the
authority to exercise the Spanish Bail-in Power from time to time.
No repayment or payment of Amounts Due on
the debt securities of any series, will become due and payable or be paid after the exercise of any Spanish Bail-in Power by the
relevant resolution authority if and to the extent such amounts have been reduced, converted, cancelled, amended or altered as
a result of such exercise.
Neither a reduction or
cancellation, in part or in full of the Amounts Due on, the conversion thereof into another security or obligation of the
relevant issuer, Banco Santander or another person, as a result of the exercise of the Spanish Bail-in Power by the relevant
resolution authority with respect to the relevant issuer or Banco Santander, nor the exercise of the Spanish Bail-in Power by
the relevant resolution authority with respect to the debt securities of any series will be an event of default.
Upon the exercise of the Spanish Bail-in
Power by the relevant resolution authority with respect to the debt securities of any series, the relevant issuer or Banco Santander
will provide a written notice to the holders of the debt securities of such series through DTC as soon as practicable regarding
such exercise of the Spanish Bail-in Power. The relevant issuer or Banco Santander will also deliver a copy of such notice to the
trustee for information purposes.
By its acquisition of the debt securities
of any series, each holder of the debt securities of such series, (which, for the purposes of this clause, includes each holder
of a beneficial interest in the debt securities of such series), to the extent permitted by the Trust Indenture Act of 1939 (“Trust
Indenture Act”), will waive any and all claims, in law and/or in equity, against the trustee for, agree not to initiate a
suit against the trustee in respect of, and agree that the trustee will not be liable for, any action that the trustee takes, or
abstains from taking, in either case in accordance with the exercise of the Spanish Bail-in Power by the relevant resolution authority
with respect to the debt securities of such series.
Additionally, by its acquisition of the
debt securities of any series, each holder of the debt securities of such series acknowledges and agrees that, upon the exercise
of the Spanish Bail-in Power by the relevant resolution authority:
(i) the trustee will not be required to
take any further directions from the holders of the debt securities of such series with respect to any portion of the debt securities
of such series that are written-down, converted to equity and/or cancelled under the relevant indenture, which authorizes holders
of a majority in aggregate outstanding principal amount of the debt securities of such series to direct certain actions relating
to the debt securities of such series; and
(ii) the relevant indenture will not impose
any duties upon the trustee whatsoever with respect to the exercise of the Spanish Bail-in Power by the relevant resolution authority;
provided, however, that notwithstanding
the exercise of the Spanish Bail-in Power by the relevant resolution authority, so long as the debt securities of any series remain
outstanding, there will at all times be a trustee for the debt securities of such series in accordance with the relevant indenture,
and the resignation and/or removal of the trustee and the appointment of a successor trustee will continue to be governed by the
relevant indenture, including to the extent no additional supplemental indenture or amendment is agreed upon in the event the debt
securities of such series remain outstanding following the completion of the exercise of the Spanish Bail-in Power.
By its acquisition of the debt securities
of any series, each holder of the debt securities of such series acknowledges and agrees that neither a cancellation or deemed
cancellation of the principal or interest (in each case, in whole or in part), nor the exercise of the Spanish Bail-in Power by
the relevant resolution authority with respect to the debt securities of such series will give rise to a default for purposes of
Section 315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act.
By purchasing the debt securities of any
series, each holder (including each beneficial owner) of the debt securities of such series shall be deemed to have authorized,
directed and requested DTC and any direct participant in DTC or other intermediary through which it holds the debt securities of
such series to take any and all necessary action, if required, to implement the exercise of the Spanish Bail-in Power with respect
to the debt securities of such series as it may be imposed, without any further action or direction on the part of such holder.
Discharge, Defeasance and Covenant Defeasance
The relevant issuer may discharge certain
obligations to holders of any series of debt securities that have not already been delivered to the applicable trustee for cancellation
and that have become due and payable, will become due and payable at their stated maturity within one year or, if redeemable at
the option of the relevant issuer, are to be called for redemption within one year, by depositing or causing to be deposited with
the applicable trustee, in trust, funds in an amount sufficient, without reinvestment, in the opinion of an internationally recognized
firm of independent public accountants, to pay and discharge the entire indebtedness on the debt securities of such series, including
principal, interest, premium and any additional amounts to the date of such deposit (if the debt securities of such series have
become due and payable) or to the maturity date of the debt securities of such series, as the case may be.
The relevant issuer may also elect to have
its obligations under the relevant indenture discharged with respect to the outstanding debt securities of any series (“legal
defeasance”). Legal defeasance means that the relevant issuer will be deemed to have paid and discharged the entire indebtedness
represented by the outstanding debt securities of such series under the relevant indenture, except for:
| · | the rights of holders of the outstanding debt securities of the relevant series to receive principal, interest, any premium
and any additional amounts when due from the trust described below; |
| · | the obligations of the relevant issuer to issue temporary debt securities, register the transfer of debt securities, replace
temporary or mutilated, destroyed, lost or stolen debt securities, pay additional amounts, maintain an office or agency for payment
and hold money for payments in trust; |
| · | the rights, powers, trusts, duties and immunities of the applicable trustee; and |
| · | the defeasance provisions of the applicable indenture. |
In addition, the relevant issuer may elect
to have its obligations released with respect only to certain covenants in the relevant indentures (“covenant defeasance”).
Any omission to comply with any obligations so released will not constitute a default or an event of default with respect to the
debt securities of any series.
In order to exercise either legal defeasance
or covenant defeasance with respect to outstanding debt securities of or within any series:
| · | the relevant issuer must irrevocably have deposited or caused to be deposited with the applicable trustee, in trust, money,
in U.S. dollars or in the foreign currency in which the debt securities of such series are payable at stated maturity, or U.S.
government obligations or a combination of money and U.S. government obligations applicable to the debt securities of such series
which through the scheduled payment of principal and interest in accordance with their terms will provide money in an amount sufficient,
without reinvestment, in the opinion of an internationally recognized firm of independent public accountants expressed in written
certification thereof delivered to the trustee, to pay and discharge when due all of the principal, interest and any premium of
the debt securities of such series and any mandatory sinking fund or analogous payments thereon; |
| · | the legal defeasance or covenant defeasance must not result in a breach or violation of, or constitute a default under, the
relevant indenture or any other material agreement or instrument to which the relevant issuer is a party or by which it is bound; |
| · | no event of default or event which, with notice or lapse of time, or both, would become an event of default with respect to
the outstanding debt securities of such series may have occurred and be continuing on the date of the establishment of such a trust,
and in the case of legal defeasance, at any time during the period ending on the 91st day after such date; |
| · | the relevant issuer must have delivered to the applicable trustee an opinion of counsel of recognized standing to the effect
that the beneficial owners of the debt securities of such series will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of the legal defeasance or covenant defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if the legal defeasance or covenant defeasance had
not occurred. In the case of legal defeasance of debt securities whose stated maturity is not within one year only, the opinion
of counsel must refer to and be based upon a letter ruling of the Internal Revenue Service received by the relevant issuer or Banco
Santander, a revenue ruling published by the Internal Revenue Service or a change in applicable U.S. federal income tax law occurring
after the date of the relevant indenture; |
| · | the legal defeasance or covenant defeasance must not cause the applicable trustee to have a conflicting interest within the
meaning of the Trust Indenture Act (assuming all relevant debt securities are in default within the meaning of such Act); |
| · | the legal defeasance or covenant defeasance must not result in the trust arising from such deposit constituting an investment
company within the meaning of the Investment Company Act of 1940, as amended, unless such trust shall be registered under such
Act or exempt from registration thereunder; and |
| · | in the case of the subordinated debt securities of any series, the relevant issuer shall have delivered to the applicable trustee
an opinion of counsel substantially to the effect that (i) the trust funds deposited to effect the legal defeasance or covenant
defeasance will not be subject to any rights of holders of senior indebtedness, including those arising under the applicable subordination
provisions of the subordinated indenture, and (ii) after the second anniversary following the deposit, the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights
generally, except that if a court were to rule under any such law in any case or proceeding that the trust funds remained property
of the relevant issuer, no opinion is given as to the effect of such laws on the trust funds
except in certain limited circumstances set forth in the subordinated indenture. |
Unless otherwise provided in the relevant
prospectus supplement, if, after the relevant issuer has deposited funds or U.S. government obligations to effect legal defeasance
or covenant defeasance with respect to the debt securities of any series,
| · | the holder of a debt security of such series is entitled to elect and does elect to receive payment in a currency other than
that in which such deposit has been made in respect of such note; or |
| · | a “conversion event” (as defined below) occurs in respect of the foreign currency in which such deposit has been
made; then, |
the indebtedness represented by the debt
securities of such series shall be deemed to have been and will be fully discharged and satisfied through the payment of the principal
or interest, premium, and any additional amounts on the debt securities of such series as they becomes due out of the proceeds
yielded by converting the amount or other property so deposited into the currency in which the debt securities of such series become
payable as a result of such election or such conversion event based on the applicable market exchange rate for such currency in
effect on the second business day prior to such payment date, except, with respect to a conversion event, for such foreign currency
in effect at the time of the conversion event.
A “conversion event” means
the cessation of use of (i) a foreign currency both by the government of the country which issued such currency and for the settlement
of transactions by a central bank or other public institutions of or within the international banking community, or (ii) the euro
both within the European monetary system and for the settlement of transactions by public institutions of or within the EU.
In the event the relevant issuer effects
covenant defeasance with respect to any series of debt securities and the debt securities of such series are declared due and payable
because of the occurrence of any event of default, the amount in money and U.S. government obligations deposited in trust will
be sufficient to pay amounts due on the debt securities of such series at the time of their stated maturity. They may not, however,
be sufficient to pay amounts due on the debt securities of such series at the time of the acceleration resulting from such event
of default. In this case, the relevant issuer will remain liable to make payment of such amounts due at the time of acceleration.
The relevant prospectus supplement may
further describe the provisions permitting legal defeasance or covenant defeasance, including any modifications to the provisions
described above, with respect to the debt securities of a particular series.
Upon the exercise of the Spanish Bail-in
Power with respect to a series of debt securities which results in the cancellation, or the conversion into other securities, of
all the principal amount of, and interest on the debt securities of such series or the debt securities of such series otherwise
ceasing to be outstanding, the relevant indenture shall be satisfied and discharged as to such series.
Limitation on Suits
No holder of debt securities will be entitled
to proceed directly against the relevant issuer or Banco Santander, except as described below.
Subject to any further limitations provided
in the relevant prospectus supplement and supplemental indenture establishing any series of debt securities, before a holder of
the debt securities may bypass the trustee and bring its own lawsuit or other formal legal action or take other steps to enforce
its rights or protect its interests relating to the debt securities, the following must occur:
| · | The holder must have given the trustee written notice that a continuing Event of Default has occurred and remains uncured. |
| · | The holders of not less than 25% in outstanding aggregate principal amount of the debt securities of the relevant series must
make a written request that the trustee institute proceedings because of the |
Event of Default, and the holder must offer
indemnity satisfactory to the trustee in its sole discretion against the cost and other liabilities incurred in connection with
such request.
| · | The trustee must not have taken action for 60 days after receipt of the above notice and offer of security or indemnity, and
the trustee must not have received an inconsistent direction from the majority in principal amount of all outstanding debt securities
of the relevant series during that period. |
Notwithstanding any other provision of
the debt securities indenture or the relevant debt securities, the right of any holder of debt securities to receive payment of
the principal amount of and interest on, the debt securities, on or after the due dates thereof or to institute suit for the enforcement
of any such payment on or after such respective dates, will not be impaired or affected without the consent of such holder.
Notices
All notices to holders of registered debt
securities shall be validly given if in writing and mailed, first-class postage prepaid, to them at their respective addresses
in the register maintained by the trustee.
If and for so long as the debt securities
of the relevant series are admitted to trading on a stock exchange, notices will also be given in accordance with any applicable
requirements of such stock exchange.
No Obligations to Beneficial Owners
None of Banco Santander, the relevant
issuer, trustee, the paying agent or the debt security registrar shall have any responsibility or obligation to any beneficial
owner in a global security, an agent member or other person with respect to the accuracy of the records of the depositary or its
nominee or of any agent member, with respect to any ownership interest in the debt securities or with respect to the delivery to
any agent member, beneficial owner or other person (other than the depository) of any notice (including any notice of redemption)
or the payment of any amount, under or with respect to such debt securities. All notices and communications to be given to the
holders and all payments to be made to holders under the debt securities and the respective indenture shall be given or made only
to or upon the order of the registered holders (which shall be the depositary or its nominee in the case of the global security).
The rights of beneficial owners in the global security shall be exercised only through the depositary subject to the applicable
procedures. Banco Santander, the relevant issuer, the trustee, the paying agent and the debt security registrar shall be entitled
to rely and shall be fully protected in relying upon information furnished by the depositary with respect to its members, participants
and any beneficial owners. Banco Santander, the relevant issuer, the trustee, the paying agent and the debt security registrar
shall be entitled to deal with the depositary, and any nominee thereof, that is the registered holder of any global security for
all purposes of the indenture relating to such global security (including the payment of principal, premium, if any, and interest
and additional amounts, if any, and the giving of instructions or directions by or to the owner or holder of a beneficial ownership
interest in such global security) as the sole holder of such global security and shall have no obligations to the beneficial owners
thereof. None of Banco Santander, the relevant issuer, the trustee, the paying agent or the debt security registrar shall have
any responsibility or liability for any acts or omissions of the depositary with respect to such global security, for the records
of any such depositary, including records in respect of beneficial ownership interests in respect of any such global security,
for any transactions between the depositary and any agent member or between or among the depositary, any such agent member and/or
any holder or owner of a beneficial interest in such global security, or for any transfers of beneficial interests in any such
global security.
Notwithstanding the foregoing, with respect
to any global security, nothing herein shall prevent Banco Santander, the relevant issuer, the trustee, or any agent of Banco Santander,
the relevant issuer or the trustee from giving effect to any written certification, proxy or other authorization furnished by any
depositary (or its nominee), as a holder, with respect to such global security or shall impair, as between such depositary and
owners of beneficial interests in such global security, the operation of customary practices governing the exercise of the rights
of such depositary (or its nominee) as holder of such global security.
Subsequent Holders’ Agreement
Holders and beneficial owners of the debt
securities of any series or beneficial interests therein that acquire the debt securities of such series in the secondary market
shall be deemed to acknowledge, agree to be bound by and consent to the same provisions specified herein to the same extent as
the holders and beneficial owners of the debt securities of such series that acquire the debt securities of such series upon their
initial issuance, including, without limitation, with respect to the acknowledgment and agreement to be bound by and consent to
the terms of the debt securities of such series, including in relation to the Spanish Bail-in Power.
The Trustee
The Bank of New York Mellon acting through
its London Branch, is the trustee under the indentures with respect to the debt securities. The trustee shall have and be subject
to all the duties and responsibilities specified with respect to an indenture trustee under the Trust Indenture Act. Subject
to the provisions of the relevant indentures and the Trust Indenture Act, the trustee is under no obligation to exercise any of
the powers vested in it by the indentures at the request of any holder of debt securities, unless offered indemnity satisfactory
to the trustee in its sole discretion by the holder against the costs, expense and liabilities which might be incurred thereby.
Banco Santander and certain of its subsidiaries maintain deposit accounts and conduct other banking transactions with The Bank
of New York Mellon in the ordinary course of their business. The Bank of New York Mellon is also the book-entry depositary
and Principal Paying Agent with respect to Banco Santander’s debt securities.
Description
of Contingent Convertible Capital Securities
The following is a summary of the general
terms that will apply to any contingent convertible capital securities that may be offered by Banco Santander.
Each time that Banco Santander issues
contingent convertible capital securities, it will file a prospectus supplement and/or free writing prospectus with the SEC, which
investors should read carefully. The prospectus supplement and/or free writing prospectus will summarize specific financial terms
of your security and may contain additional or different terms of those contingent convertible capital securities to those described
in this prospectus. All references in this prospectus to a prospectus supplement in respect of any series of securities include
references to a free writing prospectus if a free writing prospectus is filed to set forth any terms of such series. The terms
presented here, together with the terms contained in the prospectus supplement, will be a description of the material terms of
the contingent convertible capital securities, but if there is any inconsistency between the terms presented here and those in
the prospectus supplement, those in the prospectus supplement will apply and will replace those presented here. Therefore, the
statements made below in this section may not apply to each investor’s contingent convertible capital security. Contingent
convertible capital securities will be issued by Banco Santander under a contingent convertible capital securities indenture. The
contingent convertible capital securities indenture is a contract between Banco Santander, as issuer, and The Bank of New York
Mellon, as trustee. The contingent convertible capital securities indenture does not limit Banco Santander’s ability to incur
additional indebtedness, including the issuance of further contingent convertible capital securities. Investors should also read
the contingent convertible capital securities indenture and any related supplemental indenture establishing such contingent convertible
capital convertible securities, which have been filed with the SEC as an exhibit to the registration statement of which this prospectus
is a part.
General
The contingent convertible capital securities
are Banco Santander’s perpetual subordinated convertible debt securities mandatorily convertible into Banco Santander’s
ordinary shares only upon the occurrence of certain events. The contingent convertible capital securities are not deposits and
are not insured or guaranteed by the U.S. Federal Deposit Insurance Corporation or any other government agency of the United States
or the Kingdom of Spain.
Banco Santander may issue contingent
convertible capital securities in one or more series. The relevant prospectus supplement for any particular series of
contingent convertible capital securities will describe the terms of the offered contingent convertible capital securities,
including, but not limited to, some or all of the following terms, to the extent such terms differ from or are in addition to
those set forth in this prospectus:
| · | the specific designation and Liquidation Preference of the contingent convertible capital securities; |
| · | how to calculate Distributions; |
| · | the date or dates from which Distributions, if any, will accrue or the method, if any, by which such date or dates will be
determined; |
| · | the price or prices at which they will be issued; |
| · | the terms on which the contingent convertible capital
securities may or are required to convert into ordinary shares of Banco Santander and any specific terms relating to the conversion
or exchange feature, including upon the occurrence of certain events relating to our financial condition; |
| · | whether payments are subject to certain conditions that relate to our financial condition, including our capital ratios; |
| · | the times and places at which any Distributions are payable; |
| · | the terms and conditions of any mandatory redemption; |
| · | the terms and conditions, if any, under which Banco Santander may elect to substitute or vary the terms of the contingent convertible
capital securities; |
| · | the currency or currencies in which Liquidation Preference and Distributions are denominated and in which Banco Santander will
make any payments; |
| · | any index used to determine the amount of any payments on the contingent convertible capital securities; |
| · | any restrictions that apply to the offer, sale and delivery of the contingent convertible capital securities; |
| · | whether and under what circumstances, if other than those described in this prospectus, Banco Santander will pay additional
amounts on the contingent convertible capital securities following certain developments with respect to withholding tax or information
reporting laws and whether, and on what terms, if other than those described in this prospectus, Banco Santander may redeem the
contingent convertible capital securities following those developments; |
| · | the clearing system or systems on which the contingent convertible capital securities will be cleared and settled; and |
| · | any listing on a securities exchange. |
Holders of contingent convertible capital
securities shall have no voting rights except those described under the heading “—Modification and Waiver” below,
unless and until such contingent convertible capital securities are converted into Banco Santander’s ordinary shares, in
which case holders will have the voting rights described under “Description of Ordinary Shares”.
Certain Defined Terms
In this “Description of Contingent Convertible Capital
Securities” the following terms have the following meanings:
“Accounting Currency” means
EUR or such other primary currency used in the presentation of the Group’s accounts from time to time;
“ADS Depositary” means J.P.
Morgan Chase & Co., as the depositary under Banco Santander’s ordinary share American Depository Facility or any successor
ADS depositary;
“Agents” means the agents appointed
in accordance with the contingent convertible capital securities indenture or applicable supplemental indenture;
“Applicable Banking Regulations”
means at any time the laws, regulations, requirements, guidelines and policies relating to capital adequacy applicable to Banco
Santander and/or the Group including, without limitation to the generality of the foregoing, those regulations, requirements, guidelines
and policies relating to capital adequacy then in effect of the Regulator (whether or not such requirements, guidelines or policies
have the force of law and whether or not they are applied generally or specifically to Banco Santander and/or the Group);
“Available Distributable Items”
means, in respect of the payment of a Distribution at any time, those profits and reserves (if any) of Banco Santander which are
available, in accordance with applicable law and regulation for the time being, for the payment of such Distribution.
As at the date of this registration statement,
article 4(1)(128) of the CRR provides as follows:
“Distributable Items”
means the amount of the profits at the end of the last financial year plus any profits brought forward and reserves available for
that purpose before distributions to holders of own funds instruments less any losses brought forward, profits which are non-distributable
pursuant to provisions in legislation or the institution’s by-laws and sums placed to non-distributable reserves in accordance
with applicable national law or the statutes of the institution, those losses and reserves being determined on the basis of the
individual accounts of the institution and not on the basis of the consolidated accounts.
“Business Day” means any day,
other than Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required
by law, regulation or executive order to close in the City of New York, London, Madrid or any other place or places where the Liquidation
Preference of, or any Distributions on, or any Additional Amounts with respect to the contingent convertible capital securities
of that series are payable.
“Calculation Agent” means the
Trustee or such other person authorized by Banco Santander as the party responsible for calculating the Distributions and/or such
other amount(s) from time to time in relation to any series of contingent convertible capital securities.
“Capital Event” means a change
in Spanish law, Applicable Banking Regulations or any change in the application or official interpretation thereof that Banco Santander
determines results or is likely to result in the entire outstanding aggregate Liquidation Preference of the contingent convertible
capital securities of the relevant series ceasing to be included in, or counting towards, the Group’s or Banco Santander’s
Tier 1 Capital;
“Cash Dividend” means (i) any
Dividend which is to be paid or made in cash (in whatever currency), but other than falling within paragraph (b) of the definition
of “Spin-Off” and (ii) any Dividend determined to be a Cash Dividend pursuant to paragraph (a) of the definition
of “Dividend”, but a Dividend falling within paragraph (c) or (d) of the definition of “Dividend”
shall be treated as being a Non-Cash Dividend;
“CET1 Capital” means at any
time, the Common Equity Tier 1 Capital of Banco Santander or the Group, respectively, as calculated by Banco Santander in accordance
with Chapter 2 (Common Equity Tier 1 Capital) of Title I (Elements of own funds) of Part Two (Own Funds) of the CRR and/or Applicable
Banking Regulations at such time, including any applicable transitional, phasing in or similar provisions;
“CET1 ratio” means, at any
time, with respect to Banco Santander or the Group, as the case may be, the reported ratio (expressed as a percentage) of the aggregate
amount (in the Accounting Currency) of the CET1 Capital of Banco Santander or the Group, respectively, at such time divided by
the Risk Weighted Assets Amount of Banco Santander or the Group, respectively, at such time, all as calculated by Banco Santander;
“Clearing System” means DTC
or any of the European Clearing Systems, as applicable;
“Clearing System Contingent Convertible
Capital Securities” means, for so long as any contingent convertible capital securities of a series is represented by a global
contingent convertible capital security held by or on behalf of a Clearing System, any particular Liquidation Preference of such
series of the contingent convertible capital securities shown in the records of a Clearing System as being held by a holder of
the contingent convertible capital securities of such series;
“CNMV” means the Spanish Market
Securities Commission (Comisión Nacional del Mercado de Valores);
“Common Shares” means ordinary
shares in the capital of Banco Santander, each of which confers on the holder one vote at general meetings of Banco Santander and
is credited as fully paid up;
“Conversion Price” means, in
respect of the Trigger Event Notice Date, if the Common Shares are:
(a) then admitted
to trading on a Relevant Stock Exchange, the higher of:
(i) the Current Market Price of a Common Share,
translated into U.S. dollars at the Prevailing Rate;
(ii) the Floor Price; and
(iii) the nominal value of a Common Share, in each
case on the Trigger Event Notice Date, translated into U.S. dollars at the Prevailing Rate; or
(b) not then
admitted to trading on a Relevant Stock Exchange, the higher of (ii) and (iii) above;
For the avoidance of doubt, the translation
into U.S. dollars at the Prevailing Rate described above shall in no circumstances imply that any Common Share will be issued at
a price of less than its nominal value expressed in the Share Currency.
“Conversion Settlement Date”
means the date on which the relevant Common Shares are to be delivered on Trigger Conversion, which shall be as soon as practicable
and in any event not later than one month following (or such other period as Applicable Banking Regulations may require) the Trigger
Event Notice Date and notice of the expected Conversion Settlement Date and of the Conversion Price shall be given to holders of
contingent convertible capital securities in accordance with “—Notices” below not more than 10 Business Days
following the Trigger Event Notice Date;
“Conversion Shares” means the
number of Common Shares to be issued on Trigger Conversion in respect of each contingent convertible capital security of any series
to be converted;
“CRD IV” means any or any combination
of the CRD IV Directive, the CRR, and any CRD IV Implementing Measures;
“CRD IV Directive” means Directive
2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the
prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC
and 2006/49/EC or such other directive as may come into effect in place thereof;
“CRD IV Implementing Measures”
means any regulatory capital rules implementing the CRD IV Directive or the CRR which may from time to time be introduced, including,
but not limited to, delegated or implementing acts (regulatory technical standards) adopted by the European Commission, national
laws and regulations, and regulations and guidelines issued by the Regulator, the European Banking Authority or any other relevant
authority, which are applicable to Banco Santander (on a standalone basis) or the Group (on a consolidated basis);
“CRR” means Regulation (EU)
No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on the prudential requirements for credit institutions
and investment firms and amending Regulation (EU) No. 648/2012 or such other regulation as may come into effect in place thereof;
“Current Market Price” means,
in respect of a Common Share at a particular date, the average of the daily Volume Weighted Average Price of a Common Share on
each of the 5 consecutive dealing days ending on the dealing day immediately preceding such date (the “Relevant Period”)
(rounded if necessary to the nearest cent with 0.5 cents being rounded upwards); provided that if at any time during the Relevant
Period the Volume Weighted Average Price shall have been based on a price ex-Dividend (or ex-any other entitlement) and during
some other part of that period the Volume Weighted Average Price shall have been based on a price cum-Dividend (or cum-any other
entitlement), then:
(a) if the
Common Shares to be issued and delivered do not rank for the Dividend (or entitlement) in question, the Volume Weighted Average
Price on the dates on which the Common Shares shall have been based on a price cum-Dividend (or cum-any other entitlement) shall
for the purposes of this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of any
such Dividend or entitlement per Common Share as at the date of the first public announcement relating to such Dividend or entitlement;
or
(b) if the
Common Shares to be issued and delivered do rank for the Dividend (or entitlement) in question, the Volume Weighted Average Price
on the dates on which the Common Shares shall have been based on a price ex-Dividend (or ex-any other entitlement) shall for the
purposes of this definition be deemed to be the amount thereof increased by an amount equal to the Fair Market Value of any such
Dividend or entitlement per Common Share as at the date of the first public announcement relating to such Dividend or entitlement,
and provided further that:
(i) if on each of the dealing days in the Relevant
Period the Volume Weighted Average Price shall have been based on a price cum-Dividend (or cum-any other entitlement) in respect
of a Dividend (or other entitlement) which has been declared or announced but the Common Shares to be issued and delivered do not
rank for that Dividend (or other entitlement) the Volume Weighted Average Price on each of such dates shall for the purposes of
this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of any such Dividend or
entitlement per Common Share as at the date of first public announcement relating to such Dividend or entitlement; and
(ii) if the Volume Weighted Average Price of a Common
Share is not available on one or more of the dealing days in the Relevant Period (disregarding for this purpose the proviso to
the definition of Volume Weighted Average Price), then the average of such Volume Weighted Average Prices which are available in
the Relevant Period shall be used (subject to a minimum of two such prices) and if only one, or no, such Volume Weighted Average
Price is available in the Relevant Period the Current Market Price shall be determined in good faith by an Independent Financial
Adviser;
In making any calculation or determination
of Current Market Price, such adjustments (if any) shall be made as an Independent Financial Adviser determines in good faith appropriate
to reflect any consolidation or sub-division of the Common Shares or any issue of Common Shares by way of capitalisation of profits
or reserves, or any like or similar event.
“dealing day” means a day on
which the Relevant Stock Exchange or relevant stock exchange or securities market is open for business and on which Common Shares,
Securities, Spin-Off Securities, options, warrants or other rights (as the case may be) may be dealt in (other than a day on which
the Relevant Stock Exchange or relevant stock exchange or securities market is scheduled to or does close prior to its regular
weekday closing time);
“Delivery Notice” means a notice
in the form for the time being currently available from the specified office of any Paying and Conversion Agent or in such form
as may be acceptable to DTC from time to time, which contains the relevant account and related details for the delivery of any
ADSs or Common Shares and all relevant certifications and/or representations as may be required by applicable law and regulations
(or is deemed to constitute the confirmation thereof), and which are required to be delivered in connection with a conversion of
the contingent convertible capital securities and the delivery of the ADSs or Common Shares;
“Distribution” means the non-cumulative
cash distribution in respect of the contingent convertible capital securities and a Distribution Period determined in accordance
with “—Distributions” below;
“Distribution Payment Date”
shall have the meaning as determined in the relevant prospectus supplement;
“Distribution Period” means
the period from and including one Distribution Payment Date (or, in the case of the first Distribution Period, the date of issuance)
to but excluding the next Distribution Payment Date;
“Distribution Rate” means the
rate at which the contingent convertible capital securities accrue Distributions in accordance with “—Distributions”
below;
“Dividend” means any dividend
or distribution to Shareholders in respect of the Common Shares (including a Spin-Off) whether of cash, assets or other property
(and for these purposes a distribution of assets includes without limitation an issue of Common Shares or other Securities credited
as fully or partly paid up by way of capitalisation of profits or reserves), and however described and whether payable out of share
premium account, profits, retained earnings or any other capital or revenue reserve or account, and including a distribution or
payment to Shareholders upon or in connection with a reduction of capital provided that:
(a) where:
(i) a Dividend in cash is announced which is to
be, or may at the election of a Shareholder or Shareholders be, satisfied by the issue or delivery of Common Shares or other property
or assets, or where a capitalisation of profits or reserves is announced which is to be, or may at the election of a Shareholder
or Shareholders be, satisfied by the payment of cash, then the Dividend in question shall be treated as a Cash Dividend of an amount
equal to the greater of (A) the Fair Market Value of such cash amount and (B) the Current Market Price of such Common Shares as
at the first date on which the Common Shares are traded ex-the relevant Dividend on the Relevant Stock Exchange or, as the case
may be, the record date or other due date for establishment of entitlement in respect of the relevant capitalisation or, as the
case may be, the Fair Market Value of such other property or assets as at the date of the first public announcement of such Dividend
or capitalisation or, in any such case, if later, the date on which the number of Common Shares (or amount of such other property
or assets, as the case may be) which may be issued and delivered is determined; or
(ii) there shall be any issue of Common Shares by
way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve) where such issue
is or is expressed to be in lieu of a Dividend (whether or not a Cash Dividend equivalent or amount is announced or would otherwise
be payable to Shareholders, whether at their election or otherwise), the Dividend in question shall be treated as a Cash Dividend
of an amount equal to the Current Market Price of such Common Shares as at the first date on which the Common Shares are traded
ex-the relevant Dividend on the Relevant Stock Exchange or, as the case may be, the record date or other due date for establishment
of entitlement in respect of the relevant capitalisation or, in any such case, if later, the date on which the number of Common
Shares to be issued and delivered is determined;
(b) any issue
of Common Shares falling within subparagraphs (a) and (b) of “—Conversion Upon Trigger Event—Conversion Price—Anti-Dilution
Adjustment of the Floor Price” below shall be disregarded;
(c) a purchase
or redemption or buy back of share capital of Banco Santander by or on behalf of Banco Santander in accordance with any general
authority for such purchases or buy backs approved by a general meeting of Shareholders and otherwise in accordance with the limitations
prescribed under the Spanish Companies Act for dealings generally by a company in its own shares shall not constitute a Dividend
and any other purchase or redemption or buy back of share capital of Banco Santander by or on behalf of Banco Santander or any
member of the Group shall not constitute a Dividend unless, in the case of a purchase or redemption or buy back of Common Shares
by or on behalf of Banco Santander or any member of the Group, the weighted average price per Common Share (before expenses) on
any one day (a “Specified Share Day”) in respect of such purchases or redemptions or buy backs (translated, if not
in the Share Currency, into the Share Currency at the Prevailing Rate on such day) exceeds by more than 5 per cent the average of the daily Volume Weighted
Average Price of a Common Share on the 5 dealing days immediately preceding the Specified Share Day or, where an announcement (excluding,
for the avoidance of doubt for these purposes, any general authority for such purchases, redemptions or buy backs approved by a
general meeting of Shareholders or any notice convening such a meeting of Shareholders) has been made of the intention to purchase,
redeem or buy back Common Shares at some future date at a specified price or where a tender offer is made, on the 5 dealing days
immediately preceding the date of such announcement or the date of first public announcement of such tender offer (and regardless
of whether or not a price per Common Share, a minimum price per Common Share or a price range or a formula for the determination
thereof is or is not announced at such time), as the case may be, in which case such purchase, redemption or buy back shall be
deemed to constitute a Dividend in the Share Currency in an amount equal to the amount by which the aggregate price paid (before
expenses) in respect of such Common Shares purchased, redeemed or bought back by Banco Santander or, as the case may be, any member
of the Group (translated where appropriate into the Share Currency as provided above) exceeds the product of (i) 105 per cent
of the daily Volume Weighted Average Price of a Common Share determined as aforesaid and (ii) the number of Common Shares so purchased,
redeemed or bought back;
(d) if Banco
Santander or any member of the Group shall purchase, redeem or buy back any depositary or other receipts or certificates representing
Common Shares, the provisions of paragraph (c) above shall be applied in respect thereof in such manner and with such modifications
(if any) as shall be determined in good faith by an Independent Financial Adviser; and
(e) where a
dividend or distribution is paid or made to Shareholders pursuant to any plan implemented by Banco Santander for the purpose of
enabling Shareholders to elect, or which may require Shareholders, to receive dividends or distributions in respect of the Common
Shares held by them from a person other than (or in addition to) Banco Santander, such dividend or distribution shall for the purposes
of these contingent convertible capital securities of any series be treated as a dividend or distribution made or paid to Shareholders
by Banco Santander, and the provisions of the contingent convertible capital securities and the contingent convertible capital
securities indenture, including references to Banco Santander paying or making a dividend, shall be construed accordingly;
“equity share capital” means,
in relation to any entity, its issued share capital excluding any part of that capital which, in respect of dividends and capital,
does not carry any right to participate beyond a specific amount in a distribution;
“EUR”, “€”
and “euro” means the currency introduced at the start of the third stage of European economic and monetary union pursuant
to the Treaty on the Functioning of the European Union, as amended;
“European Clearing System”
means Euroclear Bank S.A./N.V. (“Euroclear Bank”), as operator of the Euroclear System (“Euroclear”) and/or
Clearstream Banking, société anonyme (“Clearstream Luxembourg”);
“Existing Shareholders” has
the meaning given in the definition of “Newco Scheme”;
“Fair Market Value” means,
with respect to any property on any date, the fair market value of that property as determined by an Independent Financial Adviser
in good faith provided that (a) the Fair Market Value of a Cash Dividend shall be the amount of such Cash Dividend; (b) the Fair
Market Value of any other cash amount shall be the amount of such cash; (c) where Securities, Spin-Off Securities, options, warrants
or other rights are publicly traded on a stock exchange or securities market of adequate liquidity (as determined by an Independent
Financial Adviser in good faith), the Fair Market Value (i) of such Securities or Spin-Off Securities shall equal the arithmetic
mean of the daily Volume Weighted Average Prices of such Securities or Spin-Off Securities and (ii) of such options, warrants or
other rights shall equal the arithmetic mean of the daily closing prices of such options, warrants or other rights, in the case
of both (i) and (ii) above during the period of 5 dealing days on the relevant stock exchange or securities market commencing on
such date (or, if later, the first such dealing day such Securities,
Spin-Off Securities, options, warrants
or other rights are publicly traded) or such shorter period as such Securities, Spin-Off Securities, options, warrants or other
rights are publicly traded; and (d) where Securities, Spin-Off Securities, options, warrants or other rights are not publicly traded
on a stock exchange or securities market of adequate liquidity (as aforesaid), the Fair Market Value of such Securities, Spin-Off
Securities, options, warrants or other rights shall be determined by an Independent Financial Adviser in good faith, on the basis
of a commonly accepted market valuation method and taking account of such factors as it considers appropriate, including the market
price per Common Share, the dividend yield of a Common Share, the volatility of such market price, prevailing interest rates and
the terms of such Securities, Spin-Off Securities, options, warrants or other rights, including as to the expiry date and exercise
price (if any) thereof. Such amounts shall, in the case of (a) above, be translated into the Share Currency (if such Cash Dividend
is declared or paid or payable in a currency other than the Share Currency) at the rate of exchange used to determine the amount
payable to Shareholders who were paid or are to be paid or are entitled to be paid the Cash Dividend in the Share Currency; and
in any other case, shall be translated into the Share Currency (if expressed in a currency other than the Share Currency) at the
Prevailing Rate on that date. In addition, in the case of (a) and (b) above, the Fair Market Value shall be determined on a gross
basis and disregarding any withholding or deduction required to be made for or on account of tax, and disregarding any associated
tax credit;
“Floor Price” means the price
per Common Share determined in the relevant prospectus supplement, subject to adjustment in accordance with “—Anti-Dilution
Adjustment of the Floor Price” below;
“Further Contingent Convertible Capital
Securities” means any securities which are contingently convertible into Common Shares of Banco Santander pursuant to their
terms in the event that the CET1 ratio of Banco Santander or the Group is less than a specified percentage;
“Iberclear” means the Spanish
clearing and settlement system (Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación
de Valores, S.A., Sociedad Unipersonal);
“Independent Financial Adviser”
means an independent financial institution of international repute appointed by Banco Santander at its own expense;
“Initial Margin” means the
per cent per annum determined in the relevant prospectus supplement;
“Liquidation Distribution”
means the Liquidation Preference per contingent convertible capital security plus, if applicable, where not cancelled pursuant
to, or otherwise subject to the limitations on payment set out in, “—Distributions”, an amount equal to accrued
and unpaid Distributions for the then current Distribution Period to (but excluding) the date of payment of the Liquidation Distribution;
“Liquidation Preference” shall
have the meaning set forth in the relevant prospectus supplement;
“Maximum Distributable Amount”
means any maximum distributable amount required to be calculated in accordance with article 48 of Law 10/2014 and articles 73 and
74 of Royal Decree 84/2015, each interpreted in light of article 141 of the CRD IV Directive;
“Newco Scheme” means a scheme
of arrangement or analogous proceeding (Scheme of Arrangement which effects the interposition of a limited liability company (“Newco”)
between the Shareholders of Banco Santander immediately prior to the Scheme of Arrangement (the “Existing Shareholders”)
and Banco Santander, provided that:
(a) only ordinary
shares of Newco or depositary or other receipts or certificates representing ordinary shares of Newco are issued to Existing Shareholders;
(b) immediately
after completion of the Scheme of Arrangement the only shareholders of Newco or, as the case may be, the only holders of depositary
or other receipts or certificates representing ordinary shares of Newco, are Existing Shareholders and the Voting Rights in respect
of Newco are held by Existing Shareholders in the same proportions as their respective holdings of such Voting Rights immediately
prior to the Scheme of Arrangement;
(c) immediately
after completion of the Scheme of Arrangement, Newco is (or one or more wholly-owned Subsidiaries of Newco are) the only ordinary
shareholder (or shareholders) of Banco Santander;
(d) all Subsidiaries
of Banco Santander immediately prior to the Scheme of Arrangement (other than Newco, if Newco is then a Subsidiary) are Subsidiaries
of Banco Santander (or of Newco) immediately after completion of the Scheme of Arrangement; and
(e) immediately
after completion of the Scheme of Arrangement, Banco Santander (or Newco) holds, directly or indirectly, the same percentage of
the ordinary share capital and equity share capital of those Subsidiaries as was held by Banco Santander immediately prior to the
Scheme of Arrangement.
“Non-Cash Dividend” means any
Dividend which is not a Cash Dividend, and shall include a Spin-Off;
“Parity Securities” means any
preferred securities (participaciones preferentes) issued under Law 13/1985 and/or RD-L 14/2013 and/or Law 10/2014, such
as the contingent convertible capital securities and/or under the CRR from time to time by Banco Santander or by any Subsidiary
and which are guaranteed by Banco Santander or any preferential participations, preferential shares or preference shares (acciones
preferentes) ranking pari passu with any preferred securities (participaciones preferentes) issued from time
to time by Banco Santander or by any Subsidiary and which are guaranteed by Banco Santander or any other instrument issued or guaranteed
by Banco Santander ranking pari passu with the contingent convertible capital securities;
“Paying and Conversion Agent”
means the Principal Paying Agent and any other paying and conversion agent appointed in accordance with the contingent convertible
capital securities indenture or any supplemental indenture and includes any successors thereto appointed from time to time in accordance
with the contingent convertible capital securities indenture or any supplemental indenture;
“Payment Business Day” means
(i) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing
in foreign exchange and foreign currency deposits) in New York City and London and (ii) in the case of contingent convertible capital
securities in definitive form only, a day on which commercial banks and foreign exchange markets settle payments and are open for
general business (including dealing in foreign exchange and foreign currency deposits) in the relevant place of presentation;
“Prevailing Rate” means, in
respect of any currencies on any day, the spot rate of exchange between the relevant currencies prevailing as at 12 noon (London
time) on that date as appearing on or derived from Reuters page ECB37 or, if not available, from any other Reference Page or, if
such a rate cannot be determined at such time, the rate prevailing as at 12 noon (London time) on the immediately preceding day
on which such rate can be so determined or, if such rate cannot be so determined by reference to the Reference Page, the rate determined
in such other manner as an Independent Financial Adviser in good faith shall prescribe;
“Principal Paying Agent” means
any Person (which may include Banco Santander) authorized by Banco Santander to pay the Liquidation Preference of, or Distributions
on, or any Additional Amounts with respect to, the contingent convertible capital securities of any series on behalf of Banco Santander.
Unless otherwise specified in the applicable prospectus supplement, The Bank of New York Mellon, acting through its London Branch
will act as Principal Paying Agent in respect of the contingent convertible capital securities of any series;
“Recognised Stock Exchange”
means a regulated regularly operating, recognised stock exchange or securities market in an OECD member state;
“Redemption Price” means, per
contingent convertible capital security, the Liquidation Preference plus, if applicable, where not cancelled pursuant to, or otherwise
subject to the limitations on payment set out in “—Distributions”, an amount equal to accrued and unpaid Distributions
for the then current Distribution Period to (but excluding) the date fixed for redemption of the contingent convertible capital
securities of the relevant series;
“Reference Page” means the
relevant page on Bloomberg or Reuters or such other information service provider that displays the relevant information;
“Regulator” means the European
Central Bank or such other or successor authority exercising primary bank supervisory authority, in each case with respect to prudential
matters in relation to Banco Santander and/or the Group;
“Relevant Stock Exchange” means
the Spanish Stock Exchanges or if at the relevant time the Common Shares are not at that time listed and admitted to trading on
the Spanish Stock Exchanges, the principal stock exchange or securities market on which the Common Shares are then listed, admitted
to trading or quoted or accepted for dealing;
“Risk Weighted Assets Amount”
means at any time, with respect to Banco Santander or the Group, as the case may be, the aggregate amount (in the Accounting Currency)
of the risk weighted assets of Banco Santander or the Group, respectively, calculated in accordance with Applicable Banking Regulations
at such time;
“Scheme of Arrangement” has
the meaning given in the definition of “Newco Scheme”;
“Securities” means any securities
including, without limitation, shares in the capital of Banco Santander, or options, warrants or other rights to subscribe for
or purchase or acquire shares in the capital of Banco Santander;
“Settlement Shares Depository”
means a reputable independent financial institution, trust company or similar entity to be appointed by Banco Santander on or prior
to any date when a function ascribed to the Settlement Shares Depository is required to be performed to perform such functions
and who will hold Common Shares in Iberclear or any of its participating entities in a designated trust or custody account for
the benefit of the holders of the contingent convertible capital securities of any series and otherwise on terms consistent with
the terms of the contingent convertible capital securities and the contingent convertible capital securities indenture;
“Share Currency” means euro
or such other currency in which the Common Shares are quoted or dealt in on the Relevant Stock Exchange at the relevant time or
for the purposes of the relevant calculation or determination;
“Shareholders” means the holders
of Common Shares;
“Spanish Companies Act” means
the Royal Decree Legislative 1/2010, of 2 July 2010, approving the consolidated text of the Spanish Companies Act (Ley de Sociedades
de Capital);
“Spanish Stock Exchanges” means
the Madrid, Barcelona, Bilbao and Valencia stock exchanges and the Automated Quotation System -Continuous Market (Sistema de
Interconexión Bursátil -Mercado Continuo (SIBE));
“Specified Date” has the meanings
given in sub-paragraphs (d), (f), (g) and (h) of “—Anti-Dilution Adjustment of the Floor Price” below, as
applicable;
“Spin-Off” means:
(a) a distribution
of Spin-Off Securities by Banco Santander to Shareholders as a class; or
(b) any issue,
transfer or delivery of any property or assets (including cash or shares or other securities of or in or issued or allotted by
any entity) by any entity (other than Banco Santander) to Shareholders as a class or, in the case of or in connection with a Newco
Scheme, Existing Shareholders as a class (but excluding the issue and allotment of ordinary shares (or depositary or other receipts
or certificates representing such ordinary shares) by Newco to Existing Shareholders as a class), pursuant in each case to any
arrangements with Banco Santander or any member of the Group;
“Spin-Off Securities” means
equity share capital of an entity other than Banco Santander or options, warrants or other rights to subscribe for or purchase
equity share capital of an entity other than Banco Santander;
“Subsidiary” means any entity
over which Banco Santander may have, directly or indirectly, control in accordance with Applicable Banking Regulations;
“Tax Event” in respect of any
series of contingent convertible capital securities, means that as a result of any
change in the laws or regulations of Spain
or in either case of any political subdivision thereof or any authority or agency therein or thereof having power to tax or
in the interpretation or administration of any such laws or regulations which becomes effective on or after the date of issue
of the contingent convertible capital securities of such series Banco Santander shall determine that (a) Banco Santander
would not be entitled to claim a deduction in computing taxation liabilities in Spain in respect of any Distribution to be
made on the next Distribution Payment Date or the value of such deduction to Banco Santander would be materially reduced, or
(b) Banco Santander would be required to pay Additional Amounts (as defined below), or (c) the applicable tax treatment of
the contingent convertible capital securities of such series changes;
“Tier 1 Capital” means at any
time, with respect to Banco Santander or the Group, as the case may be, the Tier 1 capital of Banco Santander or the Group, respectively,
as calculated by Banco Santander in accordance with Chapters 1, 2 and 3 (Tier 1 Capital, Common Equity Tier 1 Capital and Additional
Tier 1 capital) of Title I (Elements of own funds) of Part Two (Own Funds) of the CRR and/or Applicable Banking Regulations at
such time, including any applicable transitional, phasing in or similar provisions;
“Tier 2 Capital” means at any
time, with respect to Banco Santander or the Group, as the case may be, the Tier 2 capital of Banco Santander or the Group, respectively,
as calculated by Banco Santander in accordance with Chapter 4 (Tier 2 capital) of Title I (Elements of own funds) of Part Two (Own
Funds) of the CRR and/or Applicable Banking Regulations at such time, including any applicable transitional, phasing in or similar
provisions.
“Trigger Conversion” has the
meaning given in “—Conversion Procedures” below;
“Trigger Event” means if, at
any time, as determined by Banco Santander, the CET1 ratio of Banco Santander or the Group calculated in accordance with Applicable
Banking Regulations is less than 5.125 per cent;
“Trigger Event Notice” has
the meaning given in “—Conversion Procedures” below;
“Trigger Event Notice Date”
means the date on which a Trigger Event Notice is given;
“U.S.$” and “U.S. dollars”
means the lawful currency of the United States of America;
“U.S. Government Securities Business
Day” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association
recommends that the fixed income departments of its members be closed for the entire day for the purposes of trading in U.S. government
securities;
“Volume Weighted Average Price”
means, in respect of a Common Share, Security or, as the case may be, a Spin-Off Security on any dealing day, the order book volume-weighted
average price of a Common Share, Security or, as the case may be, a Spin-Off Security published by or derived (in the case of a
Common Share) from the Reference Page or (in the case of a Security (other than Common Shares) or Spin-Off Security) from the principal
stock exchange or securities market on which such Securities or Spin-Off Securities are then listed or quoted or dealt in, if any
or, in any such case, such other source as shall be determined in good faith to be appropriate by an Independent Financial Adviser
on such dealing day, provided that if on any such dealing day such price is not available or cannot otherwise be determined as
provided above, the Volume Weighted Average Price of a Common Share, Security or a Spin-Off Security, as the case may be, in respect
of such dealing day shall be the Volume Weighted Average Price, determined as provided above, on the immediately preceding dealing
day on which the same can be so determined or as an Independent Financial Adviser might otherwise determine in good faith to be
appropriate; and
“Voting Rights” means the right
generally to vote at a general meeting of Shareholders of Banco Santander (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of the happening of any contingency).
References to any act or statute or any
provision of any act or statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory
instrument, order or regulation made in accordance therewith or under such modification or re-enactment.
References to any issue or offer or grant
to Shareholders or Existing Shareholders “as a class” or “by way of rights” shall be taken to be references
to an issue or offer or grant to all or substantially all Shareholders or Existing Shareholders, as the case may be, other than
Shareholders or Existing Shareholders, as the case may be, to whom, by reason of the laws of any territory or requirements of any
recognised regulatory body or any other stock exchange or securities market in any territory or in connection with fractional entitlements,
it is determined not to make such issue or offer or grant.
Payments
Banco Santander will make any payments
of Distributions and Liquidation Preference on any particular series of contingent convertible capital securities on the dates
and, in the case of payments of Distributions, in the amounts that are determined by the method of calculation described in, the
relevant prospectus supplement. All payments in respect of the contingent convertible capital securities of any series will be
subject in all cases to any fiscal or other laws and regulations applicable thereto in the place of payment (including FATCA, any
regulations or agreements thereunder, any official interpretation thereof, any intergovernmental agreements with respect thereto,
or any law implementing an intergovernmental agreement or any regulations or official interpretations relating thereto), but without
prejudice to the provisions of “—Additional Amounts” below.
Distributions
The contingent convertible capital securities
of any series will accrue non-cumulative cash distributions (“Distributions”) as may be specified in, or determined
in accordance with the provisions of, the relevant prospectus supplement.
Distributions Discretionary
Banco Santander may elect, in its sole
and absolute discretion, to cancel the payment of any Distribution in whole or in part at any time that it deems necessary or desirable,
and for any reason.
Distributions on the contingent convertible
capital securities will be non-cumulative. Accordingly, if any Distribution (or part thereof) is not paid in respect of the contingent
convertible capital securities of any series as a result of any election of Banco Santander to cancel such Distribution pursuant
this section “—Distributions Discretionary” or the limitations on payment set out in “—Restrictions
on Payments” below then the right of the holders to receive the relevant Distribution (or part thereof) in respect of the
relevant Distribution Period will be extinguished and Banco Santander will have no obligation to pay such Distribution (or part
thereof) accrued for such Distribution Period or to pay any interest thereon, whether or not Distributions on the contingent convertible
capital securities of such series are paid in respect of any future Distribution Period.
No such election to cancel the payment
of any Distribution (or part thereof) or non-payment of any Distribution (or part thereof) as a result of the limitations on payment
set out in “—Restrictions on Payments” below will constitute an event of default, an Enforcement Event or the
occurrence of any event related to the insolvency of Banco Santander or entitle holders to take any action to cause such Distribution
to be paid or the liquidation, dissolution or winding-up of Banco Santander or in any way limit or restrict Banco Santander from
making any distribution or equivalent payment in connection with any instrument ranking junior to the contingent convertible capital
securities of such series (including, without limitation, any CET1 Capital of Banco Santander or the Group) or in respect of any
other Parity Security or other security.
Restrictions on Payments
To the extent that (i) Banco Santander
has insufficient Available Distributable Items to make Distributions on the contingent convertible capital securities of such series
scheduled for payment in the then current financial year and any equivalent payments scheduled to be made in the then current financial
year in respect of any other Parity Securities then outstanding, in each case excluding any portion of such payments already accounted
for in determining the Available Distributable Items, and/or (ii) the Regulator, in accordance with Applicable Banking Regulations,
requires Banco Santander to cancel the relevant Distribution in whole or in part, then Banco Santander will, without prejudice
to the right above to cancel at its discretion the payment of any such Distributions on the
contingent convertible capital securities
of such series at any time, make partial or, as the case may be, no payment of the relevant Distribution on the contingent convertible
capital securities of such series.
No payment will be made on the contingent
convertible capital securities of any series (whether by way of a repayment of the Liquidation Preference, the payment of any Distribution
or otherwise) if and to the extent that such payment would cause the Maximum Distributable Amount (if any) then applicable to Banco
Santander and/or the Group to be exceeded.
Agreement to Distribution Cancellation
By acquiring contingent convertible capital
securities, holders and beneficial owners of the contingent convertible capital securities acknowledge and agree that:
(a) Distributions are payable solely
at Banco Santander’s discretion, and no amount of Distribution shall become or remain due and payable in respect of the relevant
Distribution Period to the extent that it has been cancelled by Banco Santander at Banco Santander’s sole discretion and/or
deemed cancelled as a result of our having insufficient Available Distributable Items or as a result of the Regulator requiring
Banco Santander to cancel the Distributions or as a result of exceeding the Maximum Distributable Amount (if any) then applicable
to Banco Santander and/or the Group; and
(b) a cancellation or deemed
cancellation of Distributions (in each case, in whole or in part) in accordance with the terms of the contingent convertible
capital securities indenture or applicable supplemental indenture and the contingent convertible capital securities shall not
constitute an Enforcement Event or other default under the terms of the contingent convertible capital securities or the
contingent convertible capital securities indenture or applicable supplemental indenture.
Distributions will only be due and payable
on a Distribution Payment Date to the extent they are not cancelled or deemed cancelled previously or thereafter in accordance
with the provisions described under “—Distributions”, “—Liquidation Distribution” and “—Conversion
Upon Trigger Event”. Any Distributions cancelled or deemed cancelled (in each case, in whole or in part) in the circumstances
described herein shall not be due and shall not accumulate or be payable at any time thereafter, and holders of the contingent
convertible capital securities shall have no rights thereto or to receive any additional Distributions or compensation as a result
of such cancellation or deemed cancellation.
Notice of Distribution Cancellation
If practicable, Banco Santander will provide
notice of any cancellation or deemed cancellation of Distributions (in each case, in whole or in part) to the holders of the contingent
convertible capital securities through the relevant Clearing System (or, if the contingent convertible capital securities are held
in definitive form, to the holders of the contingent convertible capital securities directly at their addresses shown on the register
for the contingent convertible capital securities) and to the trustee directly on or prior to the relevant Distribution Payment
Date. Failure to provide such notice will have no impact on the effectiveness of, or otherwise invalidate, any such cancellation
or deemed cancellation of Distributions (and accordingly, such Distributions will not be due and payable), or give the holders
of the contingent convertible capital securities any rights as a result of such failure.
Liquidation Distribution
Except as set forth in the following paragraph,
in the event of any voluntary or involuntary liquidation of Banco Santander (a “Liquidation Event”), holders of the
contingent convertible capital securities of any series (unless previously converted into Common Shares pursuant to “—Conversion
Upon Trigger Event” below) shall be entitled to receive out of the assets of Banco Santander available for distribution to
holders of such series, the Liquidation Distribution. Such entitlement will arise before any distribution of assets is made to
holders of Common Shares or any other instrument of Banco Santander ranking junior to the contingent convertible capital securities
of such series.
If, before the occurrence of a Liquidation
Event, the Trigger Event occurs but the relevant conversion of the contingent convertible capital securities of such series into
Common Shares pursuant to “—Conversion Upon
Trigger Event” below is still to
take place, holders of the contingent convertible capital securities of such series will be entitled to receive out of the relevant
assets of Banco Santander a monetary amount equal to that which holders of such contingent convertible capital securities of such
series would have received on any distribution of the assets of Banco Santander if such conversion had taken place immediately
prior to such liquidation.
After payment of the relevant entitlement
in respect of a contingent convertible capital security as described in this section, such contingent convertible capital security
will confer no further right or claim to any of the remaining assets of Banco Santander.
Subordination
Unless previously converted into
Common Shares pursuant to section “—Conversion Upon Trigger Event” below, the contingent convertible
capital securities are unsecured and subordinated obligations of Banco Santander and rank (1) senior to (i) those
subordinated obligations which qualify as more subordinated claims pursuant to Articles 92.3 to 92.7 of the Spanish
Insolvency Law, or equivalent legal provisions which replace them in the future, (ii) the Common Shares and (iii) any
other instruments issued or guaranteed by Banco Santander ranking junior to the contingent convertible capital securities,
(2) pari passu with each other and with any Parity Securities and (3) junior to (i) any other liabilities of Banco
Santander including subordinated liabilities other than Parity Securities and (ii) instruments issued or guaranteed by Banco
Santander ranking senior to the contingent convertible capital securities.
Banco Santander agrees with respect
to any series of contingent convertible capital securities and each holder of contingent convertible capital securities of
any series, by his or her acquisition of a contingent convertible capital security, will be deemed to have agreed to the
above described subordination. Each such holder will be deemed to have irrevocably waived his or her rights of priority which
would otherwise be accorded to him or her under the laws of Spain, to the extent necessary to effectuate the subordination
provisions of the contingent convertible capital security. In addition, each holder of contingent convertible capital
securities of any series by his or her acquisition of the securities authorizes and directs the applicable trustee on his or
her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the relevant contingent
convertible capital securities as provided in the contingent convertible capital securities indenture and as
summarized herein and appoints the applicable trustee his attorney-in-fact for any and all such purposes.
Banco Santander may not issue, or
guarantee the issue of, any Parity Securities or other instruments equivalent to Parity Securities ranking, either directly
or through a guarantee, senior to the contingent convertible capital securities of any series, unless the terms and
conditions of the contingent convertible capital securities of such series are amended so as to rank pari passu with
any such issue of senior securities.
Redemption and Repurchase
The contingent convertible capital securities
are perpetual and are only redeemable in accordance with the following provisions of the contingent convertible capital securities
indenture described in this section “—Redemption and Repurchase”.
Optional Redemption
Unless otherwise provided in the applicable
prospectus supplement, subject to certain exceptions described further below, the contingent convertible capital securities shall
not be redeemable prior to the date specified in the relevant prospectus supplement. The contingent convertible capital securities
of any series may be redeemed by Banco Santander following such date in whole but not in part, unless otherwise provided by the
applicable prospectus supplement, subject to (i) the prior consent of the Regulator and (ii) the final paragraph of “Redemption
Procedures” below, on the date or dates specified in the relevant prospectus supplement at the Redemption Price (and otherwise
in accordance with Applicable Banking Regulations then in force).
Pre-Conditions to Redemptions and
Repurchases
Article 78(1) of the CRR provides that
the Regulator will give its consent to a redemption of the contingent convertible capital securities provided that either of the
following conditions is met:
(a) on or before
such redemption of the contingent convertible capital securities, Banco Santander replaces the contingent convertible capital securities
with instruments qualifying as Tier 1 Capital of an equal or higher quality on terms that are sustainable for the income capacity
of Banco Santander; or
(b) Banco Santander
has demonstrated to the satisfaction of the Regulator that its Tier 1 Capital and Tier 2 Capital would, following such redemption,
exceed the requirements set forth in article 92(1) of the CRR and the combined buffer requirement as defined in point (6) of article
128 of the CRD IV Directive by a margin that the Regulator may consider necessary on the basis of article 104(3) of the CRD IV
Directive.
Redemption Due to a Capital Event
Unless otherwise provided in the applicable
prospectus supplement, if, on or after the issue date of the contingent convertible capital securities of any series, (i) there
is a Capital Event, and (ii) such circumstances are evidenced by the delivery by Banco Santander to the trustee of a certificate
signed by two directors of Banco Santander stating that the said circumstances prevail and describing the facts leading thereto
and a copy of the Regulator’s consent to the redemption, the contingent convertible capital securities of such series may
be redeemed, in whole but not in part, at the option of Banco Santander, subject to the prior consent of the Regulator and otherwise
in accordance with Applicable Banking Regulations then in force, at any time, at the Redemption Price.
Article 78(4) provides that the Regulator
may only permit Banco Santander to redeem any series contingent convertible capital securities before the fifth anniversary of
the date of issuance of contingent convertible capital securities of such series in the case of a Capital Event if, in addition
to meeting one of the conditions referred to in paragraphs (a) or (b) of article 78(1) (as described above), there is a change
in the regulatory classification of the contingent convertible capital securities of such series that would be likely to result
in their exclusion from own funds or reclassification as a lower quality form of own funds, the Regulator considers such change
to be sufficiently certain and Banco Santander demonstrates to the satisfaction of the Regulator that the regulatory classification
was not reasonably foreseeable at the date of issuance of contingent convertible capital securities of such series.
Redemption Due to a Tax Event
Unless otherwise provided in the applicable
prospectus supplement, if, on or after the date of issuance of any series of contingent convertible capital securities, (i) there
is a Tax Event, and (ii) such circumstances are evidenced by the delivery by Banco Santander to the trustee of a certificate signed
by two directors of Banco Santander stating that the said circumstances prevail and describing the facts leading thereto and a
copy of the Regulator’s consent to the redemption, the contingent convertible capital securities of such series may be redeemed,
in whole but not in part, at the option of Banco Santander, subject to the prior consent of the Regulator and otherwise in accordance
with Applicable Banking Regulations then in force, at any time, at the Redemption Price per contingent convertible capital security.
Article 78(4) provides that the Regulator
may only permit Banco Santander to redeem the contingent convertible capital securities of any series before the fifth anniversary
of the date of issuance of contingent convertible capital securities of such series in the case of a Tax Event if, in addition
to meeting one of the conditions referred to in paragraphs (a) or (b) of article 78(1) (as described above), there is a change
in the applicable tax treatment of the contingent convertible capital securities of such series and Banco Santander demonstrates
to the satisfaction of the Regulator that such Tax Event is material and was not reasonably foreseeable at the date of issuance
of contingent convertible capital securities of such series.
Redemption Procedures
The decision to redeem the contingent convertible
capital securities must be irrevocably notified by Banco Santander to holders of the contingent convertible capital securities
of such series upon not less than 30 nor more than 60 days’ notice prior to the relevant redemption date (i) through the
filing of a relevant event (hecho relevante) announcement with the CNMV and its publication in accordance with the rules
and regulations of any applicable stock exchange or other relevant authority and (ii) in accordance with “—Notices”
below, and to the trustee at least five (5) Business Days prior to such date, unless a shorter notice period shall be satisfactory
to the trustee.
Any notice of redemption will state: the
redemption date; that on the redemption date the Redemption Price will, subject to the satisfaction of the conditions set forth
in the contingent convertible capital securities indenture become due and payable upon each contingent convertible capital security
being redeemed and that, subject to certain exceptions, Distributions will cease to accrue on or after that date; the place or
places where the contingent convertible capital securities are to be surrendered for payment of the redemption price; and the CUSIP,
Common Code and/or ISIN number or numbers, if any, with respect to the contingent convertible capital securities being redeemed.
If Banco Santander gives notice of redemption
of the contingent convertible capital securities of any series, then by 12:00 noon (London time) on the relevant redemption date,
Banco Santander will:
(a) irrevocably
deposit with the Principal Paying Agent funds sufficient to pay the Redemption Price; and
(b) give the
Principal Paying Agent irrevocable instructions and authority to pay the Redemption Price to the holders.
If the notice of redemption has been given
on any series of contingent convertible capital securities, and the funds deposited and instructions and authority to pay given
as required above, then on the date of such deposit:
(a) Distributions
on the contingent convertible capital securities of such series shall cease to accrue;
(b) such contingent
convertible capital securities of such series will no longer be considered outstanding; and
(c) the holders
of contingent convertible capital securities of such series will no longer have any rights as holders except the right to receive
the Redemption Price.
Non-payment of Redemption Price
If in connection with any series of contingent
convertible capital securities either the notice of redemption has been given and the funds are not deposited as required on the
date of such deposit or if Banco Santander improperly withholds or refuses to pay the Redemption Price of the contingent convertible
capital securities of such series, Distributions will continue to accrue, subject as provided in “—Distributions”
above, at the rate specified from (and including) the redemption date to (but excluding) the date of actual payment of the Redemption
Price.
Banco Santander may not give a notice of
redemption pursuant to this section “—Redemption and Repurchase” if a Trigger Event Notice has been given. If
a Trigger Event Notice is given after a notice of redemption shall have been given by Banco Santander but before the redemption
has occurred, such notice of redemption shall automatically be revoked and be null and void and the relevant redemption shall not
be made.
Repurchases of Contingent Convertible Capital Securities
Unless otherwise provided in the relevant
indenture, Banco Santander or any member of the Group, may repurchase or otherwise acquire any of the outstanding contingent convertible
capital securities of any series at any price in the open market or otherwise in accordance with Applicable Banking Regulations
in force at the relevant time.
Under the current Applicable Banking Regulations,
an institution requires the prior permission of the Regulator (article 77, b of CRR) to effect the repurchase of Additional Tier
1 instruments, and these may not be repurchased before five years after the date of issuance (article 52.1(i) of CRR).
Notwithstanding any other provision of
“—Settlement Procedures” below and subject to compliance with the provisions of the Spanish Companies Act and/or
with any Applicable Banking Regulations, Banco Santander or any member of the Group may exercise such rights as it may from time
to time enjoy to purchase or redeem or buy back any shares of Banco Santander (including Conversion Shares) or any depositary or
other receipts or certificates representing the same without the consent of the holders.
Conversion Upon Trigger Event
If the Trigger Event occurs at any time
on or after the issue date of any series of contingent convertible capital securities, then Banco Santander will:
(a) not
declare or pay any Distribution on the contingent convertible capital securities of such series, including any accrued and unpaid
Distributions, which shall be cancelled by Banco Santander in accordance with “—Distributions—Restrictions on
Payments” above; and
(b) irrevocably
and mandatorily (and without any requirement for the consent or approval of the holders of contingent convertible capital securities
of such series) convert all the contingent convertible capital securities of such series into Common Shares (the “Trigger
Conversion”) to be delivered on the relevant Conversion Settlement Date. If the Trigger Event occurs, the contingent convertible
capital securities of any series will be converted in whole and not in part.
For the purposes of determining whether
the Trigger Event has occurred, Banco Santander will (A) calculate the CET1 ratio based on information (whether or not published)
available to management of Banco Santander, including information internally reported within Banco Santander pursuant to its procedures
for ensuring effective ongoing monitoring of the capital ratios of Banco Santander and the Group and (B) calculate and publish
the CET1 ratio on at least a quarterly basis. Banco Santander’s calculation shall be binding on the trustee and the holders
of the relevant series of contingent convertible capital securities.
Except as provided below with respect to
fractions, the number of Conversion Shares shall be determined by dividing the Liquidation Preference of such contingent convertible
capital security by the relevant Conversion Price in effect on the relevant Trigger Event Notice Date. Fractions of Common Shares
will not be issued on Trigger Conversion and no cash payment or other adjustment will be made in lieu thereof. Without prejudice
to the generality of the foregoing, if one or more Delivery Notices and the related contingent convertible capital securities are
received by or on behalf of the Paying and Conversion Agent such that the Conversion Shares
or related ADSs to be delivered by or on behalf of the Settlement Shares Depository
are to be registered in the same name or delivered to the same Clearing Agency participant account, the number of such Conversion
Shares to be delivered in respect thereof shall be calculated on the basis of the aggregate Liquidation Preference of such contingent
convertible capital securities being so converted and rounded down to the nearest whole number of Common Shares or related ADSs,
as applicable.
Upon any Trigger Event of any series of
contingent convertible capital securities, holders shall have no claim against Banco Santander in respect of (i) any Liquidation
Preference of such series of contingent convertible capital securities or (ii) any accrued and unpaid Distributions cancelled or
otherwise unpaid in respect of contingent convertible capital securities of such series and the contingent convertible capital
securities of such series shall cease to represent any right other than the right to receive Common Shares, if elected, or ADSs
from or on behalf of the Settlement Shares Depository.
On the Conversion Settlement
Date, Banco Santander shall deliver to the Settlement Shares Depository such number of Common Shares as is required to
satisfy in full Banco Santander’s obligation to deliver Common Shares in respect of the Trigger Conversion of the
aggregate Liquidation Preference of contingent convertible capital securities of such series outstanding on the Trigger Event
Notice Date.
The obligation of Banco Santander to issue
and deliver Conversion Shares to a holder of contingent convertible capital securities of any series on the relevant Conversion
Settlement Date shall be satisfied by the delivery of such Conversion Shares to the Settlement Shares Depository on behalf of the
relevant holder. Receipt of the relevant Conversion Shares by the Settlement Shares Depository shall discharge Banco Santander’s
obligations in respect of such contingent convertible capital securities.
Holders of any series of contingent convertible
capital securities shall have recourse to Banco Santander only for the issue and delivery of the relevant Conversion Shares to
the Settlement Shares Depository. After such delivery, holders of any series of contingent convertible capital securities shall
have recourse to the Settlement Shares Depository only for the delivery to them
of such Conversion Shares or related ADSs,
in the circumstances described in “—Settlement Procedures” below.
Conversion Price
“Conversion Price” means, on
the Trigger Event Notice Date, if the Common Shares are:
(a) then admitted to trading on a Relevant
Stock Exchange, the higher of:
(i) the Current Market Price
of a Common Share;
(ii) the Floor Price; and
(iii) the nominal value of
a Common Share, in each case on the Trigger Event Notice Date; or
(b) not then admitted to trading on
a Relevant Stock Exchange, the higher of (ii) and (iii) above.
Anti-Dilution Adjustment of the Floor
Price
For the purposes of this section “—Anti-Dilution
Adjustment of the Floor Price” only (a) references to the “issue” of Common Shares or Common Shares being issued
shall, if not otherwise expressly specified in this “Description of Contingent Convertible Capital Securities”, include
the transfer and/or delivery of Common Shares, whether newly issued and allotted or previously existing or held by or on behalf
of Banco Santander or any member of the Group, and (b) Common Shares held by or on behalf of Banco Santander or any member of the
Group (and which, in the case of sub-paragraphs (d) and (f) below, do not rank for the relevant right or other entitlement) shall
not be considered as or treated as in issue or issued or entitled to receive any Dividend, right or other entitlement.
Upon the happening of any of the events
described below and unless otherwise provided in the relevant prospectus supplement, the Floor Price of any series of contingent
convertible capital securities shall be adjusted as follows:
(a) If and whenever there
shall be a consolidation, reclassification/redesignation or subdivision affecting the number of Common Shares, the Floor Price
shall be adjusted by multiplying the Floor Price in force immediately prior to such consolidation, reclassification/redesignation
or subdivision by the following fraction:
where:
A is the aggregate number of Common
Shares in issue immediately before such consolidation, reclassification/redesignation or subdivision, as the case may be; and
B is the aggregate number of Common
Shares in issue immediately after, and as a result of, such consolidation, reclassification/redesignation or subdivision, as the
case may be.
Such adjustment shall become effective
on the date the consolidation, reclassification/redesignation or subdivision, as the case may be, takes effect.
(b) If and whenever Banco
Santander shall issue any Common Shares credited as fully paid to Shareholders by way of capitalization of profits or reserves
(including any share premium account or capital redemption reserve) other than (i) where any such Common Shares are or are to be
issued instead of the whole or part of a Cash Dividend which Shareholders would or could otherwise have elected to receive, (ii)
where Shareholders may elect to receive a Cash Dividend in lieu of such Common Shares or (iii) where any such Common Shares are
or are
expressed to be issued in lieu of a Dividend
(whether or not a Cash Dividend equivalent or amount is announced or would otherwise be payable to Shareholders, whether at their
election or otherwise), the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to such issue
by the following fraction:
where:
A is the aggregate number of Common
Shares in issue immediately before such issue; and
B is the aggregate number of Common
Shares in issue immediately after such issue.
Such adjustment shall become effective
on the first day on which Common Shares are traded ex-rights on the relevant Stock Exchange.
(c) (i) If and whenever Banco Santander shall pay any Extraordinary
Dividend to its shareholders, the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to the
Effective Date by the following fraction:
where:
A is the Current Market Price of one Common Share
on the Effective Date;
B is the portion of the Fair Market Value of the
aggregate Extraordinary Dividend attributable to one Common Share, with such portion being determined by dividing the Fair Market
Value of the aggregate Extraordinary Dividend by the number of Common Shares entitled to receive the relevant Dividend; and
C is the amount (if any) by which the Reference
Amount determined in respect of the Relevant Dividend exceeds an amount equal to the aggregate of the Fair Market Values of any
previous Cash Dividends per Common Share paid or made in such Relevant Year (where C shall equal zero if such previous Cash Dividends
per Common Share are equal to, or exceed, the Reference Amount in respect of the Relevant Year). For the avoidance of doubt, “C”
shall equal the Reference Amount determined in respect of the Relevant Dividend where no previous Cash Dividends per Common Share
have been paid or made in such Relevant Year.
Such adjustment shall become effective
on the Effective Date or, if later, the first date upon which the Fair Market Value of the relevant Extraordinary Dividend can
be determined.
“Effective Date” means, in
respect of this sub-paragraph (i), the first date on which the Common Shares are traded ex-the relevant Cash Dividend on the Relevant
Stock Exchange.
“Extraordinary Dividend” means
(i) any Cash Dividend which is expressly declared by Banco Santander to be a capital distribution, extraordinary dividend, extraordinary
distribution, special dividend, special distribution or return of value to its shareholders or any analogous or similar term (including
any distribution made as a result of any capital reduction), in which case the Extraordinary Dividend shall be such Cash Dividend;
or (ii) any Cash Dividend (the “Relevant Dividend”) paid or made in a financial year of Banco Santander (the “Relevant
Year”) if (A) the Fair Market Value of the Relevant Dividend per Common Share or (B) the sum of (I) the Fair Market Value
of the Relevant Dividend per Common Share and (II) an amount equal to the aggregate of the Fair Market Value or Fair Market Values
of any other Cash Dividend or Cash Dividends per Common Share paid or made in the Relevant Year
(other than any Cash Dividend or part thereof
previously determined to be an Extraordinary Dividend paid or made in such Relevant Year), exceeds the Reference Amount, and in
that case the Extraordinary Dividend shall be the amount by which the Reference Amount is so exceeded.
“Reference Amount” means an
amount per Ordinary Share that is consistent with the dividend policy of Banco Santander as applied or to be applied for a period
or projected period of at least three years.
(ii) If and whenever
Banco Santander shall pay or make any Non-Cash Dividend to Shareholders, the Floor Price shall be adjusted by multiplying the Floor
Price in force immediately prior to the Effective Date by the following fraction:
where:
A is the Current Market Price of one Common Share
on the Effective Date; and
B is the portion of the Fair Market Value of the
aggregate Non-Cash Dividend attributable to one Common Share, with such portion being determined by dividing the Fair Market Value
of the aggregate Non-Cash Dividend by the number of Common Shares entitled to receive the relevant Non-Cash Dividend (or, in the
case of a purchase, redemption or buy back of Common Shares or any depositary or other receipts or certificates representing Common
Shares by or on behalf of Banco Santander or any member of the Group, by the number of Common Shares in issue immediately following
such purchase, redemption or buy back, and treating as not being in issue any Common Shares, or any Common Shares represented by
depositary or other receipts or certificates, purchased, redeemed or bought back).
Such adjustment shall become effective on the Effective
Date or, if later, the first date upon which the Fair Market Value of the relevant Non-Cash Dividend is capable of being determined
as provided herein.
“Effective Date” means, in respect of
this sub-paragraph (ii), the first date on which the Common Shares are traded ex-the relevant Dividend on the Relevant Stock Exchange
or, in the case of a purchase, redemption or buy back of Common Shares or any depositary or other receipts or certificates representing
Common Shares by or on behalf of Banco Santander or any member of the Group, the date on which such purchase, redemption or buy
back is made (or, in any such case if later, the first date upon which the Fair Market Value of the relevant Dividend is capable
of being determined as provided herein) or in the case of a Spin-Off, the first date on which the Common Shares are traded ex-the
relevant Spin-Off on the Relevant Stock Exchange.
(iii) For the purposes
of the above, Fair Market Value shall (subject as provided in paragraph (a) of the definition
of “Dividend” and in the definition of “Fair Market Value”) be determined as at the Effective Date.
(iv) In making any calculations
for the purposes of this paragraph (c), such adjustments (if any) shall be made as an Independent Financial Adviser may determine
in good faith to be appropriate to reflect (A) any consolidation or sub-division of any Common Shares or (B) the issue of Common
Shares by way of capitalisation of profits or reserves (or any like or similar event) or (C) any increase in the number of Common
Shares in issue in the Relevant Year in question.
(d) If and whenever Banco
Santander shall issue Common Shares to its shareholders as a class by way of rights,or Banco Santander or any member of the
Group or (at the direction or request or pursuant to any arrangements with Banco Santander or any member of the Group) any other
company, person or entity shall issue or grant to its shareholders as a class by way of rights, any options, warrants or other
rights to subscribe for or purchase or otherwise acquire any Common Shares, or any Securities which by their terms of issue carry
(directly or indirectly) rights of conversion into, or exchange or subscription for, or the right to acquire, any Common Shares
(or shall grant any such rights in respect of existing Securities so issued), in each case at a price per Common Share which is
less than 95 per cent of the Current Market Price per Common Share on the Effective Date, the Floor Price shall be adjusted by
multiplying the Floor Price in force immediately prior to the Effective Date by the following fraction:
where:
A is the number of Common Shares in issue on the
Effective Date;
B is the number of Common Shares which the aggregate
consideration (if any) receivable for the Common Shares issued by way of rights, or for the Securities issued by way of rights,
or for the options or warrants or other rights issued or granted by way of rights and for the total number of Common Shares deliverable
on the exercise thereof, would purchase at such Current Market Price per Common Share; and
C is the number of Common Shares to be issued
or, as the case may be, the maximum number of Common Shares which may be issued upon exercise of such options, warrants or rights
calculated as at the date of issue of such options, warrants or rights or upon conversion or exchange or exercise of rights of
subscription or purchase or other rights of acquisition in respect thereof at the initial conversion, exchange, subscription, purchase
or acquisition price or rate,
provided that if at the first date on which the Common
Shares are traded ex-rights, ex-options or ex-warrants on the Relevant Stock Exchange (as used in this sub-paragraph(d), the “Specified
Date”) such number of Common Shares is to be determined by reference to the application of a formula or other variable feature
or the occurrence of any event at some subsequent time, then for the purposes of this sub-paragraph (d), “C” shall
be determined by the application of such formula or variable feature or as if the relevant event occurs or had occurred as at the
Specified Date and as if such conversion, exchange, subscription, purchase or acquisition had taken place on the Specified Date.
Such adjustment shall become effective on the Effective
Date.
“Effective Date” means, in respect of
this sub-paragraph (d), the first date on which the Common Shares are traded ex-rights, ex-options or ex-warrants on the Relevant
Stock Exchange.
(e) If
and whenever Banco Santander or any member of the Group or (at the direction or request or pursuant to any arrangements with Banco
Santander or any member of the Group) any other company, person or entity shall issue any Securities (other than Common Shares
or options, warrants or other rights to subscribe for or purchase or otherwise acquire any Common Shares or Securities which by
their terms carry (directly or indirectly) rights of conversion into, or exchange or subscription for, or rights to otherwise acquire,
Common Shares) to its shareholders as a class by way of rights or grant to its shareholders as a class by way of rights any options,
warrants or other rights to subscribe for or purchase or otherwise acquire any Securities (other than Common Shares or options,
warrants or other rights to subscribe for or purchase or otherwise acquire Common Shares or Securities which by their term carry
(directly or indirectly) rights of conversion into, or exchange or subscription for, rights to otherwise acquire, Common Shares),
the Floor Price shall be adjusted by multiplying the Floor
Price in force immediately prior to the
Effective Date by the following fraction:
where:
A is the Current Market Price of one Common Share
on the Effective Date; and
B is the Fair Market Value on the Effective Date
of the portion of the rights attributable to one Common Share.
Such adjustment shall become effective on the Effective
Date.
“Effective Date” means, in respect of
this sub-paragraph (e), the first date on which the Common Shares are traded ex-the relevant Securities or ex-rights, ex-option
or ex-warrants on the Relevant Stock Exchange.
(f) If and whenever Banco
Santander shall issue (otherwise than as mentioned in sub-paragraph (d) above) wholly for cash or for no consideration any Common
Shares (other than Common Shares issued on conversion of the any series of contingent convertible capital securities or on the
exercise of any rights of conversion into, or exchange or subscription for or purchase of, or right to otherwise acquire Common
Shares) or if and whenever Banco Santander or any member of the Group or (at the direction or request or pursuance to any arrangements
with Banco Santander or any member of the Group) any other company, person or entity shall issue or grant (otherwise than as mentioned
in sub-paragraph (d) above) wholly for cash or for no consideration any options, warrants or other rights to subscribe for or purchase
or otherwise acquire any Common Shares (other than the contingent convertible capital securities of any series, which for this
purpose include any Further Contingent Convertible Capital Securities), in each case at a price per Common Share which is less
than 95 percent of the Current Market Price per Common Share on the date of the first public announcement of the terms of such
issue or grant, the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to the Effective Date
by the following fraction:
where:
A is the number of Common Shares in issue immediately
before the issue of such Common Shares or the grant of such options, warrants or rights;
B is the number of Common Shares which the aggregate
consideration (if any) receivable for the issue of such Common Shares or, as the case may be, for the Common Shares to be issued
or otherwise made available upon the exercise of any such options, warrants or rights, would purchase at such Current Market Price
per Common Share on the Effective Date; and
C is the number of Common Shares to be issued
pursuant to such issue of such Common Shares or, as the case may be, the maximum number of Common Shares which may be issued upon
exercise of such options, warrants or rights calculated as at the date of issue of such options, warrants or rights,
provided that if at the time of issue of such Common
Shares or date of issue or grant of such options, warrants or rights (as used in this sub-paragraph (f), the “Specified Date”),
such number of Common Shares is to be determined by reference to the application of a formula or other variable feature or the
occurrence of any event at some subsequent
time, then for the purposes of this sub-paragraph (f), “C” shall be determined by the application of such formula or
variable feature or as if the relevant event occurs or had occurred as at the Specified Date and as if such conversion, exchange,
subscription, purchase or acquisition had taken place on the Specified Date.
Such adjustment shall become effective on the Effective
Date.
“Effective Date” means, in respect of
this sub-paragraph (f), the date of issue of such Common Shares or, as the case may be, the grant of such options, warrants or
rights.
(g) If and whenever Banco Santander or any member of the
Group or (at the direction or request of or pursuant to any arrangements with Banco Santander or any member of the Group) any other
company, person or entity (otherwise than as mentioned in sub-paragraphs (d), (e) or (f) above) shall issue wholly for cash
or for no consideration any Securities (other than contingent convertible capital securities of any series) which by their terms
of issue carry (directly or indirectly) rights of conversion into, or exchange or subscription for, purchase of, or rights to otherwise
acquire, Common Shares (or shall grant any such rights in respect of existing Securities so issued) or Securities which by their
terms might be reclassified/redesignated as Common Shares, and the consideration per Common Share receivable upon conversion, exchange,
subscription, purchase, acquisition or redesignation is less than 95 per cent of the Current Market Price per Common Share on the
date of the first public announcement of the terms of issue of such Securities (or the terms of such grant), the Floor Price shall
be adjusted by multiplying the Floor Price in force immediately prior to the Effective Date by the following fraction:
where:
A is the number of Common Shares in issue immediately
before such issue or grant (but where the relevant Securities carry rights of conversion into or rights of exchange or subscription
for, purchase of, or rights to otherwise acquire Common Shares which have been issued, purchased or acquired by Banco Santander
or any member of the Group (or at the direction or request or pursuant to any arrangements with Banco Santander or any member of
the Group) for the purposes of or in connection with such issue, less the number of such Common Shares so issued, purchased or
acquired);
B is the number of Common Shares which the aggregate
consideration (if any) receivable for the Common Shares to be issued or otherwise made available upon conversion or exchange or
upon exercise of the right of subscription, purchase or acquisition attached to such Securities or, as the case may be, for the
Common Shares to be issued or to arise from any such reclassification/redesignation would purchase at such Current Market Price
per Common Share; and
C is the maximum number of Common Shares to be
issued or otherwise made available upon conversion or exchange of such Securities or upon the exercise of such right of subscription
attached thereto at the initial conversion, exchange, subscription, purchase or acquisition price or rate or, as the case may be,
the maximum number of Common Shares which may be issued or arise from any such reclassification/redesignation;
provided that if at the time of issue of the relevant
Securities or date of grant of such rights (as used in this sub-paragraph (g), the “Specified Date”) such number of
Common Shares is to be determined by reference to the application of a formula or other variable feature or the occurrence of any
event at
some subsequent time (which may be when
such Securities are converted or exchanged or rights of subscription, purchase or acquisition are exercised or, as the case may
be, such Securities are reclassified/redesignated or at such other time as may be provided), then for the purposes of this sub-paragraph
(g), “C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs
or had occurred as at the Specified Date and as if such conversion, exchange, subscription, purchase or acquisition or, as the
case may be, reclassification/redesignation had taken place on the Specified Date.
Such adjustment shall become effective on the Effective
Date.
“Effective Date” means, in respect of
this sub-paragraph (g), the date of issue of such Securities or, as the case may be, the grant of such rights.
(h) If and whenever there
shall be any modification of the rights of conversion, exchange, subscription, purchase or acquisition attaching to any Securities
(other than the contingent convertible capital securities of any series) as are mentioned in sub-paragraph (g) above (other than
in accordance with the terms (including terms as to adjustment) applicable to such Securities upon issue) so that following such
modification the consideration per Common Share receivable has been reduced and is less than 95 per cent of the Current Market
Price per Common Share on the date of the first public announcement of the proposals for such modification, the Floor Price shall
be adjusted by multiplying the Floor Price in force immediately prior to the Effective Date by the following fraction:
where:
A is the number of Common Shares in issue immediately
before such modification (but where the relevant Securities carry rights of conversion into or rights of exchange or subscription
for, or purchase or acquisition of, Common Shares which have been issued, purchased or acquired by Banco Santander or any member
of the Group (or at the direction or request or pursuant to any arrangements with Banco Santander or any member of the Group) for
the purposes of or in connection with such Securities, less the number of such Common Shares so issued, purchased or acquired);
B is the number of Common Shares which the aggregate
consideration (if any) receivable for the Common Shares to be issued or otherwise made available upon conversion or exchange or
upon exercise of the right of subscription, purchase or acquisition attached to the Securities so modified would purchase at such
Current Market Price per Common Share or, if lower, the existing conversion, exchange, subscription, purchase or acquisition price
or rate of such Securities; and
C is the maximum number of Common Shares which
may be issued or otherwise made available upon conversion or exchange of such Securities or upon the exercise of such rights of
subscription, purchase or acquisition attached thereto at the modified conversion, exchange, subscription, purchase or acquisition
price or rate but giving credit in such manner as an Independent Financial Adviser in good faith shall consider appropriate for
any previous adjustment under this sub-paragraph (h) or sub-paragraph (g) above;
provided that if at the time of such modification
(as used in this sub-paragraph (h), the “Specified Date”) such number of Common Shares is to be determined by reference
to the application of a formula or other variable feature or the occurrence of any event at some subsequent time (which may be
when such Securities are converted or exchanged or rights of subscription, purchase or acquisition are
exercised or at such other time as may
be provided) then for the purposes of this sub-paragraph (h), “C” shall be determined by the application of such formula
or variable feature or as if the relevant event occurs or had occurred as at the Specified Date and as if such conversion, exchange,
subscription, purchase or acquisition had taken place on the Specified Date.
Such adjustment shall become effective on the Effective
Date.
“Effective Date” means, in respect of
this sub-paragraph (h), the date of modification of the rights of conversion, exchange, subscription, purchase or acquisition attaching
to such Securities.
(i) If
and whenever Banco Santander or any member of the Group or (at the direction or request of or pursuant to any arrangements with
Banco Santander or any member of the Group) any other company, person or entity shall offer any Securities in connection with which
its shareholders as a class are entitled to participate in arrangements whereby such Securities may be acquired by them (except
where the Floor Price falls to be adjusted under sub-paragraphs (b), (c), (d), (e) or (f) above or sub-paragraph (j) below (or
would fall to be so adjusted if the relevant issue or grant was at less than 95 per cent of the Current Market Price per Common
Share on the relevant dealing day under sub-paragraph (e) above)) the Floor Price shall be adjusted by multiplying the Floor Price
in force immediately before the Effective Date by the following fraction:
where:
A is the Current Market Price of one Common Share
on the Effective Date; and
B is the Fair Market Value on the Effective Date
of the portion of the relevant offer attributable to one Common Share.
Such adjustment shall become effective on the Effective
Date.
“Effective Date” means, in respect of
this sub-paragraph (i), the first date on which the Common Shares are traded ex-rights on the Relevant Stock Exchange.
(j) If
Banco Santander determines that a reduction to the Floor Price should be made for whatever reason, the Floor Price will be reduced
(either generally or for a specified period as notified to holders of the contingent convertible capital securities of such relevant
series) in such manner and with effect from such date as Banco Santander shall determine and notify to the holders of the relevant
series of contingent convertible capital securities.
Notwithstanding the foregoing provisions:
| (i) | where the events or circumstances giving rise to any adjustment of the Floor Price have already resulted or will result in
an adjustment to the Floor Price or where the events or circumstances giving rise to any adjustment arise by virtue of any other
events or circumstances which have already given or will give rise to an adjustment to the Floor Price or where more than one event
which gives rise to an adjustment to the Floor Price occurs within such a short period of time that, in the opinion of Banco Santander,
a modification to the operation of the adjustment provisions is required to give the intended result, such modification shall be
made to the operation of the adjustment provisions as may be determined in good faith by an Independent Financial Adviser to be
in its opinion appropriate to give the intended result; and |
| (ii) | such modification shall be made as may be determined in good faith by an Independent |
Financial Adviser to be in its opinion
appropriate (A) to ensure that an adjustment to the Floor Price or the economic effect thereof shall not be taken into account
more than once and (B) to ensure that the economic effect of a Dividend is not taken into account more than once.
For the purpose of any calculation of the
consideration receivable or price pursuant to sub-paragraphs (d), (f), (g) and (h) above, the following provisions shall apply:
| (i) | the aggregate consideration receivable or price for Common Shares issued for cash shall be the amount of such cash; |
| (ii) | (A) the aggregate consideration receivable or price for Common Shares to be issued or otherwise made available upon the conversion
or exchange of any Securities shall be deemed to be the consideration or price received or receivable for any such Securities and
(B) the aggregate consideration receivable or price for Common Shares to be issued or otherwise made available upon the exercise
of rights of subscription attached to any Securities or upon the exercise of any options, warrants or rights shall be deemed to
be that part (which may be the whole) of the consideration or price received or receivable for such Securities or, as the case
may be, for such options, warrants or rights which are attributed by Banco Santander to such rights of subscription or, as the
case may be, such options, warrants or rights or, if no part of such consideration or price is so attributed, the Fair Market Value
of such rights of subscription or, as the case may be, such options, warrants or rights as at the relevant Effective Date as referred
to in sub-paragraphs (d), (f), (g) or (h) above, as the case may be, plus in the case of each of (A) and (B) above, the additional
minimum consideration receivable or price (if any) upon the conversion or exchange of such Securities, or upon the exercise of
such rights or subscription attached thereto or, as the case may be, upon exercise of such options, warrants or rights and (C)
the consideration receivable or price per Common Share upon the conversion or exchange of, or upon the exercise of such rights
of subscription attached to, such Securities or, as the case may be, upon the exercise of such options, warrants or rights shall
be the aggregate consideration or price referred to in (A) or (B) above (as the case may be) divided by the number of Common Shares
to be issued upon such conversion or exchange or exercise at the initial conversion, exchange or subscription price or rate; |
| (iii) | if the consideration or price determined pursuant to (I) or (II) above (or any component thereof) shall be expressed in a currency
other than the Share Currency, it shall be converted into the Share Currency at the Prevailing Rate on the relevant Effective Date
(in the case of (I) above) or the relevant date of first public announcement (in the case of (II) above); |
| (iv) | in determining the consideration or price pursuant to the above, no deduction shall be made for any commissions or fees (howsoever
described) or any expenses paid or incurred for any underwriting, placing or management of the issue of the relevant Common Shares
or Securities or options, warrants or rights, or otherwise in connection therewith; and |
| (v) | the consideration or price shall be determined as provided above on the basis of the consideration or price received, receivable,
paid or payable regardless of whether all or part thereof is received, receivable, paid or payable by or to Banco Santander or
another entity. |
If the record date in respect of any consolidation,
reclassification/redesignation or sub-division as is mentioned in sub-paragraph (a) above, or the record date or other due date
for the establishment of entitlement for any such issue, distribution, grant or offer (as the case may be) as is mentioned in sub-paragraphs
(b), (c), (d), (e) or (i)
above, or the date of the first public
announcement of the terms of any such issue or grant as is mentioned in sub-paragraphs (f) and (g) above or of the terms of any
such modification as is mentioned in sub-paragraph (h) above, shall be after the Trigger Event Notice Date in relation to the conversion
of any contingent convertible capital security of any series but before the date on which the resolution of issuance of the relevant
Common Shares is approved, then Banco Santander shall procure the execution of the corresponding adjustment mechanism pursuant
to this section “—Anti-Dilution Adjustment of the Floor Price” so that there shall be issued and delivered to
the Settlement Shares Depository, for onward delivery to the holders of the relevant contingent convertible capital securities,
in accordance with the instructions contained in the Delivery Notices received by the Settlement Shares Depository, such number
of Common Shares that could be required to be issued and delivered on such conversion taking into account the relevant adjustment
to the Floor Price pursuant to this section “—Anti-Dilution Adjustment of the Floor Price” and all references
to the issue and/or delivery of Common Shares or Conversion Shares in this prospectus and the contingent convertible capital securities
indenture shall be construed accordingly.
If any doubt shall arise as to whether
an adjustment falls to be made to the Floor Price or as to the appropriate adjustment to the Floor Price, and following consultation
between Banco Santander and an Independent Financial Adviser, a written determination of such Independent Financial Adviser in
respect thereof shall be conclusive and binding on all parties, save in the case of wilful default, bad faith or manifest error.
No adjustment will be made to the Floor
Price where Common Shares or other Securities (including rights, warrants and options) are issued, offered, exercised, allotted,
purchased, appropriated, modified or granted to, or for the benefit of, employees or former employees (including directors holding
or formerly holding executive or non-executive office or the personal service company of any such person) or their spouses or relatives,
in each case, of Banco Santander or any of member of the Group or any associated company or to a trustee or trustees or intermediary
to be held for the benefit of any such person, in any such case pursuant to any share or option or similar scheme.
On any adjustment, the resultant Floor
Price, if a number of more decimal places than the initial Floor Price, shall be rounded down to such decimal place. No adjustment
shall be made to the Floor Price where such adjustment (rounded down if applicable) would be less than 1 per cent of the Floor
Price then in effect. Any adjustment not required to be made and/or any amount by which the Floor Price has been rounded down,
shall be carried forward and taken into account in any subsequent adjustment, and such subsequent adjustment shall be made on the
basis that the adjustment not required to be made had been made at the relevant time and/or, as the case may be, that the relevant
rounding down had not been made.
Notice of any adjustments to the Floor
Price shall be given by Banco Santander to holders of the contingent convertible capital securities of any series through the filing
of a relevant event (hecho relevante) announcement with the CNMV and its publication in accordance with the rules and regulations
of any applicable stock exchange or other relevant authority and in accordance with “—Notices” below promptly
after the determination thereof.
Conversion Procedures
If the Trigger Event occurs at any time
on or after the issue date of any series of contingent convertible capital securities, then Banco Santander will: notify the Regulator
and holders of such series of contingent convertible capital securities immediately through (i) the filing of a relevant event
(hecho relevante) announcement with the CNMV and its publication in accordance with the rules and regulations of any applicable
stock exchange or other relevant authority and (ii) to the Regulator, holders and the trustee in accordance with “—Notices”
below (the “Trigger Event Notice”);
A Trigger Event Notice shall be a written
notice
specifying the following information:
| · | that a Trigger Event has occurred; |
| · | the then-prevailing Conversion Price (which Conversion Price shall remain subject to any subsequent adjustment as set forth
under “—Anti-Dilution Adjustment of the Floor Price”); |
| · | the Conversion Settlement Date; |
| · | the date on which Banco Santander expects DTC to suspend all clearance and settlement of transactions in the Securities in
accordance with its rules and procedures (the “Suspension Date”); |
| · | the contact details of the Settlement Shares Depository (if one has been appointed) and Paying and Conversion Agent and the
procedures holders of the contingent convertible capital securities must follow to obtain delivery of the Conversion Shares or
related ADSs; |
| · | if Banco Santander has been unable to appoint a Settlement Shares Depository, such other arrangements for the issuance and/or
delivery of the Conversion Shares to the holders of the contingent convertible capital securities of such series as it shall consider
reasonable in the circumstances; |
| · | that the contingent convertible capital securities shall remain in existence for the sole purpose of evidencing the
holder’s right to receive Common Shares or related ADSs from or on behalf of the Settlement Shares Depository. |
The date on which the Trigger Event Notice
shall be deemed to have been given shall be the date on which it is dispatched by Banco Santander to DTC.
Upon Banco Santander’s determination
that a Trigger Event has occurred, it shall immediately inform the Regulator and shall, prior to giving a Trigger Event Notice,
deliver to the trustee a certificate stating that a Trigger Event has occurred, which the trustee shall accept without any further
enquiry as sufficient evidence of such matters, in which event such certificate will be conclusive and binding on the trustee,
the holders and beneficial owners of the contingent convertible capital securities of such series.
Within two (2) Business Days after its
receipt of the Trigger Event Notice, the trustee shall transmit the Trigger Event Notice to DTC and promptly following its receipt
of the Trigger Event Notice, pursuant to DTC’s procedures currently in effect, DTC will post the Trigger Event Notice to
its Reorganization Inquiry for Participants System.
Notwithstanding anything set forth
in this prospectus to the contrary, once Banco Santander has delivered a Trigger Event Notice following the occurrence of
a Trigger Event, (i) subject to the right of holders of the contingent convertible capital securities of the relevant
series relating to a breach of the Performance Obligation (as defined below) in the event of a failure by Banco Santander to
issue and deliver any Common Shares to the Settlement Shares Depository on the Conversion Settlement Date, the contingent
convertible capital securities indenture shall impose no duties upon the trustee whatsoever with regard to a Trigger
Conversion and the holders of the contingent convertible capital securities of such series shall have no rights whatsoever
under the contingent convertible capital securities indenture or the contingent convertible capital securities of such series
to instruct the trustee to take any action whatsoever and
(ii) as of the date of the Trigger Event Notice, except for any indemnity and/or security provided by any holders of
the contingent convertible capital securities of such series in such direction or related to such direction, any
direction previously given to the trustee by any holders of the contingent convertible capital securities of such series
shall cease automatically and shall be null and void and of no further effect.
Banco Santander’s obligations to
indemnify the trustee in accordance with the contingent convertible capital securities indenture shall survive any Trigger Conversion.
Agreement and Waiver with Respect
to a Trigger Conversion
The contingent convertible capital securities
of any series are not convertible into Common Shares at the option of holders of contingent convertible capital securities of any
series at any time and are not redeemable in cash as a result of a Trigger Event. Notwithstanding any other provision herein, by
its acquisition of the contingent convertible capital securities of any series, each holder and beneficial owner shall be deemed
to have (i) agreed to all the terms and conditions of the contingent convertible capital securities of such series, including,
without limitation, those related to (x) Trigger Conversion following a Trigger Event and (y) the appointment of the Settlement
Shares Depository, the issuance of the Settlement Shares to the Settlement Shares Depository (or to the relevant recipient in accordance
with the terms of the contingent convertible capital securities of such series), and acknowledged that
such events in (x) and (y) may
occur without any further action on the part of the holders of the contingent convertible capital securities of such series
or the trustee, (ii) agreed that effective upon, and following, the Trigger Conversion, no amount shall be due and payable to
the holders of the contingent convertible capital securities of such series, and Banco Santander’s liability to pay
any such amounts (including the Liquidation Preference of, or any Distribution in respect of, the contingent convertible
capital securities of such series), except as noted under “—Settlement Procedures” with respect to certain
stamp and similar taxes, shall be automatically released, and the holders shall not have the right to give a direction to the
trustee with respect to the Trigger Event and any related Trigger Conversion, (iii) waived, to the extent permitted by the
Trust Indenture Act, any claim against the trustee arising out of its acceptance of its trusteeship under, and the
performance of its duties, powers and rights in respect of, the contingent convertible capital securities indenture and in
connection with the contingent convertible capital securities of such series, including, without limitation, claims related
to or arising out of or in connection with a Trigger Event and/or any Trigger Conversion and (iv) authorized, directed and
requested DTC, the European Clearing Systems and any direct participant in DTC, the European Clearing Systems or other
intermediary through which it holds such contingent convertible capital securities to take any and all necessary action, if
required, to implement the Trigger Conversion without any further action or direction on the part of such holder or
beneficial owner of the contingent convertible capital securities of such series or the trustee.
Settlement Procedures
Delivery of the Common Shares to the holders
of any series of contingent convertible capital securities upon a Trigger Event shall be made in accordance with the following
procedures. The procedures set forth in this section are subject to change to reflect changes in clearing system practices.
Holders of any series of contingent convertible
capital securities cleared and settled through DTC may elect to have their Common Shares delivered in the form of Common Shares
or ADSs in accordance with the procedures described below. The obligation to deliver ADSs if a holder elects to have its Common
Shares delivered in such form will apply only if at the time of any Trigger Conversion Banco Santander continues to maintain an
ADS depositary facility. For further information on the ADSs and Banco Santander’s current ADS deposit agreement, see “Description
of American Depositary Shares”.
DTC Suspension. The Trigger
Event Notice shall specify the Suspension Date. On the Suspension Date, DTC shall suspend all clearance and settlement of
transactions in the relevant series of contingent convertible capital securities. As a result, holders of the contingent
convertible capital securities of such series will not be able to settle any transfers of any contingent convertible capital
securities of such series following the Suspension Date, and any sale or other transfer of the contingent convertible capital
securities of such series that a holder of the contingent convertible capital securities of such series may have initiated
prior to the Suspension Date that is scheduled to settle after the Suspension Date will be rejected by DTC and will not be
settled through DTC. The contingent convertible capital securities of such series may cease to be admitted to trading on any
stock exchange on which the contingent convertible capital securities of such series are then listed or admitted to trading
after the Suspension Date.
Settlement Request Notice. On
the Suspension Date, Banco Santander shall deliver a notice in accordance with “—Notices” below to
the trustee and to the holders of the contingent convertible capital securities of the relevant series (a “Settlement
Request Notice”) requesting that holders and beneficial owners of the contingent convertible capital securities of such
series complete a notice to be delivered to the Paying and Conversion Agent, with a copy to the trustee (a “Delivery
Notice”). The Settlement Request Notice shall specify the date by which the Delivery Notice must be received by the
Paying and Conversion Agent (the “Notice Cut-off Date”) and (ii) the date on which the Contingent Convertible
Capital Securities of such series in relation to which no Delivery Notice has been received by the Paying and Conversion
Agent on or before the Notice Cut-off Date shall be cancelled, which will be no more than twelve Business Days after the
Conversion Settlement Date (the “Final Cancellation Date”), as set forth in “—Failure to Deliver a
Delivery Notice” below.
Delivery Notice. In order
to obtain delivery of the relevant Common Shares, or, if the holder elects, ADSs, a holder or beneficial owner must deliver
its contingent convertible capital securities and Delivery Notice to the Paying and Conversion Agent (including, the delivery
of such contingent convertible capital securities and Delivery Notice to the Paying and Conversion Agent through DTC) on
or before the Notice Cut-off Date. If such delivery is made after the end of normal business hours at the specified office
of the Paying and Conversion Agent, such delivery shall be deemed for all purposes to have been made or given on the
following Business Day. The Delivery Notice shall contain: (i) the name of the holder or beneficial owner of the applicable
series of contingent convertible capital securities; (ii) the aggregate Liquidation Preference held by such holder or
beneficial owner of such series of contingent convertible capital securities on the date of such notice; (iii) the name in
which the Common Shares or ADSs, as applicable, are to be registered, if applicable (iv) whether Common Shares or ADSs are to
be delivered to the holder or beneficial owner of such series of contingent convertible capital securities; (v) the details
of the DTC, Iberclear or other clearing system account (subject to the limitations set out below) to which the ADSs or
Common Shares are to be credited, details of the registered account in Banco Santander’s ADS facility if direct
registration ADSs are to be issued, or, if the Common Shares are not a participating security in Iberclear or another
clearing system, the address to which the Common Shares should be delivered; and (vi) such other details as may be required
by the Paying and Conversion Agent.
The Delivery Notice must be given and the
contingent convertible capital securities delivered in accordance with the applicable procedures of DTC (which may include the
notice being given to the Paying and Conversion Agent by electronic means) and in a form acceptable to DTC and the Paying and Conversion
Agent.
Any Delivery Notice shall be irrevocable.
Failure properly to complete and deliver a Delivery Notice and deliver the relevant contingent convertible capital securities may
result in such Delivery Notice being treated as null and void and Banco Santander shall be entitled to procure the sale of any
applicable Common Shares to which the relevant holder may be entitled in accordance with this section “—Settlement
Procedures”. Any determination as to whether any Delivery Notice has been properly completed and delivered as provided in
this section “—Settlement Procedures” shall be made by Banco Santander in its sole discretion, acting in good
faith, and shall, in the absence of manifest error, be conclusive and binding on the relevant holders.
Subject as provided herein and provided
the contingent convertible capital securities and Delivery Notice are delivered on or before the Notice Cut-off Date, the Paying
and Conversion Agent shall give instructions to the Settlement Shares Depository that the Settlement Shares Depository shall deliver
the relevant Common Shares (rounded down to the nearest whole number of Common Shares) to, or shall deposit such relevant Common
Shares with the ADS Depositary on behalf of, the holder or beneficial owner of the relevant contingent convertible capital securities
completing the relevant Delivery Notice or its nominee in accordance with the instructions given in such Delivery Notice on the
applicable Conversion Settlement Date.
Delivery of ADSs. In respect
of any Conversion Shares that holders elect to receive in the form of ADSs as specified in the Delivery Notice, the
Settlement Shares Depository shall deposit with the custodian for the ADS Depositary the number of Conversion Shares to be
issued upon Trigger Conversion of the relevant series of contingent convertible capital securities, and the ADS Depositary
shall issue the corresponding number of ADSs to the DTC Participant account or registered ADS facility account specified by
such holders (per the ADS-to-ordinary share ratio in effect on the Conversion Settlement Date). However, the issuance of the
ADSs by the ADS Depositary may be delayed until the depositary bank or the custodian receives confirmation that all required
approvals have been given and that the Conversion Shares have been duly transferred to the custodian and that all applicable
depositary fees and payments have been paid to the ADS Depositary. For further information on the ADSs or the ADS deposit
agreement, see “Description of American Depositary Shares”.
Failure to Deliver a Delivery Notice.
If a duly completed Delivery Notice and the relevant contingent convertible capital securities are not delivered to the Paying
and Conversion Agent as provided above on or before the Notice Cut-off Date, then at any time following the Notice Cut-off Date
and prior to the 10th Business Day after the Conversion Settlement Date Banco Santander may
in its sole and absolute discretion (and the relevant holders of such contingent convertible capital
securities shall be deemed to
agree thereto), elect to appoint a person (the “Selling Agent”) to procure that all Common Shares held by
the Settlement Shares Depository in respect of which the applicable contingent convertible capital securities and
completed Delivery Notice have not been delivered on or before the Notice Cut-off Date as aforesaid shall be sold by or on
behalf of the Selling Agent as soon as reasonably practicable. If the applicable contingent convertible capital securities
and Delivery Notice are not delivered to the Paying and Conversion Agent on or before the Notice Cut-off Date, the Settlement
Shares Depository shall continue to hold any Conversion Shares not sold by the Selling Agent until a Delivery Notice is so
delivered or the Final Cancellation Date (as defined below), whichever is earlier. However, any holder or beneficial owner of
the contingent convertible capital securities delivering a Delivery Notice after the Notice Cut-off Date will have to
provide evidence of its entitlement to the relevant Common Shares, or if the holder so elects, ADSs, satisfactory to the
Settlement Shares Depository in its sole and absolute discretion in order to receive delivery of such Common Shares or ADSs
(if so elected to be deposited with the ADS Depositary on its behalf).
Subject to the deduction by or on behalf
of the Selling Agent of any amount payable in respect of its liability to taxation and the payment of any capital, stamp, issue,
registration and/or transfer taxes and duties (if any) and any fees or costs incurred by or on behalf of the Selling Agent in connection
with the issue, allotment and sale thereof, and the conversion of any proceeds of such sale into U.S. dollars, the net proceeds
of such sale, converted into U.S. dollars at the Prevailing Rate on the Notice Cut-off Date, if necessary, shall as soon as reasonably
practicable be distributed rateably to the relevant holders in such manner and at such time as Banco Santander shall determine
and notify to the relevant holders.
Such payment shall for all purposes discharge
the obligations of Banco Santander, the Settlement Shares Depository, the Paying and Conversion Agent and the Selling Agent to
such holders in respect of the Trigger Conversion.
Banco Santander, the Settlement Shares
Depository and the Selling Agent shall have no liability in respect of the exercise or non-exercise of any discretion or power
pursuant to this section “—Settlement Procedures” or in respect of any sale of any Common Shares, whether for
the timing of any such sale or the price at or manner in which any such Common Shares are sold or the inability to sell any such
Common Shares.
If Banco Santander does not appoint the
Selling Agent by the 10th Business Day after the Conversion Settlement Date, or if any Common
Shares are not sold by the Selling Agent in accordance with this section “Settlement Procedures”, such Common Shares
for which a Delivery Notice has not been received will be cancelled on the Final Cancellation Date.
Certain Taxes
A holder of the contingent convertible
capital securities of any series or Selling Agent (as defined below) must pay (in the case of the Selling Agent by means of deduction
from the net proceeds of sale referred to in “—Failure to Deliver a Delivery Notice” below) any taxes and capital,
stamp, issue and registration and transfer taxes or duties arising on Trigger Conversion (other than any taxes or capital, issue
and registration and transfer taxes or stamp duties payable in Spain by Banco Santander in respect of the issue and delivery of
the Common Shares in accordance with a Delivery Notice delivered pursuant to the contingent convertible capital securities indenture
which shall be paid by Banco Santander) and such holder or the Selling Agent (as the case may be) must pay (in the case of the
Selling Agent, by way of deduction from the net proceeds of sale as aforesaid) all, if any, taxes arising by reference to any disposal
or deemed disposal of a contingent convertible capital security or interest therein.
If Banco Santander shall fail to pay any
capital, stamp, issue, registration and transfer taxes and duties for which it is responsible as provided above, the holder or
Selling Agent, as the case may be, shall be entitled (but shall not be obliged) to tender and pay the same and Banco Santander
as a separate and independent obligation, undertakes to reimburse and indemnify each holder or Selling Agent, as the case may be,
in respect of any payment thereof and any penalties payable in respect thereof.
Status of the Conversion Shares
The Common Shares issued on Trigger Conversion
will be fully paid and will in all respects rank pari passu with the fully paid Common Shares in issue on the Trigger Event
Notice Date, except in any such case for any right excluded by mandatory provisions of applicable law and except that such Common
Shares will not rank for (or, as the case may be, the relevant holder shall not be entitled to receive) any rights, dividends or
payments the record date or other due date for the establishment of entitlement for which falls prior to the date that the resolution
of issuance of the relevant Common Shares is approved.
Additional Amounts
Unless otherwise specified in the relevant
prospectus supplement, all payments of Distributions and other amounts payable in respect of contingent convertible capital securities
by Banco Santander will be made free and clear of and without withholding or deduction for or on account of any present or future
taxes, duties, assessments or governmental charges (collectively “Taxes”) of whatever nature imposed or levied by or
on behalf of Spain or any political subdivision thereof or any authority or agency therein or thereof having power to tax, unless
the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In that event, Banco
Santander shall pay, in respect of any withholding or deduction imposed on payments of Distributions only (and not Liquidation
Preference) such additional amounts (“Additional Amounts”) as will result in holders of any series of outstanding contingent
convertible capital securities receiving such amounts as they would have received had no such withholding or deduction been required.
Banco Santander shall not be required to
pay any Additional Amounts in relation to any payment in respect of any contingent convertible capital securities:
(a) to, or to a third party on behalf
of, a holder if the holder or the beneficial owner of contingent convertible capital securities is liable for such Taxes in respect
of such contingent convertible capital security by reason of his having some connection with Spain other than the mere holding
of such contingent convertible capital security; or
(b) to, or to a third party on behalf
of, a holder in respect of whose contingent convertible capital securities Banco Santander does not receive such information as
may be required in order to comply with the applicable Spanish tax reporting obligations (as amended or restated from time to time),
including but not limited to the receipt in a timely manner of a duly executed and completed certificate in accordance with Law
10/2014 and Royal Decree 1065/2007, as amended, and any implementing legislation or regulation; or
(c) to, or to a third party on behalf
of, a holder if the holder or the beneficial owner of contingent convertible capital securities of any series failed to make
any necessary claim or to comply with any certification, identification or other requirements concerning the nationality, residence,
identity or connection with the taxing jurisdiction of such holder or beneficial owner, if such claim or compliance is required
by statute, treaty, regulation or administrative practice of the taxing jurisdiction of Banco Santander as a condition to relief
or exemption from such taxes; or
(d) presented for payment (where presentation
is required) more than 30 days after the Relevant Date, except to the extent that the relevant holder would have been entitled
to such Additional Amounts on presenting the same for payment on the expiry of such period of 30 days; or
(e) where the withholding or deduction
is imposed pursuant to European Council Directive 2003/48/EC or any Directive amending, supplementing or replacing such Directive,
or any law implementing or complying with, or introduced in order to conform to, such Directive; or
(f) presented for payment (where presentation
is required) by or on behalf of a holder of a contingent convertible capital security who would have been able to avoid such withholding
or deduction by presenting the contingent convertible capital security to another paying agent in a Member State of the European
Union; or
(g) to, or to a third party on behalf of,
individuals resident for tax purposes in the Kingdom of Spain; or
(h) to, or to a third party on behalf
of, a Spanish-resident legal entity subject to Spanish corporation tax if the Spanish tax authorities determine that the contingent
convertible capital securities of any series do not comply with exemption requirements specified in the Reply to a Consultation
of the Directorate General for Taxation (Dirección General de Tributos) dated 27 July 2004 and require a withholding
to be made; or
(i) where the withholding or deduction
is required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through
1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, any intergovernmental agreements
with respect thereto (including the intergovernmental agreement between the United States and Spain on the implementation of FATCA),
or any law implementing an intergovernmental agreement or any regulations or official interpretations relating thereto.
In addition, Additional Amounts will not
be payable with respect to any Taxes that are imposed in respect of any combination of the items listed in (a) through (i) set
forth above.
Additional Amounts will also not be paid
with respect to any payment to a holder who is a fiduciary, a partnership, a limited liability company or person other than the
sole beneficial owner of that payment, to the extent that payment would be required by the laws of Spain (or any political subdivision
thereof) to be included in the income, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, a member of
that partnership, an interest holder in that limited liability company or a beneficial owner who would not have been entitled to
the Additional Amounts had it been the holder.
For the purposes of this section:
“Relevant Date” means, in respect
of any payment, the date on which such payment first becomes due and payable, except that, if the full amount of the moneys payable
has not been duly received by the Principal Paying Agent on or prior to such due date, it means the date on which, the full amount
of such moneys having been so received and being available for payment to holders, notice to that effect is duly given to the holders
in accordance with“—Notices” below.
Except where the context requires
otherwise, any reference in this prospectus and the relevant prospectus supplement to Distributions in respect of the
contingent convertible capital securities shall include any Additional Amounts payable with respect thereto.
Undertakings
So long as any contingent convertible capital
security of a series remains outstanding, Banco Santander shall, unless approved by a majority in aggregate Liquidation Preference
of such series:
(a) not make
any issue, grant or distribution or take or omit to take any other action if the effect thereof would be that, on Trigger Conversion,
Common Shares could not, under any applicable law then in effect, be legally issued as fully paid;
(b) if any
offer is made to all (or as nearly as may be practicable all) Shareholders (or all (or as nearly as may be practicable all) such
Shareholders other than the offeror and/or any associates of the offeror) to acquire all or a majority of the issued Common Shares,
or if a scheme is proposed with regard to such acquisition (other than a Newco Scheme), give notice of such offer or scheme to
the holders at the same time as any notice thereof is sent to the Shareholders (or as soon as practicable thereafter) that details
concerning such offer or scheme may be obtained from the specified offices of the Paying and Conversion Agents and, where such
an offer or scheme has been recommended by the board of directors of Banco Santander, or where such an offer has become or been
declared unconditional in all respects or such scheme has become effective, use all commercially reasonable endeavours to procure
that a like offer or scheme is extended to the holders of any Common Shares issued during the period of the offer or scheme arising
out of the Trigger Conversion;
(c) in the
event of a Newco Scheme, take (or shall procure that there is taken) all necessary action to ensure that such amendments are made
to the contingent convertible capital securities indenture immediately after completion of the Scheme of Arrangement as are necessary
to ensure that the
contingent convertible capital securities
may be converted into or exchanged for ordinary shares in Newco (or depositary or other receipts or certificates representing ordinary
shares of Newco) mutatis mutandis in accordance with and subject to the contingent convertible capital securities indenture
and the ordinary shares of Newco are:
(i) admitted
to the Relevant Stock Exchange; or
(ii) listed
and/or admitted to trading on another Recognised Stock Exchange;
and
the holders of the contingent convertible capital securities of the relevant series irrevocably authorise Banco Santander to make
such amendments to the contingent convertible capital securities indenture without the need for any further authorization from
the holders of the contingent convertible capital securities of such series;
(d) issue,
allot and deliver Common Shares upon Trigger Conversion subject to and as provided in “—Conversion Upon Trigger Event”
above;
(e) use all
reasonable endeavours to ensure that its issued and outstanding Common Shares and any Common Shares issued upon Trigger Conversion
will be admitted to listing and trading on the Relevant Stock Exchange or will be listed and/or admitted to trading on another
Recognised Stock Exchange;
(f) at all
times keep in force the relevant resolutions needed for issue, free from pre-emptive rights, sufficient authorized but unissued
Common Shares to enable Trigger Conversion of the contingent convertible capital securities, and all rights of subscription and
exchange for Common Shares, to be satisfied in full; and
(g) where the
provisions of “—Conversion Upon Trigger Event” above require or provide for a determination by an Independent
Financial Adviser or a role to be performed by a Settlement Shares Depository or a Paying and Conversion Agent, Banco Santander
shall use all reasonable endeavours promptly to appoint such persons for such purposes.
Modification and Waiver
Banco Santander and the trustee may make
certain modifications and amendments to the contingent convertible capital securities indenture and any applicable supplemental
indenture with respect to any series of contingent convertible capital securities of that series without the consent of the holders
of such contingent convertible capital securities, including for, but not limited to, any of the following purposes:
| · | to evidence the succession of another corporation to Banco Santander and the assumption by any such successor of the covenants
of Banco Santander in the contingent convertible capital securities indenture and in the contingent convertible capital securities
of any series; |
| · | to add to the covenants of Banco Santander for the benefit of the holders of all or any series of contingent convertible capital
securities (and, if such covenants are to be for the benefit of less than all series of contingent convertible capital securities,
stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power
conferred upon Banco Santander by the contingent convertible capital securities indenture; |
| · | to add any additional Enforcement Events; |
| · | to make changes to procedures relating to Trigger Conversion, delivery of the Common Shares, or ADSs, as applicable; |
| · | to change or eliminate any of the provisions of the contingent convertible capital securities indenture, or any supplemental
indenture, provided that any such change or elimination shall become effective only when there is no outstanding contingent convertible
capital security of any series created prior to the execution of such supplemental indenture that is entitled to the benefit of
such provision or as to which such supplemental indenture would apply; |
| · | to secure the contingent convertible capital securities; |
| · | to change any place of payment, so long as a place of payment as required by the
contingent convertible capital securities indenture is maintained; |
| · | to cure any ambiguity, to correct or supplement any provision of the contingent convertible capital securities indenture which
may be defective or inconsistent with any other provision of the contingent convertible capital securities indenture or in any
supplemental indenture; |
| · | to evidence and provide for the acceptance of appointment under the contingent convertible capital securities indenture by
a successor trustee with respect to the contingent convertible capital securities of one or more series and to add to or change
any of the provisions of the contingent convertible capital securities indenture as shall be necessary to provide for or facilitate
the administration of the trusts under the contingent convertible capital securities indenture by more than one trustee, pursuant
to the requirements of the contingent convertible capital securities indenture; |
| · | to change or eliminate any provision of the contingent convertible capital securities indenture so as to conform with the current
provisions or any future provisions of the Trust Indenture Act; |
| · | with respect to any contingent convertible capital security (including a global security), to amend any such contingent convertible
capital security to conform to the description of the terms of such contingent convertible capital security in the prospectus,
prospectus supplement, product supplement, pricing supplement or any other similar offering document related to the offering of
such contingent convertible capital security; and |
| · | to change
or modify any provision of the contingent convertible capital securities indenture as necessary to ensure that the contingent
convertible capital securities of any series shall be convertible into ordinary shares of Newco in the event of a Newco Scheme. |
Other modifications and amendments may
be made to the contingent convertible capital securities indenture and any applicable supplemental indenture with the consent of
not less than a majority in aggregate outstanding Liquidation Preference of the contingent convertible capital securities of the
series outstanding under the contingent convertible capital securities indenture and any applicable supplemental indenture that
are affected by the modification or amendment, voting as one class. However, no modifications or amendments may be made without
the consent of the holder of each contingent convertible capital security affected that would:
| · | change the terms of any contingent convertible capital security to include a stated maturity date; |
| · | reduce the Liquidation Preference of, the Distribution rates of, or the payments with respect to any contingent convertible
capital security, other than as permitted under the contingent convertible capital securities indenture and any applicable supplemental
indenture; |
| · | change Banco Santander’s (or any successor’s) obligation to pay Additional Amounts; |
| · | change the currency of payment; |
| · | reduce the percentage in aggregate Liquidation Preference of outstanding contingent convertible capital securities of the series
necessary to modify or amend the applicable indenture or to waive compliance with certain provisions of the contingent convertible
capital securities indenture and any applicable supplemental indenture; |
| · | impair the right to institute suit for the enforcement of any payment due and payable; |
| · | modify the subordination provisions or the terms of Banco Santander’s obligations in respect of the payment of
amounts due and payable on the contingent convertible capital securities in a manner adverse to the holders, in each case
other than as permitted under the contingent convertible capital securities indenture or applicable supplemental
indenture; |
| · | modify the provisions of the contingent convertible capital securities indenture affecting the calculation of, and any adjustment
to, the Conversion Price; or |
| · | modify the above requirements. |
In addition to the permitted amendments
described in the preceding paragraph, Banco Santander and the trustee may amend or supplement the contingent convertible capital
securities indenture or the contingent convertible capital securities of any series and the related supplemental indenture without
the consent of any holders of the contingent convertible capital securities of such series to conform the provisions of the contingent
convertible capital securities indenture to this “Description of Contingent Convertible Capital Securities” section
in this registration statement and the applicable prospectus supplement.
Any agreements, arrangements or understandings
between Banco Santander and any holder and beneficial owner of the contingent convertible capital securities of any series with respect to the
contingent convertible capital securities of such series must be entered into in accordance with the terms of the contingent convertible
capital securities indenture and any applicable supplemental indenture.
In addition, unless the relevant prospectus
supplement provides otherwise, any variations in the terms and conditions of the contingent convertible capital securities of any
series, including modifications relating to the subordination or redemption provisions of such contingent convertible capital securities,
can only be made in accordance with the rules and requirements of the Regulator, as and to the extent applicable from time to time.
No vote of the outstanding holders of the
contingent convertible capital securities of any series will be required for Banco Santander to redeem and cancel the contingent
convertible capital securities of such series.
Notwithstanding that the contingent
convertible capital securities of any series confer an entitlement to vote under any of the circumstances described above,
neither Banco Santander nor any Subsidiary, to the extent that it is a holder of the contingent convertible
capital securities of such series of Banco Santander, shall be so entitled to vote.
The holders of any series
of contingent convertible capital securities of any series will have no voting rights at any extraordinary or ordinary
meetings of Shareholders of Banco Santander.
Additional Issuances
Banco Santander may, without the consent
of the holders of the contingent convertible capital securities of any series, issue additional contingent convertible capital
securities of such series having the same ranking and same Distribution Rate, redemption terms and other terms as the contingent
convertible capital securities of such series described in the relevant prospectus supplement except for the price to the public,
original Distribution accrual date, issue date and first Distribution Payment Date, provided however that such additional contingent
convertible capital securities will not have the same CUSIP, ISIN or other identifying number as the outstanding contingent convertible
capital securities of the relevant series unless the additional contingent convertible capital securities are fungible with the
outstanding contingent convertible capital securities of the relevant series for U.S. federal income tax purposes. Any such additional
contingent convertible capital securities, together with the contingent convertible capital securities of the relevant series offered
by the relevant prospectus supplement, will constitute a single series of securities under the contingent convertible capital securities
indenture. There is no limitation on the amount of contingent convertible capital securities that Banco Santander may issue under
the contingent convertible capital securities indenture.
Banco Santander may without the
consent or sanction of the holders of the relevant series of contingent convertible capital securities: (i) take any action
required to issue additional Parity Securities or authorise, create and issue one or more other series of Parity Securities
ranking equally with the contingent convertible capital securities of such series, as to the participation in the profits
and/or assets of Banco Santander, without limit as to the amount; or (ii) take any action required to authorise, create and
issue one or more other classes or series of shares of Banco Santander or securities mandatorily convertible into
Common Shares of Banco Santander ranking junior to the contingent convertible capital securities of any series, as to the
participation in the profits and/or assets of Banco Santander.
By acquiring a contingent convertible capital
security of any series, each holder of contingent convertible capital securities of such series agrees to renounce any rights of
seniority or preference that may be conferred upon it (if any) under applicable Spanish law over any holder of such other Parity
Securities issued by Banco Santander from time to time.
The contingent convertible capital securities
of any series do not grant the holders the contingent convertible capital securities of such series pre-emption rights in respect
of any possible future issues of Parity Securities or any other securities by Banco Santander or any Subsidiary.
Substitution of Issuer
Banco Santander may, without the consent
of the holders of any of the contingent convertible capital securities of any series, consolidate with, amalgamate, merge into
or transfer or lease Banco Santander’s assets substantially as an entirety to any person, provided that (a) any successor
corporation formed by any consolidation, amalgamation or merger, or any transferee or lessee of o Banco Santander’s assets, is a company organized
under the laws of any part of the European Union that expressly assumes, by a supplemental indenture, Banco Santander’s obligations
on the contingent convertible capital securities of such series and under the contingent convertible capital securities indenture,
and such supplemental indenture to be executed by Banco Santander and such successor entity, if applicable, and delivered to the
trustee, in form satisfactory to the trustee; (b) immediately after giving effect to such consolidation, amalgamation or merger,
no Enforcement Event and no event which, after notice or lapse of time or both, would become an Enforcement Event, shall have occurred
and be continuing; (c) Banco Santander shall have delivered to the trustee an officer’s certificate and an opinion of counsel
in such forms as are required in the relevant indenture. In such event, Additional Amounts under the contingent convertible capital
securities of such series will be payable for taxes imposed by the jurisdiction of incorporation or tax residence of the successor
entity (subject to exceptions equivalent to those that apply to the obligation to pay Additional Amounts for taxes imposed by the
laws of Spain) rather than taxes imposed by Spain.
A holding company of Banco Santander may
assume the obligations of Banco Santander under the contingent convertible capital securities of any series, subject to the prior
consent of the European Central Bank, if required, with respect to any series of contingent convertible capital securities, without
the consent of the holders of the any series of contingent convertible capital securities, provided that (a) the successor entity
shall expressly assume such obligations by an amendment to the relevant indenture, executed by Banco Santander and such successor
entity, if applicable, and delivered to the trustee, in form satisfactory to the trustee; (b) immediately after giving effect to
such assumption of obligations, no Enforcement Event and no event which, after notice or lapse of time or both, would become an
Enforcement Event, shall have occurred and be continuing; and (c) Banco Santander shall have delivered to the trustee an officer’s
certificate and an opinion of counsel in such forms as are required in the contingent convertible capital securities indenture.
In the event of any assumption, Additional Amounts under the contingent convertible capital securities of such series will be payable
for taxes imposed by the jurisdiction of incorporation or tax residence of the assuming entity (subject to exceptions equivalent
to those that apply to the obligation to pay Additional Amounts for taxes imposed by the laws of Spain) rather than taxes imposed
by Spain.
Additional Amounts for payments of Distributions
or Liquidation Preference due prior to the date of the assumption will be payable only for taxes imposed by Spain. The assuming
corporation will also be entitled to redeem the contingent convertible capital securities of any series in the circumstances described
above under the section “—Redemption Due to a Tax Event” for any change or amendment to, or change in the application
or official interpretation of, the laws or regulations of the assuming entity’s jurisdiction of incorporation or tax residence,
which change or amendment must, in the case of a substituted issuer, occur subsequent to the date of such assumption if the assuming
entity is not incorporated or tax resident in Spain. Upon such assumption, Banco Santander will be released from all its obligations
under the applicable contingent convertible capital securities and contingent convertible capital securities indenture and any
supplemental indentures.
An assumption of the obligations of
Banco Santander under any series of contingent convertible capital securities might be considered for U.S. federal income tax
purposes to be an exchange by the holders of the contingent convertible capital securities of such series for new contingent convertible
capital securities, resulting in recognition of taxable gain or loss for these purposes and possible other adverse tax consequences
for such holders. Holders should consult their tax advisors regarding the U.S. federal, state and local income tax consequences
of an assumption.
Governing Law
The contingent convertible capital securities
of any series, the contingent convertible capital securities indenture and any supplemental indentures will be governed by and
construed in accordance with the laws of the State of New York, except that the authorization and execution
by Banco Santander of the indentures and the contingent convertible capital securities, certain provisions of the contingent convertible
capital securities and the contingent convertible capital securities indenture related to the subordination of the contingent convertible
capital securities as well as the price at which contingent convertible capital securities can be issued, certain minimum requirements
with respect to the conversion price and the legal regime applicable for the exclusion of the pre-emptive rights shall be governed
by and construed in accordance with Spanish law.
Waiver of Right of Set-off
Subject to applicable law, neither any holder
or beneficial owner of the contingent convertible capital securities of any series nor the trustee acting on behalf of the holders
of the contingent convertible capital securities of such series may exercise, claim or plead any right of set-off, compensation
or retention in respect of any amount owed to it by Banco Santander in respect of, or arising under, or in connection with, the
contingent convertible capital securities of such series or the contingent convertible capital securities indenture and each holder
and beneficial owner of the contingent convertible capital securities of such series, by virtue of its holding of any contingent
convertible capital securities of such series or any interest therein, and the trustee acting on behalf of the holders of the contingent
convertible capital securities of such series, shall be deemed to have waived all such rights of set-off, compensation or retention.
If, notwithstanding the above, any amounts due and payable to any holder or beneficial owner of a contingent convertible capital
security of any series or any interest therein by Banco Santander in respect of, or arising under, the contingent convertible capital
securities of such series are discharged by set-off, such holder or beneficial owner shall, subject to applicable law, immediately
pay an amount equal to the amount of such discharge to Banco Santander (or, if a Liquidation Event (as defined below) shall have
occurred, the liquidator or administrator of Banco Santander, as the case may be) and, until such time as payment is made, shall
hold an amount equal to such amount in trust (where possible) or otherwise for Banco Santander (or the liquidator or administrator
of Banco Santander, as the case may be) and, accordingly, any such discharge shall be deemed not to have taken place.
Trustee and Agents
Unless stated otherwise in the relevant
prospectus supplement, the trustee for the contingent convertible capital securities of any series will be The Bank of New York
Mellon acting through its London Branch. The trustee makes no representations, and shall not be liable with respect to, the information
set forth in this registration statement.
Unless stated otherwise in the relevant
prospectus supplement, The Bank of New York Mellon acting through its London Branch will initially act as Principal Paying Agent
and Calculation Agent for the contingent convertible capital securities of any series. Banco Santander may appoint additional or
successor agents (together, the “Agents”).
Banco Santander will procure that there
will at all times be a Principal Paying Agent and a Calculation Agent. Banco Santander may change the Principal Paying Agent without
prior notice to the holders of the contingent convertible capital securities of any series, and in such an event Banco Santander
may act as Principal Paying Agent. Banco Santander is entitled to appoint other banks of international standing as Agents, or,
in the case of the Calculation Agent only, Banco Santander may appoint a financial adviser with appropriate expertise. Furthermore,
Banco Santander is entitled to terminate the appointment of any Agent. In the event of such termination or such Agent being unable
or unwilling to continue to act as Agent in the relevant capacity, Banco
Santander will appoint another bank of
international standing, or, in the case of the Calculation Agent only, another financial adviser with appropriate expertise as
Agent in the relevant capacity. Such appointment or termination will be published without undue delay in accordance with the contingent
convertible capital securities indenture or, should this not be possible, be published in another appropriate manner.
Agreement and Acknowledgement with Respect to the Exercise
of the Spanish Bail-in Power
Notwithstanding any other term of the contingent
convertible capital securities of any series or any other agreements, arrangements, or understandings between Banco Santander and
any holder of the contingent convertible capital securities of any series, by its acquisition of the contingent convertible capital
securities of any series, each holder (which, for the purposes of this clause, includes each holder of a beneficial interest in
the contingent convertible capital securities of any series) acknowledges, accepts, consents to and agrees to be bound by:
(a) the effect of the exercise of the Spanish
Bail-in Power by the relevant resolution authority, which exercise may include and result in any of the following, or some combination
thereof:
(i) the reduction of all, or a portion,
of the Amounts Due on the contingent convertible capital securities of such series;
(ii) the conversion of all, or a portion,
of the Amounts Due on the contingent convertible capital securities of such series into ordinary shares, other securities or other
obligations of Banco Santander or another person (and the issue to or conferral on the holder of the contingent convertible capital
securities of such series of such shares, securities or obligations), including by means of an amendment, modification or variation
of the terms of the contingent convertible capital securities of such series;
(iii) the cancellation of the contingent
convertible capital securities of such series;
(iv) the amendment or alteration of the
Liquidation Preference of the contingent convertible capital securities of such series or amendment of the amount of Distributions
payable on the contingent convertible capital securities of such series, or the date on which the Distributions become payable,
including by suspending payment for a temporary period; and
(b) the variation of the terms of the contingent
convertible capital securities of such series, if necessary, to give effect to the exercise of the Spanish Bail-in Power by the
relevant resolution authority.
For these purposes, the “Amounts
Due” are the Liquidation Preference, together with any accrued but unpaid Distributions, and Additional Amounts, if any,
due on the contingent convertible capital securities of any series. References to such amounts will include amounts that have become
due and payable, but which have not been paid, prior to the exercise of the Spanish Bail-in Power by the relevant resolution authority.
For these purposes, the “Spanish Bail-in Power”
is any write-down, conversion, transfer, modification, or suspension power existing from time to time under, and exercised in compliance
with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of Directive
2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, as amended or
superseded from time to time, (“BRRD”), including but not limited to Law 11/2015, of June 18, for the recovery
and resolution of credit institutions and investment firms, as amended from time to time (“Law 11/2015”), and up
to 31 December 2015 (inclusive), Law 9/2012, of 14 November, on restructuring and resolution of credit institutions, (ii) the Regulation
(EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and a uniform procedure
for the resolution of credit institutions and certain investment firms in the framework of the Single Resolution Mechanism and
the Single Resolution Fund and amending Regulation (EU) No. 1093/2010, as amended or superseded from time to time (the “SRM
Regulation”) and (iii) the instruments, rules and standards created thereunder, pursuant to which any obligation of a
regulated entity (as defined below) (or other affiliate of such regulated entity) can be reduced, cancelled, modified, or converted
into shares, other securities, or other obligations of such regulated entity or any other person (or suspended for a temporary
period).
A reference to a “regulated entity”
is to any entity to which Law 11/2015 applies as provided under article 1.2 of Law 11/2015, which includes, certain credit institutions,
investment firms, and certain of their parent or holding companies.
A reference to the “relevant
resolution authority” is to the Spanish Fund for the Orderly Restructuring of Banks (the “FROB”), the European Single
Resolution Mechanism, as the case may be, according to Law 11/2015, and any other entity with the authority to exercise the
Spanish Bail-in Power from time to time.
No repayment or payment of Amounts Due on
the contingent convertible capital securities of any series, will become due and payable or be paid after the exercise of any Spanish
Bail-in Power by the relevant resolution authority if and to the extent such amounts have been reduced, converted, cancelled, amended
or altered as a result of such exercise.
Neither a reduction or cancellation, in
part or in full of the Amounts Due on, the conversion thereof into another security or obligation of Banco Santander or another
person, as a result of the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to Banco Santander,
nor the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to the contingent convertible capital
securities of any series will be an Enforcement Event.
Upon the exercise of the Spanish Bail-in
Power by the relevant resolution authority with respect to the contingent convertible capital securities of any series, Banco Santander
will provide a written notice to the holders of the contingent convertible capital securities of such series through DTC as soon
as practicable regarding such exercise of the Spanish Bail-in Power. Banco Santander will also deliver a copy of such notice to
the trustee for information purposes.
By its acquisition of the contingent convertible
capital securities of any series, each holder of the contingent convertible capital securities of such series, (which, for the
purposes of this clause, includes each holder of a beneficial interest in the contingent convertible capital securities of such
series), to the extent permitted by the Trust Indenture Act, will waive any and all claims, in law and/or in equity, against the
trustee for, agree not to initiate a suit against the trustee in respect of, and agree that the trustee will not be liable for,
any action that the trustee takes, or abstains from taking, in either case in accordance with the exercise of the Spanish Bail-in
Power by the relevant resolution authority with respect to the contingent convertible capital securities of such series.
Additionally, by its acquisition of the
contingent convertible capital securities of any series, each holder of the contingent convertible capital securities of such series
acknowledges and agrees that, upon the exercise of the Spanish Bail-in Power by the relevant resolution authority:
(i) the trustee will not be required to
take any further directions from the holders of the contingent convertible capital securities of such series with respect to any
portion of the contingent convertible capital securities of such series that are written-down, converted to equity and/or cancelled
under the contingent convertible capital securities indenture, which authorizes holders of a majority in aggregate outstanding
Liquidation Preference of the contingent convertible capital securities of such series to direct certain actions relating to the
contingent convertible capital securities of such series; and
(ii) the contingent convertible capital
securities indenture will not impose any duties upon the trustee whatsoever with respect to the exercise of the Spanish Bail-in
Power by the relevant resolution authority;
provided, however, that
notwithstanding the exercise of the Spanish Bail-in Power by the relevant resolution authority, so long as the contingent
convertible capital securities of any series remain outstanding, there will at all times be a trustee for the contingent
convertible capital securities of such series in accordance with the contingent convertible capital securities indenture,
and the resignation and/or removal of the trustee and the appointment of a successor trustee will continue to be governed by
the contingent convertible capital securities indenture, including to the extent no additional supplemental indenture
or amendment is agreed upon in the event the contingent convertible capital securities of such series remain
outstanding following the completion of the exercise of the Spanish Bail-in Power.
By its acquisition of the contingent convertible
capital securities of any series, each holder of the contingent convertible capital securities of such series acknowledges and
agrees that neither a cancellation or deemed cancellation of the Liquidation Preference or Distributions (in each case, in whole
or in part), nor the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to the contingent
convertible capital securities of such series will give rise to a default for purposes of Section 315(b) (Notice of Default) and
Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act.
By purchasing the contingent convertible
capital securities of any series, each holder (including each beneficial owner) of the contingent convertible capital securities
of such series shall be deemed to have authorized, directed
and requested DTC and any direct participant
in DTC or other intermediary through which it holds contingent convertible capital securities of such series to take any and all
necessary action, if required, to implement the exercise of the Spanish Bail-in Power with respect to the contingent convertible
capital securities of such series as it may be imposed, without any further action or direction on the part of such holder.
Enforcement Events and Remedies
There are no events of default under any
series of contingent convertible capital securities. In addition, under the terms of the contingent convertible capital securities
indenture neither the Trigger Conversion nor the exercise of the Spanish Bail-in Power or any other resolution tools by the relevant
resolution authority or any action in compliance therewith will be an Enforcement Event.
Enforcement Events
Each of the following events described in clauses (i), (ii) and (iii) is an “Enforcement Event”
with respect to the contingent convertible capital securities of any series:
(i) non-payment of
Redemption Price when due as further described in “—Redemption and Repurchase — Non-payment of Redemption
Price” above;
(ii) the breach of any term,
obligation or condition binding on Banco Santander under the contingent convertible capital securities of any series or the
contingent convertible capital securities indenture (other than any of Banco Santander’s payment obligations under or arising
from the contingent convertible capital securities of any series or the contingent convertible capital securities
indenture, including payment of any Liquidation Preference or Distributions, including any damages awarded for breach of
any obligations) (a “Performance Obligation”); or
(iii) the occurrence of a Liquidation
Event prior to the occurrence of a Trigger Event.
Remedies
The sole remedies of the holders of the
contingent convertible capital securities of a series and the trustee under the contingent convertible capital securities of such
series or the contingent convertible capital securities indenture upon the occurrence of an Enforcement Event shall be (1) to seek
enforcement of Banco Santander’s obligation to pay the Redemption Price of the securities of such series if not paid within
14 days of the date fixed for redemption (provided that the applicable conditions described under “—Redemption and
Repurchase” above shall have been satisfied), (2) to seek enforcement of a Performance Obligation, and (3) to enforce the
entitlement described under “—Liquidation Distribution” above. The foregoing shall not prevent the holders of
the contingent convertible capital securities of such series or the trustee from instituting proceedings for the bankruptcy of
Banco Santander.
For the avoidance of doubt, the
breach by Banco Santander of any Performance Obligation shall not give the trustee and/or the holders of the contingent
convertible capital securities of any series a claim for damages, and, in such circumstances, the sole and exclusive remedy
that the trustee and/or the holders of the contingent convertible capital securities of such series may seek under the
contingent convertible capital securities of such series and the contingent convertible capital securities indenture is
specific performance under New York law. By its acquisition of the contingent convertible capital securities of any series,
each holder of the contingent convertible capital securities of such series will acknowledge and agree that such holder will
not seek, and will not direct the trustee to seek, a claim for damages against Banco Santander in respect of a breach by
Banco Santander of a Performance Obligation and that the sole and exclusive remedy that such holder and the trustee may seek
under the contingent convertible capital securities of such series and the contingent convertible capital securities
indenture for a breach by Banco Santander of a Performance Obligation is specific performance under New York law.
No Other Remedies
Other than the limited remedies specified
above, no remedy against Banco Santander shall be available to the trustee (acting on behalf of the holders of the contingent convertible
capital securities of any series) or to the holders of the contingent convertible capital securities of such series, provided that
(1) the trustee shall have such powers as are required to be authorized to it under the Trust Indenture Act in respect of the rights
of the holders under the provisions of the contingent convertible capital securities indenture and (2) nothing shall impair the
rights of a
holder of the contingent convertible
capital securities under the Trust Indenture Act, absent such holder’s consent, to sue for any payment due but unpaid
in respect of the contingent convertible capital securities, provided that, in the case of (1) and (2), any payments in
respect of, or arising from, the contingent convertible capital securities of such series including any payments or amounts
resulting or arising from the enforcement of any rights under the Trust Indenture Act in respect of the contingent
convertible capital securities of such series shall be subject to the subordination provisions of the contingent
convertible capital securities indenture. For the avoidance of doubt, such limitations shall not apply to Banco
Santander’s obligations to pay the fees and expenses of, and to indemnify, the trustee.
The contingent convertible capital securities
of any series are perpetual securities in respect of which there is no fixed redemption date or maturity date. Holders of the contingent
convertible capital securities of any series may not require any redemption of the contingent convertible capital securities of
such series at any time.
Trustee’s Duties
If an Enforcement Event has occurred
and is continuing, the trustee shall exercise such of the rights and powers vested in it by the contingent convertible
capital securities indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs. Holders of not less than a majority in aggregate
Liquidation Preference of the outstanding contingent convertible capital securities of any series may on behalf of all
holders of the contingent convertible capital securities of such series waive any past Enforcement Event that results from a
breach by Banco Santander of a Performance Obligation. Holders of a majority of the aggregate Liquidation Preference of the
outstanding contingent convertible capital securities of any series may not waive any past Enforcement Events that result
from a Liquidation Event or non-payment of Redemption Price when due.
If an Enforcement Event has occurred and
is continuing, the trustee will have no obligation to take any action at the direction of any holders of the contingent convertible
capital securities of any series, unless they have offered the trustee security or indemnity satisfactory to the trustee in its
sole discretion. The holders of a majority in aggregate Liquidation Preference of the outstanding contingent convertible capital
securities of any series shall have the right to direct the time, method and place of conducting any proceeding in the name of
and on the behalf of the trustee for any remedy available to the trustee or exercising any trust or power conferred on the trustee
with respect to the contingent convertible capital securities of such series. However, this direction (a) must not be in conflict
with any rule of law or the contingent convertible capital securities indenture and (b) must not be unjustly prejudicial to the
holders of the contingent convertible capital securities of such series not taking part in the direction, in the case of either
(a) or (b) as determined by the trustee in its sole discretion. The trustee may also take any other action, consistent with the
direction, that it deems proper.
By acquiring the contingent convertible
capital securities of any series, the holders and beneficial owners will acknowledge and agree that neither a Trigger Conversion,
a cancellation or deemed cancellation of Distributions, (in each case, in whole or in part) in accordance with the terms of the
contingent convertible capital securities indenture and the contingent convertible capital securities of such series nor the exercise
of the Spanish Bail-in Power or any other resolution tools by the relevant resolution authority or any action in compliance therewith
will give rise to a default for the purposes of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the
Trustee in Case of Default) of the Trust Indenture Act.
Limitation on Suits
No holder of contingent convertible capital
securities will be entitled to proceed directly against Banco Santander, except as described below.
Subject to any further limitations provided
in the relevant prospectus supplement and supplemental indenture establishing any series of contingent convertible capital securities,
before a holder of the contingent convertible capital securities may bypass the trustee and bring its own lawsuit or other formal
legal action or take other steps to enforce its rights or protect its interests relating to the contingent convertible securities,
the following must occur:
| · | The holder must have given the trustee written notice that a continuing Enforcement Event has occurred and remains uncured. |
| · | The holders of not less than 25% in outstanding Liquidation Preference of the contingent convertible capital securities of
the relevant series must make a written request that the trustee institute proceedings because of the Enforcement Event, and the
holder must offer indemnity satisfactory to the trustee in its sole discretion against the cost and other liabilities incurred
in connection with such request. |
| · | The trustee must not have taken action for 60 days after receipt of the above notice and offer of security or indemnity, and
the trustee must not have received an inconsistent direction from the majority in Liquidation Preference of all outstanding contingent
convertible capital securities of the relevant series during that period. |
Notwithstanding any other provision of
the contingent convertible capital securities indenture or the contingent convertible capital securities, the right of any holder
of contingent convertible capital securities to receive payment of the Liquidation Preference of and Distributions on, the contingent
convertible capital securities, on or after the due dates thereof or to institute suit for the enforcement of any such payment
on or after such respective dates, will not be impaired or affected without the consent of such holder.
Notices
All notices to holders of registered contingent
convertible capital securities shall be validly given if in writing and mailed, first-class postage prepaid, to them at their respective
addresses in the register maintained by the trustee.
If and for so long as the contingent convertible
capital securities of the relevant series are admitted to trading on a stock exchange, notices will also be given in accordance
with any applicable requirements of such stock exchange.
No Obligations to Beneficial Owners
None of Banco Santander, the trustee,
the paying agent or the contingent convertible capital security registrar shall have any responsibility or obligation to any beneficial
owner in a global security, an agent member or other person with respect to the accuracy of the records of the depositary or its
nominee or of any agent member, with respect to any ownership interest in the contingent convertible capital securities or with
respect to the delivery to any agent member, beneficial owner or other person (other than the depository) of any notice (including
any notice of redemption) or the payment of any amount, under or with respect to such contingent convertible capital securities.
All notices and communications to be given to the holders and all payments to be made to holders under the contingent convertible
capital securities and the respective indenture shall be given or made only to or upon the order of the registered holders (which
shall be the depositary or its nominee in the case of the global security). The rights of beneficial owners in the global security
shall be exercised only through the depositary subject to the applicable procedures. Banco Santander, the trustee, the paying agent
and the contingent convertible capital security registrar shall be entitled to rely and shall be fully protected in relying upon
information furnished by the depositary with respect to its members, participants and any beneficial owners. Banco Santander, the
trustee, the paying agent and the contingent convertible capital security registrar shall be entitled to deal with the depositary,
and any nominee thereof, that is the registered holder of any global security for all purposes of the indenture relating to such
global security (including the payment of principal, premium, if any, and interest and additional amounts, if any, and the giving
of instructions or directions by or to the owner or holder of a beneficial ownership interest in such global security) as the sole
holder of such global security and shall have no obligations to the beneficial owners thereof. None of Banco Santander, the trustee,
the paying agent or the contingent convertible capital security registrar shall have any responsibility or liability for any acts
or omissions of the depositary with respect to such global security, for the records of any such depositary, including records
in respect of beneficial ownership interests in respect of any such global security, for any transactions between the depositary
and any agent member or between or among the depositary, any such agent member and/or any holder or owner of a beneficial interest
in such global security, or for any transfers of beneficial interests in any such global security.
Notwithstanding the foregoing, with respect
to any global security, nothing herein shall prevent Banco Santander, the trustee, or any agent of Banco Santander or the trustee
from giving effect to any written certification, proxy or other authorization furnished by any depositary (or its nominee), as
a holder, with respect to such global security or shall impair, as between such depositary and owners of beneficial interests in
such global security, the operation of customary practices governing
the exercise of the rights of such depositary (or its nominee) as holder of such global security.
Subsequent Holders’ Agreement
Holders and beneficial owners of the contingent
convertible capital securities of any series that acquire the contingent convertible capital securities of such series or beneficial
interests therein in the secondary market shall be deemed to acknowledge, agree to be bound by and consent to the same provisions
specified herein to the same extent as the holders and beneficial owners of the contingent convertible capital securities of such
series that acquire the contingent convertible capital securities of such series upon their initial issuance, including, without
limitation, with respect to the acknowledgment and agreement to be bound by and consent to the terms of the contingent convertible
capital securities of such series, including in relation to Distribution cancellation, the Trigger Conversion, the Spanish Bail-in
Power and the limitations on remedies specified in “—Enforcement Events and Remedies” above.
The Trustee
The Bank of New York Mellon acting through
its London Branch, One Canada Square, London E14 5AL, is the trustee under the indenture with respect to the contingent convertible
capital securities. The trustee shall have and be subject to all the duties and responsibilities specified with respect to an indenture
trustee under the Trust Indenture Act. Subject to the provisions of the Trust Indenture Act, the trustee is under no obligation
to exercise any of the powers vested in it by the contingent convertible capital securities indenture at the request of any holder
of contingent convertible capital securities, unless offered indemnity satisfactory to the trustee in its sole discretion by the
holder against the costs, expense and liabilities which might be incurred thereby. Banco Santander and certain of its subsidiaries
maintain deposit accounts and conduct other banking transactions with The Bank of New York Mellon in the ordinary course of its
business. The Bank of New York Mellon is also the book-entry depositary and Principal Paying Agent with respect to Banco Santander’s
contingent convertible capital securities. The Bank of New York Mellon is the depositary with respect to the American Depositary
Shares representing certain of Banco Santander’s preference shares and Banco Santander’s ordinary shares.
Consent to Service of Process
Under the contingent convertible capital
securities indenture, Banco Santander irrevocably designates Banco Santander, S.A., New York Branch, as its authorized agent for
service of process in any legal action or proceeding arising out of or relating to the contingent convertible capital securities
indenture or any supplemental indentures or any contingent convertible capital securities brought in any federal or state court
in The City of New York, New York and we irrevocably submit to the jurisdiction of those courts.
Description
of Certain Provisions Relating to Debt Securities and
Contingent Convertible Capital Securities
Agreement and Acknowledgement with Respect to the Exercise
of Resolution Tools
Notwithstanding any other term of
the securities of any series or any other agreements, arrangements, or understandings between the relevant issuer or Banco
Santander and any holder of the securities of any series, by its acquisition of the securities of any series, each holder
(which, for the purposes of this clause, includes each holder of a beneficial interest in the securities of any series)
acknowledges, accepts, consents and agrees to be bound by the effect of the exercise of any resolution tools (including but
not limited to the sale of business tool, the bridge institution tool and the asset separation tool) by the relevant
resolution authority in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain,
relating to (i) the transposition of BRRD, including but not limited to Law 11/2015, (ii) the SRM Regulation and (iii) the
instruments, rules and standards created thereunder.
By its acquisition of the securities of
any series, each holder of the securities of such series, (which, for the purposes of this clause, includes each holder of a beneficial
interest in the securities of such series), to the extent
permitted by the Trust Indenture Act, will
waive any and all claims, in law and/or in equity, against the trustee for, agree not to initiate a suit against the trustee in
respect of, and agree that the trustee will not be liable for, any action that the trustee takes, or abstains from taking, in either
case in accordance with the exercise of any resolution power by the relevant resolution authority.
Additionally, by its acquisition of the
securities of any series, each holder of the securities of such series acknowledges and agrees that, upon the exercise of
any resolution power by the relevant resolution authority the relevant indenture will not impose any duties upon the trustee whatsoever
with respect to the exercise of any resolution tool by the relevant resolution authority (including no duty whatsoever to take
any directions from the holders of the securities of such series); provided, however, that notwithstanding the exercise of any
resolution tool by the relevant resolution authority, so long as the securities of any series remain outstanding, there will at
all times be a trustee for the securities of such series in accordance with the relevant indenture, and the resignation and/or
removal of the trustee and the appointment of a successor trustee will continue to be governed by the relevant indenture, including
to the extent no additional supplemental indenture or amendment is agreed upon in the event the securities of such series remain
outstanding following the completion of the exercise of the resolution tool.
By its acquisition of the securities of
any series, each holder (including each beneficial owner) of the securities of such series shall be deemed to have authorized,
directed and requested DTC and any direct participant in DTC or other intermediary through which it holds the securities of such
series to take any and all necessary action, if required, to implement the exercise of any resolution tool with respect to the
securities of such series as it may be imposed, without any further action or direction on the part of such holder.
Form of Securities; Book-Entry System
Unless the relevant prospectus supplement
states otherwise, the securities shall initially be represented by one or more global securities in registered form, without coupons
attached, and will be deposited with or on behalf of one or more depositaries identified in the applicable prospectus supplement,
including, without limitation, DTC, Euroclear Bank, as operator of Euroclear and/or Clearstream Luxembourg, and will be registered
in the name of such depositary or its nominee. Unless and until the securities are exchanged in whole or in part for other securities
that we issue or the global securities are exchanged for definitive securities, the global securities may not be transferred except
as a whole by the depositary to a nominee or a successor of the depositary.
Special procedures to facilitate clearance
and settlement have been established among these clearing systems to trade securities across borders in the secondary market. Where
payments for securities we issue in global form will be made in U.S. dollars, these procedures can be used for cross-market transfers
and the securities will be cleared and settled on a delivery against payment basis. Cross-market transfers of securities that are
not in global form may be cleared and settled in accordance with other procedures that may be established among the clearing systems
for these securities.
The securities may be accepted for clearance
by DTC, Euroclear and Clearstream Luxembourg.
The laws of some states may require that
certain investors in securities take physical delivery of their securities in definitive form. Those laws may impair the ability
of investors to own interests in book-entry securities.
Neither we nor the trustee nor any of our
or its agents has any responsibility for any aspect of the actions of DTC, Clearstream Luxembourg or Euroclear or any of their
direct or indirect participants. Neither we nor the trustee nor any of our or its agents has any responsibility for any aspect
of the records kept by DTC, Clearstream Luxembourg or Euroclear or any of their direct or indirect participants. Neither we nor
the trustee nor any of our or its agents supervise these systems in any way. This is also true for any other clearing system indicated
in a prospectus supplement.
DTC, Clearstream Luxembourg, Euroclear
and their participants perform these clearance and settlement functions under agreements they have made with one another or with
their customers. Investors should be aware that DTC, Clearstream Luxembourg, Euroclear and their participants are not obligated
to perform these procedures and may modify them or discontinue them at any time.
The description of the clearing systems
in this section reflects our understanding of the rules and procedures of DTC, Clearstream Luxembourg and Euroclear as they are
currently in effect. Those systems could change their rules and procedures at any time.
So long as the depositary, or its nominee,
is the holder of a global security, the depositary or its nominee will be considered the sole holder of such global security for
all purposes under the relevant indentures. Except as described below under “—Issuance of Definitive Securities”,
no participant, indirect participant or other person will be entitled to have securities registered in its name, receive or be
entitled to receive physical delivery of securities in definitive form or be considered the owner or holder of the securities under
the relevant indentures. Each person having an ownership or other interest in securities must rely on the procedures of the depositary,
and, if a person is not a participant in the depositary, must rely on the procedures of the participant or other securities intermediary
through which that person owns its interest to exercise any rights and obligations of a holder under the applicable indentures
or the securities.
The Clearing Systems
DTC, Euroclear and Clearstream Luxembourg
have advised us as follows:
DTC. DTC, the world’s largest
securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization”
within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within
the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions
of Section 17A of the Securities Exchange Act 1934, as amended (“Exchange Act”). DTC holds securities deposited with
it by its participants and facilitates the settlement of transactions among its participants in such securities through electronic
computerized book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities
certificates. Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation
(“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation,
all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system
is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing
corporations that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly.
The DTC rules applicable to its participants are on file with the SEC. More information about DTC can be found at www.dtcc.com.
Euroclear. Euroclear holds securities
for its participants and clears and settles transactions between its participants through simultaneous electronic book-entry delivery
against payment, thus eliminating the need for physical movement of certificates. Euroclear provides various other services, including
safekeeping, administration, clearance and settlement and securities lending and borrowing, and interfaces with domestic markets
in several countries. Euroclear is operated by Euroclear Bank, under contract with Euroclear plc, a U.K. corporation. Euroclear
Bank conducts all operations, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with Euroclear
Bank, not Euroclear plc. Euroclear plc establishes policy for Euroclear on behalf of Euroclear participants. Euroclear participants
include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may
include any underwriters for the securities. Indirect access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear participant, either directly or indirectly. Euroclear is an indirect participant
in DTC. Securities clearance accounts and cash accounts with Euroclear are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System (collectively, the “Euroclear Terms and Conditions”)
and applicable law. The Euroclear Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of
securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear.
Clearstream Luxembourg. Clearstream
Luxembourg is incorporated under the laws of The Grand Duchy of Luxembourg as a société anonyme and is subject
to regulation by the Luxembourg Commission for the Supervision of the Financial Sector (Commission de Surveillance du Secteur
Financier). Clearstream Luxembourg is owned by Deutsche Börse AG, a publicly traded company. Clearstream Luxembourg holds
securities for its participants and facilitates the clearance and settlement of securities transactions among its participants
through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates.
Clearstream Luxembourg provides other services
to its participants, including safekeeping, administration, clearance and settlement of internationally traded securities and securities
lending and borrowing. Clearstream Luxembourg interfaces with domestic markets in several countries. Clearstream Luxembourg’s
customers include worldwide securities brokers and dealers, banks, trust companies and clearing corporations and may include professional
financial intermediaries. Its U.S. customers are limited to securities brokers, dealers and banks. Indirect access to the Clearstream
Luxembourg system is also available to others that clear through Clearstream Luxembourg customers or that have custodial relationships
with its customers, such as banks, brokers, dealers and trust companies. Clearstream Luxembourg is an indirect participant in DTC.
Clearstream Luxembourg has established an electronic bridge with Euroclear to facilitate settlement of trades between Clearstream
Luxembourg and Euroclear. Distributions with respect to the securities held beneficially through Clearstream Luxembourg are credited
to cash accounts of Clearstream Luxembourg customers in accordance with its rules and procedures, to the extent received by Clearstream
Luxembourg.
Other Clearing Systems
We may choose any other clearing system
for a particular series of securities. The clearance and settlement procedures for the clearing system we choose will be described
in the applicable prospectus supplement.
Payments on the Global Security
Payments of any amounts in respect of any
global securities will be made by the Principal Paying Agent to the depositary. Payments will be made to beneficial owners of securities
in accordance with the rules and procedures of the depositary or its direct and indirect participants, as applicable. Neither we
nor the trustee nor any of our agents will have any responsibility or liability for any aspect of the records of any securities
intermediary in the chain of intermediaries between the depositary and any beneficial owner of an interest in a global security,
or the failure of the depositary or any intermediary to pass through to any beneficial owner any payments that we make to the depositary.
Primary Distribution
The distribution of securities will be
cleared through one or more of the clearing systems that we have described above or any other clearing system that is specified
in the applicable prospectus supplement. Payment for securities will be made on a delivery versus payment or free delivery basis.
Clearance and settlement procedures may
vary from one series of securities to another according to the currency that is chosen for the specific series of securities. Customary
clearance and settlement procedures are described below.
We will submit applications to the relevant
system or systems for the securities to be accepted for clearance. The clearance numbers that are applicable to each clearance
system will be specified in the applicable prospectus supplement.
Clearance and Settlement Procedures—DTC
DTC participants that hold securities through
DTC on behalf of investors will follow the settlement practices applicable to United States corporate debt obligations in DTC’s
Same-Day Funds Settlement System.
Securities will be credited to the securities
custody accounts of these DTC participants against payment in same-day funds, for payments in U.S. dollars, on the settlement date.
For payments in a currency other than U.S. dollars, securities will be credited free of payment on the settlement date.
Clearance and Settlement Procedures—Euroclear and Clearstream
Luxembourg
We understand that investors that hold
securities through Euroclear or Clearstream Luxembourg accounts will follow the settlement procedures that are applicable to conventional
Eurobonds in registered form for securities.
Securities will be credited to the securities
custody accounts of Euroclear and Clearstream Luxembourg participants on the business day following the settlement date, for value
on the settlement date. They will be credited either free of payment or against payment for value on the settlement date.
Secondary Market Trading
Trading Between DTC Participants
Secondary market trading between DTC participants
will occur in the ordinary way in accordance with DTC’s rules. Secondary market trading will be settled using procedures
applicable to United States corporate debt obligations in DTC’s Same-Day Funds Settlement System for securities.
If payment is made in U.S. dollars, settlement
will be in same-day funds. If payment is made in a currency other than U.S. dollars, settlement will be free of payment. If payment
is made other than in U.S. dollars, separate payment arrangements outside of the DTC system must be made between the DTC participants
involved.
Trading Between Euroclear and/or Clearstream Luxembourg Participants
We understand that secondary market trading
between Euroclear and/or Clearstream Luxembourg participants will occur in the ordinary way following the applicable rules and
operating procedures of Euroclear and Clearstream Luxembourg. Secondary market trading will be settled using procedures applicable
to conventional Eurobonds in registered form for securities.
Trading Between a DTC Seller and a Euroclear or Clearstream
Luxembourg Purchaser
A purchaser of securities that are held
in the account of a DTC participant must send instructions to Euroclear or Clearstream Luxembourg at least one business day prior
to settlement. The instructions will provide for the transfer of the securities from the selling DTC participant’s account
to the account of the purchasing Euroclear or Clearstream Luxembourg participant. Euroclear or Clearstream Luxembourg, as the case
may be, will then instruct the common depositary for Euroclear and Clearstream Luxembourg to receive the securities either against
payment or free of payment.
The interests in the securities will be
credited to the respective clearing system. The clearing system will then credit the account of the participant, following its
usual procedures. Credit for the securities will appear on the next day, European time. Cash debit will be back-valued to, and
the interest or Distributions, as applicable, on the securities will accrue from, the value date, which would be the preceding
day, when settlement occurs in New York. If the trade fails and settlement is not completed on the intended date, the Euroclear
or Clearstream Luxembourg cash debit will be valued as of the actual settlement date instead.
Euroclear participants or Clearstream Luxembourg
participants will need the funds necessary to process same-day funds settlement. The most direct means of doing this is to pre-position
funds for settlement, either from cash or from existing lines of credit, as for any settlement occurring within Euroclear or Clearstream
Luxembourg. Under this approach, participants may take on credit exposure to Euroclear or Clearstream Luxembourg until the securities
are credited to their accounts one business day later.
As an alternative, if Euroclear or Clearstream
Luxembourg has extended a line of credit to them, participants can choose not to pre-position funds and will instead allow that
credit line to be drawn upon to finance settlement. Under this procedure, Euroclear participants or Clearstream Luxembourg participants
purchasing securities would incur overdraft charges for one business day (assuming they cleared the overdraft as soon as the securities
were credited to their accounts). However, any interest or Distributions, as applicable, on the securities would accrue from the
value date. Therefore, in many cases, the investment income on securities that is earned during that one-business day period may
substantially reduce or offset the amount of the overdraft charges. This result will, however, depend on each participant’s
particular cost of funds.
Because the settlement will take place
during New York business hours, DTC participants will use their usual procedures to deliver securities to the depositary on behalf
of Euroclear participants or Clearstream Luxembourg participants. The sale proceeds will be available to the DTC seller on the
settlement date. For the DTC participants, then, a cross-market transaction will settle no differently than a trade between two
DTC participants.
Special Timing Considerations
Investors should be aware that they will
only be able to make and receive deliveries, payments and other communications involving the securities through Clearstream Luxembourg
and Euroclear on days when those systems are open for business. Those systems may not be open for business on days when banks,
brokers and other institutions are open for business in the United States.
In addition, because of time-zone differences,
there may be problems with completing transactions involving Clearstream Luxembourg and Euroclear on the same business day as in
the United States. U.S. investors who wish to transfer their interests in the securities or to receive or make a payment or delivery
of the securities on a particular day, may find that the transactions will not be performed until the next business day in Luxembourg
or Brussels, depending on whether Clearstream Luxembourg or Euroclear is used.
Issuance of Definitive Securities
So long as the depositary holds the global
securities of a particular series of securities such global securities will not be exchangeable for definitive securities of that
series unless:
| · | the depositary notifies the trustee that it is unwilling or unable to continue to act as depositary for the securities of such
series, or, in the case of DTC, the depositary ceases to be a clearing agency registered under the Exchange Act; |
| · | the relevant issuer or Banco Santander is liquidated and we fail to make a payment on the securities when due, other than in
connection with a cancelled Distribution, Trigger Conversion or any exercise of Spanish Bail-in Power; or |
| · | at any time the relevant issuer or Banco Santander determines in its option and in its sole discretion that the global securities
of a particular series of securities should be exchanged for definitive securities of that series in registered form. |
Each person having an ownership or other
interest in a security must rely exclusively on the rules or procedures of the depositary as the case may be, and any agreement
with any direct or indirect participant of the depositary, including Euroclear or Clearstream Luxembourg and their participants,
as applicable, or any other securities intermediary through which that person holds its interest, to receive or direct the delivery
of possession of any definitive security. The indentures permit the relevant issuers to determine at any time and in their sole
discretion that securities shall no longer be represented by global securities. DTC has advised the relevant issuers that, under
its current practices, it would notify its participants of the relevant issuer’s request, but will only withdraw beneficial
interests from the global securities at the request of each DTC participant. The relevant issuers would issue definitive certificates
in exchange for any such beneficial interests withdrawn.
Unless otherwise specified in the relevant
prospectus supplement, definitive securities will be issued in registered form only. To the extent permitted by law, the relevant
issuers, the trustee and any paying agent shall be entitled to treat the person in whose name any definitive security is registered
as its absolute owner.
Payments in respect of each series of definitive
securities will be made to the person in whose name such definitive securities are registered as it appears in the register for
that series securities. Payments will be made in respect of the securities by check drawn on a bank in New York or London or, if
the holder requests, by transfer to the holder’s account in New York or London. Definitive securities should be presented
to the paying agent for redemption.
If the relevant issuers issue definitive
securities of a particular series in exchange for a particular global security, the depositary, as holder of that global security,
will surrender it against receipt of the definitive securities, cancel the book-entry securities of that series, and distribute
the definitive securities of that series to the persons and in the amounts that the depositary specifies pursuant to the internal
procedures of such depositary.
If definitive securities are issued in
the limited circumstances described above, those securities may be transferred in whole or in part in denominations of any whole
number of securities upon surrender of the definitive securities certificates together with the form of transfer endorsed on it,
duly completed and executed at the specified office of a paying agent. If only part of a securities certificate is transferred,
a new securities certificate representing the balance not transferred will be issued to the transferor within three business days
after the paying agent receives the certificate. The new certificate representing the balance will be delivered to the transferor
by uninsured post at the risk of the transferor, to the address of the transferor appearing in the records of the paying agent.
The new certificate representing the securities that were transferred will be sent to the transferee within three business days
after the paying agent receives the certificate transferred, by uninsured post at the risk of the holder entitled to the securities
represented by the certificate, to the address specified in the form of transfer.
Description
of Ordinary Shares
Banco Santander refers to “Item 10.
Additional Information — B. Memorandum and articles of association” in Banco Santander’s Annual Report on Form
20-F for the year ended December 31, 2014 for a summary of the material terms of Banco Santander’s By-laws and applicable
Spanish corporate law in effect as of the date of this prospectus regarding Banco Santander’s ordinary shares and the holders
thereof. Such summary describes Banco Santander’s By-laws which were approved at the shareholders’ meeting held on
June 21, 2008, filed with the office of the Commercial Registry of Santander on August 11, 2008 and became effective immediately
thereafter. Subsequently, several articles have been amended and sub-subsections 1 and 2 of Article 5 of Banco Santander’s
Bylaws have been updated several times to show the current share capital and the number of shares outstanding. The most recent
of such amendments corresponds to the one required by the share capital increase carried out on April 30, 2015 and filed with the
office of the Mercantile Registry on the following day. This summary may not contain all of the information that is important to
prospective investors. To understand them fully, prospective investors should read Banco Santander’s By-laws, a copy of which
has been included in Exhibit 1.1 and Exhibit 1.2 of Banco Santander’s Annual Report on Form 20-F for the year ended December
31, 2014.
As of October 5, 2015, Banco Santander’s
paid in share capital was €7,158,316,402.50 represented by a single class of 14,316,632,805 ordinary shares having a par value
of fifty euro cents (€ 0.50) each, represented by means of book entries.
Description
of American Depositary Shares
This prospectus incorporates by reference
the description of Banco Santander’s ADSs under the heading “Description of Santander American Depositary Shares”
in Banco Santander’s registration statement under the Securities Act (as defined below) on Form F-4, filed on November 17,
2008, and as amended on December 15, 2008 and December 19, 2008.
As of October 5, 2015, there were 501,638,808 ADSs
outstanding.
Taxation
Spanish
Tax Considerations
The following is
a general description of material Spanish tax considerations relating to the holders who are the beneficial owners of the securities
(the “holders”, the “investors”, the “purchasers” or the “shareholders”, as the
case may be). It does not purport to be a complete analysis of all tax considerations relating to these securities.
Prospective purchasers
of securities should consult their own tax advisers as to the consequences under the tax laws of the country of which they are
resident for tax purposes and the tax laws of Spain of acquiring, holding and disposing of securities and receiving any payments
under the securities. The information contained within this
section is based upon the law as in effect
on the date of this document and is subject to any change in law that may take effect after such date (which may have retroactive
effects).
This analysis is
a general description of the tax treatment under the currently in force Spanish legislation applicable in the common territory
of Spain and, hence, it does not describe the regional tax regimes in the Historical Territories of the Basque Country and the
Community of Navarre or the provisions passed by Autonomous Communities which may apply to investors for certain taxes.
In addition, investors
should note that the appointment by an investor in securities or any person through which an investor holds securities, of a custodian,
collection agent or similar person in relation to such securities in any jurisdiction may have tax implications. Investors should
consult their own tax advisors in relation to the tax consequences for them of any such appointment.
Introduction
This information has been prepared in accordance
with the following Spanish tax legislation in force at the date of this document:
| a) | of general application, First Additional Provision of Law 10/2014, of June 26, on
organization, supervision and solvency of credit institutions (“Law 10/2014”) and Royal Decree 1065/2007; |
| b) | for individuals resident for tax purposes in Spain who are subject to the Individual Income Tax
(“IIT”), Law 35/2006 of 28 November, on the IIT and on the Partial Amendment of the Corporate Income Tax Law,
the Non-Residents Income Tax Law and the Net Wealth Tax Law, as amended, and Royal Decree 439/2007, of 30 March, promulgating the
IIT Regulations, along with Law 19/1991, of 6 June, on Net Wealth Tax, as amended, Law 36/2014, of 26 December, of General State
Budget for 2015 and Law 29/1987, of 18 December on the Inheritance and Gift Tax; |
| c) | for legal entities resident for tax purposes in Spain which are subject to the Corporate Income
Tax (“CIT”), Law 27/2014, of 27 November, on Corporate Income Tax and Royal Decree 634/2015, of 10 July, promulgating
the CIT Regulations; and |
| d) | for individuals and entities who are not resident for tax purposes in Spain that are subject to
the Non-Resident Income Tax (“NRIT”), Royal Legislative Decree 5/2004, of 5 March, promulgating the Consolidated
Text of the NRIT Law, as amended, and Royal Decree 1776/2004 of 30 July promulgating the NRIT Regulations, along with Law 19/1991,
of 6 June, on Net Wealth Tax as amended, Law 36/2014, of 26 December, of General State Budget for 2015 and Law 29/1987, of 18 December,
on the Inheritance and Gift Tax. |
| A. | TAXATION IN SPAIN OF DEBT SECURITIES |
| 1. | Individuals with Tax Residency in Spain |
1.1 Individual Income
Tax (Impuesto sobre la Renta de las Personas Físicas)
Both interest payments periodically received
and income derived from the transfer, redemption or repayment of the debt securities constitute a return on investment obtained
from the transfer of a person’s own capital to third parties in accordance with the provisions of Section 25 of the IIT Law,
and therefore must be included in the investor’s IIT savings taxable base pursuant to the provisions of the aforementioned
law and generally taxed at a flat rate of 19% on the first EUR 6,000 (exceptionally 19.5% during fiscal year 2015); 21% from EUR
6,000.01 up to EUR 50,000 (exceptionally 21.5% during fiscal year 2015) and 23% for any amount in excess of EUR 50,000 (exceptionally
23.5% during fiscal year 2015).
Income from the transfer of the debt securities
must be computed as the difference between the amounts obtained in the transfer, redemption or reimbursement of the debt securities
and their acquisition or subscription value. Costs and expenses effectively borne on the acquisition and/or disposal of the debt
securities must be taken into account, insofar as adequately evidenced, in calculating the income. When calculating the net income,
expenses related to the management and deposit of the debt securities
will be deductible, excluding those pertaining to discretionary or individual portfolio management.
According to Section 44.5 of Royal
Decree 1065/2007, and in the opinion of each issuer and the guarantor, as the case may be, the relevant issuer will pay
interest without withholding to individual holders who are resident for tax purposes in Spain provided that the information
about the debt securities required by Exhibit I is submitted by the relevant paying agent,
notwithstanding the information obligations of each issuer under general provisions of Spanish tax legislation. In addition,
income obtained upon redemption or repayment by the issuer of the debt securities may also be paid without withholding on
account of IIT under the same conditions.
However, income derived from the transfer
of the debt securities may be subject to withholding tax at the general rate of 19% (exceptionally, during the fiscal year 2015,
the withholding tax rate applicable is 19.5%). Furthermore, in the case of debt securities held by Spanish resident individuals
and deposited with a Spanish resident entity acting as depositary or custodian, payments of interest or income obtained upon redemption
or repayment by the issuer of the debt securities may be subject to withholding tax at the general rate of 19% which will be made
by the depositary or custodian (exceptionally, during the fiscal year 2015, the withholding tax rate applicable is 19.5%). Any
amounts withheld on account of IIT may be credited against the final IIT liability.
1.2 Net Wealth Tax (Impuesto sobre
el Patrimonio)
Individuals with tax residency in Spain
are subject to Net Wealth Tax to the extent that their net worth exceeds EUR 700,000. Therefore, they should take into account
the value of the debt securities which they hold as at 31 December of each year, the applicable rates ranging between 0.2% and
2.5%. The Autonomous Communities may have different provisions on this respect.
1.3 Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
Individuals resident in Spain for tax purposes
who acquire ownership or other rights over any debt securities by inheritance, gift or legacy will be subject to the Spanish Inheritance
and Gift Tax in accordance with the applicable Spanish regional and State rules. The applicable tax rates currently range between
7.65% and 81.6% depending on relevant factors.
| 2. | Legal Entities with Tax Residency in Spain |
2.1 Corporate Income Tax (Impuesto sobre Sociedades)
Both interest received periodically and
income derived from the transfer, redemption or repayment of the debt securities are subject to CIT at the current general tax
rate of 25% (exceptionally 28% during fiscal year 2015) in accordance with the rules for this tax.
Pursuant to Section 44.5 of Royal Decree
1065/2007, and in the opinion the issuer and the guarantor, as the case may be, there is no obligation to withhold on income payable
to Spanish CIT taxpayers (which for the sake of clarity, include Spanish tax resident investment funds and Spanish tax resident
pension funds).
Consequently, the issuer will not
withhold tax on interest payments to Spanish CIT taxpayers provided that the information about the debt securities required
by Exhibit I is submitted, notwithstanding the information obligations of the issuer under
general provisions of Spanish tax legislation.
However, income derived from the debt securities
may be subject to withholding tax at the generally applicable rate of 19% (exceptionally, 19.5% during fiscal year 2015), if the
debt securities do not comply with the exemption requirements specified in the Reply to the Consultation of the Directorate General
for Taxation (Dirección General de Tributos) dated 27 July 2004. In case the debt securities are held by a Spanish
resident entity and deposited with a Spanish resident entity acting as depositary or custodian, this withholding tax will be generally
levied by that depositary or custodian.
Notwithstanding the above, amounts withheld,
if any, may be credited by the relevant investors against its final CIT liability.
2.2 Net Wealth Tax (Impuesto sobre el Patrimonio)
Legal entities resident in Spain for tax purposes are not subject
to Net Wealth Tax.
2.3 Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
Legal entities resident in Spain for tax
purposes which acquire ownership or other rights over the debt securities by inheritance, gift or legacy are not subject to the
Spanish Inheritance and Gift Tax but must include the market value of the debt securities in their taxable income for Spanish CIT
purposes.
| 3. | Individuals and Legal Entities with no tax residency in Spain |
3.1 Non-resident Income Tax (Impuesto sobre la renta de
No Residentes)
(a) Non-Spanish tax resident investors acting through a permanent
establishment in Spain
If the debt securities form part
of the assets of a permanent establishment in Spain of a person or legal entity who is not resident in Spain for tax
purposes, the tax rules applicable to income deriving from such debt securities are, generally, the same as those previously
set out for Spanish CIT taxpayers. See “Taxation in Spain of Debt Securities—Legal Entities with Tax Residency in
Spain—Corporate Income Tax (Impuesto sobre Sociedades)”. Ownership of the debt securities by investors who
are not resident for tax purposes in Spain will not in itself create the existence of a permanent establishment in Spain.
(b) Non-Spanish tax resident investors not operating through
a permanent establishment in Spain
Both interest payments received periodically
and income derived from the transfer, redemption or repayment of the debt securities, obtained by individuals or entities who are
not resident in Spain for tax purposes and who do not act, with respect to the debt securities, through a permanent establishment
in Spain, are exempt from NRIT and therefore no withholding on account of NRIT will be levied on such income provided certain requirements
are met.
In order for the exemption to apply, it
is necessary to comply with certain information obligations relating to the debt securities, in the manner detailed under “—Information
about the debt securities in connection with payments” as laid down in Section 44.5 of Royal Decree 1065/2007. If these information
obligations are not complied with in the manner indicated, the issuer will withhold at the general rate of 19% (exceptionally 19.5%
during fiscal year 2015) and the issuer will not pay additional amounts.
Holders not resident in Spain for tax
purposes and entitled to exemption from NRIT but where the issuer or the guarantor, as the case may be, does not timely
receive the information about the debt securities in accordance with the procedure described in detail as set forth in
Exhibit I hereto would have to apply directly to the Spanish tax authorities for any refund
to which they may be entitled, according to the procedures set forth in the Spanish NRIT Law and the relevant
regulations.
3.2 Net Wealth Tax (Impuesto sobre el Patrimonio)
Individuals resident in a country with
which Spain has entered into a double tax treaty in relation to Wealth Tax would generally not be subject to such tax. The U.S.
– Spain Income Tax Treaty (the “Treaty”) does not address Net Wealth Tax. Otherwise, non-Spanish resident
individuals whose properties and rights located in Spain, or that can be exercised within the Spanish territory exceed EUR700,000
would be subject to Net Wealth Tax, the applicable rates ranging between 0.2% and 2.5%. Individuals who are non-resident in Spain
for tax purposes who are resident in an European Union or European Economic Area Member State may apply the rules approved by the
autonomous region where the assets and rights with more value are situated. All such prospective investors should consult their
tax advisers.
However, non-Spanish resident individuals
will be exempt from Net Wealth Tax in respect of the debt securities which income is exempt from NRIT as described above.
3.3 Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
Individuals not resident in Spain for tax
purposes who acquire ownership or other rights over debt securities by inheritance, gift or legacy, will be subject to the Spanish
Inheritance and Gift Tax in accordance with the applicable Spanish regional and state rules, unless they reside in a country for
tax purposes with which Spain has entered into a double tax treaty in relation to Inheritance and Gift Tax. In such case, the provisions
of the relevant double tax treaty will apply. The U.S. and Spain have not entered into a double tax treaty in relation to Inheritance
and Gift Tax. Generally, individuals who are non-resident in Spain for tax purposes are subject to Spanish Inheritance and Gift
Tax according to the rules set forth in the state Inheritance and Gift Tax law. However, if the deceased or the donee are resident
in an European Union or European Economic Area Member State, the applicable rules will be those corresponding to the relevant autonomous
regions according to their law. As such, prospective investors should consult their tax advisers.
Non-Spanish resident legal entities which
acquire ownership or other rights over the debt securities by inheritance, gift or legacy are not subject to the Spanish Inheritance
and Gift Tax. Such acquisitions will be subject to NRIT (as described above), except as provided in any applicable double tax treaty
entered into by Spain. In general, double tax treaties provide for the taxation of this type of income solely in the country of
tax residence of the holder of the debt securities.
| 4. | Tax Rules for debt securities not Listed on a regulated market, a multilateral trading facility or an organised market in
an OECD Country |
4.1 Withholding on Account of IIT, CIT and NRIT
If the debt securities are not listed on
a regulated market, a multilateral trading facility or an organized market in an OECD country on any payment date, interest or
income from the transfer, redemption or repayment obtained by holders in respect of the debt securities will be subject to withholding
tax at the general rate of 19% (exceptionally, during the tax period 2015, the withholding tax rate applicable is 19.5%), except
in the case of holders which are: (a) resident in a Member State of the European Union other than Spain and obtain the interest
income either directly or through a permanent establishment located in another Member State of the European Union, provided that
such holders (i) do not obtain the interest income on the debt securities through a permanent establishment in Spain and (ii) are
not resident of, or are not located in, nor obtain income through, a tax haven (as currently defined by Royal Decree 1080/1991,
of 5 July, as amended) or (b) resident for tax purposes of a country which has entered into a convention for the avoidance of double
taxation with Spain which provides for an exemption from Spanish tax or a reduced withholding tax rate with respect to interest
payable to any holder. The withholding rate under the Treaty is generally 10%.
Individuals and entities that may benefit
from such exemptions or reduced tax rates would have to apply directly to the Spanish tax authorities in order to obtain a refund
of any amounts to which they may be entitled.
4.2 Net Wealth Tax (Impuesto sobre el Patrimonio)
See “Individuals with Tax Residency
in Spain—Net Wealth Tax (Impuesto sobre el Patrimonio)” and “Individuals and Legal Entities with no tax
residency in Spain—Net Wealth Tax (Impuesto sobre el Patrimonio)”.
| 5. | Tax Rules for payments made by the guarantor |
On the basis that payments of principal
and interest made the guarantor in respect of the debt securities are characterized as an indemnity under Spanish law, such payments
may be made without withholding or deduction on account of any Spanish Tax. However, although there is no clear precedent, statement
of law, or regulation on this matter, if the Spanish Tax Authorities take the position that the relevant guarantor has validly,
legally and effectively assumed all the obligations of the issuer under the debt securities (whether contractually or by any other
means), the Spanish Tax Authorities may determine that payments made by the guarantor relating to the debt securities will be subject
to the same tax rules set out above for payments made by the issuer.
| 6. | Information about the debt securities in connection with payments |
As described above, interest
and other income paid by the issuer with respect to the debt securities will not be subject to Spanish withholding tax
provided the procedures for delivering to the relevant issuer and/or the guarantor the information described in Exhibit I of
this prospectus are complied with.
The information obligations to be complied
with in order to apply the exemption are those laid down in Section 44.5 of Royal Decree 1065/2007 (“Section 44.5”).
In accordance with Section 44.5, the following information with respect to the debt securities must be submitted to the issuer
and the guarantor before the close of business on the business day immediately preceding the date on which any payment of interest,
principal or of any amounts in respect of the early redemption of the debt securities (each, a “Payment Date”)
is due.
Such information comprises:
| |
(i) |
identification of the debt securities; |
| |
|
|
| |
(ii) |
income payment date (or refund if the debt securities are issued at discount or are segregated); |
| |
|
|
| |
(iii) |
total amount of income (or total amount to be refunded if the debt securities are issued at discount or are segregated); and |
| |
|
|
| |
(iv) |
total amount of the income corresponding to each clearing system located outside Spain. |
In particular, the issue and paying agent
must certify the information above about the debt securities by means of a certificate in the Spanish language, an English language
form of which is attached as Exhibit I of this prospectus.
In light of the above, the issuer, the
guarantor and the issue and paying agent, as the case may be, have arranged certain procedures to facilitate the collection of
information concerning the debt securities by the close of business on the business day immediately preceding each relevant Payment
Date. If, despite these procedures, the relevant information is not received by the relevant issuer or, as the case may be, the
guarantor on each Payment Date, such issuer or, as the case may be, the guarantor will withhold tax at the then-applicable rate,
currently 19% (exceptionally, during the tax period 2015 the withholding tax rate applicable is 19.5%) from any payment in respect
of the relevant debt securities. None of the issuers or the guarantor will pay any additional amounts with respect to any such
withholding.
If, before the tenth day of the month following
the month in which interest is paid, the issue and paying agent provides such information, the relevant issuer or, as the case
may be, the guarantor, will reimburse the amounts withheld.
Prospective holders of debt securities
should note that none of the issuers, the guarantor or the dealers accepts any responsibility relating to the procedures established
for the collection of information concerning the debt securities. Accordingly, none the issuers, the guarantor or the dealers will
be liable for any damage or loss suffered by any holder of the debt securities who would otherwise be entitled to an exemption
from Spanish withholding tax but whose income payments are nonetheless paid net of Spanish withholding tax because these procedures
prove ineffective. Moreover, none of the issuers or the guarantor will pay any additional amounts with respect to any such withholding.
The acquisition and transfer of the debt
securities will be exempt from indirect taxes in Spain, i.e., exempt from Transfer Tax and Stamp Duty, in accordance with the Consolidated
Text of such tax promulgated by Royal Legislative Decree 1/1993, of 24 September and exempt from Value Added Tax, in accordance
with Law 37/1992, of 28 December regulating such tax.
| B. | TAXATION IN SPAIN OF CONTINGENT CONVERTIBLE CAPITAL SECURITIES |
| 1. | Individuals with Tax Residency in Spain |
1.1 Individual Income Tax (Impuesto sobre la Renta de
las Personas Físicas)
Both interest payments periodically received
and income derived from the transfer, redemption or repayments of the contingent convertible capital securities constitute a return
on investment obtained from the transfer of a person’s own capital to third parties in accordance with the provisions of
Section 25 of the IIT Law, and therefore must be included in the investor’s IIT savings taxable base pursuant to the provisions
of the aforementioned law and generally taxed at a flat rate of 19% on the first EUR 6,000 (exceptionally 19.5% during fiscal year
2015); (ii) 21% from EUR 6,000.01 up to EUR 50,000 (exceptionally 21.5% during fiscal year 2015) and 23% for any amount in excess
of EUR 50,000 (exceptionally 23.5% during fiscal year 2015).
Income from the transfer of the contingent
convertible capital securities must be computed as the difference between the amounts obtained in the transfer, redemption or reimbursement
of the contingent convertible capital securities and their acquisition or subscription value. Costs and expenses effectively borne
on the acquisition and/or disposal of the contingent convertible capital securities must be taken into account, insofar as adequately
evidenced, in calculating the income. When calculating the net income, expenses related to the management and deposit of the contingent
convertible capital securities will be deductible, excluding those pertaining to discretionary or individual portfolio management.
According to Section 44.5 of
Royal Decree 1065/2007, and in the opinion of each issuer, the relevant issuer will pay interest without withholding to
individual holders who are resident for tax purposes in Spain provided that the information about the contingent convertible
capital securities required by Exhibit I is submitted by the relevant paying agent,
notwithstanding the information obligations of each issuer under general provisions of Spanish tax legislation. In addition,
income obtained upon redemption or repayment by the issuer of the contingent convertible capital securities may also be paid
without withholding on account of IIT under the same conditions.
However, income derived from the transfer
of the contingent convertible capital securities may be subject to withholding tax at the general rate of 19% (exceptionally, during
the fiscal year 2015, the withholding tax rate applicable is 19.5%). Furthermore, in the case of contingent convertible capital
securities held by Spanish resident individuals and deposited with a Spanish resident entity acting as depositary or custodian,
payments of interest or income obtained upon redemption or repayment by the issuer of the contingent convertible capital securities
may be subject to withholding tax at the general rate of 19% which will be made by the depositary or custodian (exceptionally,
during the fiscal year 2015, the withholding tax rate applicable is 19.5%). Any amounts withheld on account of IIT may be credited
against the final IIT liability.
1.2 Net Wealth Tax (Impuesto sobre
el Patrimonio)
Individuals with tax residency in Spain
are subject to Net Wealth Tax to the extent that their net worth exceeds EUR 700,000. Therefore, they should take into account
the value of the contingent convertible capital securities which they hold as at each 31 December, the applicable rates ranging
between 0.2% and 2.5%. The Autonomous Communities may have different provisions on this respect.
1.3 Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
Individuals resident in Spain for tax purposes
who acquire ownership or other rights over any contingent convertible capital securities by inheritance, gift or legacy will be
subject to the Spanish Inheritance and Gift Tax in accordance with the applicable Spanish regional and State rules. The applicable
tax rates currently range between 7.65% and 81.6% depending on relevant factors.
| 2. | Legal Entities with Tax Residency in Spain |
2.1 Corporate Income Tax (Impuesto sobre Sociedades)
Both interest received periodically and
income derived from the transfer, redemption or repayment of the contingent convertible capital securities are subject to CIT (at
the current general tax rate of 25%, exceptionally 28% during fiscal year 2015) in accordance with the rules for this tax.
Pursuant to Section 44.5 of Royal Decree
1065/2007, and in the opinion the issuer, there is no obligation to withhold on income payable to Spanish CIT taxpayers (which
for the sake of clarity, include Spanish tax resident investment funds and Spanish tax resident pension funds).
Consequently, the issuer will not
withhold tax on interest payments to Spanish CIT taxpayers provided that the information about the contingent convertible
capital securities required by Exhibit I is submitted, notwithstanding the information
obligations of the issuer under general provisions of Spanish tax legislation.
However, income derived from the contingent
convertible capital securities may be subject to withholding tax at the generally applicable rate of 19% (exceptionally, 19.5%
during fiscal year 2015), if the contingent convertible capital securities do not comply with the exemption requirements specified
in the Reply to the Consultation of the Directorate General for Taxation (Dirección General de Tributos) dated 27
July 2004. In case the contingent convertible capital securities are held by a Spanish resident entity and deposited with a Spanish
resident entity acting as depositary or custodian, this withholding tax will be generally levied by that depositary or custodian.
Notwithstanding the above, amounts withheld,
if any, may be credited by the relevant investors against its final CIT liability.
2.2 Net Wealth Tax (Impuesto sobre el Patrimonio)
Legal entities resident in Spain for tax purposes are not subject
to Net Wealth Tax.
2.3 Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
Legal entities resident in Spain for tax
purposes which acquire ownership or other rights over the contingent convertible capital securities by inheritance, gift or legacy
are not subject to the Spanish Inheritance and Gift Tax but must include the market value of the contingent convertible capital
securities in their taxable income for Spanish CIT purposes.
| 3. | Individuals and Legal Entities with no tax residency in Spain |
3.1 Non-resident Income Tax (Impuesto sobre la renta de
No Residentes)
(a) Non-Spanish tax resident investors acting through a permanent
establishment in Spain
If the contingent convertible capital securities
form part of the assets of a permanent establishment in Spain of a person or legal entity who is not resident in Spain for tax
purposes, the tax rules applicable to income deriving from such contingent convertible capital securities are, generally, the same
as those previously set out for Spanish CIT taxpayers. See “—Legal Entities with Tax Residency in Spain—Corporate
Income Tax (Impuesto sobre Sociedades)”. Ownership of the contingent convertible capital securities by investors who
are not resident for tax purposes in Spain will not in itself create the existence of a permanent establishment in Spain.
(b) Non-Spanish tax resident investors not operating through
a permanent establishment in Spain
Both interest payments received periodically
and income derived from the transfer, redemption or repayment of the contingent convertible capital securities, obtained by individuals
or entities who are not resident in Spain for tax purposes and who do not act, with respect to the contingent convertible capital
securities, through a permanent establishment in Spain, are exempt from NRIT and therefore no withholding on account of NRIT will
be levied on such income provided certain requirements are met.
In order for the exemption to apply, it
is necessary to comply with certain information obligations relating to the contingent convertible capital securities, in the manner
detailed under “—Information about the contingent convertible capital securities in connection with payments”
as laid down in Section 44.5 of Royal Decree 1065/2007. If these information obligations are not complied with in the manner indicated,
the issuer will withhold at the general rate of 19% (exceptionally 19.5% during fiscal year 2015) and the issuer will not pay additional
amounts.
Holders not resident in Spain for tax
purposes and entitled to exemption from NRIT but where the issuer does not timely receive the information about the
contingent convertible capital securities in accordance with the procedure described in detail as set forth in Exhibit I
to this prospectus hereto would have to apply directly to the Spanish tax authorities for any refund to which
they may be entitled, according to the procedures set forth in the Spanish NRIT Law and the relevant regulations.
3.2 Net Wealth Tax (Impuesto sobre el Patrimonio)
Individuals resident in a country with
which Spain has entered into a double tax treaty in relation to Wealth Tax would generally not be subject to such tax. The Treaty
does not address Net Wealth Tax. Otherwise, non-Spanish resident individuals whose properties and rights located in Spain, or that
can be exercised within the Spanish territory exceed EUR700,000 would be subject during the tax year 2015 to Net Wealth Tax, the
applicable rates ranging between 0.2% and 2.5%. Individuals who are non-resident in Spain for tax purposes who are resident in
an European Union or European Economic Area Member State may apply the rules approved by the autonomous region where the assets
and rights with more value are situated. All such prospective investors should consult their tax advisers.
However, non-Spanish resident individuals
will be exempt from Net Wealth Tax in respect of the contingent convertible capital securities which income is exempt from NRIT
as described above.
3.3 Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
Individuals not resident in Spain for tax
purposes who acquire ownership or other rights over contingent convertible capital securities by inheritance, gift or legacy, will
be subject to the Spanish Inheritance and Gift Tax in accordance with the applicable Spanish regional and state rules, unless they
reside in a country for tax purposes with which Spain has entered into a double tax treaty in relation to Inheritance and Gift
Tax. In such case, the provisions of the relevant double tax treaty will apply. The U.S. and Spain have not entered into a double
tax treaty in relation to Inheritance and Gift Tax. Generally, individuals who are non-resident in Spain for tax purposes are subject
to Spanish Inheritance and Gift Tax according to the rules set forth in the state Inheritance and Gift Tax law. However, if the
deceased or the donee are resident in an European Union or European Economic Area Member State, the applicable rules will be those
corresponding to the relevant autonomous regions according to their law. As such, prospective investors should consult their tax
advisers.
Non-Spanish resident legal entities which
acquire ownership or other rights over the contingent convertible capital securities by inheritance, gift or legacy are not subject
to the Spanish Inheritance and Gift Tax. Such acquisitions will be subject to NRIT (as described above), except as provided in
any applicable double tax treaty entered into by Spain. In general, double tax treaties provide for the taxation of this type of
income solely in the country of tax residence of the holder of the contingent convertible capital securities.
| 4. | Tax Rules for contingent convertible capital securities not Listed on an regulated market, a multilateral trading
facility or an organised market in an OECD Country |
4.1 Withholding on Account of IIT, CIT and NRIT
If the contingent convertible capital securities
are not listed on a regulated market, a multilateral trading facility or an organized market in an OECD country on any payment
date, interest or income from the transfer, redemption or repayment obtained by holders in respect of the contingent convertible
capital securities will be subject to withholding tax at the general rate of 19% (exceptionally, during the tax period 2015, the
withholding tax rate applicable is 19.5%), except in the case of holders which are: (a) resident in a Member State of the European
Union other than Spain and obtain the interest income either directly or through a permanent establishment located in another Member
State of the European Union, provided that such holders (i) do not obtain the interest income on the contingent convertible capital
securities through a permanent establishment in Spain and (ii) are not resident of, or are not located in, nor obtain income through,
a tax haven (as currently defined by Royal Decree 1080/1991, of 5 July, as amended) or (b) resident for tax purposes of a country
which has entered into a convention for the avoidance of double taxation with Spain which provides for an exemption from Spanish
tax or a reduced withholding tax rate with respect to interest payable to any holder. The withholding tax rate under the Treaty
is generally 10%.
Individuals and entities that may benefit
from such exemptions or reduced tax rates would have to apply directly to the Spanish tax authorities in order to obtain a refund
of any amounts to which they may be entitled.
4.2 Net Wealth Tax (Impuesto sobre el Patrimonio)
See “—Individuals with Tax
Residency in Spain—Net Wealth Tax (Impuesto sobre el Patrimonio)” and “—Individuals and legal entities
with no tax residency in Spain—Net Wealth Tax (Impuesto sobre el Patrimonio)”.
| 5. | Information about the contingent convertible capital securities in connection with payments |
As described above, interest
and other income paid with respect to the contingent convertible capital securities will not be subject to Spanish
withholding tax provided that the procedures for delivering to the relevant issuer the information described in Exhibit I
of this prospectus are complied with.
The information obligations to be complied
with in order to apply the exemption are those laid down in Section 44.5. In accordance with Section 44.5, the following information
with respect to the contingent convertible capital securities must be submitted to the issuer before the close of business on the
business day immediately preceding the date on which any payment of interest, principal or of any amounts in respect of the early
redemption of the contingent convertible capital securities (each, a “Payment Date”) is due.
Such information comprises:
| |
(i) |
identification of the contingent convertible capital securities; |
| |
|
|
| |
(ii) |
income payment date (or refund if the contingent convertible capital securities are issued at discount or are segregated); |
| |
|
|
| |
(iii) |
total amount of income (or total amount to be refunded if the contingent convertible capital securities are issued at discount or are segregated); and |
| |
|
|
| |
(iv) |
total amount of the income corresponding to each clearing system located outside Spain. |
In particular, the issue and paying
agent must certify the information above about the contingent convertible capital securities by means of a certificate in the
Spanish language, an English language form of which is attached as Exhibit I
of this prospectus.
In light of the above, the issuer and the
issue and paying agent, as the case may be, have arranged certain procedures to facilitate the collection of information concerning
the contingent convertible capital securities by the close of business on the business day immediately preceding each relevant
Payment Date. If, despite these procedures, the relevant information is not received by the relevant issuer on each Payment Date,
such issuer will withhold tax at the then-applicable rate, currently 19% (exceptionally, during the tax period 2015 the withholding
tax rate applicable is 19.5%) from any payment in respect of the relevant contingent convertible capital securities. The issuers
will not pay any additional amounts with respect to any such withholding.
If, before the tenth day of the month following
the month in which interest is paid, the issue and paying agent provides such information, the relevant issuer will reimburse the
amounts withheld.
Prospective holders of contingent
convertible capital securities should note that none of the issuers or the dealers accepts any responsibility relating to the procedures
established for the collection of information concerning the contingent convertible capital securities. Accordingly, none
the issuers or the dealers will be liable for any damage or loss suffered by any holder of contingent convertible capital securities
who would otherwise be entitled to an exemption from Spanish withholding tax but whose income payments are nonetheless paid net
of Spanish withholding tax because these procedures prove ineffective. Moreover, the issuers will not pay any additional amounts
with respect to any such withholding.
The acquisition and transfer of the contingent
convertible capital securities will be exempt from indirect taxes in Spain, i.e., exempt from Transfer Tax and Stamp Duty, in accordance
with the Consolidated Text of such tax promulgated by Royal Legislative Decree 1/1993, of 24 September and exempt from Value Added
Tax, in accordance with Law 37/1992, of 28 December regulating such tax.
| C. | TAXATION IN SPAIN OF THE CONVERSION OF THE CONTINGENT CONVERTIBLE CAPITAL SECURITIES INTO
ORDINARY SHARES OR ADSs |
| 1. | Individuals with Tax Residency in Spain |
1.1 Individual Income Tax (Impuesto sobre la Renta de
las Personas Físicas)
Income obtained on the conversion of the
contingent convertible capital securities into ordinary shares, computed as the difference between the market value of the ordinary
shares received and the acquisition or subscription value of the contingent convertible capital securities delivered in exchange,
will be considered as a return on investment obtained from the transfer of own capital to third parties in accordance with the
provisions of Section 25.2 of the PIT Law.
The tax treatment will be the one referred
to in section B.1.1 above. Any income obtained in the conversion will not be subject to withholding tax on account of IIT.
| 2. | Legal Entities with Tax Residency in Spain |
2.1 Corporate Income Tax (Impuesto sobre Sociedades)
Subject to the applicable accounting regulations,
income derived from the conversion of the contingent convertible capital securities into ordinary shares will be computed as the
difference between the market value of the ordinary shares received and the book value of the contingent convertible capital securities
delivered in exchange. Such income will be subject to CIT at the current general rate of 25% (exceptionally 28% during fiscal year
2015).
The tax treatment will be the one referred
to in section B.2.1 above. Any income obtained in the conversion will not be subject to withholding tax on account of CIT.
| 3. | Individuals and Legal Entities with no tax residency in Spain |
3.1 Non-resident Income Tax (Impuesto sobre la renta de
No Residentes)
(a) Non-Spanish tax resident investors acting through a permanent
establishment in Spain
Non-Spanish tax resident investors operating
through a permanent establishment in Spain are subject to the same tax treatment that applies to Spanish CIT taxpayers.
(b) Non-Spanish tax resident investors not operating through
a permanent establishment in Spain
Income obtained by non-Spanish tax resident
investors on the conversion of the contingent convertible capital securities into ordinary shares or ADSs will be exempt from such
NRIT and from withholding tax on account of NRIT, provided the contingent convertible capital securities are admitted to trading
on an regulated market, a multilateral trading facility or an organised market in an OECD Country.
The tax treatment applicable to the income
obtained will be the one described in section B.3.1.(b) above.
| D. | TAXATION IN SPAIN ON OWNERSHIP AND TRANSFER OF ORDINARY SHARES AND ADSs |
| 1. | Individuals with Tax Residency in Spain |
1.1 Individual Income Tax (Impuesto sobre la Renta de
las Personas Físicas)
According to the Spanish PIT Law the following,
amongst others, must be treated as gross capital income: income received by a Spanish shareholder in the form of dividends, consideration
paid for attendance at shareholders’ meetings, income from the creation or assignment
of rights of use or enjoyment of the shares and any other income received in his position as shareholder.
Gross capital income is reduced by any
administration and custody expenses (but not by those incurred in individualized portfolio management); the net amount is included
in the relevant Spanish shareholder’s savings taxable base and currently taxed at a flat rate of 19% on the first EUR 6,000
(exceptionally 19.5% during fiscal year 2015); 21% from EUR 6,000.01 up to EUR 50,000 (exceptionally 21.5% during fiscal year 2015)
and 23% for any amount in excess of EUR 50,000 (exceptionally 23.5% during fiscal year 2015).
Gross capital income will be reduced by
any administration and custody expenses (but not by those incurred in individualised portfolio management) and the net amount must
be included in the relevant Spanish shareholder savings taxable base.
The payment to Spanish shareholders of
dividends or any other distribution will be generally subject to a withholding tax at the rate of 19% (exceptionally, 19.5% during
fiscal year 2015). Such withholding tax is creditable from the PIT payable (cuota líquida); if the amount of tax
withheld is greater than the amount of the net PIT payable, the taxpayer is entitled to a refund of the excess withheld in accordance
with the PIT Law.
| b) | Taxation of capital gains |
Gains or losses recorded by a shareholder
subject to IIT as a result of the transfer of ordinary shares qualify for the purposes of the PIT Law as capital gains or losses
and are subject to taxation according to the general rules applicable to capital gains. The amount of capital gains or losses is
equal to the difference between the shares’ acquisition value (plus any fees or taxes incurred) and the transfer value, which
is the listed value of the shares as of the transfer date or, if higher, the agreed transfer price, less any fees or taxes incurred.
Capital gains or losses arising from the
transfer of shares held by a Spanish shareholder are included in such Spanish savings taxable base and currently taxed at a flat
rate of 19% on the first EUR 6,000 (exceptionally 19.5% during fiscal year 2015); 21% from EUR 6,000.01 up to EUR 50,000 (exceptionally
21.5% during fiscal year 2015) and 23% for any amount in excess of EUR 50,000 (exceptionally 23.5% during fiscal year 2015).
Capital gains arising from the transfer
of shares are not subject to withholding tax on account of PIT. Losses arising from the transfer of ordinary shares admitted to
trading on certain official stock exchanges will not be treated as capital losses if ordinary shares of the same kind have been
acquired during the period between two months before and two months after the date of the transfer which originated the loss. In
these cases, the capital losses are included in the taxable base upon the transfer of the remaining ordinary shares by the taxpayer.
1.2 Wealth Tax (Impuesto sobre el Patrimonio)
Individuals with tax residency in Spain
are subject to Net Wealth Tax to the extent that their net worth exceeds EUR 700,000. Therefore, they should take into account
the value of the ordinary shares which they hold as at 31 December of each year, the applicable rates ranging between 0.2% and
2.5%. The Autonomous Communities may have different provisions on this respect.
1.3 Spanish Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
Individuals resident in Spain for tax purposes
who acquire ownership or other rights over any ordinary shares by inheritance, gift or legacy will be subject to the Spanish Inheritance
and Gift Tax in accordance with the applicable Spanish regional and State rules. The applicable tax rates currently range between
7.65% and 81.6% depending on relevant factors.
| 2. | Legal entities with Tax Residency in Spain |
2.1 Corporate Income
Tax (Impuesto sobre Sociedades)
Dividends from the issuer received by corporate
Spanish shareholders, less any expenses inherent to holding the ordinary shares, must be included in the CIT taxable base. The
general CIT tax rate is 25% (exceptionally, 28% for fiscal year 2015).
Dividends in respect of the shares obtained
by the shareholders that (i) hold, directly or indirectly, at least 5% in the issuer’s stock or have an acquisition cost
in the ordinary shares higher than €20 million; and (ii) hold such participation for at least one year prior to the relevant
distribution date or commits to hold the participation for the time needed to complete such one-year holding period, may be exempt
from CIT on that dividend as a general rule.
In case the issuer obtains dividends, profit
distributions or income derived from transfer of shares in entities in an amount higher than 70% of the issuer’s revenues,
the application of the participation exemption may be subject to particularly complex requirements, substantially requiring that
the shareholder holds an indirect participation of at least 5% in the share capital of the issuer’s subsidiaries. Prospective
investors should consult their own tax advisors in order to determine whether those requirements are complied with by the relevant
shareholders.
In case the conditions to apply this exemption
applies to the relevant shareholder, and provided that the minimum one year holding period requirement is complied with on the
distribution date in respect of the ordinary shares, dividends will not be subject to withholding tax. Otherwise, dividends will
be taxed at the applicable CIT tax rate of the taxpayer and a 19% withholding will apply (exceptionally 19.5% during fiscal year
2015). This CIT withholding will be credited against the taxpayer’s annual CIT due, and if the amount of tax withheld is
greater than the amount of the annual CIT due, the taxpayer will be entitled to a refund of the excess withheld.
| b) | Taxation of capital gains |
Gains or losses arising from the sale of
the ordinary shares by a shareholder that is a Spanish CIT taxpayer must be included in its taxable base. The general CIT tax rate
is 25% (exceptionally, 28% for fiscal year 2015). Gains arising from the sale of the ordinary shares will not be subject to withholding
tax on account of CIT.
For CIT payers that (i) hold, directly
or indirectly, at least 5% in the issuer’s stock or have an acquisition cost higher than €20 million; and (ii) hold
such participation for at least one year prior to the relevant transfer, capital gains will be exempt from CIT as a general rule.
Otherwise, capital gains will be taxed at the CIT rate applicable to the relevant taxpayer.
In case the issuer obtains dividends, profit
distributions or income derived from transfer of shares in entities in an amount higher than 70% of the issuer’s revenues,
the application of the participation exemption may be subject to particularly complex requirements, substantially requiring that
the shareholder holds an indirect participation of at least 5% in the share capital of the issuer’s subsidiaries. Prospective
investors should consult their own tax advisors in order to determine whether those requirements are complied with by the relevant
shareholders.
2.2 Net Wealth Tax (Impuesto sobre el Patrimonio)
Legal entities resident in Spain for tax purposes are not subject
to Net Wealth Tax.
2.3 Inheritance and Gift Tax (Impuesto sobre Sucesiones
y Donaciones)
Legal entities resident in Spain for tax
purposes which acquire ownership or other rights over the ordinary shares by inheritance, gift or legacy are not subject to the
Spanish Inheritance and Gift Tax but must include the market value of the ordinary shares in their taxable income for Spanish CIT
purposes.
| 3. | Individuals and legal entities with no tax residency in Spain |
3.1 Non-Residents Income Tax (Impuesto
sobre la Renta de No Residentes)
| a) | Non-Spanish tax resident investors acting through a permanent establishment in Spain |
Taxation on dividends
If the ordinary shares
or ADSs form part of the assets of a permanent establishment in Spain of a person or legal entity who is not resident in Spain
for tax purposes, the tax rules applicable to income deriving from such ordinary shares or ADSs are the same as those for legal
entities with tax residency in Spain described in section D.2.1(a) above.
Ownership of the ordinary
shares or ADSs by investors who are not resident for tax purposes in Spain will not in itself create the existence of a permanent
establishment in Spain.
Taxation of capital
gains
If the ordinary shares
or ADSs form part of the assets of a permanent establishment in Spain of a person or legal entity who is not resident in Spain
for tax purposes, the tax rules applicable to capital gains derived from such ordinary shares or ADSs are the same as those for
legal entities with tax residency in Spain described section D.2.1(b) above.
| b) | Non-Spanish tax resident investors not operating through a permanent establishment in Spain |
Taxation of dividends
According to the NRIT Law, dividends paid
by a Spanish resident company to a non-Spanish tax resident shareholder not holding the ordinary shares through a permanent establishment
located in Spain are subject to NRIT, withheld at the source on the gross amount of dividends, at 19% rate (exceptionally, 19.5%
during fiscal year 2015).
This taxation can be eliminated as per
the application of the NRIT exemption implementing the EU Council Directive 2011/96/EU of 30 November 2011, on the common system
of taxation applicable to parent companies and subsidiaries of different Member States (the “EU Parent-Subsidiary Directive”).
Under the EU Parent-Subsidiary Directive exemption, no Spanish withholding taxes should be levied on the dividends distributed
by a Spanish subsidiary to its European Union (“EU”) parent company, to the extent that the following requirements
are met:
| - | the EU parent company maintains a direct or indirect holding in the capital of the Spanish subsidiary
of at least 5% or has an acquisition cost exceeding €20 million. The holding must have been maintained uninterruptedly during
the year prior to the date on which the distributed profit is due or, failing that, be maintained for the time required to complete
such period (in the latter case, the withholding tax must be levied, although the EU parent company may request its refund from
the Spanish Tax Authorities once the one-year period has been completed); |
| - | the EU parent company is incorporated under the laws of a EU Member State, under one of the corporate
forms listed in Annex I, Part A, of the EU Parent-Subsidiary Directive, and is subject to a Member State Corporate Income Tax (as
listed in Annex I, Part B, of the EU Parent-Subsidiary Directive), without the possibility of being exempt; and |
| - | the dividends distributed do not derive from the subsidiary’s liquidation. |
The EU Parent Subsidiary exemption will
be applicable, subject to the compliance of certain requirements (similar to those indicated above), to dividends distributed by
a Spanish subsidiary to its European Economic Area parent company provided that there is an effective exchange of tax information
with such European Economic Area parent company’s country.
However, this exemption contains specific
anti-abuse rules (whereby this exemption might not be applicable if the shareholder is located in a tax haven or when the majority
of the voting rights of the EU parent company are held, directly or indirectly, by an individual or legal entity not resident in
the EU or in a member country of the European Economic Area with which there is an effective exchange of information in the terms
described in the Spanish Law 36/2006, to prevent tax fraud, except in the latter case if the shareholder has been incorporated
and operates for valid economic reasons and substantive business reasons) that need to be analyzed on a case-by-case basis and
procedural formalities, such as the supply of a tax authorities-issued tax residence certificate.
In addition, shareholders resident in certain countries may
be entitled to the benefits of a tax treaty (“TT”), in effect between Spain and their country of tax residence
providing for a reduced tax rate or an exemption on dividends, subject to the satisfaction of any conditions specified in the relevant
TT, including providing evidence of the tax residence of the shareholder by means of a certificate of tax residence duly issued
by the tax authorities of its country of tax residence (the U.S. Internal Revenue Service (“IRS”) for U.S. shareholders)
indicating that the relevant investor is a resident therein within the meaning of the relevant TT (or equivalent specific form
required under an applicable TT). From a Spanish tax perspective, tax residence certificates issued by a foreign tax authority
(or equivalent TT forms) are generally deemed to be valid only for one year as from their date of issuance. The withholding tax
rate applicable to dividends under the Treaty is generally 15%.
In accordance with the Order of the Ministry
of Finance and Taxation of 13 April 2000, upon distribution of a dividend, the issuer or the issuer’s paying agent will withhold
an amount equal to the NRIT amount required to be withheld according to the general rules set forth above, transferring the resulting
net amount to the financial institution acting as a depositary of the ordinary shares held by such shareholder. If the applicable
depositary is resident, domiciled or represented in Spain and it provides timely evidence (including a valid certificate of tax
residence for purposes of the exemption of reduction of withholding tax being claimed, or equivalent form under the applicable
TT), the depositary will immediately receive the amount withheld, which will be credited to the relevant shareholder. In order
to benefit from the Treaty’s reduced rate of 15%, a U.S. holder of ADSs must provide our depositary with a certificate from
the IRS stating that to the knowledge of the IRS, the U.S. holder is a resident of the United States within the meaning of the
Treaty. The IRS certificate is valid for a period of one year. For these purposes, the relevant certificate of residence (or equivalent
TT form) must be provided before the tenth day following the end of the month in which the dividends were paid. If such certificate
of tax residence or, as the case may be, the equivalent TT form referred to above, is not provided to us by the relevant depositary
within the mentioned time frame the relevant NRIT withheld will be paid to the Spanish tax authorities, and a shareholder or ADS
holder entitled to an exemption or reduction of NRIT pursuant to the NRIT Law or pursuant to an applicable TT may subsequently
request a refund of the amounts withheld in excess from the Spanish tax authorities, following the standard refund procedure described
below under “—Spanish refund procedure”.
Spanish refund procedure
According to Royal Decree 1776/2004, dated
July 30 and the Order of the Ministry of Finance and Taxation EHA/3316/2010, of December 17, a refund of an amount withheld in
excess of any applicable NRIT (taking into account an available exemption or reduction under the NRIT Law or applicable TT) can
be requested and obtained directly from the relevant Spanish tax authorities.
To pursue the refund claim, the shareholder
or holder of ADSs is required to file inter alia:
| - | the corresponding Spanish tax refund form (currently, tax form 210); |
| - | a valid certificate of tax residence issued by the relevant tax authorities of the country of residence
of the relevant shareholder or holder of ADSs stating that the investor is a resident of such country (and, in case an exemption
or reduction of NRIT is claimed pursuant to a TT, such certificate must indicate that the relevant investor is a resident therein
within the meaning of the relevant TT) or, as the case may be, the equivalent TT form; and |
| - | documentary evidence of the bank account to which the excess amount withheld should be paid. |
For the purposes of this section, a shareholder
or holder of ADSs must file the Form 210 (together with the corresponding documentation) during the period from February 1 of the
year following the year in which the NRIT was withheld, and ending on the expiration of the 4-year period which commenced with
the end of the corresponding filing period in which the issuer reported and paid such withholding taxes.
The Spanish Revenue Office must make the
refund within the six months after the filing of the refund claim. If such period elapses without the shareholder receiving the
refund, the shareholder is entitled to receive interest for late payment on the amount of the refund claimed.
For further details, prospective shareholders
or holders of ADSs should consult their own tax advisors.
Taxation of capital gains
Capital gains derived from the transfer
or sale of the ordinary shares or ADSs will be deemed to be income arising in Spain, and, therefore, subject to NRIT, at 19% rate
(exceptionally, 19.5% during fiscal year 2015). Gains arising from the sale of the ordinary shares or ADSs are not currently subject
to withholding tax on account of NRIT.
As a general rule, capital gains and losses
will be calculated separately for each transaction and it is not possible to offset losses derived from a given transfer of shares
against capital gains obtained upon another transfer of shares.
However, capital gains derived from the
transfer of ordinary shares will be exempt from NRIT in Spain in any of the three following cases:
| - | Capital gains derived from a transfer of the ordinary shares carried out on an official Spanish
secondary stock market (the Spanish Stock Exchanges), by any shareholder who is tax resident in a country that has entered into
a TT with Spain containing an “exchange of tax information” clause, must be exempt from NRIT. This exemption is not
applicable to capital gains obtained by a shareholder through a country or territory that is classified as a tax haven under the
Spanish tax regulations (currently defined by Royal Decree 1080/1991, of 5 July, as amended), nor by a shareholder holding the
ordinary shares through a permanent establishment located in Spain. |
| - | Capital gains obtained directly by any shareholder resident of another EU Member State (other than
Spain) or indirectly through a permanent establishment of such shareholder in a EU Member State (other than Spain), provided that
the gain is not obtained through a country or territory defined as a tax haven under the applicable Spanish tax regulations or
through a permanent establishment in Spain, shall be exempt from taxation in Spain if: |
| i. | the issuer’s assets do not mainly consist of, directly or indirectly, real estate property
located in Spain; |
| ii. | in the case of a non-resident individual, the shareholder has not held a direct or indirect interest
of at least 25% in the issuer’s capital or net equity during the twelve months preceding the transfer; |
| iii. | in the case of non-resident entities, the transfer fulfils the requirements set out in article
21 of CIT Law. |
| - | Capital gains realised by a shareholder or holder of ADSs who benefit from a TT entered into between
their country of tax residence and Spain that provides for taxation of capital gains derived from the transfer of the ordinary
shares only in the country of tax residence of such ordinary shares shareholder or holder of ADSs. As a result, capital gains realized
by a U.S. investor entitled to the benefits of the Treaty will generally not be subject to Spanish taxation. |
According to the Order dated December 17,
2010, shareholders or holders of ADSs, as the case may be, will be obliged to submit a Spanish tax form (currently tax form 210)
within:
| - | the first 20 calendar days of April, July, October and January, in respect of capital gains accrued
in the preceding quarter, if there is a tax payment to be made; or |
| - | the first 20 calendar days of January of the year following that in which the relevant capital
gain is accrued, if no tax is due (i.e., if qualifying for a tax exemption). |
In order for the exemptions mentioned above
to apply, a shareholder must timely file the applicable NRIT tax return before the Spanish tax authorities, and attach to it a
certificate of tax residence issued by the tax authority of its country of residence (which, if applicable, must state that the
shareholder of ordinary shares is a resident of such country within the meaning of the relevant TT) or, as the case may be, equivalent
TT form. U.S. investors should attach to the NRIT tax return an IRS certificate stating that to the knowledge of the IRS the U.S.
investor is a resident of the United States within the
meaning of the Treaty. As mentioned above, certificates of tax residence (or equivalent TT forms) will be generally valid only
for a period of one year after their date of issuance.
Prospective shareholders should consult
their own tax advisors to obtain detailed information regarding NRIT filings they may be required to make before the Spanish Tax
Authorities.
3.2 Net Wealth Tax (Impuesto sobre
el Patrimonio)
Non-Spanish tax resident individuals are
subject to the Spanish Wealth Tax on the assets located in Spain (including the ordinary shares and ADSs) as of 31 December each
year, unless an applicable TT provides otherwise. The Treaty does not address Net Wealth Tax.
Spanish Wealth Tax Law provides that the
first EUR 700,000 of assets owned in Spain by Spanish non-resident tax individuals will be exempt from taxation, while the rest
of the wealth will be taxed at a rate ranging between 0.2% and 2.5% although some reductions may apply. Individuals who are non-resident
in Spain for tax purposes who are resident in an European Union or European Economic Area Member State may apply the rules approved
by the autonomous region where the assets and rights with more value are situated. All such prospective investors should consult
their tax advisers.
Non-Spanish tax resident entities are not
subject to Wealth Tax.
3.3 Inheritance and Gift Tax (Impuesto
sobre Sucesiones y Donaciones)
Non-Spanish tax resident individuals who
acquire ownership or other rights over the ordinary shares or ADSs by inheritance, gift or legacy, and who reside in a country
with which Spain has entered into a double tax treaty in relation to Inheritance and Gift Tax will be subject to the provisions
of the relevant double tax treaty. The U.S. and Spain have not entered into a double tax treaty in relation to Inheritance and
Gift Tax.
If the provisions of the foregoing paragraph
do not apply, such individuals will be subject to Inheritance and Gift Tax in accordance with the applicable Spanish regional and
state rules. Generally, individuals who are non-resident in Spain for tax purposes are subject to Spanish Inheritance and Gift
Tax according to the rules set forth in the state Inheritance and Gift Tax law. However, if the deceased or the donee are resident
in an European Union or European Economic Area Member State, the applicable rules will be those corresponding to the relevant autonomous
regions according to their law. As such, prospective investors should consult their tax advisers.
Non-Spanish resident legal entities which
acquire ownership or other rights over the ordinary shares or ADSs by inheritance, gift or legacy are not subject to the Spanish
Inheritance and Gift Tax. Such acquisitions will be subject to NRIT (as described above), except as provided in any applicable
TT entered into by Spain. In general, TT provide for the taxation of this type of income solely in the country of tax residence
of the shareholder of the ordinary shares or holder of ADSs.
The subscription, acquisition and transfer
of the ordinary shares will be exempt from indirect taxes in Spain, i.e., exempt from Transfer Tax and Stamp Duty, in accordance
with the Consolidated Text of such tax promulgated by Royal Legislative Decree 1/1993, of 24 September and exempt from Value Added
Tax, in accordance with Law 37/1992, of 28 December regulating such tax.
U.S. Federal Income Tax Considerations
The following is a description of the material
U.S. federal income tax consequences of the ownership and disposition of contingent convertible capital securities and any Conversion
Shares or ADSs representing Conversion Shares, or debt securities denominated in U.S. dollars, to the U.S. Holders described below.
This summary applies only to the U.S. Holders described below that (i) hold contingent convertible capital securities and any Conversion
Shares or ADSs representing Conversion Shares, or debt securities, as capital assets for U.S. federal income tax purposes and (ii)
purchase the contingent convertible capital securities or debt securities in their offering, and in the case of debt securities,
at their “issue price”, which will equal the first price to the public (not including bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement agents or wholesalers) at which a substantial amount
of the debt securities of such series is sold for money. To the extent this discussion relates to debt securities, it only applies
to debt securities that are treated as debt for U.S. federal income tax purposes.
This discussion does not describe all of
the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including the alternative
minimum tax and the Medicare contribution tax on net investment income, as well as tax consequences applicable to U.S. Holders
subject to special rules, such as:
| · | certain financial institutions; |
| · | dealers or certain traders in securities; |
| · | persons holding contingent convertible capital securities, ADSs, Conversion Shares, or debt securities as part of a straddle,
wash sale, conversion transaction or integrated transaction; |
| · | persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; |
| · | entities classified as partnerships for U.S. federal income tax purposes; |
| · | tax-exempt entities, “individual retirements accounts” or “Roth IRAs”; |
| · | persons who own or are deemed to own 10% or more of our voting shares; or |
| · | persons holding debt securities, contingent convertible capital securities, Conversion Shares or ADSs in connection with a
trade or business conducted outside of the United States. |
If an entity that is classified as a partnership
for U.S. federal income tax purposes owns contingent convertible capital securities, ADSs, Conversion Shares or debt securities,
the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the
partnership. Partnerships owning contingent convertible capital securities, ADSs, ordinary shares, or debt securities and partners
in such partnerships should consult their tax advisers as to the U.S. federal income tax consequences of owning and disposing of
the contingent convertible capital securities, ADSs, Conversion Shares, or debt securities in their particular circumstances.
As used herein, a “U.S. Holder”
is a beneficial owner of contingent convertible capital securities, ADSs, Conversion Shares, or debt securities, as applicable,
that is, for U.S. federal income tax purposes:
| · | an individual who is a citizen or resident of the United States; |
| · | a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any
state therein or the District of Columbia; or |
| · | an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. |
This summary is based on the Internal Revenue
Code of 1986, as amended (the “Code”), administrative pronouncements, judicial decisions, final, temporary and proposed
Treasury regulations, and the treaty between the United States and Spain (the “Treaty”), all as of the date hereof,
any of which is subject to change, possibly with retroactive effect.
Persons considering the purchase of contingent
convertible capital securities of any series or debt securities of any series should consult their tax advisers with regard to
the application of the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of the securities offered
hereunder in their particular situations. The applicable prospectus supplement may include a summary of additional or alternative
U.S. federal income tax considerations that are not described herein and that may be relevant to a particular series of contingent
convertible capital securities or a particular series of debt securities. For example, the applicable prospectus supplement will
include a summary of U.S. federal income tax consequences to U.S. Holders of owning and disposing of debt securities that are not
U.S. dollar-denominated or debt securities that are subject to the rules applicable to contingent payment debt instruments. Accordingly,
U.S. Holders should also consult the applicable prospectus supplement for any additional discussion regarding U.S. federal income
taxation with respect to the specific securities offered thereunder.
Except as specifically discussed under
“—Passive Foreign Investment Company Rules” below, this discussion assumes that Banco Santander is not, and will
not become, a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes.
Taxation of Debt Securities
Characterization of the
Subordinated Debt Securities
There is no direct legal authority as to
the proper U.S. federal income tax treatment of an instrument that is denominated as a subordinated debt instrument and has significant
debt features, but that is subject to statutory bail-in powers such as the Regulatory Bail-in Power. Therefore, prospective investors
should consult their tax advisors as to the proper characterization of the subordinated debt securities for U.S. federal income
tax purposes. We believe that the subordinated debt securities should be treated as debt for U.S. federal income tax purposes and
the remainder of this discussion so assumes.
Stated Interest
Stated interest on a debt security will
be taxable to a U.S. Holder as ordinary interest income at the time it accrues or is received in accordance with a U.S. Holder’s
method of accounting for U.S. federal income tax purposes. The amount of interest taxable as ordinary income will include amounts
withheld in respect of Spanish taxes and, without duplication, any payments of Additional Amounts paid with respect thereto. Interest
income (and any original issue discount described below) will constitute foreign-source income for foreign tax credit purposes.
Subject to applicable restrictions and limitations, which vary depending upon the U.S. Holder’s circumstances, Spanish taxes
withheld from interest income on a debt security at a rate not exceeding any applicable rate under the Treaty may be creditable
against the U.S. Holder’s U.S. federal income tax liability. Spanish taxes withheld in excess of any applicable rate under
the Treaty will not be eligible for credit against a U.S. Holder’s U.S. federal income tax liability. The rules governing
foreign tax credits are complex. U.S. Holders should consult their own tax advisors regarding the creditability of foreign taxes
in their particular circumstances. In lieu of claiming a credit, a U.S. Holder may elect to deduct such Spanish taxes in computing
its taxable income, subject to generally applicable limitations. An election to deduct foreign taxes instead of claiming foreign
tax credits applies to all foreign taxes paid or accrued in the relevant taxable year.
Special rules applicable to certain “OID
debt securities,” “floating rate debt securities” and “short-term debt securities” are described
below.
Original Issue Discount
If a debt security’s “issue
price” (as described above) is less than its “stated redemption price at maturity”, the debt security will be
considered to have been issued at an original issue discount (“OID”) for U.S. federal income tax purposes (“OID
debt security”) unless the debt security satisfies a de minimis threshold, as described below. A
debt security’s stated redemption
price at maturity will equal the sum of all payments under the debt security, other than payments of “qualified stated interest”.
Generally, “qualified stated interest” is stated interest unconditionally payable at least annually during the entire
term of the debt security at a single fixed rate or, if certain conditions are met, at a variable rate. See “—Floating
Rate Debt Securities” below for a discussion regarding the treatment of certain variable rates as qualified stated interest.
If the difference between a debt security’s
stated redemption price at maturity and its issue price is less than a prescribed de minimis amount (generally 1/4 of 1%
of the stated redemption price at maturity multiplied by the number of complete years to maturity), the debt security will not
be considered to have OID. A U.S. Holder of OID debt securities will be required to include any qualified stated interest in income
in accordance with the U.S. Holder’s method of accounting for U.S. federal income tax purposes, as described in “—Stated
Interest” above. In addition, a U.S. Holder of OID debt securities will be required to include in income the sum of the daily
portions of the OID for each day on which the U.S. Holder held the OID debt securities. The U.S. holder will be required to include
such OID as it accrues in accordance with a constant yield method based on a compounding of interest, regardless of whether cash
attributable to this income is received and regardless of such U.S. Holder’s regular method of tax accounting. Under this
method, U.S. Holders of OID debt securities generally will be required to include in income increasingly greater amounts of original
issue discount in successive accrual periods.
For purposes of applying the OID rules
and determining whether a debt security is issued with OID, if the issuer or a holder has an unconditional option to redeem a debt
security prior to its stated maturity date and certain other conditions are met, this option will be presumed to be exercised if,
by utilizing any date on which the debt security may be redeemed as the maturity date and the amount payable on that date in accordance
with the terms of the debt security as the stated redemption price at maturity, in the case of the issuer’s option, the yield
on the debt security would be lower than its yield to the stated maturity date or, in the case of the holder’s option, the
yield on the debt security would be higher than its yield to the stated maturity date. If this option is not in fact exercised,
the debt security would be treated, solely for purposes of calculating original issue discount, as if it were redeemed, and a new
debt security were issued, on the presumed exercise date for an amount equal to the debt security’s adjusted issue price
on that date. The adjusted issue price of a debt security is generally the issue price of the debt security, increased by the amount
of original issue discount previously includible in gross income and decreased by the amount of any payment previously made, other
than a payment of qualified stated interest.
A U.S. Holder may make an election to include
in income all interest that accrues on a debt security (including stated interest, original issue discount and de minimis
original issue discount), as adjusted by any amortizable bond premium (as described below), in accordance with a constant yield
method based on the compounding of interest (a “constant yield election”). The constant yield election will apply only
to the debt securities with respect to which it is made and may not be revoked without the consent of the Internal Revenue Service.
Floating Rate Debt Securities
The discussion below addresses floating
rate debt securities that pay interest at a rate equal to a LIBOR, plus a fixed spread, throughout the term of the debt security
which is unconditionally payable at least annually in cash. If a floating rate debt security of any series is issued with different
terms, the applicable prospectus supplement may describe relevant U.S. federal income tax consequences to U.S. Holders.
All stated interest on a floating rate
debt security will constitute qualified stated interest and will be taxed as described in “—Stated Interest”
above. Thus, a floating rate debt security generally will not be treated as issued with OID, unless the floating rate debt security
is issued at an issue price below its principal amount and the difference between the issue price and the principal amount equals
or is in excess of the specified de minimis amount described in “—Original Issue Discount” above.
In general, if a floating rate debt security is issued with OID, the amount of qualified stated interest and the amount of OID
that accrues during an accrual period will be determined under the rules applicable to fixed rate debt instruments, as discussed
under “—Stated Interest” and “—Original Issue Discount” above, by assuming that the variable
rate is a fixed rate equal to the value, as of the issue date, of the LIBOR plus the applicable fixed spread. The qualified stated
interest allocable to an accrual period will be increased (or decreased) if the interest actually paid during an accrual period
exceeds (or is less than) the interest assumed to be paid during the accrual period pursuant to the foregoing sentence.
Short-Term Debt Securities
A debt security that matures one year or
less from its date of issuance taking into account the last possible date on which the debt security could be outstanding (a “short-term
debt security”) will be treated as being issued at a discount and none of the interest paid on the short-term debt security
will be treated as qualified stated interest. In general, a cash-method U.S. Holder of a short-term debt security is not required
to accrue the discount for U.S. federal income tax purposes unless it elects to do so (but will be required to include in income
any interest paid to such U.S. Holder). U.S. Holders who so elect and certain other U.S. Holders, including those who report income
on the accrual method of accounting for U.S. federal income tax purposes, are required to include the discount in income as it
accrues on a straight-line basis, unless another election is made to accrue the discount according to a constant-yield method based
on daily compounding. In the case of a U.S. Holder who is not required and who does not elect to include the discount in income
currently, any gain realized on the sale, exchange or retirement of the short-term debt security will be ordinary income to the
extent of the discount accrued on a straight-line basis (or, if elected, according to a constant-yield method based on daily compounding)
through the date of sale, exchange or retirement. In addition, such U.S. Holders will be required to defer deductions for any interest
paid on indebtedness incurred to purchase or carry short-term debt securities in an amount not exceeding the accrued discount that
has not been included in income.
Prior Accrued Interest
on Additional Debt Securities
Under the terms of the debt securities,
if an issuer issues additional debt securities that have the same CUSIP, ISIN or other identifying number of the outstanding debt
securities (“additional debt securities”), the additional debt securities and the outstanding debt securities must
be fungible for U.S. federal income tax purposes. U.S. Holders that purchase additional debt securities from an issuer upon their
issuance may elect to exclude from income the portion of the interest paid on the first interest date on additional debt securities
that relates to the period from the preceding interest payment date on the outstanding debt securities to the issue date of the
additional debt securities (“prior accrued interest”). Prior accrued interest not included in income will not form
part of any amortizable bond premium (as described under “––Amortizable Bond Premium” below). A U.S. Holder’s
tax basis in an additional debt securities will generally equal the cost of such additional debt security to the U.S. Holder, reduced
by any prior accrued interest excluded from income.
Amortizable Bond Premium
If a U.S. Holder purchases a debt security
for an amount that is greater than the sum of all amounts payable on the debt security other than qualified stated interest, the
U.S. Holder will be considered to have purchased the debt security with amortizable bond premium. In general, the amount of amortizable
bond premium will be equal to the excess of the purchase price over the sum of all amounts payable on the debt security other than
qualified stated interest and the U.S. Holder may elect to amortize this premium, using a constant yield method, over the remaining
term of the debt security. The amortization of bond premium on a debt security with an unconditional early redemption put or call
option may be deferred. A U.S. Holder may generally use the amortizable bond premium allocable to an accrual period to offset qualified
stated interest required to be included in such U.S. Holder’s income with respect to the debt security in that accrual period.
A U.S. Holder that elects to amortize bond premium must reduce its tax basis in the debt security by the amount of the amortized
premium. An election to amortize bond premium applies to all taxable debt obligations then owned and thereafter acquired by the
U.S. Holder and may be revoked only with the consent of the Internal Revenue Service. If a U.S. Holder makes a constant yield election
(as described in “—Original Issue Discount” above) for a debt security with amortizable bond premium, such election
will result in a deemed election to amortize bond premium for all of the U.S. Holder’s debt instruments with amortizable
bond premium and may be revoked only with the permission of the Internal Revenue Service.
Sale, Retirement or Other
Taxable Disposition of the Debt Securities
Upon the sale, retirement or other taxable
disposition of a debt security, a U.S. Holder will recognize taxable gain or loss equal to the difference between the amount realized
on the sale, retirement or disposition and the U.S. Holder’s adjusted tax basis in the debt security. For these purposes,
the amount realized does not include any amount attributable to accrued but unpaid interest. Amounts attributable to accrued but
unpaid interest will be taxed as interest as described in “—Stated Interest” above. A U.S. Holder’s
adjusted tax basis in the debt securities will
generally equal the cost of such debt security
to the U.S. Holder, increased by the amount of any OID included in income, decreased by the amount of any payment on the debt securities
other than payments of qualified stated interest, and further decreased by any amortized bond premium.
Except as described under “Short-Term
Debt Securities” above, gain or loss recognized on the sale, retirement or other taxable disposition of a debt security will
generally be capital gain or loss, and will be long-term capital gain or loss if at the time of the sale, retirement or taxable
disposition the U.S. Holder has held the debt security for more than one year. Gain or loss will generally be U.S.-source for purposes
of computing a U.S. Holder’s foreign tax credit limitation. The deductibility of capital losses may be subject to limitations.
Substitution of Issuer
An assumption of the obligations of a relevant
issuer under any series of debt securities as described in “Description of Debt Securities and Guarantees—Substitution
of Issuer” may be considered for U.S. federal income tax purposes to be a taxable exchange by U.S. Holders of the debt securities
for new debt securities, resulting in recognition of taxable gain or loss for U.S. federal income tax purposes and other possible
adverse tax consequences. U.S. Holders should consult their tax advisers regarding the U.S. federal, state, local and other tax
consequences of any assumption of the relevant issuer’s obligations under the debt securities.
Taxation of Contingent Convertible Capital Securities
Characterization of the
Contingent Convertible Capital Securities
Banco Santander believes, and the remainder
of this discussion assumes, that the contingent convertible capital securities will be treated as equity for U.S. federal income
tax purposes.
Taxation of Distributions
Distributions with respect to contingent
convertible capital securities (including Spanish taxes withheld and, without duplication, any Additional Amounts paid with respect
thereto), generally will be treated as dividends to the extent paid out of Banco Santander’s current or accumulated earnings
and profits as determined under U.S. federal income tax principles. Because Banco Santander does not maintain calculations of its
earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to
U.S. Holders as dividends.
Distributions will be treated as foreign-source
dividend income for foreign tax credit purposes and will not be eligible for the dividends-received deduction generally available
to U.S. corporations under the Code. Subject to applicable limitations, distributions received by certain non-corporate U.S. Holders
may be eligible for taxation as “qualified dividend income” and therefore may be taxable at reduced rates applicable
to long-term capital gains. Non-corporate U.S. Holders should consult their own tax advisors regarding the availability of the
long-term capital gains rate on dividends in their particular circumstances.
Distributions will be included in a U.S.
Holder’s income on the date of the U.S. Holder’s receipt of the distribution. The amount of dividend income will include
any Spanish taxes withheld and, without duplication, any Additional Amounts paid with respect thereto. Subject to applicable restrictions
and limitations, which vary depending upon the U.S. Holder’s circumstances, Spanish taxes withheld from distributions at
a rate not exceeding any applicable rate under the Treaty will be creditable against the U.S. Holder’s U.S. federal income
tax liability. Spanish taxes withheld in excess of any applicable rate under the Treaty will not be eligible for credit against
a U.S. Holder’s U.S. federal income tax liability. The rules governing foreign tax credits are complex. U.S. Holders should
consult their own tax advisors regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming
a credit, a U.S. Holder may elect to deduct such Spanish taxes in computing its taxable income, subject to generally applicable
limitations. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued
in the relevant taxable year.
Sale, Redemption or Other
Taxable Disposition
A U.S. Holder will generally recognize
capital gain or loss on the sale, redemption or other disposition of contingent convertible capital securities (other than the
receipt of Conversion Shares or ADSs upon Conversion, which will be treated as described below under “Consequences of a Conversion”),
assuming that in the case of a redemption, the U.S. Holder does not own, and is not deemed to own any of our Common Shares at such
time. The gain or loss will be long-term capital gain or loss if the U.S. Holder has held the contingent convertible capital securities
for more than one year. The amount of the U.S. Holder’s gain or loss will equal the difference between the amount realized
on the sale or other disposition and the U.S. Holder’s tax basis in the contingent convertible capital securities. The deductibility
of capital losses is subject to limitations. Any gain or loss will generally be U.S.-source gain or loss for foreign tax credit
purposes.
Substitution of Issuer
An assumption of the obligations of Banco
Santander under any series of contingent convertible capital securities as described under “Description of Contingent Convertible
Capital Securities—Substitution of Issuer” might be considered for U.S. federal income tax purposes to be an exchange
by the U.S. Holders of the contingent convertible capital securities of such series for new contingent convertible capital securities,
resulting in recognition of taxable gain or loss for these purposes and possible other adverse tax consequences for such U.S. Holders.
U.S. Holders should consult their tax advisors regarding the U.S. federal, state and local income tax consequences of an assumption.
Consequences of a Trigger
Conversion
A conversion of contingent convertible
capital securities into Conversion Shares or ADSs generally will not be a taxable event for U.S. federal income tax purposes. A
U.S. Holder’s tax basis in, and holding period for, the Conversion Shares or ADSs received upon conversion will generally
be the same as the U.S. Holder’s tax basis in, and holding period of, the contingent convertible capital securities.
Taxation of ADSs and Conversion Shares
This discussion, to the extent it relates
to the ADSs, is based in part on representations by the ADS Depositary and assumes that each obligation under the Deposit Agreement
and any related agreement or undertaking will be performed in accordance with its terms. In general, a U.S. Holder who owns ADSs
will be treated as the owner of the Conversion Shares represented by those ADSs for U.S. federal income tax purposes. Accordingly,
no gain or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying Conversion Shares represented by those ADSs.
The U.S. Treasury has expressed concern
that parties to whom American depositary shares are released before shares are delivered to the depositary, or intermediaries in
the chain of ownership between holders and the issuer of the security underlying the American depositary shares, may be taking
actions that are inconsistent with the claiming of foreign tax credits by holders of American depositary shares. These actions
would also be inconsistent with the claiming of the reduced rate of tax described above applicable to dividends received by certain
non-corporate holders. Accordingly, the creditability of Spanish taxes, and the availability of the reduced tax rate for dividends
received by certain non-corporate U.S. Holders could be affected by actions taken by such parties or intermediaries.
Taxation of Distributions
Subject to the discussion above regarding
concerns expressed by the U.S. Treasury, distributions paid on the Conversion Shares or ADSs (other than certain pro-rata
distributions of Common Shares) will generally be treated in the manner described above under “—Taxation of Contingent
Convertible Capital Securities—Taxation of Distributions” with the following modifications. In the case of ADSs, a
dividend will be included in a U.S. Holder’s income on the date of the Depositary’s receipt of the dividend. The amount
of any dividend paid in euros will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date
of receipt by the U.S. Holder, or in the case of ADSs, by the Depositary, regardless of whether the payment is converted into U.S.
dollars on the date of receipt. The amount of any scrip dividend (see “Item 4. Information on the Company—A. History
and development of the company—Principal Capital expenditures and Divestures—Recent Events” in Banco
Santander’s Annual Report on Form
20-F for the year ended December 31, 2014) will be the U.S. dollar fair market value of the Common Shares on the date of receipt.
If a cash dividend is converted into U.S. dollars on the date of receipt, the U.S. Holder generally should not be required to recognize
foreign currency gain or loss in respect of the dividend payment. A U.S. Holder may have foreign currency gain or loss if a cash
dividend is converted into U.S. dollars after the date of receipt. Any foreign currency gain or loss realized by a U.S. Holder
on a sale or other disposition of the foreign currency will be U.S.-source ordinary income or loss.
Subject to applicable restrictions and
limitations, which vary depending upon the U.S. Holder’s circumstances, Spanish taxes withheld from distributions at a rate
not exceeding any applicable rate under the Treaty will be creditable against the U.S. Holder’s U.S. federal income tax liability.
Spanish taxes withheld in excess of any applicable rate under the Treaty will not be eligible for credit against a U.S. Holder’s
U.S. federal income tax liability. The rules governing foreign tax credits are complex. U.S. Holders should consult their own tax
advisors regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a credit, a U.S. Holder
may elect to deduct such Spanish taxes in computing its taxable income, subject to generally applicable limitations. An election
to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the relevant taxable
year.
Sale and Other Taxable
Disposition of ADSs or Ordinary Shares
A U.S. Holder’s sale or other taxable
disposition of Conversion Shares or ADSs will generally be treated in the manner described above under “—Taxation of
Contingent Convertible Capital Securities—Sale, Redemption or Other Taxable Disposition,” with the U.S. Holder’s
adjusted basis and amount realized each determined in U.S. dollars.
Passive Foreign Investment Company Rules
Based upon certain proposed Treasury regulations
that are not yet in effect, but are generally proposed to become effective for taxable years beginning after December 31,
1994, Banco Santander does not expect to be a PFIC for U.S. federal income tax purposes for its current taxable year or for the
foreseeable future. However, since PFIC status depends upon the composition of Banco Santander’s income and assets and the
market value of its assets from time to time, there can be no assurance that Banco Santander will not be a PFIC for any taxable
year.
If Banco Santander were a PFIC for any
taxable year during which a U.S. Holder held contingent convertible capital securities, ADSs or Conversion Shares, certain adverse
U.S. federal income tax consequences could apply to the U.S. Holder. Generally, gain recognized by a U.S. Holder on a sale, redemption
or other disposition (including under certain circumstances, a pledge) of contingent convertible capital securities, ADSs or Conversion
Shares would be allocated ratably over the U.S. Holder’s holding period for the contingent convertible capital securities,
ADSs or Conversion Shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before Banco
Santander became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to
tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge
would be imposed on the resulting tax liability for such taxable year. Further, any payments or distributions in respect of contingent
convertible capital securities, ADSs or Conversion Shares in excess of 125% of the average of the annual payments or distributions
on such contingent convertible capital securities, ADSs or Conversion Shares received by the U.S. Holder during the preceding three
years or the U.S. Holder’s holding period, whichever is shorter, would be subject to taxation in the same manner as gain,
as described immediately above. Certain elections may be available that would result in alternative treatments (such as the mark-to-market
election) of the contingent convertible capital securities, ADSs and Conversion Shares if Banco Santander were a PFIC.
U.S. Holders should consult their tax advisors
regarding the PFIC rules.
Information Reporting and Backup Withholding
Payments of interest, dividends and proceeds
from the sale, redemption or other disposition of debt securities, contingent convertible capital securities, ADSs or Conversion
Shares that are made within the United States or through certain U.S.-related financial intermediaries may be subject to information
reporting and to backup withholding, unless the U.S. Holder is an exempt recipient or, in the case of backup withholding, the U.S.
Holder
provides a correct taxpayer identification
number and certifies that no loss of exemption from backup withholding has occurred. The amount of any backup withholding from
a payment to a U.S. Holder will be allowed as a credit against such U.S. Holder’s U.S. federal income tax liability and may
entitle such U.S. Holder to a refund, provided that the required information is timely furnished to the Internal Revenue Service.
Certain U.S. Holders who are individuals
(and under proposed Treasury regulations, certain entities) may be required to report information relating to their ownership of
an interest in certain foreign financial assets, including securities of a non-U.S. entity subject to certain exceptions (including
an exception for securities held in accounts at financial institutions, in which case the accounts may be reportable if maintained
by non-U.S. financial institutions). U.S. Holders should consult their tax advisors regarding their reporting obligations with
respect to the debt securities, contingent convertible capital securities, ADSs or Conversion Shares.
Benefit
Plan Investor Considerations
A fiduciary of a pension, profit-sharing
or other employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
including entities such as collective investment funds, partnerships and separate accounts whose underlying assets include the
assets of such plans (collectively, “ERISA Plans”) should consider the fiduciary standards of ERISA in the context
of the ERISA Plan’s particular circumstances before authorizing an investment in the securities. Among other factors, the
fiduciary should consider whether the investment would satisfy the prudence and diversification requirements of ERISA and would
be consistent with the documents and instruments governing the ERISA Plan.
Section 406 of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended, (the “Code”) prohibit ERISA Plans, as well as plans (including individual
retirement accounts and Keogh plans) subject to Section 4975 of the Code (together with ERISA Plans, “Plans”), from
engaging in certain transactions involving the “plan assets” with persons who are “parties in interest”
under ERISA or “disqualified persons” under Section 4975 of the Code (in either case, “Parties in Interest”)
with respect to such Plans. As a result of our business, we, and our current and future affiliates, may be Parties in Interest
with respect to many Plans. Where we (or our affiliate) are a Party in Interest with respect to a Plan (either directly or by reason
of our ownership interests in our directly or indirectly owned subsidiaries), the purchase and holding of the securities by or
on behalf of the Plan could be a prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless exemptive
relief were available under an applicable exemption (as described below).
Certain prohibited transaction class exemptions
(“PTCEs”) issued by the U.S. Department of Labor may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the securities. Those class exemptions are PTCE 96-23 (for certain transactions determined
by in-house asset managers), PTCE 95-60 (for certain transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for certain transactions involving insurance company
separate accounts) and PTCE 84-14 (for certain transactions determined by independent qualified asset managers). In addition, ERISA
Section 408(b)(17) and Section 4975(d)(20) of the Code may provide a limited exemption for the purchase and sale of the securities
and related lending transactions, provided that neither the issuer of the securities nor any of its affiliates have or exercise
any discretionary authority or control or render any investment advice with respect to the assets of the Plan involved in the transaction
and provided further that the Plan pays no more, and receives no less, than adequate consideration in connection with the transaction
(the so-called “service provider exemption”). There can be no assurance that any of these statutory or class exemptions
will be available with respect to transactions involving the securities.
Accordingly, the securities may not be
purchased or held by any Plan, any entity whose underlying assets include “plan assets” by reason of any Plan’s
investment in the entity (a “Plan Asset Entity”) or any person investing “plan assets” of any Plan, unless
such purchaser or holder is eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or the service-provider
exemption or there is some other basis on which the purchase and holding of the securities will not constitute a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code. Each purchaser or holder of the securities or any interest therein will be
deemed to have represented by its purchase or holding of the securities that (a) it is not a Plan and its purchase and holding
of the
securities is not made on behalf of or
with “plan assets” of any Plan or (b) its purchase and holding of the securities will not result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code.
Certain governmental plans (as defined
in Section 3(32) of ERISA), church plans (as defined in Section 3(33) of ERISA) and non-U.S. plans (as described in Section 4(b)(4)
of ERISA) (“Non-ERISA Arrangements”) are not subject to these “prohibited transaction” rules of ERISA or
Section 4975 of the Code, but may be subject to similar rules under other applicable laws or regulations (“Similar Laws”).
Accordingly, each such purchaser or holder of the securities shall be required to represent (and deemed to have represented by
its purchase of the securities) that such purchase and holding is not prohibited under applicable Similar Laws.
Due to the complexity of these rules, it
is particularly important that fiduciaries or other persons considering purchasing the securities on behalf of or with “plan
assets” of any Plan consult with their counsel regarding the relevant provisions of ERISA, the Code or any Similar Laws and
the availability of exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1, 84-14, the service provider exemption or some other
basis on which the acquisition and holding will not constitute a non-exempt prohibited transaction under ERISA or Section 4975
of the Code or a violation of any applicable Similar Laws.
Each purchaser and holder of the securities
has exclusive responsibility for ensuring that its purchase, holding and subsequent disposition of the securities does not violate
the fiduciary or prohibited transaction rules of ERISA, the Code or any applicable Similar Laws. The sale of any securities to
any Plan is in no respect a representation by us or any of our affiliates or representatives that such an investment meets all
relevant legal requirements with respect to investments by Plans or Non-ERISA Arrangements generally or any particular Plan or
Non-ERISA Arrangement, or that such an investment is appropriate for Plans or Non-ERISA Arrangements generally or any particular
Plan or Non-ERISA Arrangement.
Plan of
Distribution (Conflicts of Interest)
We may sell debt securities, contingent
convertible capital securities or ordinary shares (including ADSs) to or through underwriters or dealers and also may sell all
or part of such securities directly to other purchasers or through agents.
The distribution of the securities may
be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices
prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices.
In connection with the sale of securities,
we may compensate underwriters in the form of discounts, concessions or commissions or in any other way that the applicable prospectus
supplement describes. Underwriters may sell securities to or through dealers, and the dealers may receive compensation in the form
of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of securities may be deemed to be underwriters, and
any discounts or commissions that we pay them and any profit on the resale of securities by them may be deemed to be underwriting
discounts and commissions, under the Securities Act of 1933 (“Securities Act”). Any such underwriter or agent will
be identified, and any such compensation that we pay will be described, in the prospectus supplement.
Under agreements which we may enter into,
we may be required to indemnify underwriters, dealers and agents who participate in the distribution of securities against certain
liabilities, including liabilities under the Securities Act.
Each new series of debt securities, ordinary
shares and contingent convertible capital securities will be a new issue of securities with no established trading market. If securities
of a particular series are not listed on a U.S. national securities exchange, certain broker-dealers may make a market in those
securities, but will not be obligated to do so and may discontinue any market making at any time without notice. We cannot give
any assurance that any broker-dealer will make a market in securities of any series or as to the liquidity of the trading market
for those securities.
Conflicts of Interest
To the extent an initial offering of the
securities will be distributed by an affiliate of ours, each such offering of securities will be conducted in compliance with the
requirements of FINRA Rule 5121 of the Financial Industry Regulatory Authority, Inc. (“FINRA”) regarding a FINRA member
firm’s distribution of securities of an affiliate and related conflicts of interest. No underwriter, selling agent or dealer
utilized in the initial offering of securities who is an affiliate of ours will confirm sales to accounts over which it exercises
discretionary authority without the prior specific written approval of its customer.
Following the initial distribution of any
of these securities, affiliates of ours may offer and sell these securities in the course of their businesses as broker-dealers.
Such affiliates may act as principals or agents in these transactions and may make any sales at varying prices related to prevailing
market prices at the time of sale or otherwise. Such affiliates may also use this prospectus in connection with these transactions.
None of our affiliates is obligated to make a market in any of these securities and may discontinue any market-making activities
at any time without notice.
Underwriting discounts and commissions
on securities sold in the initial distribution will not exceed 8% of the offering proceeds.
Any underwriter, selling agent or dealer
utilized in the initial offering of securities will not confirm sales to accounts over which it exercises discretionary authority
without the prior specific written approval of its customer.
Delayed Delivery Arrangements
If so indicated in the prospectus supplement,
we may authorize underwriters or other persons acting as their agents to solicit offers by certain institutions to purchase ordinary
shares, debt securities or contingent convertible capital securities from it pursuant to contracts providing for payment and delivery
on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies,
pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must
be approved by us. The obligations of any purchaser under any such contract will be subject to the condition that the purchase
of the offered securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser
is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of
such contracts.
Legal Opinions
The validity of the securities will be
passed upon by Davis Polk & Wardwell LLP as to matters of U.S. federal and New York law, and by Uría Menéndez
as to matters of Spanish law.
Experts
The consolidated financial statements as
of December 31, 2014, 2013 and 2012, and for each of the three years in the period ended December 31, 2014, incorporated in this
prospectus by reference from the Group’s Annual Report on Form 20-F filed with the SEC on April 29, 2015 (the “2014
Annual Report”) and the effectiveness of the Group’s internal control over financial reporting have been audited by
Deloitte S.L., an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference.
Such consolidated financial statements have been so incorporated in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
Enforcement
of Civil Liabilities
Each of Banco Santander and the subsidiary
issuers is a corporation (sociedad anónima) organized under the laws of the Kingdom of Spain. Substantially all of
the directors and executive officers of Banco Santander and all of the directors of the subsidiary issuers, and certain of the
experts named in this prospectus, are not residents of the United States. A substantial majority of the assets of Banco Santander
and substantially all of the assets of the
subsidiary issuers are located outside
the United States. As a result, it may not be possible for investors to effect service of process within the United States upon
us or those persons or to enforce against them judgments obtained in U.S. courts predicated upon civil liability provisions of
the federal securities laws of the United States. Banco Santander and the subsidiary issuers are advised by Spanish legal counsel
that there is doubt as to the enforceability in Spain in original actions or in actions for enforcement of judgments of U.S. courts,
of liabilities predicated solely upon the securities laws of the United States. Banco Santander and the subsidiary issuers have
submitted to the non-exclusive jurisdiction of New York state and U.S. federal courts sitting in New York City for the purpose
of any suit, action or proceeding arising out of or in connection with the securities and have appointed Banco Santander, S.A.,
New York Branch, as agent in New York City to accept service of process in any such action.
Where You
Can Find More Information
Ongoing Reporting
We file reports and other information with
the SEC. You can read and copy these reports and other information that we file with the SEC at the SEC’s Public Reference
Room, 100 F Street, N.E., Washington, D.C. 20549, United States. You can call the SEC at 1-800-SEC-0330 for further information
about the Public Reference Room. The SEC’s website, at http://www.sec.gov, contains reports and other information in electronic
form that we have filed electronically with the SEC. You can also read this material at the offices of The New York Stock Exchange,
20 Broad Street, New York, New York 10005, United States, on which certain of our securities are listed.
We will provide the trustee for any debt
securities and contingent convertible capital securities and the ADR depositary for any ordinary shares with our annual reports,
which will include a description of operations and our annual audited consolidated financial statements. We will also provide any
trustee or ADR depositary with interim reports that will include unaudited interim summary consolidated financial information.
Upon receipt, the trustee or the ADR depositary will mail the reports to all record holders of the debt securities, contingent
convertible capital securities or ordinary shares. In addition, we will provide the trustee or the ADR depositary with all notices
of meetings at which holders of debt securities, contingent convertible capital securities or ordinary shares are entitled to vote,
and all other reports and communications that are made generally available to holders of debt securities, contingent convertible
capital securities or ordinary shares.
Registration Statement
This prospectus is part of a registration
statement that we filed with the SEC. As exhibits to the registration statement, we have also filed or incorporated by reference
the indentures, the underwriting agreements, the ADR deposit agreement as well as various other documents listed in the exhibit
index. Statements contained in this prospectus as to the contents of any contract or other document referred to in this prospectus
are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement, each such statement being qualified in all respects by such reference. For further information,
you should refer to the registration statement. You can obtain the full registration statement from the SEC or from us.
Incorporation
of Documents by Reference
The SEC allows us to “incorporate
by reference” the information that we file with the SEC. This permits us to disclose important information to you by referring
to these filed documents. Any information referred to in this way is considered part of this prospectus, and any information that
we file with the SEC after the date of this prospectus will automatically be deemed to update and supersede this information.
We incorporate by reference the Group’s
2014 Annual Report on Form 20-F for the year ended December 31, 2014 filed with the SEC on April 29, 2015 and the Group’s
Report on Form 6-K including the Group’s results for the interim period ended June 30, 2015 filed with the SEC on September
30, 2015.
We also incorporate by reference all subsequent
annual reports of the Group filed on Form 20-F and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act and certain reports on Form 6-K, if they state that they are incorporated by reference into this prospectus,
that we furnish to the SEC after the date of this prospectus and until we or any underwriters sell all of the securities.
Upon written or oral request, we will provide
free of charge a copy of any or all of the documents that we incorporate by reference into this prospectus, other than exhibits
which are not specifically incorporated by reference into this prospectus. To obtain copies you should
contact us at Investor Relations, Ciudad Grupo Santander, Avenida de Cantabria s/n, 28660 Boadilla del Monte, Madrid, Spain (telephone:
(011) 34-91-259-6520).
Cautionary
Statement on Forward-Looking Statements
This prospectus, any accompanying prospectus
supplement and the documents incorporated by reference into this prospectus contain statements that constitute “forward-looking
statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include,
but are not limited to, information regarding:
| · | exposure to various types of market risks; |
| · | earnings and other targets; and |
Forward-looking statements may be identified
by words such as “expect,” “project,” “anticipate,” “should,” “intend,”
“probability,” “risk,” “VaR,” “RORAC,” “target,” “goal,”
“objective,” “estimate,” “future” and similar expressions or by the use of similar expressions
or variations on such expressions, or by the discussion of strategy or objectives. Forward-looking statements are based on current
plans, estimates and projections, and are subject to inherent risks, uncertainties and other factors which could cause actual results
to differ materially from the future results expressed or implied by such forward-looking statements.
You should understand that the following
important factors could affect our future results and could cause those results or other outcomes to differ materially from those
anticipated in any forward-looking statement:
| · | general economic or industry conditions in Spain, the U.K., the U.S., other European countries, Brazil, other Latin American
countries and the other areas in which we have significant business activities or investments; |
| · | exposure to various types of market risks, principally including interest rate risk, foreign exchange rate risk and equity
price risk; |
| · | a worsening of the economic environment in Spain, the U.K., other European countries, Brazil, other Latin American countries,
and the U.S., and an increase of the volatility in the capital markets; |
| · | the effects of a continued decline in real estate prices, particularly in Spain and the U.K.; |
| · | monetary and interest rate policies of the European Central Bank and various central banks; |
| · | the effects of non-linear market behavior that cannot be captured by linear statistical models, such as the VaR model we use; |
| · | changes in competition and pricing environments; |
| · | the inability to hedge some risks economically; |
| · | the adequacy of loss reserves; |
| · | acquisitions or restructurings of businesses that may not perform in accordance with our expectations; |
| · | changes in demographics, consumer spending, investment or saving habits; |
| · | potential losses associated with prepayment of our loan and investment portfolio, declines in the value of collateral securing
our loan portfolio, and counterparty risk; and |
| · | changes in competition and pricing environments as a result of the progressive adoption of the internet for conducting financial
services and/or other factors. |
Other factors could also adversely affect
our results or the accuracy of forward-looking statements in this prospectus, and you should not consider the factors discussed
here or in the Group’s 2014 Annual Report or any of its interim reports filed on Form 6-K incorporated by reference herein,
to be a complete set of all potential risks or uncertainties.
The forward-looking statements made in
this prospectus speak only as of the date of this prospectus. We do not intend to publicly update or revise these forward-looking
statements to reflect events or circumstances after the date of this prospectus, and we do not assume any responsibility to do
so. You should, however, consult any further disclosures of a forward-looking nature we made in other documents filed with the
SEC that are incorporated by reference into this prospectus.
Set out below is Exhibit
I. The information set out in Exhibit I has been translated from the original Spanish and has been presented in this document in
English only as the language of this prospectus is English. However, only the Spanish language text of Exhibit I is recognised
under Spanish law. In the event of any discrepancy between the English language translation of the information in Exhibit I appearing
herein, and the Spanish language information appearing in the corresponding certificate provided by the Paying Agent to the relevant
issue, the Spanish language information shall prevail.
EXHIBIT I
Annex to Royal Decree 1065/2007,
of 27 July, approving the General Regulations of the tax inspection and management procedures and developing the common rules of
the procedures to apply taxes Declaration form referred to in paragraphs 3, 4 and 5 of Article 44 of the General Regulations of
the tax inspection and management procedures and developing the common rules of the procedures to apply taxes
Mr. (name), with tax identification
number (...)(1), in the name and on behalf of (entity), with tax identification number (....)(1) and address in (...) as (function
- mark as applicable):
(a) Management Entity of the
Public Debt Market in book entry form.
(b) Entity that manages the
clearing and settlement system of securities resident in a foreign country.
(c) Other entities that hold
securities on behalf of third parties within clearing and settlement systems domiciled in the Spanish territory.
(d) Paying Agent appointed by
the issuer.
Makes the following statement,
according to its own records:
1. In relation to paragraphs
3 and 4 of Article 44:
1.1 Identification of the securities
1.2 Income payment date (or
refund if the securities are issued at discount or are segregated)
1.3 Total amount of income (or
total amount to be refunded, in any case, if the securities are issued at discount or are segregated)
1.4 Amount of income corresponding
to Personal Income Tax taxpayers, except segregated coupons and segregated principals for which reimbursement an intermediary entity
is involved
1.5 Amount of income which according
to paragraph 2 of Article 44 must be paid gross (or total amount to be refunded if the securities are issued at discount or are
segregated)
2. In relation to paragraph
5 of Article 44.
2.1 Identification of the securities
2.2 Income payment date (or
refund if the securities are issued at discount or are segregated)
2.3 Total amount of income (or
total amount to be refunded if the securities are issued at discount or are segregated)
2.4 Amount corresponding to
the entity that manages the clearing and settlement system of securities resident in a foreign country A.
2.5 Amount corresponding to
the entity that manages the clearing and settlement system of securities resident in a foreign country B.
2.6 Amount corresponding to
the entity that manages the clearing and settlement system of securities resident in a foreign country C.
I declare the above in ..................
.... on the.... of ................... ... of .... (1) In case of non-residents (individuals or corporations) without permanent
establishment in Spain it shall be included the number or identification code which corresponds according to their country of residence.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Capitalized terms used but not otherwise
defined in this Part II of the registration statement shall have the meaning ascribed to them in the prospectus included
in this registration statement.
Item 8. Indemnification
of Directors and Officers
Banco Santander, S.A.
Indemnification under Banco Santander’s By-Laws (estatutos)
and Spanish Law
Under Banco Santander’s by-laws and
Spanish law, Banco Santander’s directors will be liable to Banco Santander and the shareholders and creditors of Banco Santander
for any damage they cause through acts contrary to the law or the bylaws of Banco Santander, or acts carried out in breach of the
duties inherent to the discharge of their office. All directors shall be jointly liable for those acts, except those
that evidence that they did not intervene in the approval and execution of the act and did not know about the act or, if they knew,
did everything that they deem reasonable to avoid the damage or, at least, expressly opposed the act. The fact that
the act has been approved, ratified or authorized by a Shareholders’ Meeting shall not relieve the directors from their liability. No
provision of Banco Santander’s bylaws provides for the indemnification of the directors with respect to such liabilities.
Pursuant to resolutions adopted by the
Executive Committee of the Board of Directors of Banco Santander on September 28, 2015 in connection with the filing of this registration
statement, Banco Santander has undertaken to indemnify its directors and officers, to the extent permitted by applicable law and
Banco Santander’s by-laws, against any loss, claim, damages and judgments, and any expenses (including legal expenses) relating
thereto, to which they may become subject under any U.S. state or federal securities laws insofar as such liabilities arise in
connection with this registration statement.
Directors and Officers Insurance
Banco Santander maintains an insurance
policy that protects officers and directors of Banco Santander and its consolidated subsidiaries from civil liabilities incurred
as a result of actions taken in their official capacity associated with any civil, criminal or administrative process.
Item 9. Exhibits
The following is a list of all exhibits
filed as part of this registration statement on Form F-3.
| Number |
Description |
| 1.1 |
Form of Underwriting Agreement for the senior debt securities of Santander
US Debt, S.A. Unipersonal as Issuer and Banco Santander, S.A., as Guarantor |
| 1.2 |
Form of Underwriting Agreement for the subordinated debt securities
of Santander Issuances, S.A. Unipersonal, as Issuer and Banco Santander, S.A., as Guarantor |
| 1.3 |
Form of Underwriting Agreement for the contingent convertible capital
securities of Banco Santander, S.A. |
| 4.1 |
Form of Senior Debt Indenture among Santander US Debt, S.A. Unipersonal,
as Issuer, Banco Santander, S.A., as Guarantor, and The Bank of New York Mellon, as Trustee |
| 4.2 |
Form of Subordinated Debt Indenture among Santander Issuances, S.A.
Unipersonal, as Issuer, Banco |
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Santander, S.A., as Guarantor, and The Bank of New York Mellon, as Trustee |
| 4.3 |
Form of Contingent Convertible Capital Securities Indenture between Banco Santander, S.A., as Issuer, and The Bank of New York Mellon, as Trustee |
| 4.4 |
Deposit Agreement dated as of June 1, 1987 among Banco Santander, S.A., JPMorgan Chase Bank, N.A., as depositary, and all holders from time to time of American Depositary Receipts issued thereunder incorporated herein by reference to Exhibit 99(a)(1) to registration statement on Form F-6 (File No. 333-12274), filed on July 10, 2000 |
| 4.5 |
Amendment No. 1 to Deposit Agreement dated July 11, 2000 among Banco Santander, S.A., JPMorgan Chase Bank, N.A., as depositary, and all holders from time to time of American Depositary Receipts issued thereunder incorporated herein by reference to Exhibit 99(a)(2) to registration statement on Form F-6 (File No. 333-12274), filed on July 10, 2000 |
| 4.6 |
Amendment No. 2 to Deposit Agreement dated June 16, 2008 among Banco Santander, S.A., JPMorgan Chase Bank, N.A., as depositary, and all holders from time to time of American Depositary Receipts issued thereunder incorporated herein by reference to Exhibit 99(a)(3) to registration statement on Form F-6 (File No. 333-151677), filed on June 16, 2008 |
| 5.1 |
Opinion and Consent of Davis Polk & Wardwell LLP, U.S. counsel to Banco Santander, S.A., Santander Issuances, S.A. Unipersonal and Santander US Debt, S.A. Unipersonal as to the validity of the debt securities issued by Banco Santander, S.A., Santander Issuances, S.A. Unipersonal and Santander US Debt, S.A. Unipersonal, respectively, and the guarantees |
| 5.2 |
Opinion and Consent of Uría Menéndez, Spanish counsel to Banco Santander, S.A., Santander Issuances, S.A. Unipersonal and Santander US Debt, S.A. Unipersonal, as to the validity of the securities issued by Banco Santander, S.A., Santander Issuances, S.A. Unipersonal and Santander US Debt, S.A. Unipersonal, respectively, and the guarantees |
| 23.1 |
Consent of Deloitte, S.L. |
| 23.2 |
Consent of Davis Polk & Wardwell LLP (included in 5.1) |
| 23.3 |
Consent of Uría Menéndez (included in 5.2) |
| 25.1 |
Statement of Eligibility for the Form of Senior Debt Indenture among Santander US Debt, S.A. Unipersonal, as Issuer, Banco Santander, S.A., as Guarantor, and The Bank of New York Mellon, as Trustee, on Form T-1 |
| 25.2 |
Statement of Eligibility for the Form of Subordinated Debt Indenture among Santander Issuances, S.A. Unipersonal, as Issuer, Banco Santander, S.A., as Guarantor, and The Bank of New York Mellon, as Trustee, on Form T-1 |
| 25.3 |
Statement of Eligibility for the Form of Contingent Convertible Capital Securities Indenture between Banco Santander, S.A., as Issuer, and The Bank of New York Mellon, as Trustee, on Form T-1 |
Item 10. Undertakings
The undersigned registrants hereby undertake:
(1) To file, during any period in
which offers or sales are being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required
by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus
any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the “SEC”)
pursuant to
Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation
of Registration Fee” table in the effective registration statement; and
(iii) to include any material information
with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs
(1)(i), (1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in reports filed with or furnished to the SEC pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining
any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by
means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) To file a post-effective amendment
to the registration statement to include any financial statements required by “Item 8.A. of Form 20-F” at
the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Securities Act need not be furnished, provided, that the registrants includes in
the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (4) and other
information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, a post-effective amendment need not be filed to include financial statements
and information required by Section 10(a)(3) of the Securities Act or Rule 3-19 of Regulation S-X if such financial
statements and information are contained in periodic reports filed with or furnished to the SEC by the registrants pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement.
(5) That, for the purpose of determining
liability under the Securities Act to any purchaser:
(A) Each prospectus filed by a registrant
pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
(B) Each prospectus required to be
filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to
an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required
by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier
of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in
the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that
no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated
or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration statement or made in any such document immediately
prior to such effective date.
(6) That, for the purpose of determining
liability of a registrant under the Securities Act to any purchaser in the initial distribution of the securities, each undersigned
registrant undertakes that in a primary offering of securities of
such undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, such undersigned registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or
prospectus of such undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any free writing prospectus relating
to the offering prepared by or on behalf of such undersigned registrant or used or referred to by such undersigned registrant;
(iii) the portion of any other free
writing prospectus relating to the offering containing material information about such undersigned registrant or its securities
provided by or on behalf of such undersigned registrant; and
(iv) any other communication that
is an offer in the offering made by such undersigned registrant to the purchaser.
The undersigned registrant hereby undertakes
that, for purposes of determining any liability under the Securities Act, each filing of Banco Santander, S.A.’s annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s
annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and controlling persons of each registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by a registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, that registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities
Act, Banco Santander, S.A. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing
on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized
in the City of Madrid, Kingdom of Spain, on October 13, 2015.
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BANCO SANTANDER, S.A. |
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By: |
/s/ José Antonio Soler |
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Name: |
José Antonio Soler |
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Title: |
Authorized Representative |
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that
each of the individuals whose signature appears below (whether as a director, officer or authorized representative of Banco Santander,
S.A., or otherwise) constitutes and appoints any member of the Board of Directors of Banco Santander, S.A., José García
Cantera, Jaime Pérez-Renovales, Francisco Javier Illescas Fernández-Bermejo, José Antonio Soler Ramos, Natalia
Butragueño Rodríguez-Borlado, Antonio Torío Martín, María Visitación Díaz Varona
and Silvana Leticia Borgatti Casale and each of them, as his or her true and lawful attorney-in-fact and agent, with full and several
power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any such subsequent registration statement and reports
on Form 6-K relating thereto and any registration statement filed pursuant to Rule 426(b) under the Securities Act, and
to file the same, with all exhibits thereto, and all documents in connection therewith, with the SEC, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities
Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| Signature |
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Title |
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Date |
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| Ana Botín |
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Chairman of the Board of Directors |
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October 8, 2015 |
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| /s/ José Antonio Álvarez |
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| José Antonio Álvarez |
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Chief Executive Officer |
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October 8, 2015 |
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| Bruce Carnegie-Brown |
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Vice Chairman of the Board of Directors |
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October 8, 2015 |
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| /s/ Matías R. Inciarte |
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| Matías R. Inciarte |
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Vice Chairman of the Board of Directors |
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October 8, 2015 |
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| Guillermo de la Dehesa |
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Vice Chairman of the Board of Directors |
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October 8, 2015 |
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| /s/ Rodrigo Echenique |
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| Rodrigo Echenique |
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Vice Chairman of the Board of Directors |
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October 8, 2015 |
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| /s/ Ignacio Benjumea |
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| Ignacio Benjumea |
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Director |
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October 8, 2015 |
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| /s/ Javier Botín |
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| Javier Botín |
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Director |
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October 8, 2015 |
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| Sol Daurella |
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Director |
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October 8, 2015 |
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| /s/ Carlos Fernández |
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| Carlos Fernández |
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Director |
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October 8, 2015 |
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| Esther Giménez-Salinas |
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Director |
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October 8, 2015 |
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| /s/ Ángel Jado |
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| Ángel Jado |
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Director |
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October 8, 2015 |
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| /s/ Isabel Tocino |
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| Isabel Tocino |
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Director |
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October 8, 2015 |
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| Juan Miguel Villar-Mir |
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Director |
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October 8, 2015 |
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| /s/ José Cantera |
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| José Cantera |
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Chief Financial Officer |
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October 8, 2015 |
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| /s/ José Doncel |
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| José Doncel |
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Chief Accounting Officer |
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October 8, 2015 |
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| /s/ James Bathon |
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| James Bathon |
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Managing Director of Banco Santander, S.A., New York Branch; Authorized U.S. Representative |
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October 8, 2015 |
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SIGNATURES
Pursuant to the requirements of the Securities
Act, Santander US Debt, S.A. Unipersonal certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Madrid, Kingdom of Spain, on October 13, 2015.
| |
SANTANDER US DEBT, S.A. UNIPERSONAL |
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By: |
/s/ José Antonio Soler |
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Name: |
José Antonio Soler |
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Title: |
Chairman of the Board of Directors |
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that
each of the individuals whose signature appears below (whether as a director, officer or authorized representative of Santander
US Debt, S.A. Unipersonal, or otherwise) constitutes and appoints any member of the Board of Directors of Banco Santander, José
García Cantera, Jaime Pérez-Renovales, Francisco Javier Illescas Fernández-Bermejo, José Antonio Soler
Ramos, Natalia Butragueño Rodríguez-Borlado, Antonio Torío Martín, María Visitación Díaz
Varona and Silvana Leticia Borgatti Casale and each of them, as his or her true and lawful attorney-in-fact and agent, with full
and several power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this registration statement or any such subsequent registration statement
and reports on Form 6-K relating thereto and any registration statement filed pursuant to Rule 426(b) under the Securities
Act, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the premises, as fully for all intents and purposes as
he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them,
or their substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities
Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| Signature |
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Title |
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Date |
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| /s/ José Antonio Soler |
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| José Antonio Soler |
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Chairman of the Board of Directors |
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October 8, 2015 |
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| /s/ Antonio Torío |
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| Antonio Torío |
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Director |
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October 8, 2015 |
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| /s/ Pablo Roig |
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| Pablo Roig |
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Director |
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October 8, 2015 |
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| /s/ Visitación Díaz |
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| Visitación Díaz |
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Director |
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October 8, 2015 |
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| /s/ James Bathon |
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| James Bathon |
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Managing Director of Banco Santander, S.A., New York Branch; Authorized U.S. Representative |
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October 8, 2015 |
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SIGNATURES
Pursuant to the requirements of the Securities
Act, Santander Issuances, S.A. Unipersonal certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Madrid, Kingdom of Spain, on October 13, 2015.
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SANTANDER ISSUANCES, S.A. UNIPERSONAL |
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By: |
/s/ José Antonio Soler |
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Name: |
José Antonio Soler |
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| |
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Title: |
Chairman of the Board of Directors |
|
POWER OF ATTORNEY
KNOW ALL
PERSONS BY THESE PRESENTS that each of the individuals whose signature appears below (whether as a director, officer or authorized
representative of Santander Issuances, S.A. Unipersonal, or otherwise) constitutes and appoints any
member of the Board of Directors of Banco Santander, José García Cantera, Jaime Pérez-Renovales, Francisco
Javier Illescas Fernández-Bermejo, José Antonio Soler Ramos, Natalia Butragueño Rodríguez-Borlado,
Antonio Torío Martín, María Visitación Díaz Varona and Silvana Leticia Borgatti Casale and each
of them, as his or her true and lawful attorney-in-fact and agent, with full and several power of substitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement or any such subsequent registration statement and reports on Form 6-K relating thereto and
any registration statement filed pursuant to Rule 426(b) under the Securities Act, and to file the same, with all exhibits
thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities
Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| Signature |
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Title |
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Date |
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| /s/ José Antonio Soler |
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| José Antonio Soler |
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Chairman of the Board of Directors |
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October 8, 2015 |
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| /s/ Antonio Torío |
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| Antonio Torío |
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Director |
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October 8, 2015 |
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| /s/ Pablo Roig |
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| Pablo Roig |
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Director |
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October 8, 2015 |
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| /s/ Visitación Díaz |
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| Visitación Díaz |
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Director |
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October 8, 2015 |
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| /s/ James Bathon |
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| James Bathon |
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Managing Director of Banco Santander, S.A., New York Branch; Authorized U.S. Representative |
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October 8, 2015 |
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Exhibit
1.1
SANTANDER
US DEBT, S.A. UNIPERSONAL
(a company with limited liability organized under
the laws of The Kingdom of Spain)
Senior Notes
fully, unconditionally and irrevocably guaranteed on a senior basis by
BANCO SANTANDER, S.A.
FORM OF UNDERWRITING AGREEMENT
[DATE]
[UNDERWRITERS]
as Representatives
of the several Underwriters
named in
Schedule I hereto
Ladies and
Gentlemen:
Santander
US Debt, S.A. Unipersonal, a sociedad anónima incorporated under the laws of The Kingdom of Spain (the “Company”),
proposes to issue and sell to the several underwriters named in Schedule I hereto (the “Underwriters”), acting
severally and not jointly, for whom you are acting as representatives (the “Representatives”), the respective
amounts set forth in Schedule I hereto of the securities specified in Exhibit D hereto (the “Notes”) to be
issued pursuant to the resolutions of the Company's general shareholders’ meeting and board of directors approving the issuance
of the Notes and the indenture dated as of [DATE] (the “Base Indenture”) among the Company, Banco Santander,
S.A., a sociedad anónima incorporated under the laws of The Kingdom of Spain (the “Bank”), and
The Bank of New York Mellon, as trustee (the “Trustee”) as supplemented, with respect to the Notes, by a supplemental
indenture to be dated on or about [DATE], which together with the Base Indenture sets out the terms and rights of this particular
issue of Notes (the “[NUMBER] Supplemental Indenture”; and the Base Indenture as supplemented, with respect
to the Notes, by the [NUMBER] Supplemental Indenture, and as further supplemented from time to time, the “Indenture”).
Payment of principal and interest on the Notes, as well as payment of the redemption price for the Notes upon any redemption thereof
plus accrued but unpaid interest on the Notes, upon the dissolution, winding up or liquidation of the Bank, will be fully, unconditionally
and irrevocably guaranteed, on a senior basis, by the Bank pursuant to the terms of certain guarantees for the benefit of holders
from time to time, to be dated as of the Closing Date (as defined herein) (the “Guarantees”).
The
Company and the Bank have filed with the Securities and Exchange Commission (the “Commission”) a registration
statement, including a prospectus, (file number 333-[NUMBER]), on Form F-3 relating to securities (the “Shelf Securities”),
including the Notes and the Guarantees, to be issued from time to time by the Company. The registration statement as
amended to
the date of this Agreement, including the information (if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A or Rule 430B under the Securities Act of 1933, as amended (the “Securities Act”),
is hereinafter referred to as the “Registration Statement,” and the related prospectus covering the Shelf Securities
dated [DATE] in the form first used to confirm sales of the Notes (or in the form first made available to the Underwriters by
the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “Base
Prospectus.” The Base Prospectus, as supplemented by the prospectus supplement specifically relating to the Notes in
the form first used to confirm sales of the Notes (or in the form first made available to the Underwriters by the Company to meet
requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “Prospectus,”
and the term “preliminary prospectus” means any preliminary form of the Prospectus. For purposes of this Agreement,
“free writing prospectus” has the meaning set forth in Rule 405 under the Securities Act, “Time of
Sale Prospectus” means the Base Prospectus as supplemented by the preliminary prospectus, together with the free writing
prospectuses, if any, each identified in Exhibit E hereto, and intended for general distribution to prospective investors, and
“road show” means a “bona fide electronic road show”, including any Bloomberg road show presentation,
as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction to any person. As used
herein, the terms “Registration Statement,” “Base Prospectus,” “preliminary prospectus,” “Time
of Sale Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein.
The terms “supplement,” “amendment,” and “amend” as used herein with
respect to the Registration Statement, the Base Prospectus, the Time of Sale Prospectus, any preliminary prospectus or free writing
prospectus shall include all documents subsequently filed by the Company and the Bank with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), that are deemed to be incorporated by reference therein.
| 1. | Representations
and Warranties. Each of the Company and the Bank, jointly and severally, represents
and warrants to, and agrees with, each of the Underwriters that as of the date hereof: |
| (a) | The
Registration Statement has become effective; no stop order suspending the effectiveness
of the Registration Statement is in effect, and no proceedings for such purpose are pending
before or threatened by the Commission. The Bank is a well-known seasoned issuer (as
defined in Rule 405 under the Securities Act) eligible to use the Registration Statement
as an “automatic shelf registration statement” (as defined in Rule 405 under
the Securities Act) and the Company has not received notice that the Commission objects
to the use of the Registration Statement as an automatic shelf registration statement. |
| (b) | Each
document, if any, filed or to be filed pursuant to the Exchange Act and incorporated
by reference in the Time of Sale Prospectus or the Prospectus complied or will comply
when so filed in all material respects with the Securities Act, the Exchange Act and
the applicable rules and regulations of the Commission thereunder, (i) each part
of the Registration Statement, when such part became effective, did not contain, and
each such part, as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to |
make
the statements therein not misleading, (ii) the Registration Statement as of the date hereof does not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein
not misleading, (iii) the Registration Statement and the Prospectus comply, and as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder,
(iv) the Time of Sale Prospectus does not, and at the time of each sale of the Notes in connection with the offering when
the Prospectus is not yet available to prospective purchasers and at the Closing Date (as defined in Section 3 below), the Time
of Sale Prospectus, as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading, (v) each broadly available road show, if any, when considered together with the Time of
Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading and (vi) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set forth in this paragraph do not apply to (a) statements or omissions
in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to any Underwriter
furnished to the Company or the Bank in writing by such Underwriter through the Representatives expressly for use therein or (b)
that part of the Registration Statement that constitutes the Statement of Eligibility (Form T-1) under the Trust Indenture Act
of 1939, as amended (the “Trust Indenture Act”), of the Trustee.
| (c) | Neither
the Company nor the Bank is an “ineligible issuer” in connection with the
offering pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing
prospectus that the Company or the Bank is required to file pursuant to Rule 433(d) under
the Securities Act has been, or will be, filed with the Commission in accordance with
the requirements of the Securities Act and the applicable rules and regulations of the
Commission thereunder. Each free writing prospectus that the Company or the Bank has
filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that
was prepared by or behalf of on used or referred to by the Company or the Bank complies
or will comply in all material respects with the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder. Except for the free
writing prospectuses, if any, identified in Exhibit E hereto, and electronic road shows,
if any, each furnished to the Underwriters before first use, neither the Company nor
the Bank has prepared, used or referred to, and will not, without the Underwriters’
prior consent, prepare, use or refer to, any free writing prospectus. |
| (d) | Each
of the Company and the Bank has been duly incorporated and is validly existing as a limited
liability corporation (sociedad anónima) in good standing under the laws
of The Kingdom of Spain. |
| (e) | On or prior to the Closing Date, the Notes will be duly
authorized
and, when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be entitled to the benefits of the Indenture, and,
when registered with the Mercantile Registry of Madrid, will constitute valid and
legally binding obligations of the Company enforceable against the Company in
accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally or by general equity principles; the Notes and Guarantees will be consistent
with the descriptions thereof contained in the Time of Sale Prospectus and the Prospectus,
and such descriptions will conform to the rights set forth in the instruments defining
the same. |
| (f) | This
Agreement has been duly authorized, executed and delivered by the Company and the Bank. |
| (g) | On or prior to the Closing Date, the Indenture will have been
duly
qualified
under the Trust Indenture Act, will have been duly authorized by each of the
Company
and the
Bank and will constitute a valid and legally binding agreement of the Company and
the Bank, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally or by general equity
principles. |
| (h) | The
execution and delivery of this Agreement, the Guarantees and the Indenture, the issuance,
delivery and sale of the Notes and the Guarantees, the performance of this Agreement
and compliance by the Company and the Bank, as applicable, with the terms of this Agreement,
the Indenture and the terms of the Notes and the Guarantees have been duly authorized
by all necessary corporate action on the part of the Company and the Bank, as applicable,
and, upon their execution and delivery, did not or, if applicable, will not result in
any violation of the memorandum and articles of association (or similar constitutive
documents) of the Company or of the Bank and do not and will not conflict with, or breach,
any of the terms or provisions of, or constitute a default under, (A) any indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to which the Company
or the Bank is a party or by which it may be bound or to which any of its properties
may be subject or (B) any existing applicable law, rule, regulation, judgment, order
or decree of any governmental instrumentality or court having jurisdiction over the Company
or the Bank or any of the properties of either of them (except, in either case, for such
conflicts, breaches or defaults that would not have a material adverse effect on the
financial condition of the Bank and its subsidiaries considered as one enterprise, or
on the earnings or business affairs of the Bank and its subsidiaries, considered as one
enterprise). |
| (i) | The
Guarantees have been duly authorized by the Bank and upon their execution and delivery,
will constitute valid and legally binding agreements of the Bank, enforceable in accordance
with their terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights generally
or by general equity principles. |
| (j) | No
consent, approval, authorization or order of any governmental instrumentality or court
is required for the consummation by the Company and the Bank of the transactions contemplated
hereby, except (a) such as may be required by the securities or Blue Sky laws of the
various states of the United States in connection with the offer and sale of the Notes,
(b) such approvals as have been obtained and (c) the registration of the public deed
of issuance (escritura pública de emisión) with the Mercantile Registry
of Madrid. Within the term set out in Regulation 4/2012, of April 25, of the Bank of
Spain, on rules for the communication by Spanish residents of the economic transactions
and the balance of financial assets and liabilities outside Spain (Circular 4/2012,
de 25 de abril, del Banco de España, sobre normas para la comunicación
por los residentes en España de las transacciones económicas y los saldos
de activos y pasivos financieros con el exterior), and in accordance to the regime
set out therein, the Company shall communicate to the Bank of Spain the economic transactions
and the balance of financial assets and liabilities outside Spain performed in relation
to the Notes. |
| (k) | Neither
the Company, the Bank, nor any of its or their affiliates (as defined in Rule 405 under
the Securities Act), nor any person acting on its or their behalf has taken or will take,
directly or indirectly, any action designed to cause or to result in, or that has constituted
or which might reasonably be expected to cause or result in, the stabilization in violation
of applicable laws or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Notes or the Guarantees. |
| (l) | Each
preliminary prospectus filed as part of the registration statement as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities
Act, complied when so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder. |
| (m) | The
Bank maintains “disclosure controls and procedures” (as such term is defined
in Rule 13a-15(e) under the Exchange Act). |
| (n) | Neither
the Company nor the Bank is, and after giving effect to the offer and sale of the Notes
and the Guarantees, neither of them will be, required to register as an “investment
company,” as such term is defined in the U.S. Investment Company Act of 1940, as
amended (the “Investment Company Act”). |
| (o) | The
financial statements of the Bank and its consolidated subsidiaries, together with the
related schedules, if any, and notes (the “Financial Statements”),
that have been included or incorporated by reference in the Registration Statement, the |
Time
of Sale Prospectus and the Prospectus present fairly the financial position of the Bank and its consolidated subsidiaries at the
dates indicated and the statement of operations, stockholders’ equity and cash flows of the Bank and its consolidated subsidiaries
for the periods specified; and said Financial Statements have been prepared in conformity with International Financial Reporting
Standards as issued by the International Accounting Standards Board (the “IFRS-IASB”). The supporting schedules,
if any, included or incorporated by reference in the Time of Sale Prospectus and the Prospectus present fairly, in accordance
with IFRS-IASB, the information required to be stated therein. The selected financial data and the summary financial information
included or incorporated by reference in the Time of Sale Prospectus and the Prospectus present fairly, in accordance with IFRS-IASB,
the information shown therein and have been compiled on a basis consistent with that of the Financial Statements incorporated
by reference in the Time of Sale Prospectus and the Prospectus.
| (p) | Each
of the Company and the Bank acknowledges and agrees that each of the Underwriters is
acting solely in the capacity of an arm’s length contractual counterparty to the
Company and the Bank with respect to the offering of the Notes and the Guarantees (including
in connection with determining the terms of the offering contemplated by this Agreement)
and not as an agent or fiduciary to the Company, the Bank or any other person. Additionally,
the Underwriters are not advising the Company, the Bank or any other person as to any
legal, tax, investment, accounting or regulatory matters in any jurisdiction. Each of
the Company and the Bank shall consult with their own advisors concerning such matters
and shall be responsible for making their own independent investigation and appraisal
of such matters, and the Underwriters shall have no responsibility or liability to the
Company, the Bank or any other person with respect to such matters. Any review by the
Underwriters of the Company, the Bank, the transactions contemplated by this Agreement
or any other due diligence review by the Underwriters in connection with such transactions
will be performed solely for the benefit of the Underwriters and shall not be on or behalf
of the Company, the Bank or any other person. |
| (q) | So
long as certain conditions set forth in Law 10/2014 of June 26, on organization, supervision
and solvency of credit institutions (“Law 10/2014”) are met, any payments
in respect of the Notes made by the Company to a non-Spanish tax resident beneficial
owner, who does not operate with respect to the Notes through a permanent establishment
in Spain, shall not be subject to taxation in Spain pursuant to Royal Legislative Decree
5/2004 of March 5, promulgating the consolidated text of the non-resident income tax
law (Real Decreto Legislativo 5/2004, de 5 de Marzo, por el que se aprueba el texto
refundido de la Ley del Impuesto sobre la Renta de no Residentes), and no withholding
tax on account of Spanish taxes shall be required on such payments, except that payments made to non-Spanish tax
resident beneficial owners where the Company has not received from the paying agent certain
information about the Notes will be subject to Spanish withholding tax at the applicable
rate (19% / 19.50% in 2015). |
| (r) | The
Company is a wholly–owned subsidiary of the Bank; the Guarantees are full and unconditional;
and no subsidiary of the Bank will guarantee the Notes. The exclusive activity of the
Company is the issuance of debt. |
| (s) | As
of the date hereof, neither the Company nor the Bank has made, and neither of them will
make (without prior consent of the Underwriters) any public offer of the Notes by means
of Supplemental Offering Materials. For purposes of this Agreement, “Supplemental
Offering Materials” means any “written communication” (within the
meaning of the rules and regulations promulgated under the Securities Act) prepared by
or on behalf of the Company or the Bank, or used or referred to by the Company or the
Bank, that constitutes an offer to sell or a solicitation of an offer to buy the Notes
or the Guarantees (other than the free writing prospectuses identified in Exhibit E hereto,
the Time of Sale Prospectus and the Prospectus), including, without limitation, any road
show materials relating to the Notes or the Guarantees that constitute such a written
communication. |
| (t) | Under
the laws of The Kingdom of Spain, neither the Company nor the Bank nor any of their respective
revenues, assets or properties has any right of immunity from service of process or from
the jurisdiction of competent courts of The Kingdom of Spain or the United States or
the State of New York in connection with any suit, action or proceeding, attachment prior
to judgment, attached in aid of execution of a judgment or execution of a judgment or
from any other legal process with respect to its obligations under this Agreement, the
Indenture, the Notes and the Guarantees (together, the “Transaction Documents”). |
| (u) | The
choice of the law of the State of New York as the governing law of the Transaction Documents
is a valid, effective and irrevocable choice of law under the laws of The Kingdom of
Spain. Each of the Company and the Bank has the power to submit and, pursuant to the
Transaction Documents to which it is a party, has legally, validly, effectively and irrevocably
submitted to the non-exclusive personal jurisdiction of the United States District Court
for the Southern District of New York and the Supreme Court of New York, New York County
(including, in each case, any appellate courts therefrom) in any suit, action or proceeding
against it arising out of or related to any of the Transaction Documents, including with
respect to its obligations, liabilities or any other matter arising out of or in connection
with this Agreement, and has validly and irrevocably waived any objection to the venue
of a proceeding in any such court and has the power to designate, appoint and empower
and pursuant to Section 13 of this Agreement has legally, validly, effectively and irrevocably
designated, appointed and empowered an agent for service of process in any suit or proceeding
based on or arising under this Agreement in any federal or state court in the State of
New York. |
| (v) | None
of the Company, the Bank or any of the Bank’s Significant Subsidiaries (as such
term is defined in Rule 1-02(w) of Regulation S-X under the Securities Act “Significant
Subsidiaries”), nor, to the knowledge of the Company or the Bank, |
any
director, officer, agent, employee, affiliate or person acting on behalf of either the Company or the Bank is currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”)
or any similar European, Spanish, U.K. or Brazilian, as applicable, sanctions administered by the European Union, Spain, the United
Kingdom or Brazil, as applicable, and neither the Company nor the Bank is located, organized or resident in a country or a territory
that is the subject of such sanctions; and neither the Company nor the Bank will directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any person known by the Company or the Bank to be currently subject
to any U.S. sanctions administered by OFAC or is in Iran, North Korea, Sudan or in any other country or territory that, at the
time of such funding is the subject of such sanctions, except to the extent permissible for a U.S. person; nor will the Company
or the Bank directly or indirectly use the transaction proceeds to contravene any OFAC or any similar European, Spanish, U.K.
or Brazilian regulations that may be applicable to them.
| (w) | The
operations of the Bank and its Significant Subsidiaries are and have been conducted at
all times in compliance in all material respects with applicable financial recordkeeping
and reporting requirements of the European Union, the Kingdom of Spain, the United Kingdom,
Brazil, the United States and each State thereof and the money laundering statutes and
the rules and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any European, Spanish, U.K., Brazilian
or U.S., as applicable, governmental agency (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Bank or any of its subsidiaries
with respect to the Money Laundering Laws is pending or, to the knowledge of the Company
or the Bank, threatened. |
| (x) | None
of the Company, the Bank or any of the Bank’s Significant Subsidiaries or, to the
knowledge of the Company or the Bank, any director, officer, agent or employee of the
Company or the Bank or any of the Bank’s Significant Subsidiaries (a) is aware
or has taken any action, directly or indirectly, that would result in a violation by
such persons of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules
and regulations thereunder (the “FCPA”), the U.K. Bribery Act or any
other anti-corruption law, rule or regulation of any locality that is applicable to the
Company of the Bank (“applicable anti-corruption laws”) or (B) has
taken or will take any action in furtherance of an offer, payment, promise to pay, or
authorization or approval of the payment or giving of money, property, gifts or anything
else of value, directly or indirectly, to any “foreign official” (as such
term is defined in the FCPA) (including any officer or employee of a government or government-owned
or controlled entity or of a public international organization, or any person acting
in an official capacity for or on behalf of any of the foregoing, or any political party
or party official or candidate for political office) to influence official action or
secure an improper |
advantage,
and (C) each of the Company and the Bank and its Significant Subsidiaries has conducted its businesses in compliance with the
FCPA, the U.K. Bribery Act and applicable anti-corruption laws, and (D) to the knowledge of the Company and the Bank, their respective
affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures
designed to ensure continued compliance therewith.
| (y) | [AUDITOR]
who have certified certain financial statements of the Bank, are independent public accountants
in respect of the Bank and the Company as required by the Securities Act and the applicable
rules and regulations of the Commission. |
| (a) | Subject
to the terms and conditions and in reliance upon the representations and warranties herein
set forth, the Company agrees to issue and sell to the Underwriters, and the Underwriters
agree, severally and not jointly, to purchase from the Company, the aggregate principal
amount of Notes set forth opposite such Underwriter’s name on Schedule I hereto
at a purchase price of 100% of the principal amount of the Notes. The Company and the
Bank hereby, jointly and severally, agree to pay a commission of [AMOUNT]% of the aggregate
principal amount of the Notes to the Underwriters, in consideration of the Underwriters
agreeing severally, and not jointly, to purchase the Notes from the Company subject to,
and in accordance with, the terms and conditions set forth in this Agreement. The Bank
and the Company each agree that such commission will be divided pro rata among each of
the Underwriters in proportion to the aggregate principal amount of Notes set forth opposite
each Underwriter’s name on Schedule I hereto. The foregoing aggregate fees in an
amount of $[AMOUNT] will be payable on the Closing Date concurrently with the settlement
of the Notes or such other date as may be agreed by the Bank and the Underwriters, by
wire transfer of immediately available funds to an account identified in writing by [DATE]. |
| (b) | The
Underwriters are not authorized to give any information or to make any representation
in connection with the offering or sale of the Notes other than such information or representations
consistent with the Time of Sale Prospectus and the Prospectus or otherwise approved
in writing by the Bank. |
| 3. | Delivery
and Payment. The global certificates for the Notes to be purchased by the Underwriters
hereunder shall be delivered by or on behalf of (and at the expense of) the Company to
or upon the order of [SETTLEMENT BANK] for the accounts of the several Underwriters against
payment by the Underwriters of the purchase price therefor by wire transfer of immediately
available funds, payable to or upon the order of the Company, at [LOCATION] at [TIME]
London time, on [DATE], or such later date (not later than ten business days thereafter)
as the Underwriters shall designate, which date and time may be postponed by agreement
among the Underwriters, the Company and the Bank (such date and time of delivery and
payment for the Notes being herein called the “Closing Date”). |
Payment
for the Notes shall be made against delivery to the Underwriters of the Notes registered in such names and in such denominations
as you shall request in writing not later than two full business days prior to the date of delivery, with any transfer taxes payable
in connection with the transfer of the Notes to you duly paid by the Company or the Bank. The Company agrees that delivery of
the Notes will be made on the Closing Date through the book-entry facilities of The Depository Trust Company (the “Depositary”).
Upon issuance, all Notes will be represented by one or more global securities registered in the name of a nominee of the Depositary.
| 4. | Covenants
and Agreements. The Company and the Bank agree with each Underwriter that: |
| (a) | The
Company and the Bank shall prepare and furnish to each Underwriter, without charge, a
conformed copy of the Registration Statement (including exhibits thereto and documents
incorporated by reference therein) in a form approved by the Underwriters, and will promptly
furnish the Underwriters during the period mentioned in Section 4(d) or 4(e) below with
copies of the Time of Sale Prospectus, the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto or to the Registration Statement,
in such quantities as the Underwriters may from time to time reasonably request, and
will not publish any amendment or supplement to the Registration Statement, the Time
of Sale Prospectus or the Prospectus unless they have furnished a copy to the Underwriters
for review and, except as required by law, will not publish any such proposed amendment
or supplement to which the Underwriters reasonably object. If at any time prior to completion
of the distribution of the Notes (as determined by the Underwriters) any event occurs
as a result of which the Registration Statement, the Time of Sale Prospectus or the Prospectus
as then amended or supplemented would contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading, the Company
or the Bank will promptly so notify the Underwriters and will prepare and furnish to
the Underwriters, subject to prior review as provided above, a reasonable number of copies
of an amendment or supplement to the Registration Statement, the Time of Sale Prospectus
or the Prospectus which will correct such statement or omission. |
| (b) | Each
of the Company and the Bank shall furnish to each Underwriter a copy of each proposed
free writing prospectus to be prepared by or on behalf of, used by, or referred to by
the Company or the Bank and not to use or refer to any proposed free writing prospectus
to which you reasonably object. |
| (c) | Except
as otherwise contemplated pursuant to this Agreement, each of the Company and the Bank
shall not take any action that would result in an Underwriter, the Company or the Bank
being required to file with the Commission pursuant to Rule 433(d) under the Securities
Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter
otherwise would not have been required to file thereunder. |
| (d) | If
the Time of Sale Prospectus is being used to solicit offers to buy the Notes at a time
when the Prospectus is not yet available to prospective purchasers and any event shall
occur or condition exist as a result of which it is necessary to amend or supplement
the Time of Sale Prospectus in order to make the statements therein, in the light of
the circumstances, not misleading, or if any event shall occur or condition exist as
a result of which the Time of Sale Prospectus conflicts with the information contained
in the Registration Statement then on file, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish, at its
own expense, to the Underwriters and to any dealer upon request, either amendments or
supplements to the Time of Sale Prospectus so that the statements in the Time of Sale
Prospectus as so amended or supplemented will not, in the light of the circumstances
when the Time of Sale Prospectus is delivered to a prospective purchaser, be misleading
or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict
with the Registration Statement, or so that the Time of Sale Prospectus, as amended or
supplemented, will comply with applicable law. |
| (e) | If,
during such period after the first date of the public offering of the Notes as in the
opinion of counsel for the Underwriters the Prospectus (or in lieu thereof the notice
referred to in Rule 173(a) of the Securities Act) is required by law to be delivered
in connection with sales by an Underwriter or dealer, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the Prospectus in order
to make the statements therein, in the light of the circumstances when the Prospectus
(or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered
to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters,
it is necessary to amend or supplement the Prospectus to comply with applicable law,
forthwith to prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish to the Company
or the Bank) to which Notes may have been sold by you on behalf of the Underwriters and
to any other dealers upon request, either amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus (or in lieu thereof the notice referred
to in Rule 173(a) of the Securities Act) is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with applicable law. |
| (f) | Each
of the Company and the Bank shall endeavor to qualify the Notes for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Underwriters shall reasonably
request. |
| (g) | Each
of the Company and the Bank shall make generally available to the Bank’s security
holders and to the Underwriters as soon as practicable an earnings statement covering
a period of at least twelve months after the effective date of the Registration Statement
which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules
and regulations of the Commission thereunder. |
| (h) | If
the third anniversary of the initial effective date of the Registration Statement occurs
before all the Notes have been sold by the Underwriters, prior to the third anniversary
each of the Company and the Bank shall file a new shelf registration statement and take
any other action necessary to permit the public offering of the Notes to continue without
interruption; references herein to the Registration Statement shall include the new registration
statement declared effective by the Commission. |
| (i) | Each
of the Company and the Bank shall prepare a final term sheet relating to the offering
of the Notes, containing only information that describes the final terms of the Notes
or the offering in a form consented to by the Underwriters, and to file such final term
sheet within the period required by Rule 433(d)(5)(ii) under the Securities Act following
the date the final terms have been established for the offering of the Notes. |
| (j) | The
Bank will use its reasonable efforts, and shall cause the Company to use its reasonable
efforts, to effect, on or as soon as practicable after the Closing Date, and in no event
more than 45 days following the Closing Date, the authorization of the Notes for listing
on the New York Stock Exchange, Inc. (the “NYSE”), subject only to
official notice of issuance. For so long as any of the Notes are outstanding, each of
the Bank and the Company will use its commercially reasonable efforts to maintain the
listing of the Notes, and will prepare, submit, furnish and publish (as appropriate)
all such documents, instruments, information, advertisements and undertakings as may
be necessary or advisable for such purposes. |
| (k) | The
Bank will use its best efforts, and shall cause the Company to use its best efforts,
to ensure that the Notes qualify as debt instruments (instrumentos de deuda) under
Law 10/2014. |
| (l) | The
Bank will use its best efforts, and shall cause the Company to use its best efforts,
to ensure that the public deed in respect of the Notes and disbursement minutes in respect
of the Notes, if required, are registered in the Mercantile Registry of Madrid within
one month of the Closing Date. |
| (m) | The
Bank will use its best efforts, and shall cause the Company to use its best efforts,
to permit the Notes to be eligible for clearance and settlement through the Depositary. |
| (n) | From
the date hereof and continuing to and including the Closing Date, the Bank will not,
and shall ensure that the Company does not, without the Underwriters’ prior written
consent (which consent shall not be unreasonably withheld), offer, sell, contract to
sell or otherwise dispose of in the United States any material amount of dollar-denominated
debt securities issued or guaranteed by the Bank which both mature more than one year
after such Closing Date and which are substantially similar to the Notes and the Guarantees,
except for the Bank’s customary deposit-raising activities. |
| (o) | The
Bank agrees that for as long as the Notes are outstanding it will maintain 100% ownership
of the share capital of the Company, directly or indirectly. |
| (p) | The
Company confirms that this Agreement has been executed and delivered in the name of the
Company by a signatory authorized by the Board of Directors of the Company and agrees
that the Notes will be executed and delivered in the name of the Company, manually or
via facsimile by a signatory authorized by the Board of Directors of the Company. |
| (q) | The
Bank confirms that this Agreement has been executed and delivered in the name of the
Bank and agrees that the Guarantees will be executed and delivered in the name of the
Bank, manually or via facsimile by a signatory authorized by the Board of Directors or
the Executive Committee of the Bank. |
| (r) | If
the Company or the Bank maintains a paying agent in respect of the Notes or the related
Guarantees in a European Union member state, it will ensure that it maintains a paying
agent in a European Union member state that will not be obliged to withhold or deduct
tax pursuant to the European Union Directive 2003/48/EC or any directive amending, supplementing
or replacing such directive (each, a “Directive”) or any law implementing
or complying with, or introduced in order to conform to, such Directive or Directives. |
| (s) | The
Company will, so long as the Notes are outstanding, permanently deposit the proceeds
of the issuance of the Notes, net of management and issuance costs, with the Bank or
a company of its consolidated group, which may use the proceeds for the general corporate
purposes of the group. |
| 5. | Conditions
to the Obligations of the Underwriters. The obligation of the several Underwriters
to purchase and pay for the Notes they have agreed to purchase hereunder on the Closing
Date is subject to the accuracy of the representations and warranties of the Company
and the Bank contained herein as of the date of this Agreement, at [__:00 P./A.M.], New
York City time, on [INSERT DATE] or such other time as agreed by the Bank and the Representatives
(the “Time of Sale”) and the Closing Date, to the accuracy of the
statements of the Company and the Bank made in any certificates pursuant to the provisions
hereof delivered prior to or concurrently with such purchase, to the performance by the
Company and the Bank of their obligations hereunder, and to the following further conditions: |
| (a) | Each
of the Underwriters, [COUNSEL], U.S. counsel for the Company and the Bank, and [COUNSEL],
U.S. counsel for the Underwriters, have completed their respective diligence investigations
in accordance with procedures customary for a transaction such as the offering of the
Notes and the Guarantees pursuant to the terms and conditions of this Agreement. |
| (b) | At
the Closing Date, (i) since the date of the latest balance sheet included in the Time
of Sale Prospectus and the Prospectus, there shall not have been any material adverse
change (other than as set forth in or contemplated in the Time of |
Sale
Prospectus or the Prospectus) in the financial condition or in the earnings, affairs or business prospects of the Bank and its
subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business; (ii) each of the Company
and the Bank shall have complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date; and (iii) the representations and warranties of the Company and the Bank set forth in Section
1 shall be accurate in all material respects as though expressly made at and as of the Closing Date. At the Closing Date, the
Underwriters shall have received a certificate, dated as of the Closing Date, from each of the Bank and of the Company signed
by the principal financial or accounting officer of the Bank and a director of the Company, respectively, certifying, with respect
to the Bank, the matters set forth in (i), (ii) and (iii) of this Section 5(b) and, with respect to the Company, the matters set
forth in (ii) and (iii) of this Section 5(b).
| (c) | At
the Closing Date, the Underwriters shall have received a signed opinion, dated as of
the Closing Date, of [COUNSEL], Spanish counsel to the Company and the Bank, substantially
in the form set forth in Exhibit A. |
| (d) | At
the Closing Date, the Underwriters shall have received a signed opinion, dated as of
the Closing Date, of [COUNSEL], U.S. counsel to the Company and the Bank, substantially
in the form set forth in Exhibit B. |
| (e) | At
the Closing Date, the Underwriters shall have received a signed opinion, dated as of
the Closing Date, of [COUNSEL], Spanish counsel to the Underwriters, substantially in
the form set forth in Exhibit C. |
| (f) | At
the Closing Date, the Underwriters shall have received a signed opinion, dated as of
the Closing Date, of [COUNSEL], U.S. counsel to the Underwriters, as to such matters
as the Underwriters may reasonably request. |
| (g) | On
the date hereof, the Underwriters shall have received from [AUDITOR] a letter dated such
date, to the effect that (i) they are independent accountants with respect to the Bank
and its subsidiaries within the meaning of the Securities Act; (ii) it is their opinion
that the Financial Statements included or incorporated by reference in the Time of Sale
Prospectus and the Prospectus and covered by their opinions therein comply as to form
in all material respects, except as stated in such report, with the applicable accounting
requirements of the Securities Act for foreign private issuers; (iii) nothing has come
to their attention that any Financial Statements included or incorporated by reference
in the Time of Sale Prospectus and the Prospectus and not covered by their opinions do
not comply as to form in all material respects with the accounting requirements of the
Securities Act for foreign private issuers; (iv) based upon limited procedures set forth
in detail in such letter, nothing has come to their attention which causes them to believe
that at a specified date not more than three business days prior to the date of such
letter, there was any decrease in the capital stock, any increase in long-term debt or
any decreases in consolidated net current assets or shareholders’ equity as |
compared
with the amounts shown in the most recent consolidated balance sheet included or incorporated by reference in the Time of Sale
Prospectus and the Prospectus, or during the period from the date of such balance sheet to a specified date not more than three
days prior to the date of such letter, there were any decreases, as compared with the corresponding period in the preceding year,
in consolidated net income or consolidated net income of the Bank and its subsidiaries, except in all cases for changes, increases
or decreases which the Time of Sale Prospectus and the Prospectus disclose have occurred or may occur; and (v) in addition to
the examination referred to in their opinions and the limited procedures referred to in clause (iv) above, they have carried out
certain specified procedures, not constituting an audit, with respect to certain amounts, percentages and financial information
which are included in the Time of Sale Prospectus and the Prospectus and which are specified by the Underwriters, and have found
such amounts, percentages and financial information to be in agreement with the relevant accounting, financial and other records
of the Bank and its subsidiaries identified in such letter. At the Closing Date, the Underwriters shall have received a letter
from [AUDITOR], dated as of the Closing Date, confirming the information given in their letter dated the date of the Time of Sale
Prospectus and the Prospectus.
| (h) | At
the Closing Date, U.S. counsel [and Spanish counsel] to the Bank and the Company, and
U.S. counsel and Spanish counsel for the Underwriters, shall have been furnished with
all such documents, certificates, resolutions and opinions as each may reasonably request
for the purpose of enabling them to pass upon the issuance and sale of the Notes and
the Guarantees as contemplated in this Agreement and the matters referred to in the opinions
required by Sections 5(d), (e) and (f), and in order to evidence the performance of any
of the covenants of the Company and the Bank, or the fulfillment of any of the conditions
herein contained. |
| | If any of
the conditions specified in this Section 5 shall not have been fulfilled when and as
required by this Agreement to be fulfilled, this Agreement may be terminated by the Underwriters
on notice to the Company and the Bank at any time at or prior to the Closing Date, as
the case may be, and such termination shall be without liability of any party to any
other party except as provided in Section 6 herein. Notwithstanding any such termination,
the provisions of Sections 7, 8, 9, 13 and 14 herein shall remain in effect. |
| (a) | [The
Bank will, except as set forth in subsection (b) below, pay and bear all, or cause the
Company to pay or bear all, costs and expenses incident to the performance of the Company’s
and the Bank’s obligations under this Agreement, including (i) the preparation
and filing of the Registration Statement, any preliminary prospectus, the Time of Sale
Prospectus, the Prospectus, any free writing prospectus prepared by or on behalf of,
or used by or referred to by the Company or the Bank, and any amendments or supplements
to any of the foregoing, including the filing fees payable to the Commission relating
to the |
Notes
(within the time required by Rule 456(b)(1), if applicable), (ii) the preparation and distribution of this Agreement and the Indenture,
(iii) the preparation and delivery of the Notes and the Guarantees, (iv) the fees and disbursements of the counsel and accountants
for the Bank and the Company, (v) the costs and charges of the Trustee incurred in connection with the transactions contemplated
in this Agreement, and (vi) all initial and on-going expenses and listing fees in connection with the listing of the Notes on
the NYSE.
| (b) | Notwithstanding
subsection (a) above, each Underwriter, individually and not jointly, agrees to pay severally
in proportion to the aggregate principal amount of the Notes set forth opposite their
respective names in Schedule I hereto (i) the fees and disbursements of U.S. and Spanish
counsels to the Underwriters, and (ii) an amount of the expenses referenced in subclause
(a) above up to an aggregate amount equal to [AMOUNT]. For the avoidance of doubt, no
Underwriter will be liable for any initial or on-going expenses after payment has been
made in accordance with this Section 6 and each amount identified in this Section 6(b)
(i) and (ii) above will be divided pro rata in proportion to the aggregate principal
amount of the Notes set forth opposite the respective names of each Underwriter.] |
| (a) | Each
of the Company and the Bank jointly and severally agrees to indemnify and hold harmless
each Underwriter and its directors, officers and employees, and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each affiliate of any Underwriter within the meaning
of Rule 405 under the Securities Act as follows: (i) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, arising out of an untrue statement
or alleged untrue statement of a material fact contained in the Registration Statement
or any amendment thereto, any preliminary prospectus, the Time of Sale Prospectus, the
Prospectus (or any amendment or supplement to the Time of Sale Prospectus or the Prospectus)
or any Supplemental Offering Materials, or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; (ii) against any and all
loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any claim whatsoever,
based upon any such untrue statement or omission, or any such alleged untrue statement
or omission, if such settlement is effected with the written consent of the Bank, which
consent shall not be unreasonably withheld; and (iii) against any and all expense whatsoever,
as incurred (including fees and disbursements of counsel chosen by the Underwriters),
reasonably incurred in investigating, preparing or defending against any litigation,
or investigation or proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is not |
paid
under clause (i) or (ii) above; provided, however, that this indemnity does not apply to any loss, liability, claim, damage or
expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information furnished in writing to the Company or the Bank by the Underwriters expressly for use
in the Time of Sale Prospectus or the Prospectus (or any amendment or supplement to the Time of Sale Prospectus or the Prospectus)
or any Supplemental Offering Materials.
| (b) | Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company
and the Bank, and each person, if any, who controls the Company or the Bank, within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against
any and all loss, liability, claim, damage and expense described in the indemnity contained
in Section 7(a), as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Time of Sale Prospectus and the
Prospectus (or any amendment or supplement to the Time of Sale Prospectus and the Prospectus)
or any Supplemental Offering Materials, in each case in reliance upon and in conformity
with information furnished in writing to the Company or the Bank by the Underwriters
through the Representatives expressly for use in the Time of Sale Prospectus and the
Prospectus (or any amendment or supplement to the Time of Sale Prospectus and the Prospectus)
or any Supplemental Offering Materials. |
| (c) | Each
indemnified party shall give prompt notice to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. An indemnifying party may participate at
its own expense in the defense of such action. In no event shall the indemnifying party
or parties be liable for the fees and expenses of more than one counsel for all indemnified
parties in connection with any one action or separate but similar or related actions
in the same jurisdiction arising out of the same general allegations or circumstances. |
| 8. | Contribution.
In order to provide for just and equitable contribution in circumstances under which
the indemnity provided for in Section 7 is for any reason held to be unenforceable by
the indemnified parties although applicable in accordance with its terms, the Company
and the Bank, on the one hand, and the Underwriters, on the other hand, shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated
by such indemnity incurred by the Company, the Bank and the Underwriters, as incurred,
in such proportions that (a) the Underwriters are responsible for that portion represented
by the percentage that the total discounts and commissions received by the Underwriters
bears to the aggregate offering price of the Notes and (b) the Company and the Bank jointly
and severally are responsible for the balance; provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as an Underwriter, and each director
of the Company or the Bank and each person, if any, who controls the Company or the Bank
within the meaning of Section |
15
of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company and the Bank.
The Underwriters’ respective obligations to contribute pursuant to this Section 8 are several in proportion to the aggregate
principal amount of the Notes set forth opposite their respective names in Schedule I hereto and not joint.
| 9. | Representations
and Indemnities to Survive. The representations, warranties, indemnities, agreements
and other statements of the Underwriters, the Company and the Bank and their officers
set forth in or made pursuant to this Agreement will remain operative and in full force
and effect regardless of any investigation made by or on behalf of the Company, the Bank
or the Underwriters or controlling persons and will survive delivery of and payment for
the Notes. |
| 10. | Termination
of Agreement. |
| (a) | The
Underwriters may terminate this Agreement, by notice to the Company and the Bank, at
any time at or prior to the Closing Date (i) if there has been, since the date hereof,
any material adverse change (otherwise than as set forth in or contemplated by the Time
of Sale Prospectus or the Prospectus) in the financial condition or in the earnings,
business affairs or business prospects of the Company or the Bank and its subsidiaries,
considered as one enterprise, whether or not arising in the ordinary course of business,
or (ii) if, since the execution and delivery of this Agreement (A) there has occurred
any outbreak or escalation of hostilities or other calamity or crisis, including, without
limitation, an act of terrorism, the effect of which on the financial markets of the
United States are such as to make it, in the judgment of the Underwriters, impracticable
or inadvisable to market the Notes or (B) trading in any securities of the Company or
the Bank has been suspended by the Commission, the Spanish Stock Exchanges (Comisión
Nacional del Mercado de Valores) or the NYSE, or if trading generally on the NYSE
or in the over-the-counter market has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been required
by such exchange or by order of the Commission, or any other governmental authority,
or (C) a banking moratorium has been declared by Spanish, U.S. or New York authorities,
or (D) there has occurred any change or any development involving a prospective change
in national or international political, financial or economic conditions or exchange
controls which, in the judgment of the Underwriters, is likely to have a material adverse
effect on the market for the Notes, or (E) any rating of the Bank’s debt securities
shall have been lowered by Moody’s Investors Service Inc., Fitch Ratings Ltd. or
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Company,
Inc., or any of such rating agencies have publicly announced it has under surveillance
or review with possible negative implications any rating of the Bank’s debt securities
(provided, however, that this clause (E) shall not apply if a lowering of any such rating
or any such public announcement occurs as a result of the |
lowering
of any rating by any such rating agency of obligations of The Kingdom of Spain or as a result of a public announcement by any
such rating agency that it has under surveillance or review with possible negative implications obligations of The Kingdom of
Spain), or (F) there has occurred a material disruption in commercial banking or securities settlement or clearance services in
the United States or with respect to the Depositary. The Underwriters agree that they will notify the Company and the Bank of
the occurrence of any event described in clause (A) through (F) as soon as they shall become aware of such occurrence.
| (b) | If
this Agreement is terminated pursuant to this Section, such termination shall be without
liability of any party to any other party, except to the extent provided in Section 6.
Notwithstanding any such termination, the provisions of Sections 6, 7, 8, 9, 13 and 14
shall remain in effect. |
| 11. | Notices.
All notices and other communications under this Agreement shall be in writing and shall
be deemed to have been duly given if delivered, mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the Underwriters
at the following addresses: |
[Name of Underwriter]
[address]
Attention:
Fax: .
Notices to the Company
and the Bank shall be directed to them at:
Grupo Santander, S.A.
Ciudad Grupo Santander
Avda. Cantabria s/n
Edificio Amazonia, planta
0
28660 Boadilla del Monte
Madrid
Spain
Attention: División
Financiera
Fax: +34 91 257 0118.
| 12. | Parties.
This Agreement is made solely for the benefit of the Underwriters, the Company and the
Bank and, to the extent expressed, any person controlling the Company, the Bank or the
Underwriters, and their respective executors, administrators, successors and assigns,
and no other person shall acquire or have any right under or by virtue of this Agreement.
The term “successors and assigns” shall not include any purchaser,
as such purchaser, from the Underwriters of the Notes. |
| 13. | Submission
to Jurisdiction. Each of the Company and the Bank irrevocably agrees that any suit,
action or proceeding against the Company or the Bank brought by the Underwriters or by
any person who controls the Underwriters, arising out of or based upon this Agreement
or the transactions contemplated hereby may be instituted in any |
state
or federal court in the Borough of Manhattan, The City of New York, New York, and, to the extent permitted by law, irrevocably
waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and irrevocably
submits to the nonexclusive jurisdiction of such courts in any such suit, action or proceeding. The Company and the Bank will
each irrevocably appoint Banco Santander, S.A., New York Branch as its Authorized Agent (the “Authorized Agent”)
upon whom process may be served in any such suit, action or proceeding arising out of or based on this Agreement or the transactions
contemplated hereby which may be instituted in any state or federal court in the Borough of Manhattan, The City of New York, New
York, by the Underwriters or by any person who controls the Underwriters, and the Company and the Bank each expressly consents
to the jurisdiction of any such court in respect of any such suit, action or proceeding, and waives any other requirements of
or objections to personal jurisdiction with respect thereto. The Company and the Bank each represents and warrants that the Authorized
Agent has agreed to act as said agent for service of process, and the Company and the Bank each agrees to take any and all action,
including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force
and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to the Company or the
Bank, as the case may be, shall be deemed, in every respect, effective service of process upon the Company or the Bank. Notwithstanding
the foregoing, any suit, action or proceeding based on this Agreement may be instituted by an Underwriter in any competent court
in The Kingdom of Spain.
| 14. | Judgment
Currency. Each of the Company and the Bank agrees to indemnify each of the Underwriters
against any loss incurred by the Underwriters as a result of any judgment or order being
given or made for any amount due hereunder and such judgment or order being expressed
and paid in a currency (the “Judgment Currency”) other than U.S. dollars
and as a result of any variation as between (i) the rate of exchange at which the U.S.
dollar amount is converted into the Judgment Currency for the purpose of such judgment
or order and (ii) the rate of exchange at which each Underwriter is able to purchase
U.S. dollars with the amount of the Judgment Currency actually received by each Underwriter.
The foregoing indemnity shall constitute a separate and independent obligation of each
Underwriter and shall continue in full force and effect notwithstanding any such judgment
or order as aforesaid. The parties hereto agree that, to the fullest extent permitted
by law, the “rate of exchange” used shall be the rate at which, in
accordance with normal banking procedures, each Underwriter could purchase such Judgment
Currency in The City of New York on the business day preceding that on which final judgment
is given. The term “rate of exchange” shall include any premiums and costs
of exchange payable in connection with the purchase of, or conversion into, the relevant
currency. |
| 15. | Default
by One of the Underwriters. |
| (a) | If
one of the Underwriters shall fail at the Closing Date to purchase the Notes that it
is obliged to purchase pursuant to this Agreement (the “Defaulted Notes”),
the Company and the Bank will have the option to either (i) reduce the size of the offering
by the number of Defaulted Notes, (ii) proceed with the full offering, a |
portion
of which will not be underwritten or (iii) terminate this Agreement and withdraw the offering of the Notes, without any liability
on the part of the Company or the Bank.
| (b) | No
action taken pursuant to this Section shall relieve any defaulting Underwriters from
liability in respect of its default. Any defaulting Underwriters shall be liable to any
non-defaulting Underwriter which purchases such Defaulted Notes for any losses or damages
incurred as a result of such purchase. |
| (c) | In
the event of any such default not involving termination of this Agreement, the remaining
Underwriters, the Bank or the Company shall have the right to postpone the Closing Date
for a period not exceeding seven days in order to effect any required changes in the
Prospectus or in any other documents or arrangements. |
| 16. | Governing
Law. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York. |
| 17. | Counterparts.
This Agreement may be executed in one or more counterparts and, when a counterpart has
been executed by each party, all such counterparts taken together shall constitute one
and the same agreement. |
| 18. | Entire
Agreement; Amendment. This Agreement supersedes all prior agreements and undertakings,
both written and oral, of the parties hereto, or any of them, with respect to the subject
matter hereof and constitute the entire understanding of the parties hereto with respect
to the subject matter hereof. This Agreement may not be waived, amended or modified except
in writing signed by each party to be bound hereby. |
If the foregoing
is in accordance with the Underwriters’ understanding of our agreement, please sign and return to us a counterpart hereof,
whereupon this instrument will become a binding agreement among the Company, the Bank and the Underwriters in accordance with
its terms.
| Very truly yours, |
| |
| SANTANDER US DEBT, S.A.
UNIPERSONAL |
| |
| |
| By: |
|
| |
Name: |
| |
Title: |
| BANCO SANTANDER, S.A. |
| |
| |
| By: |
|
| |
Name: |
| |
Title: |
[The rest
of this page is intentionally left blank]
The foregoing Agreement is hereby
confirmed and accepted as of
the
date first written above.
| [NAME OF UNDERWRITER] |
| |
| |
| By: |
|
| |
Name: |
| |
Title: |
SCHEDULE
I
Name
of Underwriter |
Principal
Amount of
Notes |
| [UNDERWRITER] |
$[AMOUNT] |
| Total |
$[AMOUNT] |
EXHIBIT
A
FORM
OF OPINION OF [COUNSEL]
EXHIBIT
B
FORM
OF OPINION OF [COUNSEL]
EXHIBIT
C
FORM
OF OPINION OF [COUNSEL]
EXHIBIT
D
$[]
Senior Notes
Final Terms And Conditions
| Issuer: |
Santander
US Debt, S.A. Unipersonal |
| Guarantor: |
Banco
Santander, S.A. |
| Expected
ratings: |
|
| Principal
amount: |
$ |
| Note
type: |
Senior
Notes |
| Form
of issuance: |
SEC
registered |
| Issue
price: |
|
| Minimum
purchase amount: |
|
| Denomination
and currency: |
Denominations
of $ |
| Trade
date: |
|
| Settlement
date: |
|
| Maturity
date: |
|
| Redemption
price: |
|
| Benchmark
treasury: |
|
| Spread
to benchmark: |
T+ bps |
| Re-offer
yield: |
% |
| Treasury
strike: |
% |
| Coupon: |
% |
| Interest
payment dates: |
|
| Clearing: |
DTC |
| Day
count fraction: |
|
| Business
days: |
|
| Calculation
agent: |
|
Call
/ Issuer Redemption Provisions:
[Tax
call:]
[Make-whole
call:]
[Listing
call:]
|
|
| Put
/ Investor Redemption Provisions: |
|
| Listing: |
[Application
will be made to list on the New York Stock Exchange] |
| Governing
law: |
|
| ISIN
/ CUSIP: |
|
| [Underwriters][Dealer]: |
|
| Commitment
to purchase: |
|
This material
is confidential and is for your information only and is not intended to be used by anyone other than you. This information does
not purport to be a complete description of the securities offered hereby (the “Notes”) or the offering.
The information
in this term sheet supplements the Issuer’s preliminary prospectus, dated [DATE] (the “Preliminary Prospectus”),
and supersedes the information in the Preliminary Prospectus to the extent inconsistent with the information in the Preliminary
Prospectus. Except as aforesaid, this term sheet is qualified in its entirety by reference to the Preliminary Prospectus. You
may obtain a copy of the Preliminary Prospectus and the Prospectus (when available) for this transaction by calling [UNDERWRITER]
at [NUMBER].
EXHIBIT
E
[This
Exhibit E Intentionally Left Blank]
Exhibit 1.2
SANTANDER ISSUANCES, S.A. UNIPERSONAL
(a company with limited liability organized under
the laws of The Kingdom of Spain)
Subordinated Notes
fully, unconditionally and irrevocably guaranteed on a subordinated basis by
BANCO SANTANDER, S.A.
FORM OF UNDERWRITING AGREEMENT
[DATE]
[UNDERWRITERS]
as
Representatives of the several Underwriters
named
in Schedule I hereto
Ladies and Gentlemen:
Santander Issuances,
S.A. Unipersonal, a sociedad anónima incorporated under the laws of The Kingdom of Spain (the “Company”),
proposes to issue and sell to the several underwriters named in Schedule I hereto (the “Underwriters”), acting
severally and not jointly, for whom you are acting as representatives (the “Representatives”), the respective
amounts set forth in Schedule I hereto of the securities specified in Exhibit D hereto (the “Notes”) to be issued
pursuant to the resolutions of the Company’s general shareholders’ meeting and board of directors approving the issuance
of the Notes and the indenture dated as of [DATE] (the “Base Indenture”) among the Company, Banco Santander,
S.A., a sociedad anónima incorporated under the laws of The Kingdom of Spain (the “Bank”), and
The Bank of New York Mellon, as trustee (the “Trustee”) as supplemented, with respect to the Notes, by a supplemental
indenture to be dated on or about [DATE], which together with the Base Indenture sets out the terms and rights of this particular
issue of Notes (the “[NUMBER] Supplemental Indenture”; and the Base Indenture as supplemented, with respect
to the Notes, by the [NUMBER] Supplemental Indenture, and as further supplemented from time to time, the “Indenture”).
Payment of principal and interest on the Notes, as well as payment of the redemption price for the Notes upon any redemption thereof
plus accrued but unpaid interest on the Notes, upon the dissolution, winding up or liquidation of the Bank, will be fully, unconditionally
and irrevocably guaranteed, on a subordinated basis, by the Bank pursuant to the terms of certain guarantees for the benefit of
holders from time to time, to be dated as of the Closing Date (as defined herein) (the “Guarantees”).
The Company and the
Bank have filed with the Securities and Exchange Commission (the “Commission”) a registration statement, including
a prospectus, (file number 333-[NUMBER]), on Form F-3 relating to securities (the “Shelf Securities”), including
the Notes and the Guarantees, to be issued from time to time by the Company. The registration statement as
amended to the date of
this Agreement, including the information (if any) deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A or Rule 430B under the Securities Act of 1933, as amended (the “Securities Act”), is hereinafter
referred to as the “Registration Statement,” and the related prospectus covering the Shelf Securities dated
[DATE] in the form first used to confirm sales of the Notes (or in the form first made available to the Underwriters by the Company
to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “Base
Prospectus.” The Base Prospectus, as supplemented by the prospectus supplement specifically relating to the Notes in
the form first used to confirm sales of the Notes (or in the form first made available to the Underwriters by the Company to meet
requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “Prospectus,”
and the term “preliminary prospectus” means any preliminary form of the Prospectus. For purposes of this Agreement,
“free writing prospectus” has the meaning set forth in Rule 405 under the Securities Act, “Time of
Sale Prospectus” means the Base Prospectus as supplemented by the preliminary prospectus, together with the free writing
prospectuses, if any, each identified in Exhibit E hereto, and intended for general distribution to prospective investors, and
“road show” means a “bona fide electronic road show”, including any Bloomberg road show presentation,
as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction to any person. As used herein,
the terms “Registration Statement,” “Base Prospectus,” “preliminary prospectus,” “Time
of Sale Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein.
The terms “supplement,” “amendment,” and “amend” as used herein with respect
to the Registration Statement, the Base Prospectus, the Time of Sale Prospectus, any preliminary prospectus or free writing prospectus
shall include all documents subsequently filed by the Company and the Bank with the Commission pursuant to the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), that are deemed to be incorporated by reference therein.
| 1. | Representations and Warranties. Each of the Company and the Bank, jointly and severally,
represents and warrants to, and agrees with, each of the Underwriters that as of the date hereof: |
| (a) | The Registration Statement has become effective; no stop order suspending the effectiveness of
the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission.
The Bank is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) eligible to use the Registration Statement
as an “automatic shelf registration statement” (as defined in Rule 405 under the Securities Act) and the Company has
not received notice that the Commission objects to the use of the Registration Statement as an automatic shelf registration statement. |
| (b) | Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference
in the Time of Sale Prospectus or the Prospectus complied or will comply when so filed in all material respects with the Securities
Act, the Exchange Act and the applicable rules and regulations of the Commission thereunder, (i) each part of the Registration
Statement, when such part became effective, did not contain, and each such part, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
to |
make the statements
therein not misleading, (ii) the Registration Statement as of the date hereof does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading,
(iii) the Registration Statement and the Prospectus comply, and as amended or supplemented, if applicable, will comply in
all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iv) the
Time of Sale Prospectus does not, and at the time of each sale of the Notes in connection with the offering when the Prospectus
is not yet available to prospective purchasers and at the Closing Date (as defined in Section 3 below), the Time of Sale Prospectus,
as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made,
not misleading, (v) each broadly available road show, if any, when considered together with the Time of Sale Prospectus, does not
contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading and (vi) the Prospectus does not contain and, as amended
or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to (a) statements or omissions in the Registration Statement, the Time
of Sale Prospectus or the Prospectus based upon information relating to any Underwriter furnished to the Company or the Bank in
writing by such Underwriter through the Representatives expressly for use therein or (b) that part of the Registration Statement
that constitutes the Statement of Eligibility (Form T-1) under the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), of the Trustee.
| (c) | Neither the Company nor the Bank is an “ineligible issuer” in connection with the offering
pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus that the Company or the Bank is required
to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the
requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free writing prospectus
that the Company or the Bank has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared
by or behalf of or used or referred to by the Company or the Bank complies or will comply in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the Commission thereunder. Except for the free writing prospectuses,
if any, identified in Exhibit E hereto, and electronic road shows, if any, each furnished to the Underwriters before first use,
neither the Company nor the Bank has prepared, used or referred to, and will not, without the Underwriters’ prior consent,
prepare, use or refer to, any free writing prospectus. |
| (d) | Each of the Company and the Bank has been duly incorporated and is validly existing as a limited
liability corporation (sociedad anónima) in good standing under the laws of The Kingdom of Spain. |
| (e) | On or prior to the Closing Date, the Notes will be duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the benefits of the Indenture, and, when registered with
the Mercantile Registry of
Madrid, will constitute valid and legally binding obligations of the Company enforceable against the
Company in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally or by general equity principles; the Notes and
Guarantees will be consistent with the descriptions thereof contained in the Time of Sale Prospectus and the Prospectus, and
such descriptions will conform to the rights set forth in the instruments defining the same. |
| (f) | This Agreement has been duly authorized, executed and delivered by the Company and the Bank. |
| (g) | On or prior to the Closing Date, the Indenture will have been duly qualified under the Trust
Indenture Act,
will have been
duly authorized by
each of the Company and
the Bank and will constitute a valid and legally binding agreement of the Company and
the Bank, enforceable in accordance with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally or by general equity
principles. |
| (h) | The execution and delivery of this Agreement, the Guarantees, and the Indenture, the issuance,
delivery and sale of the Notes and the Guarantees, the performance of this Agreement and compliance by the Company and the Bank,
as applicable, with the terms of this Agreement, the Indenture and the terms of the Notes and the Guarantees have been duly authorized
by all necessary corporate action on the part of the Company and the Bank, as applicable, and, upon their execution and delivery,
did not or, if applicable, will not result in any violation of the memorandum and articles of association (or similar constitutive
documents) of the Company or of the Bank and do not and will not conflict with, or breach, any of the terms or provisions of, or
constitute a default under, (A) any indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which
the Company or the Bank is a party or by which it may be bound or to which any of its properties may be subject or (B) any existing
applicable law, rule, regulation, judgment, order or decree of any governmental instrumentality or court having jurisdiction over
the Company or the Bank or any of the properties of either of them (except, in either case, for such conflicts, breaches or defaults
that would not have a material adverse effect on the financial condition of the Bank and its subsidiaries considered as one enterprise,
or on the earnings or business affairs of the Bank and its subsidiaries, considered as one enterprise). |
| (i) | The Guarantees have been duly authorized by the Bank and upon their execution and delivery, will
constitute valid and legally binding agreements of the Bank, enforceable in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally or
by general equity principles. |
| (j) | No consent, approval, authorization or order of any governmental instrumentality or court is required
for the consummation by the Company and the Bank of the transactions contemplated hereby, except (a) such as may be required by
the securities or Blue Sky laws of the various states of the United States in connection with the offer and sale of the Notes,
(b) such approvals as have been obtained and (c) the registration of the public deed of issuance (escritura pública de
emisión) with the Mercantile Registry of Madrid. Within the term set out in Regulation 4/2012, of April 25, of the Bank
of Spain, on rules for the communication by Spanish residents of the economic transactions and the balance of financial assets
and liabilities outside Spain (Circular 4/2012, de 25 de abril, del Banco de España, sobre normas para la comunicación
por los residentes en España de las transacciones económicas y los saldos de activos y pasivos financieros con el
exterior), and in accordance to the regime set out therein, the Company shall communicate to the Bank of Spain the economic
transactions and the balance of financial assets and liabilities outside Spain performed in relation to the Notes. |
| (k) | Neither the Company, the Bank, nor any of its or their affiliates (as defined in Rule 405 under
the Securities Act), nor any person acting on its or their behalf has taken or will take, directly or indirectly, any action designed
to cause or to result in, or that has constituted or which might reasonably be expected to cause or result in, the stabilization
in violation of applicable laws or manipulation of the price of any security of the Company to facilitate the sale or resale of
the Notes or the Guarantees. |
| (l) | Each preliminary prospectus filed as part of the registration statement as originally filed or
as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material
respects with the Securities Act and the applicable rules and regulations of the Commission thereunder. |
| (m) | The Bank maintains “disclosure controls and procedures” (as such term is defined in
Rule 13a-15(e) under the Exchange Act). |
| (n) | Neither the Company nor the Bank is, and after giving effect to the offer and sale of the Notes
and the Guarantees, neither of them will be, required to register as an “investment company,” as such term is defined
in the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”). |
| (o) | The financial statements of the Bank and its consolidated subsidiaries, together with the related
schedules, if any, and notes (the “Financial Statements”), that have been included or incorporated by reference
in the Registration Statement, the |
Time of Sale
Prospectus and the Prospectus present fairly the financial position of the Bank and its consolidated subsidiaries at the dates
indicated and the statement of operations, stockholders’ equity and cash flows of the Bank and its consolidated subsidiaries
for the periods specified; and said Financial Statements have been prepared in conformity with International Financial Reporting
Standards as issued by the International Accounting Standards Board (the “IFRS-IASB”). The supporting schedules,
if any, included or incorporated by reference in the Time of Sale Prospectus and the Prospectus present fairly, in accordance with
IFRS-IASB, the information required to be stated therein. The selected financial data and the summary financial information included
or incorporated by reference in the Time of Sale Prospectus and the Prospectus present fairly, in accordance with IFRS-IASB, the
information shown therein and have been compiled on a basis consistent with that of the Financial Statements incorporated by reference
in the Time of Sale Prospectus and the Prospectus.
| (p) | Each of the Company and the Bank acknowledges and agrees that each of the Underwriters is acting
solely in the capacity of an arm’s length contractual counterparty to the Company and the Bank with respect to the offering
of the Notes and the Guarantees (including in connection with determining the terms of the offering contemplated by this Agreement)
and not as an agent or fiduciary to the Company, the Bank or any other person. Additionally, the Underwriters are not advising
the Company, the Bank or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.
Each of the Company and the Bank shall consult with their own advisors concerning such matters and shall be responsible for making
their own independent investigation and appraisal of such matters, and the Underwriters shall have no responsibility or liability
to the Company, the Bank or any other person with respect to such matters. Any review by the Underwriters of the Company, the Bank,
the transactions contemplated by this Agreement or any other due diligence review by the Underwriters in connection with such transactions
will be performed solely for the benefit of the Underwriters and shall not be on or behalf of the Company, the Bank or any other
person. |
| (q) | So long as certain conditions set forth in Law 10/2014 of June 26, on organization,
supervision and solvency of credit institutions (“Law 10/2014”) are met, any payments in respect of the
Notes made by the Company to a non-Spanish tax resident beneficial owner, who does not operate with respect to the Notes
through a permanent establishment in Spain, shall not be subject to taxation in Spain pursuant to Royal Legislative Decree
5/2004 of March 5, promulgating the consolidated text of the non-resident income tax law (Real Decreto Legislativo
5/2004, de 5 de Marzo,
por el que se aprueba el
texto refundido de la Ley del Impuesto sobre la Renta de no Residentes), and no
withholding tax on account of Spanish taxes shall be required on such payments, except that payments made to non-Spanish tax
resident beneficial
owners where the Company
has not received from the paying agent certain information about the Notes will be subject to
Spanish withholding tax at the applicable rate (19% / 19.50% in 2015). |
| (r) | The Company is a wholly–owned subsidiary of the Bank; the Guarantees are full and unconditional;
and no subsidiary of the Bank will guarantee the Notes. The exclusive activity of the Company is the issuance of debt. |
| (s) | The Notes will qualify as Tier 2 capital for the purposes of the regulatory capital rules
applicable to the Bank as calculated in accordance with Chapter 4 (Tier 2 capital) of Title I (Elements of own
funds) of Part Two (Own Funds) of the CRR and/or Applicable Banking Regulations once the ECB confirms such treatment. |
| (t) | The obligations of the Bank with respect to the Notes and the Guarantees constitute direct, unconditional,
subordinated and unsecured obligations of the Bank which, upon the insolvency of the Bank (and unless they qualify as more subordinated
claims pursuant to the Spanish Insolvency Law or equivalent legal provision which replace them in the future, and subject to any
applicable legal and statutory exceptions) shall rank, under Article 92.2 of the Spanish Insolvency Law (or equivalent legal provisions
which replace, substitute or amend it in the future), (i) senior to (1) those subordinated obligations which qualify as subordinated
claims pursuant to Articles 92.3 to 92.7 of the Spanish Insolvency Law or equivalent legal provisions which replace them in the
future, and (2) any other subordinated obligations which by law or their terms, and to the extent permitted by Spanish law, rank
junior to the Bank’s obligations under the Guarantees; (ii) pari passu with all other contractually subordinated obligations
of principal related to instruments qualifying as Tier 2 capital of the Bank and any other subordinated obligations which by law
and/or their terms, and to the extent permitted by Spanish law, rank pari passu with the Bank’s obligations under
the Guarantees; and (iii) junior to any non-subordinated obligations of the Bank, any other subordinated obligations which by law
and/or their terms, and to the extent permitted by Spanish law, rank senior to the Bank’s obligations under the Guarantees,
and any claim on the Bank, which becomes subordinated as a consequence of article 92.1º of the Spanish Insolvency Law. |
| (u) | As of the date hereof, neither the Company nor the Bank has made, and neither of them will make
(without prior consent of the Underwriters) any public offer of the Notes by means of Supplemental Offering Materials. For purposes
of this Agreement, “Supplemental Offering Materials” means any “written communication” (within the
meaning of the rules and regulations promulgated under the Securities Act) prepared by or on behalf of the Company or the Bank,
or used or referred to by the Company or the Bank, that constitutes an offer to sell or a solicitation of an offer to buy the Notes
or the Guarantees (other than the free writing prospectuses identified in Exhibit E hereto, the Time of Sale Prospectus and the
Prospectus), including, without limitation, any road show materials relating to the Notes or the Guarantees that constitute such
a written communication. |
| (v) | Under the laws of The Kingdom of Spain, neither the Company nor the Bank nor any of their respective
revenues, assets or properties has any right of immunity from service of process or from the jurisdiction of competent courts of
The |
Kingdom of Spain
or the United States or the State of New York in connection with any suit, action or proceeding, attachment prior to judgment,
attached in aid of execution of a judgment or execution of a judgment or from any other legal process with respect to its obligations
under this Agreement, the Indenture, the Notes and the Guarantees (together, the “Transaction Documents”).
| (w) | The choice of the law of the State of New York as the governing law of the Transaction Documents
is a valid, effective and irrevocable choice of law under the laws of The Kingdom of Spain. Each of the Company and the Bank has
the power to submit and, pursuant to the Transaction Documents to which it is a party, has legally, validly, effectively and irrevocably
submitted to the non-exclusive personal jurisdiction of the United States District Court for the Southern District of New York
and the Supreme Court of New York, New York County (including, in each case, any appellate courts therefrom) in any suit, action
or proceeding against it arising out of or related to any of the Transaction Documents, including with respect to its obligations,
liabilities or any other matter arising out of or in connection with this Agreement, and has validly and irrevocably waived any
objection to the venue of a proceeding in any such court and has the power to designate, appoint and empower and pursuant to Section
13 of this Agreement has legally, validly, effectively and irrevocably designated, appointed and empowered an agent for service
of process in any suit or proceeding based on or arising under this Agreement in any federal or state court in the State of New
York. |
| (x) | None of the Company, the Bank or any of the Bank’s Significant Subsidiaries (as such term
is defined in Rule 1-02(w) of Regulation S-X under the Securities Act “Significant Subsidiaries”), nor, to the
knowledge of the Company or the Bank, any director, officer, agent, employee, affiliate or person acting on behalf of either the
Company or the Bank is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”) or any similar European, Spanish, U.K. or Brazilian, as applicable, sanctions administered
by the European Union, Spain, the United Kingdom or Brazil, as applicable, and neither the Company nor the Bank is located, organized
or resident in a country or a territory that is the subject of such sanctions; and neither the Company nor the Bank will directly
or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing the activities of any person known by the Company
or the Bank to be currently subject to any U.S. sanctions administered by OFAC or is in Iran, North Korea, Sudan or in any other
country or territory that, at the time of such funding is the subject of such sanctions, except to the extent permissible for a
U.S. person; nor will the Company or the Bank directly or indirectly use the transaction proceeds to contravene any OFAC or any
similar European, Spanish, U.K. or Brazilian regulations that may be applicable to them. |
| (y) | The operations of the Bank and its Significant Subsidiaries are and have been conducted at all
times in compliance in all material respects with applicable |
financial recordkeeping
and reporting requirements of the European Union, the Kingdom of Spain, the United Kingdom, Brazil, the United States and each
State thereof and the money laundering statutes and the rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any European, Spanish, U.K., Brazilian or U.S., as applicable, governmental
agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court
or governmental agency, authority or body or any arbitrator involving the Bank or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or the Bank, threatened.
| (z) | None of the Company, the Bank or any of the Bank’s Significant Subsidiaries or, to the knowledge
of the Company or the Bank, any director, officer, agent or employee of the Company or the Bank or any of the Bank’s Significant
Subsidiaries (A) is aware or has taken any action, directly or indirectly, that would result in a violation by such persons of
the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”),
the U.K. Bribery Act or any other anti-corruption law, rule or regulation of any locality that is applicable to the Company or
the Bank (“applicable anti-corruption laws”) or (B) has taken or will take any action in furtherance of an offer,
payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value,
directly or indirectly, to any “foreign official” (as such term is defined in the FCPA) (including any officer or employee
of a government or government-owned or controlled entity or of a public international organization, or any person acting in an
official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political
office) to influence official action or secure an improper advantage, and (C) each of the Company and the Bank and its Significant
Subsidiaries has conducted its businesses in compliance with the FCPA, the U.K. Bribery Act and applicable anti-corruption laws,
and (D) to the knowledge of the Company and the Bank, their respective affiliates have conducted their businesses in compliance
with the FCPA and have instituted and maintain policies and procedures designed to ensure continued compliance therewith. |
| (aa) | [AUDITOR], who have certified certain financial statements of the Bank, are independent public
accountants in respect of the Bank and the Company as required by the Securities Act and the applicable rules and regulations of
the Commission. |
| (a) | Subject to the terms and conditions and in reliance upon the representations and warranties herein
set forth, the Company agrees to issue and sell to the Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Company, the aggregate principal amount of Notes set forth opposite such Underwriter’s name on Schedule
I hereto at a purchase price of 100% of the principal amount of the Notes. The Company and the Bank hereby, jointly and |
severally, agree
to pay a commission of [AMOUNT]% of the aggregate principal amount of the Notes to the Underwriters, in consideration of the Underwriters
agreeing severally, and not jointly, to purchase the Notes from the Company subject to, and in accordance with, the terms and conditions
set forth in this Agreement. The Bank and the Company each agree that such commission will be divided pro rata among each of the
Underwriters in proportion to the aggregate principal amount of Notes set forth opposite each Underwriter’s name on Schedule
I hereto. The foregoing aggregate fees in an amount of $[AMOUNT] will be payable on the Closing Date concurrently with the settlement
of the Notes or such other date as may be agreed by the Bank and the Underwriters, by wire transfer of immediately available funds
to an account identified in writing by [DATE].
| (b) | The Underwriters are not authorized to give any information or to make any representation in connection
with the offering or sale of the Notes other than such information or representations consistent with the Time of Sale Prospectus
and the Prospectus or otherwise approved in writing by the Bank. |
| 3. | Delivery and Payment. The global certificates for the Notes to be purchased by the Underwriters
hereunder shall be delivered by or on behalf of (and at the expense of) the Company to or upon the order of [SETTLEMENT BANK] for
the accounts of the several Underwriters against payment by the Underwriters of the purchase price therefor by wire transfer of
immediately available funds, payable to or upon the order of the Company, at [LOCATION] at [TIME] London time, on [DATE], or such
later date (not later than ten business days thereafter) as the Underwriters shall designate, which date and time may be postponed
by agreement among the Underwriters, the Company and the Bank (such date and time of delivery and payment for the Notes being herein
called the “Closing Date”). Payment for the Notes shall be made against delivery to the Underwriters of the
Notes registered in such names and in such denominations as you shall request in writing not later than two full business days
prior to the date of delivery, with any transfer taxes payable in connection with the transfer of the Notes to you duly paid by
the Company or the Bank. The Company agrees that delivery of the Notes will be made on the Closing Date through the book-entry
facilities of The Depository Trust Company (the “Depositary”). Upon issuance, all Notes will be represented
by one or more global securities registered in the name of a nominee of the Depositary. |
| 4. | Covenants and Agreements. The Company and the Bank agree with each Underwriter that: |
| (a) | The Company and the Bank shall prepare and furnish to each Underwriter, without charge, a conformed
copy of the Registration Statement (including exhibits thereto and documents incorporated by reference therein) in a form approved
by the Underwriters, and will promptly furnish the Underwriters during the period mentioned in Section 4(d) or 4(e) below with
copies of the Time of Sale Prospectus, the Prospectus, any documents incorporated by reference therein and any supplements and
amendments thereto or to the Registration Statement, in such quantities as the Underwriters may from time to time reasonably request,
and |
will not publish
any amendment or supplement to the Registration Statement, the Time of Sale Prospectus or the Prospectus unless they have furnished
a copy to the Underwriters for review and, except as required by law, will not publish any such proposed amendment or supplement
to which the Underwriters reasonably object. If at any time prior to completion of the distribution of the Notes (as determined
by the Underwriters) any event occurs as a result of which the Registration Statement, the Time of Sale Prospectus or the Prospectus
as then amended or supplemented would contain any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company
or the Bank will promptly so notify the Underwriters and will prepare and furnish to the Underwriters, subject to prior review
as provided above, a reasonable number of copies of an amendment or supplement to the Registration Statement, the Time of Sale
Prospectus or the Prospectus which will correct such statement or omission.
| (b) | Each of the Company and the Bank shall furnish to each Underwriter a copy of each proposed free
writing prospectus to be prepared by or on behalf of, used by, or referred to by the Company or the Bank and not to use or refer
to any proposed free writing prospectus to which you reasonably object. |
| (c) | Except as otherwise contemplated pursuant to this Agreement, each of the Company and the Bank shall
not take any action that would result in an Underwriter, the Company or the Bank being required to file with the Commission pursuant
to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter
otherwise would not have been required to file thereunder. |
| (d) | If the Time of Sale Prospectus is being used to solicit offers to buy the Notes at a time when
the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements therein, in the light of the
circumstances, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus
conflicts with the information contained in the Registration Statement then on file, or if, in the opinion of counsel for the Underwriters,
it is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to any dealer upon request, either amendments or supplements
to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Time of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that
the Time of Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration Statement, or so that the
Time of Sale Prospectus, as amended or supplemented, will comply with applicable law. |
| (e) | If, during such period after the first date of the public offering of the Notes as in the opinion
of counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act)
is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist
as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light
of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered
to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish to the Company or the Bank) to which Notes may have
been sold by you on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus
(or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with applicable law. |
| (f) | Each of the Company and the Bank shall endeavor to qualify the Notes for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Underwriters shall reasonably request. |
| (g) | Each of the Company and the Bank shall make generally available to the Bank’s security holders
and to the Underwriters as soon as practicable an earnings statement covering a period of at least twelve months after the effective
date of the Registration Statement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder. |
| (h) | If the third anniversary of the initial effective date of the Registration Statement occurs before
all the Notes have been sold by the Underwriters, prior to the third anniversary each of the Company and the Bank shall file a
new shelf registration statement and take any other action necessary to permit the public offering of the Notes to continue without
interruption; references herein to the Registration Statement shall include the new registration statement declared effective by
the Commission. |
| (i) | Each of the Company and the Bank shall prepare a final term sheet relating to the offering of the
Notes, containing only information that describes the final terms of the Notes or the offering in a form consented to by the Underwriters,
and to file such final term sheet within the period required by Rule 433(d)(5)(ii) under the Securities Act following the date
the final terms have been established for the offering of the Notes. |
| (j) | The Bank will use its reasonable efforts, and shall cause the Company to use its reasonable efforts,
to effect, on or as soon as practicable after the Closing Date, |
and in no event
more than 45 days following the Closing Date, the authorization of the Notes for listing on the New York Stock Exchange, Inc. (the
“NYSE”), subject only to official notice of issuance. For so long as any of the Notes are outstanding, each
of the Bank and the Company will use its commercially reasonable efforts to maintain the listing of the Notes, and will prepare,
submit, furnish and publish (as appropriate) all such documents, instruments, information, advertisements and undertakings as may
be necessary or advisable for such purposes.
| (k) | The Bank will use its best efforts, and shall cause the Company to use its best efforts, to ensure
that the Notes qualify as debt instruments (instrumentos de deuda) under Law 10/2014. |
| (l) | The Bank will use its best efforts, and shall cause the Company to use its best efforts, to ensure
that the public deed in respect of the Notes and disbursement minutes in respect of the Notes, if required, are registered in the
Mercantile Registry of Madrid within one month of the Closing Date. |
| (m) | The Bank will use its best efforts, and shall cause the Company to use its best efforts, to permit
the Notes to be eligible for clearance and settlement through the Depositary. |
| (n) | From the date hereof and continuing to and including the Closing Date, the Bank will not, and shall
ensure that the Company does not, without the Underwriters’ prior written consent (which consent shall not be unreasonably
withheld), offer, sell, contract to sell or otherwise dispose of in the United States any material amount of dollar-denominated
debt securities issued or guaranteed by the Bank which both mature more than one year after such Closing Date and which are substantially
similar to the Notes and the Guarantees, except for the Bank’s customary deposit-raising activities. |
| (o) | The Bank agrees that for as long as the Notes are outstanding it will maintain 100% ownership of
the share capital of the Company, directly or indirectly. |
| (p) | The Company confirms that this Agreement has been executed and delivered in the name of the Company
by a signatory authorized by the Board of Directors of the Company and agrees that the Notes will be executed and delivered in
the name of the Company, manually or via facsimile, by a signatory authorized by the Board of Directors of the Company. |
| (q) | The Bank confirms that this Agreement has been executed and delivered in the name of the Bank and
agrees that the Guarantees will be executed and delivered in the name of the Bank, manually or via facsimile, by a signatory authorized
by the Board of Directors or the Executive Committee of the Bank. |
| (r) | If the Company or the Bank maintains a paying agent in respect of the Notes or the related Guarantees
in a European Union member state, it will ensure that it maintains a paying agent in a European Union member state that will not
be |
obliged to withhold
or deduct tax pursuant to the European Union Directive 2003/48/EC or any directive amending, supplementing or replacing such directive
(each, a “Directive”) or any law implementing or complying with, or introduced in order to conform to, such
Directive or Directives.
| (s) | The Company will, so long as the Notes are outstanding, permanently deposit the proceeds of the
issuance of the Notes, net of management and issuance costs, with the Bank or a company of its consolidated group, which may use
the proceeds for the general corporate purposes of the group. |
| 5. | Conditions to the Obligations of the Underwriters. The obligation of the several Underwriters
to purchase and pay for the Notes they have agreed to purchase hereunder on the Closing Date is subject to the accuracy of the
representations and warranties of the Company and the Bank contained herein as of the date of this Agreement, at [__:00 P./A.M.],
New York City time, on [INSERT DATE] or such other time as agreed by the Bank and the Representatives (the “Time of Sale”)
and the Closing Date, to the accuracy of the statements of the Company and the Bank made in any certificates pursuant to the provisions
hereof delivered prior to or concurrently with such purchase, to the performance by the Company and the Bank of their obligations
hereunder, and to the following further conditions: |
| (a) | Each of the Underwriters, [COUNSEL], U.S. counsel for the Company and the Bank, and [COUNSEL],
U.S. counsel for the Underwriters, have completed their respective diligence investigations in accordance with procedures customary
for a transaction such as the offering of the Notes and the Guarantees pursuant to the terms and conditions of this Agreement. |
| (b) | At the Closing Date, (i) since the date of the latest balance sheet included in the Time of Sale
Prospectus and the Prospectus, there shall not have been any material adverse change (other than as set forth in or contemplated
in the Time of Sale Prospectus or the Prospectus) in the financial condition or in the earnings, affairs or business prospects
of the Bank and its subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business; (ii)
each of the Company and the Bank shall have complied with all agreements and satisfied all conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date; and (iii) the representations and warranties of the Company and the Bank
set forth in Section 1 shall be accurate in all material respects as though expressly made at and as of the Closing Date. At the
Closing Date, the Underwriters shall have received a certificate, dated as of the Closing Date, from each of the Bank and of the
Company signed by the principal financial or accounting officer of the Bank and a director of the Company, respectively, certifying,
with respect to the Bank, the matters set forth in (i), (ii) and (iii) of this Section 5(b) and, with respect to the Company, the
matters set forth in (ii) and (iii) of this Section 5(b). |
| (c) | At the Closing Date, the Underwriters shall have received a signed opinion, dated as of the Closing
Date, of [COUNSEL], Spanish counsel to the Company and the Bank, substantially in the form set forth in Exhibit A. |
| (d) | At the Closing Date, the Underwriters shall have received a signed opinion, dated as of the Closing
Date, of [COUNSEL], U.S. counsel to the Company and the Bank, substantially in the form set forth in Exhibit B. |
| (e) | At the Closing Date, the Underwriters shall have received a signed opinion, dated as of the Closing
Date, of [COUNSEL], Spanish counsel to the Underwriters, substantially in the form set forth in Exhibit C. |
| (f) | At the Closing Date, the Underwriters shall have received a signed opinion, dated as of the Closing
Date, of [COUNSEL], U.S. counsel to the Underwriters, as to such matters as the Underwriters may reasonably request. |
| (g) | On the date hereof, the Underwriters shall have received from [AUDITOR] a letter dated such date,
to the effect that (i) they are independent accountants with respect to the Bank and its subsidiaries within the meaning of the
Securities Act; (ii) it is their opinion that the Financial Statements included or incorporated by reference in the Time of Sale
Prospectus and the Prospectus and covered by their opinions therein comply as to form in all material respects, except as stated
in such report, with the applicable accounting requirements of the Securities Act for foreign private issuers; (iii) nothing has
come to their attention that any Financial Statements included or incorporated by reference in the Time of Sale Prospectus and
the Prospectus and not covered by their opinions do not comply as to form in all material respects with the accounting requirements
of the Securities Act for foreign private issuers; (iv) based upon limited procedures set forth in detail in such letter, nothing
has come to their attention which causes them to believe that at a specified date not more than three business days prior to the
date of such letter, there was any decrease in the capital stock, any increase in long-term debt or any decreases in consolidated
net current assets or shareholders’ equity as compared with the amounts shown in the most recent consolidated balance sheet
included or incorporated by reference in the Time of Sale Prospectus and the Prospectus, or during the period from the date of
such balance sheet to a specified date not more than three days prior to the date of such letter, there were any decreases, as
compared with the corresponding period in the preceding year, in consolidated net income or consolidated net income of the Bank
and its subsidiaries, except in all cases for changes, increases or decreases which the Time of Sale Prospectus and the Prospectus
disclose have occurred or may occur; and (v) in addition to the examination referred to in their opinions and the limited procedures
referred to in clause (iv) above, they have carried out certain specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information which are included in the Time of Sale Prospectus and the Prospectus and
which are specified by the Underwriters, and have found such amounts, percentages and financial information to be in agreement
with the relevant accounting, financial and other records of the Bank and its subsidiaries |
identified in
such letter. At the Closing Date, the Underwriters shall have received a letter from [AUDITOR], dated as of the Closing Date, confirming
the information given in their letter dated the date of the Time of Sale Prospectus and the Prospectus.
| (h) | At the Closing Date, U.S. counsel [and Spanish counsel] to the Bank and the Company, and U.S. counsel
and Spanish counsel for the Underwriters, shall have been furnished with all such documents, certificates, resolutions and opinions
as each may reasonably request for the purpose of enabling them to pass upon the issuance and sale of the Notes and the Guarantees
as contemplated in this Agreement and the matters referred to in the opinions required by Sections 5(d), (e) and (f), and in order
to evidence the performance of any of the covenants of the Company and the Bank, or the fulfillment of any of the conditions herein
contained. |
If any of the conditions specified in this
Section 5 shall not have been fulfilled when and as required by this Agreement to be fulfilled, this Agreement may be terminated
by the Underwriters on notice to the Company and the Bank at any time at or prior to the Closing Date, as the case may be, and
such termination shall be without liability of any party to any other party except as provided in Section 6 herein. Notwithstanding
any such termination, the provisions of Sections 7, 8, 9, 13 and 14 herein shall remain in effect.
| (a) | [The Bank will, except as set forth in subsection (b) below, pay and bear all, or cause the Company
to pay or bear all, costs and expenses incident to the performance of the Company’s and the Bank’s obligations under
this Agreement, including (i) the preparation and filing of the Registration Statement, any preliminary prospectus, the Time of
Sale Prospectus, the Prospectus, any free writing prospectus prepared by or on behalf of, or used by or referred to by the Company
or the Bank, and any amendments or supplements to any of the foregoing, including the filing fees payable to the Commission relating
to the Notes (within the time required by Rule 456(b)(1), if applicable), (ii) the preparation and distribution of this Agreement
and the Indenture, (iii) the preparation and delivery of the Notes and the Guarantees, (iv) the fees and disbursements of the counsel
and accountants for the Bank and the Company, (v) the costs and charges of the Trustee incurred in connection with the transactions
contemplated in this Agreement, and (vi) all initial and on-going expenses and listing fees in connection with the listing of the
Notes on the NYSE. |
| (b) | Notwithstanding subsection (a) above, each Underwriter, individually and not jointly, agrees to
pay severally in proportion to the aggregate principal amount of the Notes set forth opposite their respective names in Schedule
I hereto (i) the fees and disbursements of U.S. and Spanish counsels to the Underwriters, and (ii) an amount of the expenses referenced
in subclause (a) above up to an aggregate amount equal to [AMOUNT]. For the avoidance of doubt, no Underwriter will be liable for
any initial or on-going expenses after payment has been made in |
accordance with
this Section 6 and each amount identified in this Section 6(b) (i) and (ii) above will be divided pro rata in proportion to the
aggregate principal amount of the Notes set forth opposite the respective names of each Underwriter.]
| (a) | Each of the Company and the Bank jointly and severally agrees to indemnify and hold harmless each
Underwriter and its directors, officers and employees, and each person, if any, who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act and each affiliate of any Underwriter within the meaning
of Rule 405 under the Securities Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, arising out of an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement
or any amendment thereto, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus (or any amendment or supplement
to the Time of Sale Prospectus or the Prospectus) or any Supplemental Offering Materials, or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced
or threatened, or of any claim whatsoever, based upon any such untrue statement or omission, or any such alleged untrue statement
or omission, if such settlement is effected with the written consent of the Bank, which consent shall not be unreasonably withheld;
and (iii) against any and all expense whatsoever, as incurred (including fees and disbursements of counsel chosen by the Underwriters),
reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is not paid under clause (i) or (ii) above; provided,
however, that this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information furnished
in writing to the Company or the Bank by the Underwriters expressly for use in the Time of Sale Prospectus or the Prospectus (or
any amendment or supplement to the Time of Sale Prospectus or the Prospectus) or any Supplemental Offering Materials. |
| (b) | Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company
and the Bank, and each person, if any, who controls the Company or the Bank, within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, against any and all loss, liability, claim, damage and expense described in the indemnity
contained in Section 7(a), as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Time of Sale Prospectus and the Prospectus (or any |
amendment or
supplement to the Time of Sale Prospectus and the Prospectus) or any Supplemental Offering Materials, in each case in reliance
upon and in conformity with information furnished in writing to the Company or the Bank by the Underwriters through the Representatives
expressly for use in the Time of Sale Prospectus and the Prospectus (or any amendment or supplement to the Time of Sale Prospectus
and the Prospectus) or any Supplemental Offering Materials.
| (c) | Each indemnified party shall give prompt notice to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve
it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate
at its own expense in the defense of such action. In no event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or circumstances. |
| 8. | Contribution. In order to provide for just and equitable contribution in circumstances under
which the indemnity provided for in Section 7 is for any reason held to be unenforceable by the indemnified parties although applicable
in accordance with its terms, the Company and the Bank, on the one hand, and the Underwriters, on the other hand, shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity incurred by the
Company, the Bank and the Underwriters, as incurred, in such proportions that (a) the Underwriters are responsible for that portion
represented by the percentage that the total discounts and commissions received by the Underwriters bears to the aggregate offering
price of the Notes and (b) the Company and the Bank jointly and severally are responsible for the balance; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person,
if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall
have the same rights to contribution as an Underwriter, and each director of the Company or the Bank and each person, if any, who
controls the Company or the Bank within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall
have the same rights to contribution as the Company and the Bank. The Underwriters’ respective obligations to contribute
pursuant to this Section 8 are several in proportion to the aggregate principal amount of the Notes set forth opposite their respective
names in Schedule I hereto and not joint. |
| 9. | Representations and Indemnities to Survive. The representations, warranties, indemnities,
agreements and other statements of the Underwriters, the Company and the Bank and their officers set forth in or made pursuant
to this Agreement will remain operative and in full force and effect regardless of any investigation made by or on behalf of the
Company, the Bank or the Underwriters or controlling persons and will survive delivery of and payment for the Notes. |
| 10. | Termination of Agreement. |
| (a) | The Underwriters may terminate this Agreement, by notice to the Company and the Bank, at any time
at or prior to the Closing Date (i) if there has been, since the date hereof, any material adverse change (otherwise than as set
forth in or contemplated by the Time of Sale Prospectus or the Prospectus) in the financial condition or in the earnings, business
affairs or business prospects of the Company or the Bank and its subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business, or (ii) if, since the execution and delivery of this Agreement (A) there has occurred any outbreak
or escalation of hostilities or other calamity or crisis, including, without limitation, an act of terrorism, the effect of which
on the financial markets of the United States are such as to make it, in the judgment of the Underwriters, impracticable or inadvisable
to market the Notes or (B) trading in any securities of the Company or the Bank has been suspended by the Commission, the Spanish
Stock Exchanges (Comisión Nacional del Mercado de Valores) or the NYSE, or if trading generally on the NYSE or in
the over-the-counter market has been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required by such exchange or by order of the Commission, or any other governmental authority, or
(C) a banking moratorium has been declared by Spanish, U.S. or New York authorities, or (D) there has occurred any change or any
development involving a prospective change in national or international political, financial or economic conditions or exchange
controls which, in the judgment of the Underwriters, is likely to have a material adverse effect on the market for the Notes, or
(E) any rating of the Bank’s debt securities shall have been lowered by Moody’s Investors Service Inc., Fitch Ratings
Ltd. or Standard & Poor’s Ratings Services, a division of The McGraw-Hill Company, Inc., or any of such rating agencies
have publicly announced it has under surveillance or review with possible negative implications any rating of the Bank’s
debt securities (provided, however, that this clause (E) shall not apply if a lowering of any such rating or any such public announcement
occurs as a result of the lowering of any rating by any such rating agency of obligations of The Kingdom of Spain or as a result
of a public announcement by any such rating agency that it has under surveillance or review with possible negative implications
obligations of The Kingdom of Spain), or (F) there has occurred a material disruption in commercial banking or securities settlement
or clearance services in the United States or with respect to the Depositary. The Underwriters agree that they will notify the
Company and the Bank of the occurrence of any event described in clause (A) through (F) as soon as they shall become aware of such
occurrence. |
| (b) | If this Agreement is terminated pursuant to this Section, such termination shall be without liability
of any party to any other party, except to the extent provided in Section 6. Notwithstanding any such termination, the provisions
of Sections 6, 7, 8, 9, 13 and 14 shall remain in effect. |
| 11. | Notices. All notices and other communications under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered, mailed or transmitted by any |
standard form
of telecommunication. Notices to the Underwriters shall be directed to the Underwriters at the following addresses:
[Name of Underwriter]
[address]
Attention:
Fax: .
Notices to the Company and the Bank shall be directed
to them at:
Grupo Santander, S.A.
Ciudad Grupo Santander
Avda. Cantabria s/n
Edificio Amazonia, planta 0
28660 Boadilla del Monte
Madrid
Spain
Attention: División Financiera
Fax: +34 91 257 0118.
| 12. | Parties. This Agreement is made solely for the benefit of the Underwriters, the Company
and the Bank and, to the extent expressed, any person controlling the Company, the Bank or the Underwriters, and their respective
executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this
Agreement. The term “successors and assigns” shall not include any purchaser, as such purchaser, from the Underwriters
of the Notes. |
| 13. | Submission to Jurisdiction. Each of the Company and the Bank irrevocably agrees that any
suit, action or proceeding against the Company or the Bank brought by the Underwriters or by any person who controls the Underwriters,
arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any state or federal court
in the Borough of Manhattan, The City of New York, New York, and, to the extent permitted by law, irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and irrevocably submits to the
nonexclusive jurisdiction of such courts in any such suit, action or proceeding. The Company and the Bank will each irrevocably
appoint Banco Santander, S.A., New York Branch as its Authorized Agent (the “Authorized Agent”) upon whom process
may be served in any such suit, action or proceeding arising out of or based on this Agreement or the transactions contemplated
hereby which may be instituted in any state or federal court in the Borough of Manhattan, The City of New York, New York, by the
Underwriters or by any person who controls the Underwriters, and the Company and the Bank each expressly consents to the jurisdiction
of any such court in respect of any such suit, action or proceeding, and waives any other requirements of or objections to personal
jurisdiction with respect thereto. The Company and the Bank each represents and warrants that the Authorized Agent has agreed to
act as said agent for service of process, and the Company and the Bank each agrees to take any and all action, including the filing
of any and all documents and instruments, that may be necessary to |
continue such
appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service
to the Company or the Bank, as the case may be, shall be deemed, in every respect, effective service of process upon the Company
or the Bank. Notwithstanding the foregoing, any suit, action or proceeding based on this Agreement may be instituted by an Underwriter
in any competent court in The Kingdom of Spain.
| 14. | Judgment Currency. Each of the Company and the Bank agrees to indemnify each of the Underwriters
against any loss incurred by the Underwriters as a result of any judgment or order being given or made for any amount due hereunder
and such judgment or order being expressed and paid in a currency (the “Judgment Currency”) other than U.S.
dollars and as a result of any variation as between (i) the rate of exchange at which the U.S. dollar amount is converted into
the Judgment Currency for the purpose of such judgment or order and (ii) the rate of exchange at which each Underwriter is able
to purchase U.S. dollars with the amount of the Judgment Currency actually received by each Underwriter. The foregoing indemnity
shall constitute a separate and independent obligation of each Underwriter and shall continue in full force and effect notwithstanding
any such judgment or order as aforesaid. The parties hereto agree that, to the fullest extent permitted by law, the “rate
of exchange” used shall be the rate at which, in accordance with normal banking procedures, each Underwriter could purchase
such Judgment Currency in The City of New York on the business day preceding that on which final judgment is given. The term “rate
of exchange” shall include any premiums and costs of exchange payable in connection with the purchase of, or conversion into,
the relevant currency. |
| 15. | Default by One of the Underwriters. |
| (a) | If one of the Underwriters shall fail at the Closing Date to purchase the Notes that it is obliged
to purchase pursuant to this Agreement (the “Defaulted Notes”), the Company and the Bank will have the option
to either (i) reduce the size of the offering by the number of Defaulted Notes, (ii) proceed with the full offering, a portion
of which will not be underwritten or (iii) terminate this Agreement and withdraw the offering of the Notes, without any liability
on the part of the Company or the Bank. |
| (b) | No action taken pursuant to this Section shall relieve any defaulting Underwriters from liability
in respect of its default. Any defaulting Underwriters shall be liable to any non-defaulting Underwriter which purchases such Defaulted
Notes for any losses or damages incurred as a result of such purchase. |
| (c) | In the event of any such default not involving termination of this Agreement, the remaining Underwriters,
the Bank or the Company shall have the right to postpone the Closing Date for a period not exceeding seven days in order to effect
any required changes in the Prospectus or in any other documents or arrangements. |
| 16. | Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. |
| 17. | Counterparts. This Agreement may be executed in one or more counterparts and, when a counterpart
has been executed by each party, all such counterparts taken together shall constitute one and the same agreement. |
| 18. | Entire Agreement; Amendment. This Agreement supersedes all prior agreements and undertakings,
both written and oral, of the parties hereto, or any of them, with respect to the subject matter hereof and constitute the entire
understanding of the parties hereto with respect to the subject matter hereof. This Agreement may not be waived, amended or modified
except in writing signed by each party to be bound hereby. |
If the foregoing is in accordance with
the Underwriters’ understanding of our agreement, please sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among the Company, the Bank and the Underwriters in accordance with its terms.
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Very truly yours, |
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SANTANDER ISSUANCES, S.A. UNIPERSONAL |
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BANCO SANTANDER, S.A. |
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[The rest of this page is intentionally
left blank]
The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above.
[NAME OF UNDERWRITER]
SCHEDULE I
|
Name
of Underwriter |
Principal
Amount of
Notes |
| [UNDERWRITER] |
$[AMOUNT] |
| Total |
$[AMOUNT] |
EXHIBIT A
FORM OF OPINION OF [COUNSEL]
EXHIBIT B
FORM OF OPINION OF [COUNSEL]
EXHIBIT C
FORM OF OPINION OF [COUNSEL]
EXHIBIT D
$[]
Subordinated Notes
Final Terms And Conditions
| Issuer: |
Santander Issuances, S.A. Unipersonal |
| Guarantor: |
Banco Santander, S.A. |
| Expected ratings: |
|
| Principal amount: |
$ |
| Note type: |
Subordinated Notes |
| Form of issuance: |
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| Issue price: |
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| Minimum purchase amount: |
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| Denomination and currency: |
Denominations of $ |
| Trade date: |
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| Settlement date: |
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| Maturity date: |
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| Redemption price: |
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| Benchmark treasury: |
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| Spread to benchmark: |
T+ bps |
| Re-offer yield: |
% |
| Treasury strike: |
% |
| Coupon: |
% |
| Interest payment dates: |
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| Redemption for Regulatory Reasons: |
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| Redemption for Tax Reasons: |
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| Statutory Loss Absorption / Bail-In: |
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| Clearing: |
DTC |
| Day count fraction: |
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| Business days: |
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| Calculation agent: |
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Call / Issuer Redemption Provisions:
[Tax call:]
[Make-whole call:]
[Listing call:]
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| Put / Investor Redemption Provisions: |
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| Listing: |
[Application will be made to list on the New York Stock Exchange] |
| Governing Law: |
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| ISIN / CUSIP: |
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| Underwriters [Dealer]: |
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| Commitment to purchase: |
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This material is confidential and is for
your information only and is not intended to be used by anyone other than you. This information does not purport to be a complete
description of the securities offered hereby (the “Notes”) or the offering.
The information in this term sheet supplements
the Issuer’s preliminary prospectus, dated [DATE] (the “Preliminary Prospectus”), and supersedes the information
in the Preliminary Prospectus to the extent inconsistent with the information in the Preliminary Prospectus. Except as aforesaid,
this term sheet is qualified in its entirety by reference to the Preliminary Prospectus. You may obtain a copy of the Preliminary
Prospectus and the Prospectus (when available) for this transaction by calling [UNDERWRITER] at [NUMBER].
EXHIBIT E
[This Exhibit E Intentionally Left Blank]
Exhibit
1.3
FORM OF UNDERWRITING
AGREEMENT
BANCO SANTANDER,
S.A.
Contingent Convertible Capital Securities
[DATE]
[UNDERWRITERS]
as Representatives
of the several Underwriters
named in
Schedule I hereto
Ladies and
Gentlemen:
Banco
Santander, S.A., a sociedad anónima incorporated under the laws of The Kingdom of Spain (the “Bank”), proposes
to issue and sell to the several underwriters named in Schedule I hereto (the “Underwriters”), acting severally and
not jointly, for whom you are acting as representatives (the “Representatives”), the respective amounts set forth
in Schedule I hereto of the Bank’s contingent convertible capital securities (the “Contingent Capital Securities”)
convertible in accordance with their terms into the ordinary shares of the Bank (the “Conversion Securities”) specified
in Exhibit D hereto to be issued pursuant to the resolutions of the Bank's general shareholders’ meeting and board of directors
approving the issuance of the Contingent Capital Securities and the Conversion Securities (the Contingent Capital Securities and
the Conversion Securities together, the “Securities”) and the contingent convertible capital securities indenture
dated as of [DATE] (the “Base Indenture”) between the Bank and The Bank of New York Mellon, as trustee (the “Trustee”)
as supplemented, with respect to the Contingent Capital Securities, by a supplemental indenture to be dated on or about [DATE],
which together with the Base Indenture sets out the terms and rights of this particular issue of Contingent Capital Securities
(the “[NUMBER] Supplemental Indenture”; and the Base Indenture as supplemented, with respect to the Contingent Capital
Securities, by the [NUMBER] Supplemental Indenture, and as further supplemented from time to time, the “Indenture”).
The
Bank has filed with the Securities and Exchange Commission (the “Commission”) a registration statement, including
a prospectus, (file number 333-[NUMBER]), on Form F-3 relating to securities (the “Shelf Securities”), including the
Contingent Capital Securities and the Conversion Securities, to be issued from time to time by the Bank. The registration statement
as amended to the date of this Agreement, including the information (if any) deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A or Rule 430B under the Securities Act of 1933, as amended (the “Securities
Act”), is hereinafter referred to as the “Registration Statement,” and the related prospectus covering the Shelf
Securities dated
[DATE] in
the form first used to confirm sales of the Contingent Capital Securities (or in the form first made available to the Underwriters
by the Bank to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “Base
Prospectus.” The Base Prospectus, as supplemented by the prospectus supplement specifically relating to the Contingent Capital
Securities in the form first used to confirm sales of the Contingent Capital Securities (or in the form first made available to
the Underwriters by the Bank to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred
to as the “Prospectus,” and the term “preliminary prospectus” means any preliminary form of the Prospectus.
For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under the Securities
Act, “Time of Sale Prospectus” means the Base Prospectus as supplemented by the preliminary prospectus, together with
the free writing prospectuses, if any, each identified in Exhibit E hereto, and intended for general distribution to prospective
investors, and “road show” means a “bona fide electronic road show”, including any Bloomberg road show
presentation, as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction to any person.
As used herein, the terms “Registration Statement,” “Base Prospectus,” “preliminary prospectus,”
“Time of Sale Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference
therein. The terms “supplement,” “amendment,” and “amend” as used herein with respect to the
Registration Statement, the Base Prospectus, the Time of Sale Prospectus, any preliminary prospectus or free writing prospectus
shall include all documents subsequently filed by the Bank with the Commission pursuant to the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), that are deemed to be incorporated by reference therein.
| 1. | Representations
and Warranties. The Bank represents and warrants to, and agrees with, each of the
Underwriters that as of the date hereof: |
| (a) | The
Registration Statement has become effective; no stop order suspending the effectiveness
of the Registration Statement is in effect, and no proceedings for such purpose are pending
before or threatened by the Commission. The Bank is a well-known seasoned issuer (as
defined in Rule 405 under the Securities Act) eligible to use the Registration Statement
as an “automatic shelf registration statement” (as defined in Rule 405 under
the Securities Act) and the Bank has not received notice that the Commission objects
to the use of the Registration Statement as an automatic shelf registration statement. |
| (b) | Each
document, if any, filed or to be filed pursuant to the Exchange Act and incorporated
by reference in the Time of Sale Prospectus or the Prospectus complied or will comply
when so filed in all material respects with the Securities Act, the Exchange Act and the
applicable rules and regulations of the Commission thereunder, (i) each part of
the Registration Statement, when such part became effective, did not contain, and each
such part, as amended or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) the Registration Statement
as of the date hereof does not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) the Registration Statement and the Prospectus comply,
and as |
amended
or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder, (iv) the Time of Sale Prospectus does not, and at the time of each sale of the Contingent Capital
Securities in connection with the offering when the Prospectus is not yet available to prospective purchasers and at the Closing
Date (as defined in Section 3 below), the Time of Sale Prospectus, as then amended or supplemented by the Bank, if applicable,
will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, (v) each broadly available road show, if any, when
considered together with the Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading
and (vi) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not
apply to (a) statements or omissions in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information
relating to any Underwriter furnished to the Bank in writing by such Underwriter through the Representatives expressly for use
therein or (b) that part of the Registration Statement that constitutes the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”), of the Trustee.
| (c) | The
Bank is not an “ineligible issuer” in connection with the offering pursuant
to Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus that
the Bank is required to file pursuant to Rule 433(d) under the Securities Act has been,
or will be, filed with the Commission in accordance with the requirements of the Securities
Act and the applicable rules and regulations of the Commission thereunder. Each free
writing prospectus that the Bank has filed, or is required to file, pursuant to Rule
433(d) under the Securities Act or that was prepared by or on behalf of or used or referred
to by the Bank complies or will comply in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the Commission thereunder.
Except for the free writing prospectuses, if any, identified in Exhibit E hereto, and
electronic road shows, if any, each furnished to the Underwriters before first use, the
Bank has not prepared, used or referred to, and will not, without the Underwriters’
prior consent, prepare, use or refer to, any free writing prospectus. |
| (d) | The
Bank has been duly incorporated and is validly existing as a limited liability corporation
(sociedad anónima) in good standing under the laws of The Kingdom of Spain. |
| (e) | This
Agreement has been duly authorized, executed and delivered by the Bank. |
| (f) | On or prior to the Closing Date, the
Indenture will have been duly qualified under the Trust Indenture
Act, will have been duly authorized by the Bank and will constitute a valid and legally binding
agreement of the Bank, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally or by general equity principles. |
| (g) | On or prior to the Closing Date, the
Contingent Capital Securities will be duly authorized
and established in conformity with the provisions of the Indenture, and when executed
and authenticated in accordance with the provisions of the Indenture and delivered to
and paid for by the Underwriters in accordance with the terms of this Agreement, will
be entitled to the benefits of the Indenture, and, when registered with the Mercantile
Registry of Madrid will constitute valid and legally binding obligations of the Bank
enforceable against the Bank in accordance with their terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally or by general equity principles; the Contingent Capital Securities will
be consistent with the descriptions thereof contained in the Time of Sale Prospectus
and the Prospectus, and such descriptions will conform to the rights set forth in the
instruments defining the same. |
| (h) | The
Bank had, at the date indicated, the duly authorized, issued and outstanding share capital
as set forth in the condensed consolidated statement of changes in shareholders’
equity included or incorporated by reference in the Time of Sale Prospectus and the Prospectus;
all of the issued share capital of the Bank has been duly authorized and validly issued
and is fully paid and non-assessable. |
| (i) | The execution and
delivery of this Agreement and the Indenture, the issuance, delivery and sale of
the
Contingent Capital Securities, and the compliance by the Bank with the respective
terms thereof, and the performance of this Agreement and compliance by the Bank
with the
terms of this Agreement, the Indenture and the terms of the Contingent Capital
Securities (except as provided in paragraph (j) below with respect to the Conversion Securities) have been duly authorized by
all
necessary
corporate
action on the
part of the Bank, and, consummation of the transactions contemplated hereby and thereby,
did not or, if applicable, will not result in any violation of the memorandum and articles
of association (or similar constitutive documents) of the Bank and do not and will not
conflict with, or breach, any of the terms or provisions of, or constitute a default
under, (A) any rules of any stock exchange on which the ordinary shares are listed, (B)
any indenture, mortgage, loan agreement, note, lease or other agreement or instrument
to which the Bank is a party or by which it may be bound or to which any of its properties
may be subject or (C) any existing applicable law, rule, regulation, judgment, order
or decree of any governmental instrumentality or court having jurisdiction over the Bank
or any of its properties (except, in either case, for such conflicts, breaches or defaults
that would not have a material adverse effect on the financial condition of the Bank
and its |
subsidiaries
considered as one enterprise, or on the earnings or business affairs of the Bank and its subsidiaries, considered as one enterprise).
| (j) | When issued upon the
conversion of the Contingent Capital Securities in accordance with the terms of the Indenture, the Conversion Securities will
be duly and validly authorized, and, when issued, will have been duly issued by the Bank in accordance with applicable laws and
regulations, will rank pari passu and carry the same rights and privileges in all respects as the other ordinary shares then outstanding,
will be fully paid and non-assessable, will be free and clear of all liens, charges, encumbrances, security interests or claims
of third parties and will not be subject to any calls for further funds or preemptive rights. In addition, the issuance of the
Conversion Securities upon the conversion of the Contingent Capital Securities, if applicable, will require: (i) the formalisation
of the capital increase by means of a public deed of issuance of the Conversion Securities granted before a Spanish notary public,
the filing thereof together with the relevant tax form relating to the transfer tax (Impuesto de Transmisiones Patrimoniales
y Actos Jurídicos Documentados) by the Bank with the competent Spanish tax authorities and the registration of such
public deed with the Mercantile Registry of Cantabria, (ii) the registration of the Conversion Securities with the Sociedad
de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.U., (iii) the positive
verification of the listing of the Conversion Securities on the Spanish Stock Exchanges by the Spanish Securities and Exchange
Commission (Comisión Nacional del Mercado de Valores) (“CNMV”), (iv) the approval of the listing
of the new shares by the managing entities (Sociedades Rectoras) of each of the Spanish Stock Exchanges where the Bank’s
shares are listed, and (v) the approval of the admission of the Conversion Securities to trading on the Spanish Automated Quotation
System - Continuous Market (Sistema de Interconexión Bursátil- Mercado Continuo) by the CNMV. |
| (k) | No consent, approval,
authorization or order of any governmental instrumentality or court is required for the consummation by the Bank of the transactions
contemplated hereby, except (a) such as may be required by the securities or Blue Sky laws of the various states of the United
States in connection with the offer and sale of the Contingent Capital Securities, (b) such approvals as have been obtained, (c)
the publication of an announcement in the official bulletin of the Mercantile Registry (Boletín Oficial del Registro Mercantil)
and the registration of the public deed of issuance (escritura pública de emisión) with the Mercantile Registry
of Cantabria and (d) as provided in paragraph (j) above in relation to the Conversion Securities. Within the term set out in Regulation
4/2012, of April 25, of the Bank of Spain, on rules for the communication by Spanish residents of the economic transactions and
the balance of financial assets and liabilities outside Spain (Circular 4/2012, de 25 de abril, del Banco de España, sobre
normas para la comunicación por los residentes en España de las transacciones económicas y los saldos de
activos y pasivos financieros con el exterior), and in accordance to the regime set out therein, the Bank shall communicate to
the Bank of Spain the economic transactions and the balance of financial assets and liabilities outside Spain performed in relation
to the Contingent Capital Securities. |
| (l) | The
Contingent Capital Securities will qualify as Additional Tier 1 capital for the purposes
of the regulatory capital rules applicable to the Bank once the ECB confirms such treatment. |
| (m) | Neither
the Bank nor any of its affiliates (as defined in Rule 405 under the Securities Act),
nor any person acting on its behalf has taken or will take, directly or indirectly, any
action designed to cause or to result in, or that has constituted or which might reasonably
be expected to cause or result in, the stabilization in violation of applicable laws
or manipulation of the price of any security of the Bank to facilitate the sale or resale
of the Contingent Capital Securities. |
| (n) | Each
preliminary prospectus filed as part of the registration statement as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities
Act, complied when so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder. |
| (o) | The
Bank maintains “disclosure controls and procedures” (as such term is defined
in Rule 13a-15(e) under the Exchange Act). |
| (p) | The
Bank is not, and after giving effect to the offer and sale of the Contingent Capital
Securities will not be, required to register
as an “investment company,” as such term is defined in the U.S. Investment
Company Act of 1940, as amended (the “Investment Company Act”). |
| (q) | The
financial statements of the Bank and its consolidated subsidiaries, together with the
related schedules, if any, and notes (the “Financial Statements”), that have
been included or incorporated by reference in the Registration Statement, the Time of
Sale Prospectus and the Prospectus present fairly the financial position of the Bank
and its consolidated subsidiaries at the dates indicated and the statement of operations,
stockholders’ equity and cash flows of the Bank and its consolidated subsidiaries
for the periods specified; and said Financial Statements have been prepared in conformity
with International Financial Reporting Standards as issued by the International Accounting
Standards Board (the “IFRS-IASB”). The supporting schedules, if any, included
or incorporated by reference in the Time of Sale Prospectus and the Prospectus present
fairly, in accordance with IFRS-IASB, the information required to be stated therein.
The selected financial data and the summary financial information included or incorporated
by reference in the Time of Sale Prospectus and the Prospectus present fairly, in accordance
with IFRS-IASB, the information shown therein and have been compiled on a basis consistent
with that of the Financial Statements incorporated by reference in the Time of Sale Prospectus
and the Prospectus. |
| (r) | The
Bank acknowledges and agrees that each of the Underwriters is acting solely in the capacity
of an arm’s length contractual counterparty to the Bank with respect to the offering
of the Contingent Capital Securities (including in connection with determining the terms
of the offering contemplated by this Agreement) and not as an agent or fiduciary to the
Bank or any other person. Additionally, the Underwriters are not advising the Bank or
any other person as to any legal, tax, investment, accounting or regulatory matters in
any jurisdiction. The Bank shall consult with its own advisors concerning such matters
and shall be responsible for making its own independent investigation and appraisal of
such matters, and the Underwriters shall have no responsibility or liability to the Bank
or any other person with respect to such matters. Any review by the Underwriters of the
Bank, the transactions contemplated by this Agreement or any other due diligence review
by the Underwriters in connection with such transactions will be performed solely for
the benefit of the Underwriters and shall not be on or behalf of the Bank or any other
person. |
| (s) | So
long as certain conditions set forth in Law 10/2014 of June 26, on organization, supervision
and solvency of credit institutions (“Law 10/2014”) are met, any payments
in respect of the Contingent Capital Securities made by the Bank to a non-Spanish tax
resident beneficial owner, who does not operate with |
respect
to the Contingent Capital Securities through a permanent establishment in Spain, shall not be subject to taxation in Spain
pursuant to Royal Legislative Decree 5/2004 of March 5, promulgating the consolidated text of the non-resident income tax law
(Real Decreto Legislativo 5/2004, de 5 de Marzo, por el que se aprueba el texto refundido de la Ley del Impuesto sobre la
Renta de no Residentes), and no withholding tax on account of Spanish taxes shall be required on such payments, except
that payments made to non-Spanish tax resident beneficial owners where the Bank has not received from the paying agent
certain information about the Contingent Capital Securities will be subject to Spanish withholding tax at the applicable rate
(19% / 19.50% in 2015).
| (t) | As
of the date hereof, the Bank has not made, and will not make (without prior consent of
the Underwriters) any public offer of the Contingent Capital Securities by means of Supplemental
Offering Materials. For purposes of this Agreement, “Supplemental Offering Materials”
means any “written communication” (within the meaning of the rules and regulations
promulgated under the Securities Act) prepared by or on behalf of the Bank, or used or
referred to by the Bank, that constitutes an offer to sell or a solicitation of an offer
to buy the Contingent Capital Securities (other than the free writing prospectuses identified
in Exhibit E hereto, the Time of Sale Prospectus and the Prospectus), including, without
limitation, any road show materials relating to the Contingent Capital Securities that
constitute such a written communication. |
| (u) | Under
the laws of The Kingdom of Spain, neither the Bank nor any of its revenues, assets or
properties has any right of immunity from service of process or from the jurisdiction
of competent courts of The Kingdom of Spain or the United States or the State of New
York in connection with any suit, action or proceeding, attachment prior to judgment,
attached in aid of execution of a judgment or execution of a judgment or from any other
legal process with respect to its obligations under this Agreement, the Indenture and
the Contingent Capital Securities (together, the “Transaction Documents”). |
| (v) | The
choice of the law of the State of New York as the governing law of the Transaction Documents
is a valid, effective and irrevocable choice of law under the laws of The Kingdom of
Spain. The Bank has the power to submit and, pursuant to the Transaction Documents to
which it is a party, has legally, validly, effectively and irrevocably submitted to the
non-exclusive personal jurisdiction of the United States District Court for the Southern
District of New York and the Supreme Court of New York, New York County (including, in
each case, any appellate courts therefrom) in any suit, action or proceeding against
it arising out of or related to any of the Transaction Documents, including with respect
to its obligations, liabilities or any other matter arising out of or in connection with
this Agreement, and has validly and irrevocably waived any objection to the venue of
a proceeding in any such court and has the power to designate, appoint and empower and
pursuant to Section 13 of this Agreement has legally, validly, effectively and irrevocably
designated, appointed and empowered an agent for |
service
of process in any suit or proceeding based on or arising under this Agreement in any federal or state court in the State of New
York.
| (w) | None
of the Bank or any of its Significant Subsidiaries (as such term is defined in Rule 1-02(w)
of Regulation S-X under the Securities Act “Significant Subsidiaries”), or,
to the knowledge of the Bank, any director, officer, agent, employee, affiliate or person
acting on behalf of the Bank is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”)
or any similar European, Spanish, U.K. or Brazilian, as applicable, sanctions administered
by the European Union, Spain, the United Kingdom or Brazil, as applicable, and the Bank
is not located, organized or resident in a country or a territory that is the subject
of such sanctions; and the Bank will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing the activities
of any person known by the Bank to be currently subject to any U.S. sanctions administered
by OFAC or is in Iran, North Korea, Sudan or in any other country or territory that,
at the time of such funding is the subject of such sanctions, except to the extent permissible
for a U.S. person; nor will the Bank directly or indirectly use the transaction proceeds
to contravene any OFAC or any similar European, Spanish, U.K. or Brazilian regulations
that may be applicable to them. |
| (x) | The
operations of the Bank and its Significant Subsidiaries are and have been conducted at
all times in compliance in all material respects with applicable financial recordkeeping
and reporting requirements of the European Union, the Kingdom of Spain, the United Kingdom,
Brazil, the United States and each State thereof and the money laundering statutes and
the rules and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any European, Spanish, U.K., Brazilian
or U.S., as applicable, governmental agency (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Bank or any of its Significant
Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge
of the Bank, threatened. |
| (y) | None
of the Bank or any of its Significant Subsidiaries or, to the knowledge of the Bank,
any director, officer, agent or employee of the Bank or any of its Significant Subsidiaries
(a) is aware or has taken any action, directly or indirectly, that would result in a
violation by such persons of the U.S. Foreign Corrupt Practices Act of 1977, as amended,
and the rules and regulations thereunder (the “FCPA”), the U.K. Bribery Act
or any other anti-corruption law, rule or regulation of any locality that is applicable
to the Bank (“applicable anti-corruption laws”) or (B) has taken or will
take any action in furtherance of an offer, payment, promise to pay, or authorization
or approval of the payment or giving of money, property, gifts or anything else of value,
directly or indirectly, to any “foreign official” (as such term is defined
in the FCPA) (including any officer |
or
employee of a government or government-owned or controlled entity or of a public international organization, or any person acting
in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political
office) to influence official action or secure an improper advantage, and (C) the Bank and its Significant Subsidiaries have conducted
their businesses in compliance with the FCPA, the U.K. Bribery Act and applicable anti-corruption laws, and (D) to the knowledge
of the Bank, each of its affiliates has conducted its businesses in compliance with the FCPA and has instituted and maintains
policies and procedures designed to ensure continued compliance therewith.
| (z) | [AUDITOR]
who have certified certain financial statements of the Bank, are independent public accountants
in respect of the Bank as required by the Securities Act and the applicable rules and
regulations of the Commission. |
| (a) | Subject
to the terms and conditions and in reliance upon the representations and warranties herein
set forth, the Bank agrees to issue and sell to the Underwriters, and the Underwriters
agree, severally and not jointly, to purchase from the Bank, the aggregate principal
amount of Contingent Capital Securities set forth opposite such Underwriter’s name
on Schedule I hereto at a purchase price of 100% of the principal amount of the Contingent
Capital Securities. The Bank hereby agrees to pay a commission of [AMOUNT]% of the aggregate
principal amount of the Contingent Capital Securities to the Underwriters, in consideration
of the Underwriters agreeing severally, and not jointly, to purchase the Contingent Capital
Securities from the Bank subject to, and in accordance with, the terms and conditions
set forth in this Agreement. The Bank agrees that such commission will be divided pro
rata among each of the Underwriters in proportion to the aggregate principal amount of
Contingent Capital Securities set forth opposite each Underwriter’s name on Schedule
I hereto. The foregoing aggregate fees in an amount of $[AMOUNT] will be payable on the
Closing Date concurrently with the settlement of the Contingent Capital Securities or
such other date as may be agreed by the Bank and the Underwriters, by wire transfer of
immediately available funds to an account identified in writing by [DATE]. |
| (b) | The
Underwriters are not authorized to give any information or to make any representation
in connection with the offering or sale of the Contingent Capital Securities other than
such information or representations consistent with the Time of Sale Prospectus and the
Prospectus or otherwise approved in writing by the Bank. |
| 3. | Delivery
and Payment. The global certificates for the Contingent Capital Securities to be
purchased by the Underwriters hereunder shall be delivered by or on behalf of (and at
the expense of) the Bank to or upon the order of [SETTLEMENT BANK] for the accounts of
the several Underwriters against payment by the Underwriters of the purchase price therefor
by wire transfer of immediately available funds, payable to or upon the order of |
the
Bank, at [LOCATION] at [TIME] London time, on [DATE], or such later date (not later than ten business days thereafter) as the
Underwriters shall designate, which date and time may be postponed by agreement among the Underwriters and the Bank (such date
and time of delivery and payment for the Contingent Capital Securities being herein called the “Closing Date”). Payment
for the Contingent Capital Securities shall be made against delivery to the Underwriters of the Contingent Capital Securities
registered in such names and in such denominations as you shall request in writing not later than two full business days prior
to the date of delivery, with any transfer taxes payable in connection with the transfer of the Contingent Capital Securities
to you duly paid by the Bank. The Bank agrees that delivery of the Contingent Capital Securities will be made on the Closing Date
through the book-entry facilities of The Depository Trust Company (the “Depositary”). Upon issuance, all Contingent
Capital Securities will be represented by one or more global securities registered in the name of a nominee of the Depositary.
| 4. | Covenants
and Agreements. The Bank agrees with each Underwriter that: |
| (a) | The
Bank shall prepare and furnish to each Underwriter, without charge, a conformed copy
of the Registration Statement (including exhibits thereto and documents incorporated
by reference therein) in a form approved by the Underwriters, and will promptly furnish
the Underwriters during the period mentioned in Section 4(d) or 4(e) below with copies
of the Time of Sale Prospectus, the Prospectus, any documents incorporated by reference
therein and any supplements and amendments thereto or to the Registration Statement,
in such quantities as the Underwriters may from time to time reasonably request, and
will not publish any amendment or supplement to the Registration Statement, the Time
of Sale Prospectus or the Prospectus unless they have furnished a copy to the Underwriters
for review and, except as required by law, will not publish any such proposed amendment
or supplement to which the Underwriters reasonably object. If at any time prior to completion
of the distribution of the Contingent Capital Securities (as determined by the Underwriters)
any event occurs as a result of which the Registration Statement, the Time of Sale Prospectus
or the Prospectus as then amended or supplemented would contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading, the Bank will promptly so notify the Underwriters and will prepare and furnish
to the Underwriters, subject to prior review as provided above, a reasonable number of
copies of an amendment or supplement to the Registration Statement, the Time of Sale
Prospectus or the Prospectus which will correct such statement or omission. |
| (b) | The
Bank shall furnish to each Underwriter a copy of each proposed free writing prospectus
to be prepared by or on behalf of, used by, or referred to by the Bank and not to use
or refer to any proposed free writing prospectus to which you reasonably object. |
| (c) | Except
as otherwise contemplated pursuant to this Agreement, the Bank shall not take any action
that would result in an Underwriter or the Bank being required to |
file
with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the
Underwriter that the Underwriter otherwise would not have been required to file thereunder.
| (d) | If
the Time of Sale Prospectus is being used to solicit offers to buy the Contingent Capital
Securities at a time when the Prospectus is not yet available to prospective purchasers
and any event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Time of Sale Prospectus in order to make the statements therein,
in the light of the circumstances, not misleading, or if any event shall occur or condition
exist as a result of which the Time of Sale Prospectus conflicts with the information
contained in the Registration Statement then on file, or if, in the opinion of counsel
for the Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus
to comply with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to any dealer upon request, either amendments
or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale
Prospectus as so amended or supplemented will not, in the light of the circumstances
when the Time of Sale Prospectus is delivered to a prospective purchaser, be misleading
or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict
with the Registration Statement, or so that the Time of Sale Prospectus, as amended or
supplemented, will comply with applicable law. |
| (e) | If,
during such period after the first date of the public offering of the Contingent Capital
Securities as in the opinion of counsel for the Underwriters the Prospectus (or in lieu
thereof the notice referred to in Rule 173(a) of the Securities Act) is required by law
to be delivered in connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the circumstances
when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the
Securities Act) is delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to the dealers (whose names and addresses
you will furnish to the Bank) to which Contingent Capital Securities may have been sold
by you on behalf of the Underwriters and to any other dealers upon request, either amendments
or supplements to the Prospectus so that the statements in the Prospectus as so amended
or supplemented will not, in the light of the circumstances when the Prospectus (or in
lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered
to a purchaser, be misleading or so that the Prospectus, as amended or supplemented,
will comply with applicable law. |
| (f) | The
Bank shall endeavor to qualify the Contingent Capital Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Underwriters shall reasonably
request. |
| (g) | The
Bank shall make generally available to the Bank’s security holders and to the Underwriters
as soon as practicable an earnings statement covering a period of at least twelve months
after the effective date of the Registration Statement which shall satisfy the provisions
of Section 11(a) of the Securities Act and the rules and regulations of the Commission
thereunder. |
| (h) | If
the third anniversary of the initial effective date of the Registration Statement occurs
before all the Contingent Capital Securities have been sold by the Underwriters, prior
to the third anniversary the Bank shall file a new shelf registration statement and take
any other action necessary to permit the public offering of the Contingent Capital Securities
to continue without interruption; references herein to the Registration Statement shall
include the new registration statement declared effective by the Commission. |
| (i) | The
Bank shall prepare a final term sheet relating to the offering of the Contingent Capital
Securities, containing only information that describes the final terms of the Contingent
Capital Securities or the offering in a form consented to by the Underwriters, and to
file such final term sheet within the period required by Rule 433(d)(5)(ii) under the
Securities Act following the date the final terms have been established for the offering
of the Contingent Capital Securities. |
| (j) | The
Bank will use its reasonable efforts to effect, on or as soon as practicable after the
Closing Date, and in no event more than 45 days following the Closing Date, the authorization
of the Contingent Capital Securities for listing on the New York Stock Exchange, Inc.
(the “NYSE”), subject only to official notice of issuance. For so long as
any of the Contingent Capital Securities are outstanding, the Bank will use its commercially
reasonable efforts to maintain the listing of the Contingent Capital Securities, and
will prepare, submit, furnish and publish (as appropriate) all such documents, instruments,
information, advertisements and undertakings as may be necessary or advisable for such
purposes. |
| (k) | The
Bank will use its best efforts to ensure that the public deed in respect of the Contingent
Capital Securities and disbursement minutes in respect of the Contingent Capital Securities,
if required, are registered in the Mercantile Registry of Cantabria within one month of
the Closing Date. |
| (l) | The
Bank will use its best efforts to permit the Contingent Capital Securities to be eligible
for clearance and settlement through the Depositary. |
| (m) | From
the date hereof and continuing to and including the Closing Date, the Bank will not without
the Underwriters’ prior written consent (which consent shall not be unreasonably
withheld), offer, sell, contract to sell or otherwise dispose of in the United States
any material amount of dollar-denominated contingent convertible capital securities issued
by the Bank which both mature more than one year after such Closing Date and which are
substantially similar to the Contingent Capital Securities, except for the Bank’s
customary deposit-raising activities. |
| (n) | The
Bank confirms that this Agreement has been executed and delivered in the name of the
Bank by a signatory authorized by the Board of Directors or the Executive Committee of
the Bank and agrees that the Contingent Capital Securities will be executed and delivered
in the name of the Bank, manually or via facsimile by a signatory authorized by the Board
of Directors or the Executive Committee of the Bank. |
| (o) | If
the Bank maintains a paying agent in respect of the Contingent Capital Securities in
a European Union member state, it will ensure that it maintains a paying agent in a European
Union member state that will not be obliged to withhold or deduct tax pursuant to the
European Union Directive 2003/48/EC or any directive amending, supplementing or replacing
such directive (each, a “Directive”) or any law implementing or complying
with, or introduced in order to conform to, such Directive or Directives. |
| 5. | Conditions to the
Obligations of the Underwriters. The obligation of the several Underwriters to
purchase and pay for the Contingent Capital Securities they have agreed to purchase
hereunder on the Closing Date is subject to the accuracy of the representations and warranties
of the Bank contained herein as of the date of this Agreement, at [__:00 P./A.M.], New
York City time, on [INSERT DATE] or such other time as agreed by the Bank and the Representatives (the “Time of
Sale”) and the
Closing Date, to the accuracy of the statements of the Bank made in any
certificates
pursuant to the provisions hereof delivered prior to or concurrently with such
purchase, to the performance by the Bank of its obligations hereunder, and to the
following further conditions: |
| (a) | Each
of the Underwriters, [COUNSEL], U.S. counsel for the Bank, and [COUNSEL], U.S. counsel
for the Underwriters, have completed their respective diligence investigations in accordance
with procedures customary for a transaction such as the offering of the Contingent Capital
Securities pursuant to the terms and conditions of this Agreement. |
| (b) | At
the Closing Date, (i) since the date of the latest balance sheet included in the Time
of Sale Prospectus and the Prospectus, there shall not have been any material adverse
change (other than as set forth in or contemplated in the Time of |
Sale
Prospectus or the Prospectus) in the financial condition or in the earnings, affairs or business prospects of the Bank and its
subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business; (ii) the Bank shall have
complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date; and (iii) the representations and warranties of the Bank set forth in Section 1 shall be accurate in all material
respects as though expressly made at and as of the Closing Date. At the Closing Date, the Underwriters shall have received a certificate,
dated as of the Closing Date, from the Bank signed by the principal financial or accounting officer of the Bank certifying the
matters set forth in (i), (ii) and (iii) of this Section 5(b).
| (c) | At
the Closing Date, the Underwriters shall have received a signed opinion, dated as of
the Closing Date, of [COUNSEL], Spanish counsel to the Bank, substantially in the form
set forth in Exhibit A. |
| (d) | At
the Closing Date, the Underwriters shall have received a signed opinion, dated as of
the Closing Date, of [COUNSEL], U.S. counsel to the Bank, substantially in the form set
forth in Exhibit B. |
| (e) | At
the Closing Date, the Underwriters shall have received a signed opinion, dated as of
the Closing Date, of [COUNSEL], Spanish counsel to the Underwriters, substantially in
the form set forth in Exhibit C. |
| (f) | At
the Closing Date, the Underwriters shall have received a signed opinion, dated as of
the Closing Date, of [COUNSEL], U.S. counsel to the Underwriters, as to such matters
as the Underwriters may reasonably request. |
| (g) | On
the date hereof, the Underwriters shall have received from [AUDITOR] a letter dated such
date, to the effect that (i) they are independent accountants with respect to the Bank
and its subsidiaries within the meaning of the Securities Act; (ii) it is their opinion
that the Financial Statements included or incorporated by reference in the Time of Sale
Prospectus and the Prospectus and covered by their opinions therein comply as to form
in all material respects, except as stated in such report, with the applicable accounting
requirements of the Securities Act for foreign private issuers; (iii) nothing has come
to their attention that any Financial Statements included or incorporated by reference
in the Time of Sale Prospectus and the Prospectus and not covered by their opinions do
not comply as to form in all material respects with the accounting requirements of the
Securities Act for foreign private issuers; (iv) based upon limited procedures set forth
in detail in such letter, nothing has come to their attention which causes them to believe
that at a specified date not more than three business days prior to the date of such
letter, there was any decrease in the capital stock, any increase in long-term debt or
any decreases in consolidated net current assets or shareholders’ equity as compared
with the amounts shown in the most recent consolidated balance sheet included or incorporated
by reference in the Time of Sale Prospectus and the Prospectus, or during the period
from the date of such balance sheet to a specified |
date
not more than three days prior to the date of such letter, there were any decreases, as compared with the corresponding period
in the preceding year, in consolidated net income or consolidated net income of the Bank and its subsidiaries, except in all cases
for changes, increases or decreases which the Time of Sale Prospectus and the Prospectus disclose have occurred or may occur;
and (v) in addition to the examination referred to in their opinions and the limited procedures referred to in clause (iv) above,
they have carried out certain specified procedures, not constituting an audit, with respect to certain amounts, percentages and
financial information which are included in the Time of Sale Prospectus and the Prospectus and which are specified by the Underwriters,
and have found such amounts, percentages and financial information to be in agreement with the relevant accounting, financial
and other records of the Bank and its subsidiaries identified in such letter. At the Closing Date, the Underwriters shall have
received a letter from [AUDITOR], dated as of the Closing Date, confirming the information given in their letter dated the date
of the Time of Sale Prospectus and the Prospectus.
| (h) | At
the Closing Date, U.S. counsel [and Spanish counsel] to the Bank, and U.S. counsel and
Spanish counsel for the Underwriters, shall have been furnished with all such documents,
certificates, resolutions and opinions as each may reasonably request for the purpose
of enabling them to pass upon the issuance and sale of the Contingent Capital Securities
as contemplated in this Agreement and the matters referred to in the opinions required
by Sections 5(d), (e) and (f), and in order to evidence the performance of any of the
covenants of the Bank, or the fulfillment of any of the conditions herein contained. |
| (i) | If
an affiliate (as defined in applicable FINRA rules) of the Bank is participating in the
offering of the Contingent Capital Securities and FINRA has raised any objection with
respect to the fairness and reasonableness of the underwriting terms and arrangements,
such objection shall have been resolved. |
| | If any of
the conditions specified in this Section 5 shall not have been fulfilled when and as
required by this Agreement to be fulfilled, this Agreement may be terminated by the Underwriters
on notice to the Bank at any time at or prior to the Closing Date, as the case may be,
and such termination shall be without liability of any party to any other party except
as provided in Section 6 herein. Notwithstanding any such termination, the provisions
of Sections 7, 8, 9, 13 and 14 herein shall remain in effect. |
| (a) | [The
Bank will, except as set forth in subsection (b) below, pay and bear all costs and expenses
incident to the performance of the Bank’s obligations under this Agreement, including
(i) the preparation and filing of the Registration Statement, any preliminary prospectus,
the Time of Sale Prospectus, the Prospectus, any free writing prospectus prepared by
or on behalf of, or used by or referred to by the Bank, and any amendments or supplements
to any of the foregoing, including the filing fees payable to the Commission relating
to the Contingent Capital |
Securities
(within the time required by Rule 456(b)(1), if applicable), (ii) the preparation and distribution of this Agreement and the Indenture,
(iii) the preparation and delivery of the Contingent Capital Securities, (iv) the fees and disbursements of the counsel and accountants
for the Bank, (v) the costs and charges of the Trustee incurred in connection with the transactions contemplated in this Agreement,
and (vi) all initial and on-going expenses and listing fees in connection with the listing of the Contingent Capital Securities
on the NYSE.
| (b) | Notwithstanding
subsection (a) above, each Underwriter, individually and not jointly, agrees to pay severally
in proportion to the aggregate principal amount of the Contingent Capital Securities
set forth opposite their respective names in Schedule I hereto (i) the fees and disbursements
of U.S. and Spanish counsels to the Underwriters, and (ii) an amount of the expenses
referenced in subclause (a) above up to an aggregate amount equal to [AMOUNT]. For the
avoidance of doubt, no Underwriter will be liable for any initial or on-going expenses
after payment has been made in accordance with this Section 6 and each amount identified
in this Section 6(b) (i) and (ii) above will be divided pro rata in proportion to the
aggregate principal amount of the Contingent Capital Securities set forth opposite the
respective names of each Underwriter.] |
| (a) | The
Bank jointly and severally agrees to indemnify and hold harmless each Underwriter and its directors, officers and employees, and
each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act as follows: (i) against
any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or any amendment thereto, any preliminary prospectus,
the Time of Sale Prospectus, the Prospectus (or any amendment or supplement to the Time of Sale Prospectus or the Prospectus)
or any Supplemental Offering Materials, or the omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and
all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement
of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim
whatsoever, based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement
is effected with the written consent of the Bank, which consent shall not be unreasonably withheld; and (iii) against any and
all expense whatsoever, as incurred (including fees and disbursements of counsel chosen by the Underwriters), reasonably incurred
in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to |
the
extent that any such expense is not paid under clause (i) or (ii) above; provided, however, that this indemnity does not apply
to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information furnished in writing to the Bank by the Underwriters
expressly for use in the Time of Sale Prospectus or the Prospectus (or
any amendment or supplement to the Time of Sale Prospectus or the Prospectus) or any
Supplemental Offering Materials.
| (b) | Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Bank,
and each person, if any, who controls the Bank, within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 7(a), as incurred,
but only with respect to untrue statements or omissions, or alleged untrue statements
or omissions, made in the Time of Sale Prospectus and the Prospectus (or any amendment
or supplement to the Time of Sale Prospectus and the Prospectus) or any Supplemental
Offering Materials, in each case in reliance upon and in conformity with information
furnished in writing to the Bank by the Underwriters through the Representatives expressly
for use in the Time of Sale Prospectus and the Prospectus (or any amendment or supplement
to the Time of Sale Prospectus and the Prospectus) or any Supplemental Offering Materials. |
| (c) | Each
indemnified party shall give prompt notice to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. An indemnifying party may participate at
its own expense in the defense of such action. In no event shall the indemnifying party
or parties be liable for the fees and expenses of more than one counsel for all indemnified
parties in connection with any one action or separate but similar or related actions
in the same jurisdiction arising out of the same general allegations or circumstances. |
| 8. | Contribution.
In order to provide for just and equitable contribution in circumstances under which
the indemnity provided for in Section 7 is for any reason held to be unenforceable by
the indemnified parties although applicable in accordance with its terms, the Bank, on
the one hand, and the Underwriters, on the other hand, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by such
indemnity incurred by the Bank and the Underwriters, as incurred, in such proportions
that (a) the Underwriters are responsible for that portion represented by the percentage
that the total discounts and commissions received by the Underwriters bears to the aggregate
offering price of the Contingent Capital Securities and (b) the Bank is responsible for
the balance; provided, however, that no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section, each person, if any, who controls an |
Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution
as an Underwriter, and each director of the Bank and each person, if any, who controls the Bank within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Bank. The Underwriters’
respective obligations to contribute pursuant to this Section 8 are several in proportion to the aggregate principal amount of
the Contingent Capital Securities set forth opposite their respective names in Schedule I hereto and not joint.
| 9. | Representations
and Indemnities to Survive. The representations, warranties, indemnities, agreements
and other statements of the Underwriters and the Bank and their officers set forth in
or made pursuant to this Agreement will remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Bank or the Underwriters
or controlling persons and will survive delivery of and payment for the Contingent Capital
Securities. |
| 10. | Termination
of Agreement. |
| (a) | The
Underwriters may terminate this Agreement, by notice to the Bank, at any time at or prior
to the Closing Date (i) if there has been, since the date hereof, any material adverse
change (otherwise than as set forth in or contemplated by the Time of Sale Prospectus
or the Prospectus) in the financial condition or in the earnings, business affairs or
business prospects of the Bank and its subsidiaries, considered as one enterprise, whether
or not arising in the ordinary course of business, or (ii) if, since the execution and
delivery of this Agreement (A) there has occurred any outbreak or escalation of hostilities
or other calamity or crisis, including, without limitation, an act of terrorism, the
effect of which on the financial markets of the United States are such as to make it,
in the judgment of the Underwriters, impracticable or inadvisable to market the Contingent
Capital Securities or (B) trading in any securities of the Bank has been suspended by
the Commission, the Spanish Stock Exchanges (Comisión Nacional del Mercado de
Valores) or the NYSE, or if trading generally on the NYSE or in the over-the-counter
market has been suspended, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices for securities have been required by such exchange or by
order of the Commission, or any other governmental authority, or (C) a banking moratorium
has been declared by Spanish, U.S. or New York authorities, or (D) there has occurred
any change or any development involving a prospective change in national or international
political, financial or economic conditions or exchange controls which, in the judgment
of the Underwriters, is likely to have a material adverse effect on the market for the
Contingent Capital Securities, or (E) any rating of the Bank’s debt securities
or contingent convertible capital securities shall have been lowered by Moody’s
Investors Service Inc., Fitch Ratings Ltd. or Standard & Poor’s Ratings Services,
a division of The McGraw-Hill Company, Inc., or any of such rating agencies have publicly
announced it has under surveillance or review with possible negative implications any
rating of the Bank’s debt securities or contingent convertible capital securities
(provided, however, that this clause (E) shall not |
apply
if a lowering of any such rating or any such public announcement occurs as a result of the lowering of any rating by any such
rating agency of obligations of The Kingdom of Spain or as a result of a public announcement by any such rating agency that it
has under surveillance or review with possible negative implications obligations of The Kingdom of Spain), or (F) there has occurred
a material disruption in commercial banking or securities settlement or clearance services in the United States or with respect
to the Depositary. The Underwriters agree that they will notify the Bank of the occurrence of any event described in clause (A)
through (F) as soon as they shall become aware of such occurrence.
| (b) | If
this Agreement is terminated pursuant to this Section, such termination shall be without
liability of any party to any other party, except to the extent provided in Section 6.
Notwithstanding any such termination, the provisions of Sections 6, 7, 8, 9, 13 and 14
shall remain in effect. |
| 11. | Notices.
All notices and other communications under this Agreement shall be in writing and shall
be deemed to have been duly given if delivered, mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the Underwriters
at the following addresses: |
[Name of Underwriter]
[address]
Attention:
Fax: .
Notices to the Bank
shall be directed to it at:
Grupo Santander, S.A.
Ciudad Grupo Santander
Avda. Cantabria s/n
Edificio Amazonia, planta
0
28660 Boadilla del Monte
Madrid
Spain
Attention: División
Financiera
Fax: +34 91 257 0118.
| 12. | Parties.
This Agreement is made solely for the benefit of the Underwriters, the Bank and, to the
extent expressed, any person controlling the Bank or the Underwriters, and their respective
executors, administrators, successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term “successors and
assigns” shall not include any purchaser, as such purchaser, from the Underwriters
of the Contingent Capital Securities. |
| 13. | Submission
to Jurisdiction. The Bank irrevocably agrees that any suit, action or proceeding
against the Bank brought by the Underwriters or by any person who controls the Underwriters,
arising out of or based upon this Agreement or the transactions |
contemplated
hereby may be instituted in any state or federal court in the Borough of Manhattan, The City of New York, New York, and, to the
extent permitted by law, irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding, and irrevocably submits to the nonexclusive jurisdiction of such courts in any such suit, action or
proceeding. The Bank will irrevocably appoint Banco Santander, S.A., New York Branch as its Authorized Agent (the “Authorized
Agent”) upon whom process may be served in any such suit, action or proceeding arising out of or based on this Agreement
or the transactions contemplated hereby which may be instituted in any state or federal court in the Borough of Manhattan, The
City of New York, New York, by the Underwriters or by any person who controls the Underwriters, and the Bank expressly consents
to the jurisdiction of any such court in respect of any such suit, action or proceeding, and waives any other requirements of
or objections to personal jurisdiction with respect thereto. The Bank represents and warrants that the Authorized Agent has agreed
to act as said agent for service of process, and the Bank agrees to take any and all action, including the filing of any and all
documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of
process upon the Authorized Agent and written notice of such service to the Bank shall be deemed, in every respect, effective
service of process upon the Bank. Notwithstanding the foregoing, any suit, action or proceeding based on this Agreement may be
instituted by an Underwriter in any competent court in The Kingdom of Spain.
| 14. | Judgment
Currency. The Bank agrees to indemnify each of the Underwriters against any loss
incurred by the Underwriters as a result of any judgment or order being given or made
for any amount due hereunder and such judgment or order being expressed and paid in a
currency (the “Judgment Currency”) other than U.S. dollars and as a result
of any variation as between (i) the rate of exchange at which the U.S. dollar amount
is converted into the Judgment Currency for the purpose of such judgment or order and
(ii) the rate of exchange at which each Underwriter is able to purchase U.S. dollars
with the amount of the Judgment Currency actually received by each Underwriter. The foregoing
indemnity shall constitute a separate and independent obligation of each Underwriter
and shall continue in full force and effect notwithstanding any such judgment or order
as aforesaid. The parties hereto agree that, to the fullest extent permitted by law,
the “rate of exchange” used shall be the rate at which, in accordance with
normal banking procedures, each Underwriter could purchase such Judgment Currency in
The City of New York on the business day preceding that on which final judgment is given.
The term “rate of exchange” shall include any premiums and costs of exchange
payable in connection with the purchase of, or conversion into, the relevant currency. |
| 15. | Default
by One of the Underwriters. |
| (a) | If
one of the Underwriters shall fail at the Closing Date to purchase the Contingent Capital
Securities that it is obliged to purchase pursuant to this Agreement (the “Defaulted
Securities”), the Bank will have the option to either (i) reduce the size of the
offering by the number of Defaulted Securities, (ii) proceed with the full offering,
a portion of which will not be underwritten or (iii) |
terminate
this Agreement and withdraw the offering of the Contingent Capital Securities, without any liability on the part of the Bank.
| (b) | No
action taken pursuant to this Section shall relieve any defaulting Underwriters from
liability in respect of its default. Any defaulting Underwriters shall be liable to any
non-defaulting Underwriter which purchases such Defaulted Securities for any losses or
damages incurred as a result of such purchase. |
| (c) | In
the event of any such default not involving termination of this Agreement, the remaining
Underwriters or the Bank shall have the right to postpone the Closing Date for a period
not exceeding seven days in order to effect any required changes in the Prospectus or
in any other documents or arrangements. |
| 16. | Governing
Law. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York. |
| 17. | Counterparts.
This Agreement may be executed in one or more counterparts and, when a counterpart has
been executed by each party, all such counterparts taken together shall constitute one
and the same agreement. |
| 18. | Entire
Agreement; Amendment. This Agreement supersedes all prior agreements and undertakings,
both written and oral, of the parties hereto, or any of them, with respect to the subject
matter hereof and constitute the entire understanding of the parties hereto with respect
to the subject matter hereof. This Agreement may not be waived, amended or modified except
in writing signed by each party to be bound hereby. |
If the foregoing
is in accordance with the Underwriters’ understanding of our agreement, please sign and return to us a counterpart hereof,
whereupon this instrument will become a binding agreement among the Bank and the Underwriters in accordance with its terms.
| Very truly yours, |
| |
BANCO
SANTANDER, S.A.
|
| |
| |
| By: | |
| | Name: |
| | Title: |
[The rest
of this page is intentionally left blank]
The foregoing Agreement is hereby
confirmed and accepted as of
the
date first written above.
| [NAME OF UNDERWRITER] |
| |
| |
| By: |
|
| |
Name: |
| |
Title: |
SCHEDULE
I
Name
of Underwriter |
Principal
Amount of
Contingent Convertible Capital Securities |
| [UNDERWRITER] |
$[AMOUNT] |
| Total |
$[AMOUNT] |
EXHIBIT
A
FORM
OF OPINION OF [COUNSEL]
EXHIBIT
B
FORM
OF OPINION OF [COUNSEL]
EXHIBIT
C
FORM
OF OPINION OF [COUNSEL]
EXHIBIT
D
$[]
Contingent Convertible Capital Securities
Final Terms And Conditions
| Issuer: |
Banco
Santander, S.A. |
| Expected
ratings: |
|
| Principal
amount: |
$ |
| Note
type: |
Contingent
Convertible Capital Securities |
| Form
of issuance: |
SEC
registered |
| Issue
price: |
|
| Minimum
purchase amount: |
|
| Denomination
and currency: |
Denominations
of $ |
| Trade
date: |
|
| Settlement
date: |
|
| Maturity
date: |
|
| Redemption
amount: |
|
| Benchmark
treasury: |
|
| Spread
to benchmark: |
T+ bps |
| Re-offer
yield: |
% |
| Treasury
strike: |
% |
| Coupon: |
% |
| Interest
payment dates: |
|
| Clearing: |
DTC |
| Day
count fraction: |
|
| Business
days: |
|
| Calculation
agent: |
|
Call / Issuer Redemption
Provisions:
[Tax
call:]
[Make-whole
call:]
[Listing
call:]
|
|
| Put
/ Investor Redemption Provisions: |
|
| Listing: |
[Application
will be made to list on the New York Stock Exchange] |
| Governing
law: |
|
| ISIN
/ CUSIP: |
|
| [Underwriters][Dealer]: |
|
| Commitment
to purchase: |
|
This material
is confidential and is for your information only and is not intended to be used by anyone other than you. This information does
not purport to be a complete description of the securities offered hereby (the “Securities”) or the offering.
The information
in this term sheet supplements the Issuer’s preliminary prospectus, dated [DATE] (the “Preliminary Prospectus”),
and supersedes the information in the Preliminary Prospectus to the extent inconsistent with the information in the Preliminary
Prospectus. Except as aforesaid, this term sheet is qualified in its entirety by reference to the Preliminary Prospectus. You
may obtain a copy of the Preliminary Prospectus and the Prospectus (when available) for this transaction by calling [UNDERWRITER]
at [NUMBER].
EXHIBIT
E
[This Exhibit
E Intentionally Left Blank]
Exhibit 4.1
Santander
US Debt, S.A. Unipersonal
as Issuer
Banco Santander, S.A.
as Guarantor
TO
THE BANK OF NEW YORK MELLON,
acting through its London Branch
as Trustee
FORM OF INDENTURE
Senior Debt Securities
Banco
Santander, S.A.
Reconciliation
and tie between Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, and Senior Debt Securities
Indenture, dated [●].
Trust
Indenture Act Section |
|
Senior
Debt Securities Indenture Section |
|
| §310 |
(a)(1) |
6.10 |
|
| |
(a)(2) |
6.10 |
|
| |
(a)(3) |
Not Applicable |
|
| |
(a)(4) |
Not Applicable |
|
| |
(b) |
6.09,
6.11 |
|
| §311 |
(a) |
6.14 |
|
| |
(b) |
6.14 |
|
| §312 |
(a) |
7.01,
7.02(a) |
|
| |
(b) |
7.02(b) |
|
| |
(c) |
7.02(c) |
|
| §313 |
(a) |
7.03(a) |
|
| |
(b) |
7.03(a) |
|
| |
(c) |
1.06,
7.03(a) |
|
| |
(d) |
7.03(b) |
|
| §314 |
(a) |
7.04,
10.06 |
|
| |
(b) |
Not Applicable |
|
| |
(c)(1) |
1.02 |
|
| |
(c)(2) |
1.02 |
|
| |
(c)(3) |
Not Applicable |
|
| |
(d) |
Not Applicable |
|
| |
(e) |
1.02 |
|
| |
(f) |
Not Applicable |
|
| §315 |
(a) |
6.01 |
|
| |
(b) |
6.03,
7.03(a) |
|
| |
(c) |
6.01 |
|
| |
(d) |
6.01 |
|
| |
(d)(1) |
6.01 |
|
| |
(d)(2) |
6.01 |
|
| |
(d)(3) |
6.01 |
|
| |
(e) |
5.14 |
|
| §316 |
(a)(1)(A) |
5.12 |
|
| |
(a)(l)(B) |
5.13 |
|
| |
(a)(2) |
Not Applicable |
|
| |
|
(a)(last sentence) |
1.01 |
| |
|
(b) |
5.08 |
| |
§317 |
(a)(1) |
5.03 |
| |
|
(a)(2) |
5.04 |
| |
|
(b) |
10.03 |
| |
§318 |
(a) |
1.08 |
| |
|
|
|
|
NOTE: This
reconciliation and tie shall not, for any purpose, be deemed to be a part of the Senior Debt Securities Indenture.
TABLE
OF CONTENTS
______________________
Page
Article
1
Definitions
and other Provisions of General Application |
| Section
1.01. Definitions |
2 |
| Section
1.02. Compliance Certificates and Opinions |
11 |
| Section
1.03. Form of Documents Delivered to Trustee |
11 |
| Section
1.04. Acts of Holders |
12 |
| Section
1.05. Notices, Etc. to Trustee, Company or Guarantor |
13 |
| Section
1.06. Notice to Holders; Waiver |
14 |
| Section
1.07. Language of Notices, Etc |
15 |
| Section
1.08. Conflict with Trust Indenture Act |
15 |
| Section
1.09. Effect of Headings and Table of Contents |
15 |
| Section
1.10. Successors and Assigns |
15 |
| Section
1.11. Separability Clause |
15 |
| Section
1.12. Benefits of Senior Debt Securities Indenture |
15 |
| Section
1.13. Governing Law |
16 |
| Section
1.14. Business Days and Legal Holidays |
16 |
| Section
1.15. Appointment of Agent for Service |
16 |
| Section
1.16. Calculation Agent |
17 |
| Section
1.17. Waiver of Jury Trial |
17 |
| Section
1.18. Judgment Currency |
17 |
Article
2
Senior
Debt Security Forms |
| Section
2.01. Forms Generally |
18 |
| Section
2.02. Status of the Senior Debt Securities |
18 |
| Section
2.03. Form of Guarantee |
19 |
| Section
2.04. Form of Trustee’s Certificate of Authentication |
21 |
Article
3
The
Senior Debt Securities |
| Section
3.01. Amount Unlimited; Issuable in Series |
21 |
| Section
3.02. Denominations |
24 |
| Section
3.03. Execution, Authentication, Delivery and Dating |
24 |
| Section
3.04. Temporary Senior Debt Securities |
26 |
| Section
3.05. Registration, Registration of Transfer and Exchange |
26 |
| Section
3.06. Mutilated, Destroyed, Lost and Stolen Senior Debt Securities |
30 |
| Section
3.07. Payment; Interest Rights and Rights to Additional Amounts Preserved |
31 |
| Section
3.08. Persons Deemed Owners |
32 |
| Section
3.09. Cancellation |
34 |
| Section
3.10. Computation of Interest |
34 |
| Section
3.11. CUSIP Numbers |
34 |
| Section
3.12. Additional Senior Debt Securities |
34 |
| Section
3.13. Correction of Minor Defects in or Amendment of Senior Debt Securities |
35 |
| Section
3.14. Payments Subject to Fiscal Laws |
35 |
Article
4
Satisfaction
and Discharge |
| Section
4.01. Satisfaction and Discharge of Senior Debt Securities Indenture |
35 |
| Section
4.02. Defeasance and Covenant Defeasance |
37 |
| Section
4.03. Application of Trust Money |
41 |
| Section
4.04. Repayment to Company |
41 |
| Section
4.05. Reinstatement |
41 |
Article
5
Remedies |
| Section
5.01. Events of Default |
42 |
| Section
5.02. Acceleration of Maturity; Rescission and Annulment |
43 |
| Section
5.03. Collection of Indebtedness and Suits for Enforcement by Trustee |
44 |
| Section
5.04. Trustee May File Proofs of Claim |
45 |
| Section
5.05. Trustee May Enforce Claims Without Possession of Senior Debt Securities |
46 |
| Section
5.06. Application of Money Collected |
46 |
| Section
5.07. Limitation on Suits |
47 |
| Section
5.08. Unconditional Right of Holders to Receive Principal, Premium and Interest, if any, and Additional Amounts |
48 |
| Section
5.09. Restoration of Rights and Remedies |
48 |
| Section
5.10. Rights and Remedies Cumulative |
48 |
| Section
5.11. Delay or Omission Not Waiver |
48 |
| Section
5.12. Control by Holders |
48 |
| Section
5.13. Waiver of Past Defaults |
49 |
| Section
5.14. Undertaking for Costs |
49 |
Article
6
The
Trustee |
| Section
6.01. Certain Duties and Responsibilities |
50 |
| Section
6.02. Spanish Tax Procedures and Obligations of the Trustee |
51 |
| Section
6.03. Notice of Defaults |
51 |
| Section
6.04. Certain Rights of Trustee |
51 |
| Section
6.05. Not Responsible for Recitals or Issuance of Senior Debt Securities |
53 |
| Section
6.06. May Hold Senior Debt Securities |
54 |
| Section
6.07. Money Held in Trust |
54 |
| Section
6.08. Compensation and Reimbursement |
54 |
| Section
6.09. Disqualification; Conflicting Interests |
56 |
| Section
6.10. Corporate Trustee Required; Eligibility |
56 |
| Section
6.11. Resignation and Removal; Appointment of Successor |
56 |
| Section
6.12. Acceptance of Appointment by Successor |
58 |
| Section
6.13. Merger, Conversion, Consolidation or Succession Business |
59 |
| Section
6.14. Preferential Collection of Claims |
59 |
| Section
6.15. Appointment of Authenticating Agent |
59 |
| Section
6.16. Appointment of Additional Trustees |
61 |
| Section
6.17. Tax Withholding |
61 |
Article
7
Holders
Lists and Reports by Trustee and Company |
| Section
7.01. Company and Guarantor to Furnish Trustee Names and Addresses of Holders |
62 |
| Section
7.02. Preservation of Information; Communication to Holders |
62 |
| Section
7.03. Reports by Trustee |
62 |
| Section
7.04. Reports by the Company and the Guarantor |
63 |
Article
8
Consolidation,
Merger, Conveyance or Transfer |
| Section
8.01. Company or Guarantor May Consolidate, Etc. Only on Certain Terms |
64 |
| Section
8.02. Successor Corporation Substituted |
65 |
| Section
8.03. Assumption of Obligations |
65 |
Article
9
Supplemental
Indentures |
| Section
9.01. Supplemental Indentures without Consent of Holders |
66 |
| Section
9.02. Supplemental Indentures with Consent of Holders |
68 |
| Section
9.03. Execution of Supplemental Indentures |
69 |
| Section
9.04. Effect of Supplemental Indentures |
69 |
| Section
9.05. Conformity with Trust Indenture Act |
69 |
| Section
9.06. Reference in Senior Debt Securities to Supplemental Indentures |
69 |
Article
10
Covenants |
| Section
10.01. Payment of Principal, Premium, and Interest |
70 |
| Section
10.02. Maintenance of Office or Agency |
70 |
| Section
10.03. Money for Payments to be Held in Trust |
71 |
| Section
10.04. Additional Amounts |
72 |
| Section
10.05. Corporate Existence |
75 |
| Section
10.06. Statement as to Compliance |
75 |
| Section
10.07. Original Issue Document |
75 |
Article
11
Redemption
of Senior Debt Securities |
| Section
11.01. Applicability of Article |
75 |
| Section
11.02. Election to Redeem; Notice to Trustee |
75 |
| Section
11.03. Selection by Trustee of Senior Debt Securities to be Redeemed |
76 |
| Section
11.04. Notice of Redemption |
76 |
| Section
11.05. Deposit of Redemption Price |
77 |
| Section
11.06. Senior Debt Securities Payable on Redemption Date |
77 |
| Section
11.07. Senior Debt Securities Redeemed in Part |
78 |
| Section
11.08. Optional Redemption for Taxation Reasons |
78 |
| Section
11.09. Repurchase of Senior Debt Securities |
79 |
| Section
11.10. Optional Early Redemption (Call) |
79 |
| Section
11.11. Optional Early Redemption (Put) |
79 |
Article
12
Guarantee |
| Section
12.01. The Guarantee |
80 |
| Section
12.02. Guarantee Unconditional, Etc |
80 |
| Section
12.03. Reinstatement |
81 |
| Section
12.04. Subrogation |
81 |
| Section
12.05. Assumption by Guarantor |
81 |
Article
13
Spanish
Bail-In and Resolution Actions |
| Section
13.01. Agreement and Acknowledgement with Respect to Spanish Bail-in Power |
82 |
| Section
13.02. Agreement and Acknowledgement with Respect to the Exercise of Resolution Tools |
84 |
SENIOR DEBT
SECURITIES INDENTURE, dated as of [●], among SANTANDER US DEBT, S.A. UNIPERSONAL, a sociedad anónima incorporated
under the laws of the Kingdom of Spain (the “Company”), having its principal executive office located at Ciudad
Grupo Santander, Avenida de Cantabria s/n, 28660 Boadilla del Monte, Madrid, Spain, BANCO SANTANDER, S.A., a sociedad anónima
incorporated under the laws of the Kingdom of Spain (the “Guarantor”), having its principal executive office
located at Ciudad Grupo Santander, Avenida de Cantabria s/n, 28660 Boadilla del Monte, Madrid, Spain, and THE BANK OF NEW YORK
MELLON, acting through its London Branch, a banking corporation duly organized and existing under the laws of the State of New
York as Trustee (the “Trustee”), having its Corporate Trust Office at One Canada Square, London, E14 5AL, United
Kingdom.
RECITALS
OF THE COMPANY
The Company
has duly authorized the execution and delivery of this Senior Debt Securities Indenture to provide for the issuance from time
to time of its senior debt securities (the “Senior Debt Securities”), to be issued in one or more series, represented
by one or more Global Securities in registered form, or represented by definitive Senior Debt Securities in registered form, the
amount and terms of each such series to be determined as hereinafter provided.
All things
necessary to make this Senior Debt Securities Indenture a valid and binding agreement of the Company, in accordance with its terms,
have been done.
All things
necessary to make the Guarantees, when executed by the Guarantor and endorsed on the Senior Debt Securities issued under this
Senior Debt Securities Indenture, and authenticated and delivered hereunder, the valid obligations of the Guarantor, and to make
this Senior Debt Securities Indenture a valid agreement of the Guarantor, in accordance with their and its terms, have been done.
This Senior
Debt Securities Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder that are required to be part of this Senior Debt Securities Indenture
and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE,
THIS SENIOR DEBT SECURITIES INDENTURE WITNESSETH:
For and in
consideration of the premises and the purchase of the Senior Debt Securities by the Holders (as herein defined) thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of Senior Debt Securities of any series
as follows:
Article
1
Definitions and other Provisions of General Application
Section 1.01.
Definitions. For all purposes of this Senior Debt Securities Indenture, except as otherwise expressly provided or
unless the context otherwise requires:
(1) the
terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(2) all
other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term “generally accepted accounting principles”
with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted
in the Kingdom of Spain at the date of such computation and as applied by the Company;
(4) the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Senior Debt Securities Indenture as a whole and not to any particular Article, Section or other subdivision;
(5) any
reference to an “Article” or a “Section” refers to an Article or Section of this Senior
Debt Securities Indenture; and
(6) the
word “or” is always used inclusively (for example, the phrase “A or B” means “A or B or both”,
not “either A or B but not both”).
Certain terms
used principally in certain Articles hereof are defined in those Articles.
“Act”,
when used with respect to any Holder, has the meaning set forth in Section
1.04.
“Additional Amounts”
has the meaning set forth in Section 10.04.
“Additional
Senior Debt Securities” has the meaning set forth in Section
3.12.
“Affiliate”
of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition, “control” when used with respect
to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled”
have meanings correlative to the foregoing.
“Agents”
means the agents appointed in accordance with this Senior Debt Securities Indenture or applicable supplemental indenture;
“Agent Member”
means a member of, or participant in, any Depositary.
“Amounts
Due” means the principal amount of, premium, if any, together with any accrued but unpaid interest, and Additional
Amounts, if any, due on the Senior Debt Securities of any series. References to such amounts will include amounts that have
become due and payable, but which have not been paid, prior to the exercise of the Spanish Bail-in Power by the relevant
resolution authority.
“Applicable
Banking Regulations” means at any time the laws, regulations, requirements, guidelines and policies relating to capital
adequacy applicable to the Guarantor and/or the Group including, without limitation to the generality of the foregoing, those
regulations, requirements, guidelines and policies relating to capital adequacy then in effect of the Regulator (whether or not
such requirements, guidelines or policies have the force of law and whether or not they are applied generally or specifically
to Banco Santander and/or the Group).
“Authenticating Agent”
means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Senior Debt Securities.
“Authorized Newspaper”
means a newspaper, in an official language of the place of publication or in the English language, customarily published on each
day that is a Business Day in the place of publication, whether or not published on days that are Legal Holidays in the place
of publication, and of general circulation in each place in connection with which the term is used or in the financial community
of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications
may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any
day that is a Business Day in the place of publication.
“Board
of Directors” means either the board of directors of the Company or Guarantor, as the case may be, or any committee
or Person duly authorized to act generally or in any particular respect for the Company or Guarantor hereunder.
“Board
Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary or any Person duly
authorized by the Company or the Guarantor, as the case may be, to have been duly adopted by the relevant Board of Directors
or an authorized committee thereof and to be in full force and effect on the date of such certification and delivered to
the Trustee.
“BRRD”
means Directive 2014/59/EU establishing a framework for the recovery and
resolution of credit institutions and investment firms, as amended or superseded from time to time.
“Business
Day” means, unless otherwise provided in the form of Senior Debt Securities for any particular series pursuant to the
provisions of this Senior Debt Securities Indenture, any day, other than Saturday or Sunday, that is neither a Legal
Holiday
nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in the City
of New York, London, Madrid or any other place or places where the principal of, or any premium or interest on, or any Additional
Amounts with respect to the Senior Debt Securities of that series are payable.
“Calculation
Agent” means the Trustee or such other person authorized by the Company as the party responsible for calculating the
rate(s) of interest and interest amount(s) and/or such other amount(s) from time to time in relation to any series of Senior Debt
Securities.
“Commission”
means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
“Company”
means the Person named as the “Company” in the first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Senior Debt Securities Indenture, and thereafter “Company”
shall mean such successor Person.
“Company
Request” and “Company Order” mean, respectively, a written request or order, as the case may be,
signed in the name of the Company by any member of the Board of Directors or any officer or representative of the Company empowered
to do so by Board Resolution, and delivered to the Trustee.
“Conversion
Event” means the cessation of use of (i) a Foreign Currency both by the government of the country which issued such
currency and for the settlement of transactions by a central bank or other public institutions of or within the international
banking community, or (ii) the euro both within the European monetary system and for the settlement of transactions by public
institutions of or within the European Union.
“Corporate Trust Office”
means the office of the Trustee at which its corporate trust business in London, England, is principally administered, which office
as of the date hereof is located at One Canada Square, London E14 5AL (Attention: Corporate Trust Administration, facsimile: +44
20 7964 2536) or, if a different Trustee is appointed for a particular series of Senior Debt Securities, the address set forth
in the supplemental indenture naming the Trustee for that particular series of Senior Debt Securities.
The term
“corporation” includes corporations, associations, companies, partnerships and business trusts.
“Default
Interest” has the meaning set forth in Section
3.07.
“Depositary”
means, with respect to any series of Senior Debt Securities, a clearing agency that is designated to act as Depositary for the
Global Securities evidencing all or part of such Senior Debt Securities as contemplated by
Section 3.05.
“dollar”
or “$” or any similar reference means the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
“DTC”
means The Depository Trust Company or its nominee or its or their successor.
“Early
Redemption Amount (Call)” has the meaning set forth in Section 11.10.
“Early
Redemption Amount (Put)” has the meaning set forth in Section 11.11.
“Early
Redemption Amount (Tax)” has the meaning set forth in Section 11.08.
“euro”
or “€” means the currency of the member states of the European Union (“EU”) that, from
time to time, have adopted the single currency in accordance with the treaty establishing the European Community, as amended from
time to time.
“Event of Default”
has the meaning set forth in Section 5.01.
“Exchange Act”
means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission
thereunder.
“Foreign Currency”
means the euro or any currency issued by the government of any country (or a group of countries or participating member states)
other than the United States which as at the time of payment is legal tender for the payment of public and private debts.
“Foreign Government Securities”
means, with respect to Senior Debt Securities of any series that are denominated in a Foreign Currency, non-callable (i) direct
obligations of the participating member state or government that issued such Foreign Currency for the payment of which obligations
its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality
of such participating member state or government, the payment of which obligations is unconditionally guaranteed as a full faith
and credit obligation of such participating member state or government. For the avoidance of doubt, for all purposes hereof, euro
shall be deemed to have been issued by each participating member state from time to time.
“Global Security”
means one or more global certificates evidencing all or part of a series of Senior Debt Securities, authenticated and delivered
to or on behalf of the Holder and registered in the name of the Holder or its nominee.
“Group”
means Banco Santander, S.A. and its consolidated subsidiaries.
“Guarantees”
means the guarantees to be entered into by the Guarantor with respect to the Senior Debt Securities as set forth in Section
12.01 endorsed on a Senior Debt Security authenticated and delivered pursuant to this Senior Debt Securities Indenture, set
forth in Section 2.03.
“Guarantor”
means Banco Santander, S.A., until a successor Person shall have become such pursuant to the applicable provisions of the Senior
Debt Securities Indenture, and thereafter “Guarantor” shall mean such successor Person.
“Guarantor
Request” and “Guarantor Order” mean, respectively, a written request or order, as the case may be,
signed in the name of the Guarantor by any member of the Board of Directors or any officer or representative of the Guarantor
empowered to do so by Board Resolution, and delivered to the Trustee.
“Holder”
means a Person in whose name a Senior Debt Security in global or definitive form is registered in the Senior Debt Security Register.
“Independent
Public Accountants” means accountants or a firm of accountants that, with respect to the Company, Guarantor and any
other obligor under the Senior Debt Securities, are independent public accountants within the meaning of the Securities Act of
1933, as amended, and the rules and regulations promulgated by the Commission thereunder, who may be the independent public accountants
regularly retained by the Company or Guarantor or who may be other independent public accountants.
“Interest Payment Date”,
when used with respect to any Senior Debt Security, means the Stated Maturity of any installment of interest on such Senior Debt
Security.
“Law
11/2015” means Law 11/2015, of June 18, for the recovery and resolution of credit institutions and investment
firms (Ley 11/2015, de 18 de junio, de recuperacion y resolucion de entidades de credito y empresas de servicios de inversion),
as amended from time to time.
“Legal
Holiday”, with respect to any Place of Payment or other location, means a Saturday, a Sunday or a day on which banking
institutions in such Place of Payment or other location are not authorized or obligated to be open.
“Losses”
means any and all claims, losses, liabilities, damages, costs, expenses and judgments (including legal fees and expenses) sustained
by the Company or the Trustee.
“Maturity”,
when used with respect to any Senior Debt Security, means the date, if any, on which the principal or any installment of principal
of such Senior Debt Security becomes due and payable as therein or herein provided, whether by call for redemption, repurchase
declaration of acceleration or otherwise.
“Officer’s Certificate”
means a certificate signed by any member of the Board of Directors, the Secretary or the Deputy Secretary of the Board of Directors,
a Vice President or any officer or any other Person duly authorized by the Company or the Guarantor, that complies with the requirements
of Section 314(e) of the Trust Indenture Act and is delivered to the Trustee.
“Opinion of Counsel”
means a written opinion of legal advisors, who may be an employee of or legal advisors for the Company or the Guarantor or other
legal advisors who shall be reasonably acceptable to the Trustee and that, if required by the Trust Indenture Act, complies therewith.
“Outstanding”,
when used with respect to Senior Debt Securities or any series of Senior Debt Securities means (except as otherwise specified
pursuant to Section 3.01), as of the date of determination,
all Senior Debt Securities or all Senior Debt Securities of such series, as the case may be, theretofore authenticated and delivered
under this Senior Debt Securities Indenture, except:
(i) Senior
Debt Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
(ii) Senior
Debt Securities, or portions thereof, for whose payment or redemption money, U.S. Government Obligations or Foreign Government
Securities in the necessary amount have been theretofore deposited with the Trustee or any Paying Agent (other than the Company
or the Guarantor) in trust or set aside and segregated in trust by the Company or the Guarantor (if the Company shall act as its
own or authorize the Guarantor to act as, Paying Agent) for the Holders of such Senior Debt Securities; provided,
that, if such Senior Debt Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Senior
Debt Securities Indenture or provision therefor satisfactory to the Trustee has been made;
(iii) any
such Senior Debt Security with respect to which the Company has effected defeasance pursuant to the terms hereof, except to the
extent provided in Section 4.02; and
(iv) Senior
Debt Securities which have been paid pursuant to Section
11.06 or in exchange for or in lieu of which other Senior Debt Securities have been authenticated and delivered pursuant
to this Senior Debt Securities Indenture, other than any such Senior Debt Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Senior Debt Securities are held by a bona fide purchaser in whose
hands such Senior Debt Securities are valid obligations of the Company;
provided, however, that
in determining whether the Holders of the requisite principal amount of the Outstanding Senior Debt Securities of any series have
given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal amount of a Senior
Debt Security denominated in a Foreign Currency shall be the dollar equivalent, determined on the date of original issuance of
such Senior Debt Security, of the principal amount of such Senior Debt Security; and (ii) Senior Debt Securities beneficially
owned by the Company, the Guarantor or any other obligor upon the Senior Debt Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding except that, in determining whether the Trustee shall
be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Senior Debt Securities
for which a Responsible Officer of the Trustee has received an Officer’s Certificate stating that such Senior Debt Securities
are so beneficially owned shall be so disregarded; provided, further, however,
that Senior Debt Securities so
beneficially owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee’s right so to act with respect to such Senior Debt Securities and that the pledgee is not the
Company, the Guarantor or any other obligor upon the Senior Debt Securities or any Affiliate of the Company, the Guarantor or
of such other obligor.
“Paying Agent”
means any Person (which may include the Company or the Guarantor) authorized by the Company to pay the principal of, or any premium
or interest on, or any Additional Amounts with respect to, any Senior Debt Securities on behalf of the Company. Except as otherwise
specified as contemplated by Section 3.01 hereof, The
Bank of New York Mellon, acting through its London Branch will act as Paying Agent in respect of the Senior Debt Securities of
any series.
“Payment
Statement” means the statement to be delivered to the Company or Guarantor by the Trustee, substantially in the form
set forth in Exhibit I to Appendix I, pursuant to Section
6.02.
“Person”
means any individual, company, corporation, firm, partnership, joint venture, association, organization, state or agency of a
state or other entity, whether or not having separate legal personality.
“Place of Payment”,
when used with respect to the Senior Debt Securities of any series, means the place or places where the principal of, or any premium
or interest on, or any Additional Amounts with respect to the Senior Debt Securities of that series are payable as specified pursuant
to Section 3.01 or, if not so specified, as
specified in Section 10.02.
“Predecessor Security”
of any particular Senior Debt Security means every previous Senior Debt Security evidencing all or a portion of the same debt
as that evidenced by such particular Senior Debt Security; and, for the purposes of this definition, any Senior Debt Security
authenticated and delivered under Section 3.06 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Senior Debt Security shall be deemed to evidence the same debt
as the mutilated, destroyed, lost or stolen Senior Debt Security.
“Redemption Date”,
when used with respect to any Senior Debt Security to be redeemed, means the date fixed for such redemption by or pursuant to
this Senior Debt Securities Indenture.
“Redemption Price”,
when used with respect to any Senior Debt Security to be redeemed, means the price at which it is to be redeemed pursuant to this
Senior Debt Securities Indenture, which shall include the Early Redemption Amount (Tax), Early Redemption Amount (Call) or Early
Redemption Amount (Put), as applicable.
“Record Date”
for the interest payable on any Interest Payment Date on Senior Debt Securities of any series means the date specified for the
purpose pursuant to Section 3.01.
“regulated
entity” means any entity to which Law 11/2015 applies as provided under article 1.2 of Law 11/2015, as amended from
time to time, which includes, certain credit institutions, investment firms, and certain of their parent or holding companies;
“Regulator”
means the European Central Bank or such other or successor authority exercising primary bank supervisory authority, in each case
with respect to prudential matters in relation to the Guarantor and/or the Group;
“relevant
resolution authority” means the Spanish Fund for the Orderly Restructuring of Banks, the European Single
Resolution Mechanism, as the case may be, according to Law 11/2015, and any other entity with the authority to exercise
the Spanish Bail-in Power from time to time.
“Responsible Officer”,
when used with respect to the Trustee, means any officer of the Trustee assigned to or working in the Corporate Trust Administration
unit (or any successor unit) of the Trustee located at the Corporate Trust Office of the Trustee, who shall have direct responsibility
for the administration of this Senior Debt Securities Indenture and, for purposes of Section 6.01(c)(ii), shall also include any
other officer of the Trustee to whom any corporate trust matter is referred because of such officer’s knowledge of and familiarity
with the particular subject.
“Senior Debt Securities”
has the meaning set forth in the recitals herein and more particularly means any series of Senior Debt Securities issued, authenticated
and delivered under this Senior Debt Securities Indenture.
“Senior Debt Securities Indenture”
means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms and forms of particular
series of Senior Debt Securities established pursuant to Section
3.01.
“Senior Debt Security”
means one of the Senior Debt Securities.
“Senior Debt Security Register”
and “Senior Debt Security Registrar” have the respective meanings specified
in Section 3.05.
“Senior Securities” means
Senior Debt Securities or any other unsecured and unsubordinated debt securities issued by the Company.
“Spanish
Bail-in Power” means any write-down, conversion, transfer, modification, or suspension power existing from time to
time under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain,
relating to (i) the transposition of BRRD, including but not limited to Law 11/2015, and up to 31 December 2015 (inclusive),
Law 9/2012, of 14 November, on restructuring and resolution of credit institutions, (ii) the SRM Regulation and (iii) the
instruments, rules and standards created thereunder, pursuant to which any obligation of a regulated entity (or other
affiliate of such regulated entity) can be reduced, cancelled, modified, or converted into shares, other securities, or other
obligations of such regulated entity or any other person (or suspended for a temporary period).
“Spanish
Insolvency Law” means Law 22/2003 (Ley Concursal) of 9 July 2003 regulating insolvency proceedings in Spain, or an equivalent
legal provision which replaces it in the future.
“Special Record Date”,
when used for the payment of any Default Interest on Senior Debt Securities of any series, means the date specified by the Company
for the purpose pursuant to Section 3.07.
“SRM
Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014,
establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in
the framework of the Single Resolution Mechanism and the Single Resolution Fund and amending Regulation (EU) No. 1093/2010,
as amended or superseded from time to time.
“Stated Maturity”,
when used with respect to any Senior Debt Security or any installment of principal thereof or interest thereon, means the date
or dates, if any, specified in, or determined in accordance with the terms of, such Senior Debt Security, including as the same
may be modified pursuant to the Spanish Bail-in Power set forth in Article
13, as the fixed date or dates on which the principal of such Senior Debt Security or such installment of principal or interest
(and Additional Amounts, if any) is due and payable.
“Subsidiary”
means any entity over which the Company or the Guarantor may have, directly or indirectly, control in accordance with Applicable
Banking Regulations;
“Trustee”
means the Person named as the “Trustee” in the first paragraph of this instrument until a successor trustee
shall have become such pursuant to the applicable provisions of this Senior Debt Securities Indenture, and thereafter “Trustee”
shall mean the Person who is then the Trustee hereunder, or, if a different Trustee is appointed for a particular series of Senior
Debt Securities, the Trustee named in the relevant indenture supplemental hereto as the Trustee for that particular series of
Senior Debt Securities and if at any time there is more than one such Person, “Trustee” shall mean and include
each such Person; and “Trustee” as used with respect to the Senior Debt Securities of any series shall mean
the Trustee with respect to the Senior Debt Securities of such series.
“Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended, as in effect at the date as of which this instrument
was executed, except as provided in Section 9.05.
“United States”
and “U.S.” mean the United States of America and, except in the case of Section
6.10 and Section 6.14, its territories and possessions.
“U.S.
Government Obligations” means securities that are noncallable and nonredeemable at the option of the issuer and that
are (i) direct obligations of the United States for which its full faith and credit are pledged and/or (ii) obligations of a Person
controlled
or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed
as a full faith and credit obligation of the United States, and shall also include a depository receipt issued by a bank (as defined
in Section 3(a)(2) of the Securities Act of 1933, as amended) , which may include the Trustee, as custodian with respect to any
such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held
by such custodian for the account of the holder of such depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of
or interest on or other amount with respect to the U.S. Government Obligation evidenced by such depository receipt.
Section 1.02.
Compliance Certificates and Opinions. Unless otherwise expressly provided for in this Senior Debt Securities Indenture,
upon any application or request by the Company or the Guarantor to the Trustee to take any action under any provision of this
Senior Debt Securities Indenture, the Company or Guarantor shall furnish to the Trustee an Officer’s Certificate stating
that all conditions precedent, if any, provided for in this Senior Debt Securities Indenture relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of the legal advisor rendering such opinion all such
conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of this Senior Debt Securities Indenture relating to
such particular application or request, no additional certificate or opinion need be furnished.
Every certificate
or opinion with respect to compliance with a condition or covenant provided for in this Senior Debt Securities Indenture (other
than Section 10.06) shall include:
(a) a
statement that each Person signing such certificate or opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a
brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c) a
statement that, in the opinion of each such Person, he has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a
statement as to whether, in the opinion of each such Person, such condition or covenant has been complied with.
Section 1.03.
Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion
of,
only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate
or opinion of an officer of the Company or the Guarantor may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, legal advisors, unless such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion or
representations are based are erroneous. Any such certificate or opinion of, or representations by, legal advisors may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the
Company or the Guarantor, as the case may be, stating that the information with respect to such factual matters is in the possession
of the Company or the Guarantor, as the case may be, unless such legal advisors know, or in the exercise of reasonable care should
know, that the certificate or opinion or representation with respect to such matters is erroneous.
Where any
Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Senior Debt Securities Indenture, they may, but need not, be consolidated and form one instrument.
Section 1.04.
Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided
by this Senior Debt Securities Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee
and, when it is hereby expressly required, to the Company or the Guarantor or to both of them. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the
Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Senior Debt Securities Indenture and (subject to Section
6.01) conclusive in favor of the Trustee and the Company and the Guarantor, if made in the manner provided in this Section.
(b) The
fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to him the execution thereof. When such execution is by a
signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient
proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing
the same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The
ownership of Senior Debt Securities shall be proved by the Senior Debt Security Register.
(d) Any
request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Senior Debt Security shall
bind every future Holder of the same Senior Debt Security and the Holder of every Senior Debt Security issued upon the registration
of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by
the Trustee, any Senior Debt Security Registrar, any Paying Agent, any Authenticating Agent, the Company or the Guarantor in reliance
thereon, whether or not notation of such action is made upon such Senior Debt Security or such other Senior Debt Security.
(e) If
the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution or an Officer’s Certificate, fix in advance a record
date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver
or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record
at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of
the requisite proportion of Outstanding Senior Debt Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Senior Debt Securities shall
be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date
shall be deemed effective unless it shall become effective pursuant to the provisions of this Senior Debt Securities Indenture
not later than six months after the record date.
Section 1.05.
Notices, Etc. to Trustee, Company or Guarantor. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this Senior Debt Securities Indenture to be made upon, given
or furnished to, or filed with,
(a) the
Trustee by any Holder or by the Company or the Guarantor shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or filed in writing (which may be via facsimile or email delivery of a
copy of such a document) to the Trustee at its Corporate Trust Office and the Trustee agrees to accept and act upon facsimile
transmission or email delivery of written instructions pursuant to this Senior Debt Securities Indenture; provided, however,
that (x) the party providing such written instructions, subsequent to such transmission of written instructions, shall
provide the originally executed instructions or directions to the Trustee in a timely manner, and (y) such originally
executed instructions or directions shall be signed by an authorized representative of the party providing such instructions
or directions; or
(b) the
Company or Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class air mail postage prepaid, to the Company or the Guarantor, to the address
of its principal office specified in the first paragraph of this Senior Debt Securities Indenture or at any other address previously
furnished in writing to the Trustee by the Company or the Guarantor.
The Trustee
agrees to accept and act upon instructions or directions pursuant to this Senior Debt Securities Indenture sent by unsecured e-mail,
portable document format (PDF), facsimile transmission or other similar unsecured electronic methods, provided, however, that
the Trustee shall have received from the Company an incumbency certificate listing persons designated to give such instructions
or directions and containing the titles and specimen signatures of such designated persons, which such incumbency certificate
shall be amended and replaced whenever a person is to be added or deleted from the listing, and provided further that the Trustee
shall have no obligation or responsibility to confirm or verify that the instruction or direction was in fact sent by, or on behalf
of, a person so designated to give instructions or directions. If the Company elects to give the Trustee e-mail or facsimile instructions
(or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's
understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses
arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding a conflict
or inconsistency between such instructions and a subsequent written instruction. The Company agrees to assume all risks arising
out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the
risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.
Section 1.06.
Notice to Holders; Waiver. When this Senior Debt Securities Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly provided) if given in writing and mailed, first-class
postage prepaid, to each Holder of a Senior Debt Security affected by such event in the manner and to the extent provided in Section
313(c) of the Trust Indenture Act with respect to reports pursuant to Section 7.03(a).
For so long
as the Senior Debt Securities of any series are represented by Global Securities, the Company will deliver a copy of all notices
with respect to such series to the Holder (if the address of such Holder is known to the Company).
When notice
to Holders of Senior Debt Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Senior
Debt Securities Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance
upon such waiver. In case by reason of the
suspension
of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification
as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 1.07.
Language of Notices, Etc. Any notice under this Senior Debt Securities Indenture shall be in the English language,
except that, if the Company so elects, any published notice may be in an official language of the country of publication.
Section 1.08.
Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision
hereof which is required to be included in this Senior Debt Securities Indenture by any of the provisions of the Trust Indenture
Act, such required provision of the Trust Indenture Act shall control. If at any future time any provision required to be included
herein by the Trust Indenture Act as in force at the date as of which this Senior Debt Securities Indenture was executed or any
limitation imposed by the Trust Indenture Act at such date on any provision otherwise included herein would not be so required
or imposed (in whole or in part) if this Senior Debt Securities Indenture were executed at such future time, the Company, the
Guarantor and the Trustee may enter into one or more indentures supplemental hereto pursuant to Section
9.01 to change or eliminate (in whole or in part) such provision or limitation of this Senior Debt Securities Indenture in
conformity with the requirements of the Trust Indenture Act as then in force, except that (subject to Article 9) no
provision or limitation required to be included herein by Sections 310(a)(1) and (a)(2), 315(a), (c), (d)(l), (d)(2), (d)(3) and
(e), 316(a)(1)(A), (a)(l)(B), (a)(2), (a) (last sentence) and (b) of the Trust Indenture Act as in force at the date as of which
this Senior Debt Securities Indenture was executed may be so changed or eliminated.
Section 1.09.
Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.10.
Successors and Assigns. All covenants and agreements in this Senior Debt Securities Indenture by the Company or
the Guarantor shall bind their respective successors and assigns, whether so expressed or not.
Section 1.11.
Separability Clause. In case any provision in this Senior Debt Securities Indenture or in the Senior Debt Securities
shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1.12.
Benefits of Senior Debt Securities Indenture. Nothing in this Senior Debt Securities Indenture, in the Senior Debt
Securities or the Guarantees, express or implied, shall give to any Person, other than the parties hereto and any Senior Debt
Securities Registrars or any Paying Agent or Calculation Agent with respect to any Senior Debt Securities and their successors
hereunder, and the Holders of Senior Debt Securities, any benefit or any legal or equitable right, remedy or claim under this
Senior Debt Securities Indenture.
Section 1.13.
Governing Law. This Senior Debt Securities Indenture, the Senior Debt Securities and the Guarantees shall be governed
by and construed in accordance with the laws of the State of New York, without giving effect to the choice of law provisions,
except that the authorization and execution of the Senior Debt Securities Indenture, the Senior Debt Securities and the Guarantees
shall be governed by (in addition to the laws of the State of New York relevant to execution) the respective jurisdictions of
organization of the Company, the Guarantor and the Trustee, as the case may be.
Section 1.14.
Business Days and Legal Holidays. The terms of the Senior Debt Securities shall provide that, in any case where
any Interest Payment Date, Redemption Date, Maturity or Stated Maturity, of a Senior Debt Security shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this Senior Debt Securities Indenture or the Senior Debt
Securities other than a provision in the Senior Debt Securities that specifically states that such provision shall apply in lieu
of this Section) payments of interest, if any (and premium, if any) or principal and the exchange of the Senior Debt Security
need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment
(or such other Business Day as shall be provided in such Senior Debt Security) with the same force and effect as if made on such
Interest Payment Date, Redemption Date, Maturity or Stated Maturity, provided that no interest shall accrue on
such payment for the period from and after such Interest Payment Date, Redemption Date, Maturity or Stated Maturity, as the case
may be.
Section 1.15.
Appointment of Agent for Service. Each of the Company and the Guarantor has designated and appointed Banco Santander,
S.A., New York Branch, 45 E. 53rd Street, New York, New York 10022, as its authorized agent (the “Authorized
Agent”) upon which process may be served in any suit or proceeding in any Federal or State court in the Borough of Manhattan,
The City of New York arising out of or relating to the Senior Debt Securities or this Senior Debt Securities Indenture, but for
that purpose only, and agrees that service of process upon said Authorized Agent shall be deemed in every respect effective service
of process upon it in any such suit or proceeding in any Federal or State court in the Borough of Manhattan, The City of New York,
New York. Such appointment shall be irrevocable so long as any of the Senior Debt Securities remain Outstanding until the appointment
of a successor by the Company or the Guarantor and such successor’s acceptance of such appointment. Upon such acceptance,
the Company or the Guarantor shall notify the Trustee of the name and address of such successor. Each of the Company and the Guarantor
further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as
may be necessary to continue such designation and appointment of said Authorized Agent in full force and effect so long as any
of the Senior Debt Securities shall be Outstanding. The Trustee shall not be obligated and shall have no responsibility with respect
to any failure by the Company or the Guarantor to take any such action. Each of the Company and the Guarantor hereby irrevocably
submits (for the purposes of any such suit or proceeding) to the non-exclusive jurisdiction of any such court in which any such
suit or proceeding is so instituted, and waives, to the extent it may effectively do so, any objection it may have now or hereafter
to the laying of the venue of any such suit or
proceeding.
To the extent that the Company may be entitled, in any jurisdiction in which judicial proceedings may at any time be commenced
with respect to or arising out of this Senior Debt Securities Indenture to claim for itself or its revenues, assets or properties
immunity (whether by reason of sovereign immunity or otherwise) from suit, from the jurisdiction of any court (including, but
not limited to, any court of the United States of America or the State of New York) or from any legal process with respect to
itself or its property, from attachment prior to judgment, from set-off, from execution of a judgment, from the grant of injunctive
relief, whether prior to or after judgment, or from any other legal process (including, without limitation, in relation to enforcement
of any arbitration award), and to the extent that in any such jurisdiction there may be attributed such an immunity (whether or
not claimed), the Company hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity and consents to the
grant of any such relief.
Section 1.16.
Calculation Agent. If the Company appoints a Calculation Agent pursuant to Section 3.01 with
respect to any series of Senior Debt Securities, any determination of the interest rate on, or other amounts in relation to, such
series of Senior Debt Securities in accordance with the terms of such series of Senior Debt Securities by such Calculation Agent
shall (in the absence of manifest error, bad faith or willful misconduct) be binding on the Company, the Guarantor, the Trustee
and all Holders and (in the absence of manifest error, bad faith or willful misconduct) no liability to the Holders shall attach
to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions.
Section 1.17.
Waiver of Jury Trial. EACH OF THE PARTIES HERETO, AND EACH HOLDER OF A SENIOR DEBT SECURITY BY ITS ACCEPTANCE THEREOF,
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS SENIOR DEBT SECURITIES INDENTURE, THE SENIOR DEBT SECURITIES OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 1.18.
Judgment Currency. Any payment on account of an amount that is payable in U.S. dollars (the “Required Currency”)
which is made to or for the account of any Holder or the Trustee in lawful currency of any other jurisdiction (the “Judgment
Currency”), whether as a result of any judgment or order or the enforcement thereof or the liquidation of the Company
shall constitute a discharge of the Company obligation under this Senior Debt Securities Indenture and the Senior Debt Securities
only to the extent of the amount of the Required Currency with such Holder or the Trustee, as the case may be, could purchase
in the London foreign exchange markets with the amount of the Judgment Currency in accordance with normal banking procedures at
the rate of exchange prevailing on the first Business Day following receipt of the payment in the Judgment Currency. If the amount
of the Required Currency that could be so purchased is less than the amount of the Required Currency originally due to such Holder
or the Trustee, as the case may be, the Company shall indemnify and hold harmless the Holder or the Trustee, as the case may be,
from and against all loss or damage arising out of, or as a result of, such deficiency. This indemnity shall constitute an obligation
separate and
independent
from the other obligations contained in this Senior Debt Securities Indenture or the Senior Debt Securities, shall give rise to
a separate and independent cause of action, shall apply irrespective of any indulgence granted by any Holder or the Trustee from
time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect
of an amount due hereunder or under any judgment or order.
Article
2
Senior Debt Security Forms
Section 2.01.
Forms Generally. The Senior Debt Securities of each series shall be issuable in registered form and in such forms
as shall be established by or pursuant to a Board Resolution of the Company, or an Officer’s Certificate, or in one or more
indentures supplemental hereto, pursuant to Section 3.01, in each case with such insertions, omissions,
substitutions and other variations as are required or permitted by this Senior Debt Securities Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any
applicable law or rule or regulation made pursuant thereto or with the rules of any securities exchange or Depositary therefor,
or as may, consistently herewith, be determined by the officers executing such Senior Debt Securities, all as evidenced by any
such execution.
The Trustee’s
certificates of authentication shall be in substantially the form set forth in Section
2.03 or Section 6.15.
The Guarantee
by the Guarantor to be endorsed on the Senior Debt Securities of each series shall be substantially in the form set forth in this
Article, or as shall be established by or pursuant to a Board Resolution or Officer’s Certificate of the Guarantor, or in
one of more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Senior Debt Securities Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officer
or officers executing such Guarantees, as evidenced by the officer’s or officers’ execution (whether by facsimile
or otherwise) of the Guarantees.
The definitive
Senior Debt Securities and Guarantees shall be printed, lithographed or engraved or produced by any combination of these methods
or may be produced in any other manner permitted by the rules of any securities exchange on which the Senior Debt Securities may
be listed, all as determined by the officers executing such Senior Debt Securities and Guarantees, as evidenced by their execution
thereof.
Section 2.02.
Status of the Senior Debt Securities. The Senior Debt Securities of any series constitute direct, unconditional,
unsubordinated and unsecured obligations of the Company, and upon the insolvency of the Company (and unless they qualify as subordinated
claims under Article 92 of the Spanish Insolvency Law and subject to any applicable statutory exceptions) will rank pari passu
and ratably without preference
among
themselves and the payment obligations of the Company under the Senior Debt Securities of such series will rank at least pari
passu with all of the Company’s other unsecured and unsubordinated indebtedness, present and future. The obligations
of the Company in respect of the Senior Debt Securities of each series will be effectively subordinated to those obligations that
are preferred under the Spanish Insolvency Law.
Section 2.03.
Form of Guarantee. The Guarantee shall be in substantially the following form:
GUARANTEE
OF BANCO SANTANDER, S.A.
This Guarantee
is made on ___,___ by BANCO SANTANDER, S.A. (herein called the “Guarantor,” which term includes any successor
person under the Indenture (as defined on the reverse hereof)) in favor of the Holder of the Senior Debt Security upon which this
Guarantee is endorsed (“this Security”). This Guarantee is issued subject to the provisions of the Indenture
dated [*], 2015 among Santander US Debt, S.A. Unipersonal, the Guarantor and The Bank of New York Mellon, as Trustee, as supplemented
from time to time (the “Indenture”), and each Holder of this Security, by accepting the same, agrees to and
shall be bound by such provisions.
(a) Guarantee.
The Guarantor
hereby fully, unconditionally and irrevocably guarantees (the “Guarantee”) to each Holder of this Security
and to the Trustee on behalf of each such Holder the due and punctual payment of the principal of, any premium and interest on,
and any Additional Amounts with respect to the Security and the due and punctual payment of the sinking fund payments (if any)
provided for pursuant to the terms of this Security and any and all amounts of whatever nature which may become payable under
any of the foregoing or under the Indenture (including but not limited to, the fees, expenses and indemnities of the Trustee),
including as may be modified pursuant to the exercise of the Bail-in Power under Article
13 of the Indenture, and as and when the same shall become due and payable, whether at maturity, by acceleration, redemption,
repayment or otherwise, in accordance with the terms of this Security and of the Indenture, the Guarantor will pay to such Holder,
or to the Trustee for the account of such Holder, on demand the amount payable by the Company to such Holder. In case of the failure
of the Company punctually to pay any such principal, premium, interest, Additional Amounts or sinking fund payment and any and
all amounts under the
Indenture,
(including but not limited to, the fees, expenses and indemnities of the Trustee) the Guarantor hereby agrees to pay, or cause
any such payment to be made, punctually when and as the same shall become due and payable, whether at maturity, upon acceleration,
redemption, repayment or otherwise, and as if such payment were made by the Company in accordance with the terms of such Senior
Note and of the Indenture. Unless otherwise defined herein, all terms used in this Guarantee which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
IN WITNESS
WHEREOF, the Guarantor has caused this Guarantee to be duly executed.
Dated:
| BANCO SANTANDER, S.A. |
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| By: |
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Name: |
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Title: |
Authorized Signatory |
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Name: |
|
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Title: |
Authorized Signatory |
Section 2.04.
Form of Trustee’s Certificate of Authentication. The Trustee’s certificate of authentication shall be
in substantially the following form.
CERTIFICATE
OF AUTHENTICATION
This is one
of the Senior Debt Securities of the series designated herein referred to in the within-mentioned Senior Debt Securities Indenture.
| |
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| THE BANK OF NEW YORK MELLON, as Trustee |
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| By: |
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Authorized Signatory |
Article
3
The Senior Debt Securities
Section 3.01.
Amount Unlimited; Issuable in Series. The aggregate principal amount of Senior Debt Securities which may be authenticated
and delivered under this Senior Debt Securities Indenture is unlimited. The Senior Debt Securities may be issued in one or more
series.
There shall
be established by or pursuant to a Board Resolution of the Company or established by an Officer’s Certificate or established
in one or more indentures supplemental hereto, prior to the initial issuance of Senior Debt Securities of any series:
(a) the
title of the Senior Debt Securities of the series (which shall distinguish the Senior Debt Securities of the series from all other
Senior Debt Securities);
(b) the
price or prices (expressed as a percentage of the principal amount thereof) at which the Senior Debt Securities of the series
shall be issued;
(c) any
limit upon the aggregate principal amount of the Senior Debt Securities of the series which may be authenticated and delivered
under this Senior Debt Securities Indenture (except for Senior Debt Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Senior Debt Securities of the series pursuant to Section
3.04, Section 3.05, Section 3.06, Section 9.06 or Section
11.07 and except for any Senior Debt Securities which, pursuant to Section 3.03 are deemed never
to have been authenticated and delivered hereunder);
(d) the
date or dates, if any, on which the principal of (and premium, if any, on) the Senior Debt Securities of the series is payable;
(e) the
rate or rates, if any, at which the Senior Debt Securities of the series shall accrue interest or the manner of calculation of
such rate or rates, if any, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such
interest shall be payable or the manner of determination of such Interest Payment Dates, if other than as specified in Section
3.07 and the Regular Record Date for the interest payable on any Interest Payment Date and any dates required to be established
pursuant to Section 7.01;
(f) whether
any premium, upon redemption or otherwise, shall be payable by the Company on Senior Debt Securities of the series, and whether
such premium shall be redeemable at the option of the Company or the Holder;
(g) the
place or places where the principal of (and premium, if any) and any interest on Senior Debt Securities of the series shall be
payable, and the Paying Agent or Paying Agents who shall be authorized to pay principal of (and premium, if any) and interest
on Senior Debt Securities of such series, at least one of such Paying Agents having an office or agency in the Borough of Manhattan,
The City of New York;
(h) other
than with respect to any redemption of the Senior Debt Securities pursuant to Section 11.08, whether or
not such series of Senior Debt Securities are to be redeemable, in whole or in part, at the Company’s option and, if so
redeemable, the period or periods within which, the price or prices at which and the terms and conditions upon which, Senior Debt
Securities of the series may be redeemed, including the date referred to in Section 11.08;
(i) the
obligation, if any, of the Company to redeem or purchase Senior Debt Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which,
and the terms and conditions upon which Senior Debt Securities of the series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(j) if
other than denominations of $1,000 and any multiple thereof, the denominations in which Senior Debt Securities of the series in
each applicable form shall be issuable;
(k) if
other than the full principal amount thereof, the portion, or the manner of calculation of such portion, of the principal amount
of Senior Debt Securities of the series which shall be payable upon a declaration of acceleration or acceleration of the Maturity
thereof pursuant to Section 5.02, upon redemption of Senior Debt Securities of any series which are redeemable
before their Stated Maturity, or which the Trustee shall be entitled to file and prove a claim pursuant to Section
5.04;
(l) if
Additional Amounts, pursuant to Section 10.04, will not be payable;
(m) the
terms, if any, on which such Senior Debt Securities may or shall be converted into or exchanged at the option of the Company or
otherwise for stock or other securities of the Company or another entity or other entities, into a basket or baskets of such securities,
into an index or indices of such securities, into the cash value therefor or into any combination of the foregoing, any specific
terms relating to the adjustment thereof and the period during which such Senior Debt Securities may or shall be so converted
or exchanged;
(n) if
other than dollars, provisions, if any, for the Senior Debt Securities of the series to be denominated, and payments thereon to
be made, in Foreign Currencies and specifying the manner and Place of Payment thereon and any other terms with respect thereto;
(o) if
other than the coin or currency in which the Senior Debt Securities of that series are denominated, the coin or currency in which
payment of the principal of (and premium, if any) or interest, if any, on the Senior Debt Securities of such series shall be payable;
(p) if
the principal of (and premium, if any) or interest, if any, on the Senior Debt Securities of such series are to be payable, at
the election of the Company or a Holder thereof, in a coin or currency other than that in which the Senior Debt Securities are
denominated, the period or periods within which, and the terms and conditions upon which, such election may be made;
(q) whether
the Senior Debt Securities of the series shall be issued in whole or in part in the form of one or more Global Securities and
the initial Holder with respect to such Global Security or Senior Debt Securities;
(r) if
the Senior Debt Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange
of a temporary Senior Debt Security of such series or otherwise) only upon receipt of certain certificates or other documents
or satisfaction of other conditions, then the form and terms of such certificates, documents or conditions;
(s)
if the amounts of payments of principal of (and premium, if any) or interest, if any, on the Senior Debt Securities of
the series may be determined with reference to an index or are otherwise not fixed on the original issue date thereof, the manner
in which such amounts shall be determined and the Calculation Agent, if any, who shall be appointed and authorized to calculate
such amounts;
(t) any
other Events of Default or covenants with respect to the Senior Debt Securities of such series and, if other than as specified
in this Senior Debt Securities Indenture, the terms thereof;
(u) the
forms of Senior Debt Securities of the series;
(v) any
other terms of the series (which terms shall not be inconsistent with the provisions of this Senior Debt Securities Indenture,
except as permitted by Section 9.01(d)); and
(w) the
Trustee for such series of Senior Debt Securities who shall also be named in an indenture supplemental hereto for a particular
series of Senior Debt Securities if the Trustee for such series is not the Trustee named in the first paragraph of this Senior
Debt Securities Indenture.
All Senior
Debt Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided
in or pursuant to such action or in any such Officer’s Certificate or indenture supplemental hereto.
If the forms
of Senior Debt Securities of any series, or any of the terms thereof, are established by action taken pursuant to a Board Resolution,
a copy of the Board Resolution in respect thereof shall be delivered to the Trustee at or prior to the delivery of the Company
Order pursuant to Section 3.03 for the authentication
and delivery of such Senior Debt Securities.
Section 3.02.
Denominations. The Senior Debt Securities of each series shall be issuable in such denominations as shall be specified
as contemplated by Section 3.01. In the absence of any such specification with respect to Senior Debt Securities
of any series, the Senior Debt Securities of each series shall be issuable in denominations of $1,000 each and any integral multiple
thereof. Unless otherwise specified in accordance with Section 3.01, any Global Security issued and delivered
to the Holder shall be issued in the form of units with each $1,000 principal amount of such Global Security constituting one
unit.
Section 3.03.
Execution, Authentication, Delivery and Dating. The Senior Debt Securities shall be executed on behalf of the Company
by any one of the representatives of the Company authorized to do so by Board Resolution or by any member of the Board of Directors.
The signature of any of these authorized representatives on the Senior Debt Securities may be manual or facsimile. Senior Debt
Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officer of the
Company
shall bind the Company, notwithstanding that such individual has ceased to hold such office prior to the authentication and delivery
of such Senior Debt Securities.
At any time
and from time to time after the execution and delivery of this Senior Debt Securities Indenture, the Company may deliver Senior
Debt Securities of any series executed by the Company having endorsed thereon Guarantees by the Guarantor to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such Senior Debt Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Senior Debt Securities. In authenticating such Senior Debt Securities
and accepting the additional responsibilities under this Senior Debt Securities Indenture in relation to such Senior Debt Securities
the Trustee shall be entitled to receive, and (subject to Section
6.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the form and terms thereof have been established
in conformity with the provisions of this Senior Debt Securities Indenture.
If all the
Senior Debt Securities of any series are not to be issued at one time, it shall not be necessary to deliver an Opinion of Counsel
and an Officer’s Certificate at the time of issuance of each Senior Debt Security, but such opinion and certificate, with
appropriate modifications, shall be delivered at or before the time of issuance of the first Senior Debt Security of such series.
After any such first delivery, any separate request by the Company that the Trustee authenticate Senior Debt Securities of such
series for original issue will be deemed to be a certification by the Company that all conditions precedent provided for in the
Senior Debt Securities Indenture relating to authentication and delivery of such Senior Debt Securities continue to have been
complied with.
The Trustee
shall not be required to authenticate such Senior Debt Securities if the issue of such Senior Debt Securities pursuant to this
Senior Debt Securities Indenture will affect the Trustee’s own rights, duties or immunities under the Senior Debt Securities
and this Senior Debt Securities Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.
Each Senior
Debt Security shall be dated the date of its authentication.
No Senior
Debt Security appertaining thereto shall be entitled to any benefit under this Senior Debt Securities Indenture or be valid or
obligatory for any purpose unless there appears on such Senior Debt Security a certificate of authentication substantially in
the form provided for herein executed by or on behalf of the Trustee by manual signature, and such certificate upon any Senior
Debt Security shall be conclusive evidence, and the only evidence, that such Senior Debt Security has been duly authenticated
and delivered hereunder and that such Senior Debt Security is entitled to the benefits of this Senior Debt Securities Indenture. Notwithstanding
the foregoing, if any Senior Debt Security shall have been authenticated and delivered hereunder but never issued and sold by
the Company, and the Company shall deliver such Senior Debt Security to the Trustee for cancellation as provided in Section
3.09, for all purposes of this Senior Debt Securities Indenture, such Senior Debt Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the benefit of this Senior Debt Securities Indenture.
Section 3.04.
Temporary Senior Debt Securities. Pending the preparation of definitive Senior Debt Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Senior Debt Securities, having
endorsed thereon the Guarantee by the Guarantor, substantially of the tenor of the definitive Senior Debt Securities in lieu of
which they are issued, and, if applicable, having endorsed thereon Guarantees duly executed by the Guarantor substantially of
the tenor of the definitive Guarantees, which Senior Debt Securities may be printed, lithographed, typewritten, photocopied or
otherwise produced. Temporary Senior Debt Securities shall be issuable as Senior Debt Securities in registered form in any authorized
denomination, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such
Senior Debt Securities may determine, all as evidenced by such execution.
If temporary
Senior Debt Securities of any series are issued, the Company will cause, if so required by the terms of such temporary Senior
Debt Securities, definitive Senior Debt Securities of such series to be prepared without unreasonable delay. After the preparation
of definitive Senior Debt Securities of such series, the temporary Senior Debt Securities of such series shall be exchangeable
for definitive Senior Debt Securities of such series containing identical terms and provisions upon surrender of the temporary
Senior Debt Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary Senior Debt Securities of any series the Company shall
execute, the Guarantor shall endorse the Guarantee on, and the Trustee shall authenticate and deliver in exchange therefor, a
like aggregate principal amount of definitive Senior Debt Securities of the same series of authorized denominations containing
identical terms and provisions. Until so exchanged, unless otherwise provided therein or in a supplemental indenture relating
thereto, the temporary Senior Debt Securities of any series shall in all respects be entitled to the same benefits (but shall
be subject to all the limitations of rights) under this Senior Debt Securities Indenture as definitive Senior Debt Securities
of such series.
Section
3.05. Registration,
Registration of Transfer and Exchange. (a) Global Securities. This Section 3.05(a) shall
apply to Global Securities unless otherwise specified, as contemplated by Section 3.01.
Except as
otherwise specified, as contemplated by Section
3.01 hereof, the Senior Debt Securities shall be initially issued and represented by one or more Global Securities in registered
form, which shall be authenticated as contemplated by this Senior Debt Securities Indenture.
Each Global
Security authenticated under this Senior Debt Securities Indenture shall be registered in the name of the Depositary designated
for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and
each such Global Security shall constitute a single Senior Debt Security for all purposes of this Senior Debt Securities Indenture. Except
as otherwise specified, as contemplated by Section
3.01 hereof, each Global Security authenticated under this
Senior
Debt Securities Indenture shall be initially registered in the name of DTC or its nominee only.
Unless the
Global Security is presented by an authorized representative of the Holder to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of a nominee of the Holder and any payment is made to
such nominee, any transfer, pledge or other use of the Global Security for value or otherwise shall be wrongful since the registered
owner of such Global Security, the nominee of the Holder, has an interest in such Global Security.
Except as
otherwise specified, as contemplated by Section
3.01 hereof, any Global Security shall be exchangeable for definitive Senior Debt Securities only as provided in this paragraph.
A Global Security shall be exchangeable pursuant to this Section only (i) if the relevant Depositary notifies the Trustee that
it is unwilling or unable to continue to act as Depositary and a successor depositary is not appointed by the Trustee within 120
days of such notification, (ii) if, in the event of a winding-up of the Company, the Company fails to make a payment on the Senior
Debt Securities when due, or (iii) at any time if the Company at its option and in its sole discretion determines that the Global
Securities of a particular series should be exchanged for definitive Senior Debt Securities of that series. Any Global Security
that is exchangeable pursuant to the preceding sentence shall be exchangeable for, unless otherwise specified or contemplated
by Section 3.01, definitive Senior Debt Securities bearing
interest (if any) at the same rate or pursuant to the same formula, having the same date of issuance, the same date or dates from
which such interest shall accrue, the same Interest Payment Dates on which such interest shall be payable or the manner of determination
of such Interest Payment Dates, redemption provisions, if any, specified currency and other terms and of differing denominations
aggregating a like amount as the Global Security so exchangeable. Definitive Senior Debt Securities shall be registered in the
names of the owners of the beneficial interests in such Global Securities as such names are from time to time provided by the
Holder to the Trustee.
Any Global
Security that is exchangeable pursuant to the preceding paragraph, unless otherwise specified as contemplated by Section
3.01, shall be exchangeable for Senior Debt Securities issuable in authorized denominations of a like aggregate principal amount
and tenor.
No Global
Security may be transferred except as a whole by the Holder to a nominee of the Holder or by the Holder or any such nominee to
a successor of the Holder or a nominee of such successor. Except as provided above, owners solely of beneficial interests in a
Global Security shall not be entitled to receive physical delivery of Senior Debt Securities in definitive form and will not be
considered the holders thereof for any purpose under this Senior Debt Securities Indenture.
In the event
that a Global Security is surrendered for redemption or exchange for stock or other securities of the Company or another entity
or other entities in part pursuant to Section 11.07,
the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Global Security, without service
charge, a new Global
Security
in a denomination equal to and in exchange for the unredeemed or unexchanged portion of the principal of the Global Security so
surrendered.
The Agent
Members and any other beneficial owners shall have no rights under this Senior Debt Securities Indenture with respect to any Global
Security held on their behalf by a Holder, and such Holder may be treated by the Company, the Guarantor, the Trustee, and any
agent of the Company, the Guarantor, or the Trustee as the owner of such Global Security for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall (i) prevent the Company, the Guarantor, the Trustee, or any agent of the Company, the Guarantor
or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by a Holder or (ii) impair,
as between any such Holder or other clearance service and its Agent Members and Holders, the operation of customary practices
governing the exercise of the rights of a holder of any security, including without limitation the granting of proxies or other
authorization of participants to give or take any request, demand, authorization, direction, notice, consent, waiver or other
action which a Holder is entitled to give or take under this Senior Debt Securities Indenture.
In connection
with any exchange of interests in a Global Security for definitive Senior Debt Securities of another authorized form, as provided
in this Section 3.05(a), then
without unnecessary delay but in any event not later than the earliest date on which such interests may be so exchanged, the Company
shall deliver to the Trustee definitive Senior Debt Securities in aggregate principal amount equal to the principal amount of
such Global Security or the portion to be exchanged executed by the Company. On or after the earliest date on which
such interests may be so exchanged, such Global Security shall be surrendered by the Holder to the Trustee, as the Company’s
agent for such purpose, to be exchanged, in whole or from time to time in part, for definitive Senior Debt Securities without
charge (in which case the Company or Trustee may require payment of any taxes or governmental charges arising) and the Trustee
shall authenticate and deliver, in exchange for each portion of such Global Security, an equal aggregate principal amount of definitive
Senior Debt Securities of authorized denominations as the portion of such Global Security to be exchanged. Any Global
Security that is exchangeable pursuant to this Section
3.05 shall be exchangeable for Senior Debt Securities issuable in the denominations specified as contemplated by Section
3.01 and registered in such names as the Holder of such Global Security shall direct. If a definitive Senior Debt
Security is issued in exchange for any portion of a Global Security after the close of business at the office or agency
where such exchange occurs on any record date and before the opening of business at such office or agency on the relevant Interest
Payment Date, interest will not be payable on such Interest Payment Date in respect of such definitive Senior Debt Security, but
will be payable on such Interest Payment Date only to the Person to whom payments of interest in respect of such portion of such
Global Security are payable.
A Depositary
may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent
Members, to take any action which a holder is entitled to take under this Senior Debt Securities Indenture with respect to the
Senior Debt Securities.
(b) Except
as otherwise specified pursuant to Section 3.01, Senior Debt Securities of any series may only be exchanged
for a like aggregate principal amount of Senior Debt Securities of such series of other authorized denominations containing identical
terms and provisions. Senior Debt Securities to be exchanged shall be surrendered at an office or agency of the Company designated
pursuant to Section 10.02 for such purpose, and the Company shall execute, and if applicable, the Guarantor
shall endorse the Guarantee thereon, and the Trustee shall authenticate and deliver, in exchange therefor the Senior Debt Security
or Senior Debt Securities of the same series which the Holder making the exchange shall be entitled to receive.
Except as
otherwise specified pursuant to Section 3.01, the
Company shall cause to be kept in the principal corporate trust office of the Trustee a register (the register maintained in such
office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to
as the “Senior Debt Security Register”) in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Senior Debt Securities and of transfers of such Senior Debt Securities. Except
as otherwise specified pursuant to Section 3.01,
the Trustee is hereby appointed “Senior Debt Security Registrar” for the purpose of registering Senior Debt
Securities and transfers of Senior Debt Securities as herein provided.
Senior Debt
Securities shall be transferable only on the Senior Debt Security Register. Upon surrender for registration of transfer
of any Senior Debt Security of any series, together with the form of transfer endorsed on it, duly completed and executed at an
office or agency of the Company designated pursuant to Section
10.02 for such purpose, the Company shall execute, and if applicable, the Guarantor shall endorse the Guarantee thereon,
and the Trustee shall authenticate and deliver to the address specified in the form of transfer, within three Business Days, in
the name of the designated transferee or transferees, one or more new Senior Debt Securities of the same series of any authorized
denominations containing identical terms and provisions, of a like aggregate principal amount.
If only part of a Senior Debt Security
is transferred, a new Senior Debt Security of an aggregate principal amount equal to the amount not being transferred shall be
executed by the Company (and the Guarantee shall be endorsed thereon by the Guarantor), and authenticated and delivered by the
Trustee to the transferor, in the name of the transferor, within three Business Days after the Trustee acting as Paying Agent
pursuant to Section 10.02 receives the Senior Debt Security. The
new Senior Debt Security will be delivered to the transferor by uninsured post at the risk of the transferor to the address of
the transferor appearing in the Senior Debt Security Register. A new Senior Debt Security of an aggregate principal
amount equal to the amount being transferred shall be delivered by the Trustee to the transferee, in the name of the transferee,
within three Business Days after the Trustee acting as Paying Agent pursuant to Section
10.02 receives the Senior Debt Security. The new Senior Debt Security will be delivered to the transferee by uninsured
post at the risk of the transferee to the address of the transferee specified in the form of transfer.
All Senior
Debt Securities with a Guarantee endorsed thereon issued upon any registration of transfer or exchange of Senior Debt Securities
shall be the valid obligations of the Company, and the Guarantor, respectively evidencing the same debt, and entitled to the same
benefits under this Senior Debt Securities Indenture, as the Senior Debt Securities surrendered upon such registration of transfer
or exchange.
Every Senior
Debt Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Senior
Debt Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service
charge shall be made for any registration of transfer or exchange of Senior Debt Securities, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer
or exchange of Senior Debt Securities, other than exchanges pursuant to Section
3.04, Section 9.06 or Section
11.07 not involving any transfer.
The Company
shall not be required (i) to issue, register the transfer of or exchange any Senior Debt Security of any series during a period
beginning at the opening of business 15 days before the day of the giving of a notice of redemption of Senior Debt Securities
of such series selected for redemption under Section
11.03 and ending at the close of business on the day of the giving of such notice, or (ii) to register the transfer of or
exchange any Senior Debt Security so selected for redemption in whole or in part, except the unredeemed portion of any Senior
Debt Securities being redeemed in part.
Section 3.06.
Mutilated, Destroyed, Lost and Stolen Senior Debt Securities. If any mutilated Senior Debt Security (including any
Global Security) is surrendered to the Trustee, the Company may execute (and the Guarantee shall be endorsed thereon by the Guarantor)
and the Trustee shall, in the case of a Senior Debt Security, authenticate and deliver in exchange therefor a new Senior Debt
Security of the same series containing identical terms and provisions and of like amount, and bearing a number not contemporaneously
outstanding.
If there
shall be delivered to the Company, the Guarantor and to the Trustee (i) evidence to their satisfaction of the destruction, loss
or theft of any Senior Debt Security (including any Global Security) and (ii) such security or indemnity as may be required by
them to save each of them and any agent of any of them harmless, then, in the absence of notice to the Company, the Guarantor
or the Trustee that such Senior Debt Security has been acquired by a bona fide purchaser, the Company shall execute (and the Guarantee
shall be endorsed thereon by the Guarantor) and upon the Company’s request the Trustee shall authenticate and deliver in
lieu of any such destroyed, lost or stolen Senior Debt Security a new Senior Debt Security of the same series containing identical
terms and provisions and of like amount, and bearing a number not contemporaneously outstanding.
In case any
such mutilated, destroyed, lost or stolen Senior Debt Security has become or is about to become due and payable, the Company in
its discretion may, instead of issuing a new Senior Debt Security, pay such Senior Debt Security.
Upon the
issuance of any new Senior Debt Security under this Section, the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses
of the Trustee) connected therewith.
Every new
Senior Debt Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Senior Debt Security
shall constitute an original additional contractual obligation of the Company and the Guarantor, whether or not the destroyed,
lost or stolen Senior Debt Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this
Senior Debt Securities Indenture equally and proportionately with any and all other Senior Debt Securities of that series duly
issued hereunder.
The provisions of this Section, as amended
or supplemented pursuant to this Senior Debt Securities Indenture, are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Senior Debt Securities.
Section 3.07.
Payment; Interest Rights and Rights to Additional Amounts Preserved. Except as otherwise provided as contemplated
by Section 3.01 with respect to any series of Senior Debt Securities, interest, if any, and any Additional
Amounts on any Senior Debt Securities which is payable, and is paid or duly provided for, on any Interest Payment Date shall be
paid, to the Holder (including through a Paying Agent of the Company designated pursuant to Section 3.01 for
collection by the Holder) at the close of business on the Regular Record Date.
In the case
of Senior Debt Securities where payment is to be made in dollars, payment at any Paying Agent’s office outside The City
of New York will be made in dollars by check drawn on, or, at the request of the Holder, by transfer to a dollar account maintained
by the payee with, a bank in The City of New York.
In the case
of Senior Debt Securities where payment is to be made in a Foreign Currency, payment will be made as established pursuant to Section
3.01.
Any interest
on and any Additional Amounts with respect to any Senior Debt Security of any series which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date is herein called “Default Interest”. Default Interest on
any Senior Debt Security of any series shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by
virtue then of having been such Holder, and such Default Interest may be paid by the Company, at its election in each case, as
provided in clause (a) or (b) below:
(a) The
Company may elect to make payment of any Default Interest to the Persons in whose names the Senior Debt Securities of such series
(or their respective
Predecessor
Securities) are registered at the close of business on a Special Record Date for the payment of such Default Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Default Interest
proposed to be paid on each Senior Debt Security of such series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such
Default Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Persons entitled to such Default Interest as in this clause
provided. Thereupon the Company shall fix a Special Record Date for the payment of such Default Interest in respect
of such Senior Debt Securities of such series which shall be not more than 15 days and not less than 10 days prior to the date
of the proposed payment and not less than 10 days after it delivers to the Trustee notice of the proposed payment. The
Company shall promptly notify the Trustee of such Special Record Date and, in the name and at the expense of the Company, the
Trustee shall cause notice of the proposed payment of such Default Interest and the Special Record Date therefor to be given in
the manner and to the extent provided in Section 1.06, not less than 10 days prior to such Special Record Date. The
Trustee shall, at the instruction of the Company, in the name and at the expense of the Company, cause a similar notice to be
published in an Authorized Newspaper of general circulation in the Borough of Manhattan, The City of New York, but such publication
shall be not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such
Default Interest on the Senior Debt Securities of such series and the Special Record Date therefor having been so given, such
Default Interest on the Senior Debt Securities of such series shall be paid in the case of Senior Debt Securities to the Persons
in whose names such Senior Debt Securities (or their respective Predecessor Securities) are registered in the Senior Debt Security
Register at the close of business on the Special Record Date, and such Default Interest shall no longer be payable pursuant to
the following clause (b); or
(b) The
Company may make payment of any Default Interest on the Senior Debt Securities of any series to the Persons in whose names the
Senior Debt Securities are registered in any other lawful manner not inconsistent with the requirements of any securities exchange
on which such Senior Debt Securities may be listed, and upon such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable
by the Trustee.
Subject to
the foregoing provisions of this Section, each Senior Debt Security delivered under this Senior Debt Securities Indenture upon
registration of transfer of or in exchange for or in lieu of any other Senior Debt Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Senior Debt Security.
Section 3.08.
Persons Deemed Owners. Prior to due presentment of a Senior Debt Security for registration of transfer, the Company,
the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name such
Senior Debt Security is registered as the owner of such Senior Debt Security
for the purpose of receiving payment of
principal of (and premium, if any) and interest, if any, on and any Additional Amounts with respect to such Senior Debt Security
and for all other purposes whatsoever, whether or not such Senior Debt Security be overdue, and neither the Company, the Guarantor,
the Trustee nor any agent of the Company, the Guarantor, or the Trustee shall be affected by notice to the contrary. The aggregate
principal amount of the Senior Debt Securities of any series shall be reflected on the books and records of the Senior Debt Security
Registrar.
None of the Company, the
Guarantor, the Trustee, the Paying Agent or the Senior Debt Security Registrar shall have any responsibility or obligation to
any beneficial owner in a Global Security, an Agent Member or other Person with respect to the accuracy of the records of
the Depositary or its nominee or of any Agent Member, with respect to any ownership interest in the Senior Debt Securities
or with respect to the delivery to any Agent Member, beneficial owner or other Person (other than the Depository) of any
notice (including any notice of redemption) or the payment of any amount, under or with respect to such Senior Debt
Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Senior
Debt Securities and this Senior Debt Securities Indenture shall be given or made only to or upon the order of the registered
holders (which shall be the Depositary or its nominee in the case of the Global Security). The rights of beneficial owners in
the Global Security shall be exercised only through the Depositary subject to the applicable procedures. The Company, the
Guarantor, the Trustee, the Paying Agent and the Senior Debt Security Registrar shall be entitled to rely and shall be fully
protected in relying upon information furnished by the Depositary with respect to its members, participants and any
beneficial owners. The Trustee, the Paying Agent and the Senior Debt Security Registrar shall be
entitled to deal with the Depositary, and any nominee thereof, that is the registered holder of any Global Security for all
purposes of this Senior Debt Securities Indenture relating to such Global Security (including the payment of principal,
premium, if any, and interest and additional amounts, if any, and the giving of instructions or directions by or to the owner
or holder of a beneficial ownership interest in such Global Security) as the sole holder of such Global Security and shall
have no obligations to the beneficial owners thereof. None of the Company, the Guarantor, the Trustee, the Paying Agent or
the Senior Debt Security Registrar shall have any responsibility or liability for any acts or omissions of the Depositary
with respect to such Global Security, for the records of any such depositary, including records in respect of beneficial
ownership interests in respect of any such Global Security, for any transactions between the Depositary and any Agent Member
or between or among the Depositary, any such Agent Member and/or any holder or owner of a beneficial interest in such Global
Security, or for any transfers of beneficial interests in any such Global Security.
Notwithstanding the foregoing, with respect
to any Global Security, nothing herein shall prevent the Company, the Guarantor, the Trustee, or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other authorization furnished by any Depositary (or its nominee),
as a Holder, with respect to such Global Security or shall impair, as between such Depositary and owners of beneficial interests
in such Global Security, the operation of customary practices governing the exercise of the rights of such Depositary (or its nominee)
as Holder of such Global Security.
Each
Holder and beneficial owner that acquires its Senior Debt Security in the secondary market shall be deemed to acknowledge
and agree to be bound by and consent to the same provisions specified in this Senior Debt Securities Indenture and the
Senior Debt Securities to the same extent as the Holders and beneficial owners of the Senior Debt Securities that acquire the
Senior Debt Securities upon their initial issuance, including, without limitation, with respect to the acknowledgement and
agreement to be bound by and consent to the terms of the Senior Debt Securities, including in relation to the Spanish
Bail-in Power.
Section 3.09.
Cancellation. All Senior Debt Securities surrendered for payment, redemption, registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it.
The Company or the Guarantor may at any time deliver to the Trustee for cancellation any Senior Debt Securities previously authenticated
and delivered hereunder and all Senior Debt Securities so delivered shall be promptly cancelled by the Trustee. No Senior Debt
Securities shall be authenticated in lieu of or in exchange for any Senior Debt Securities cancelled as provided in this Section,
except as expressly permitted by the provisions of the Senior Debt Securities of any series or pursuant to the provisions of this
Senior Debt Securities Indenture. The Trustee shall deliver to the Company all cancelled Senior Debt Securities held by the Trustee.
Section 3.10.
Computation of Interest. Except as otherwise specified pursuant to Section 3.01 for Senior
Debt Securities of any series, payments of interest on the Senior Debt Securities of each series shall be computed on the basis
of a 360-day year of twelve 30-day months.
Section 3.11.
CUSIP Numbers. The Company in issuing any series of the Senior Debt Securities may use “CUSIP”, “ISIN”
and/or “Common Code” and/or other similar numbers (if then generally in use) or any successor to such numbers and
thereafter with respect to such series, the Trustee shall use “CUSIP”, “ISIN” and/or “Common Code”
and/or other similar numbers or successor numbers in notices of redemption as a convenience to Holders; provided that
any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Senior
Debt Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification
numbers printed on the Senior Debt Securities, and any such redemption shall not be affected by any defect in or omission of such
numbers. The Company will promptly notify the Trustee of any change in the “CUSIP”, “ISIN” and/or “Common
Code” and/or other similar numbers or successor numbers.
Section 3.12.
Additional Senior Debt Securities. The Company may, from time to time, without the consent of the Holders of the Senior
Debt Securities of any series, issue additional Senior Debt Securities (“Additional Senior Debt Securities”)
of one or more of the series of Senior Debt Securities issued under this Senior Debt Securities Indenture, guaranteed by the Guarantor,
having the same ranking and same interest rate, Maturity, redemption terms and other terms, except for the price to the public,
original interest accrual date, issue date and first Interest Payment Date, as the Senior Debt Securities; provided,
however, that such Additional Senior Debt Securities will not have the same CUSIP, ISIN or other
identifying
number as the outstanding Senior Debt Securities of such series unless the Additional Senior Debt Securities are fungible with
the Senior Debt Securities for U.S. federal income tax purposes. Any such Additional Senior Debt Securities, together
with the Senior Debt Securities of the applicable series, will constitute a single series of Senior Debt Securities under this
Senior Debt Securities Indenture and shall be included in the definition of “Senior Debt Securities” in this Senior
Debt Securities Indenture where the context requires.
Section 3.13.
Correction of Minor Defects in or Amendment of Senior Debt Securities. If, after issuance of any Senior Debt Security
(including any Global Security), the Company, the Guarantor or the Trustee shall become aware of any ambiguity, defect or inconsistency
in any term of a Senior Debt Security or Global Security, as the case may be, or, with respect to any Senior Debt Security (including
any Global Security) issued on or after the date hereof, the Company, the Guarantor and the Trustee agree to amend such Senior
Debt Security as contemplated by Section 9.01(l), the parties hereto shall provide for the execution, authentication,
delivery and dating of one or more replacement Senior Debt Securities or Global Securities, as the case may be, pursuant to Section
3.03 hereto.
Section 3.14.
Payments Subject to Fiscal Laws. All payments in respect of the Senior Debt Securities will be subject in all cases
to any fiscal or other laws and regulations applicable thereto in the place of payment (including FATCA, any regulations or agreements
thereunder, any official interpretation thereof, any intergovernmental agreements with respect thereto, or any law implementing
an intergovernmental agreement or any regulations or official interpretations relating thereto), but without prejudice to the
provisions of Section 10.04.
Article
4
Satisfaction and Discharge
Section 4.01.
Satisfaction and Discharge of Senior Debt Securities Indenture. This Senior Debt Securities Indenture shall upon
Company Request cease to be of further effect with respect to Senior Debt Securities of any series (except as to any surviving
rights of registration of transfer or exchange of Senior Debt Securities of such series herein expressly provided for), and the
Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Senior
Debt Securities Indenture with respect to the Senior Debt Securities of such series when
(a) either
(i) all
Senior Debt Securities of such series theretofore authenticated and delivered (other than (A) Senior Debt Securities which
have been destroyed, lost or stolen and which have been replaced or paid as provided in Section
3.06 and (B) Senior Debt Securities for whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided
in Section 10.03) have been delivered to the Trustee for cancellation; or
(ii) all
such Senior Debt Securities not theretofore delivered to the Trustee for cancellation
(A)
have become due and payable or will become due and payable at their Stated Maturity within one year, or
(B)
are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the Company, or
(C)
are to be exchanged for stock or other securities of the Company or another entity or other entities and notice of exchange
of such Senior Debt Securities for stock or other securities of the Company or another entity or other entities shall have been
given,
and the Company or the Guarantor has deposited or caused to
be deposited with the Trustee, as trust funds in trust for the purpose, an amount in cash, or U.S. Government Obligations (with
respect to Senior Debt Securities denominated in dollars) or Foreign Government Securities with respect to Senior Debt Securities
denominated in the same Foreign Currency) maturing, in the case of (A) and (B) above, as to principal and interest, if any, and,
in the case of (C) above, as to accrued interest, if any, in such amounts and at such times as will ensure the availability of
cash sufficient without reinvestment, as confirmed by a letter from an internationally recognized firm of independent public accountants
(which shall not be subject to the requirements of Section 1.02) in the form of an agreed-upon procedures letter in its then customary
form, to pay, satisfy and discharge all claims with respect to such Senior Debt Securities not theretofore delivered to the Trustee
for cancellation, in the case of (A) and (B) above, for principal (and premium, if any) and accrued interest, if any to the date
of such deposit (in the case of Senior Debt Securities which have become due and payable) or to the Redemption Date, as the case
may be;
(b) the
Company or the Guarantor has paid or caused to be paid all other sums payable hereunder by the Company with respect to the Senior
Debt Securities of such series; and
(c) the
Company or the Guarantor has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
all conditions precedent herein provided for relating to the satisfaction and discharge of this Senior Debt Securities Indenture
with respect to the Senior Debt Securities of such series have been complied with.
In addition,
upon the exercise of a Spanish Bail-in Power with respect to a series of Senior Debt Securities which results in the cancellation,
or the conversion into other securities, of all the principal amount of, and interest on such Senior Debt Securities or such Senior
Debt Securities otherwise ceasing to be outstanding, the Senior Debt Securities Indenture shall be satisfied and discharged as
to such series.
Notwithstanding
any satisfaction and discharge of this Senior Debt Securities Indenture, the obligations of the Company and the Guarantor to the
Trustee under Section 6.08, the obligations of
the Trustee to any Authenticating Agent under Section
6.15 and,
if
cash, U.S. Government Obligations and/or Foreign Government Securities shall have been deposited with the Trustee pursuant to
clause (a)(ii) of subsection (a)
of this Section, the obligations of the Trustee under Section
4.03 and the last paragraph of Section 10.03 shall
survive such satisfaction and discharge, including any termination under any bankruptcy law.
Section 4.02.
Defeasance and Covenant Defeasance. (a) If, pursuant to Section 3.01, provision is made for either or
both of (i) defeasance of the Senior Debt Securities of or within a series under subsection (b) of this Section 4.02
or (ii) covenant defeasance of the Senior Debt Securities of or within a series under subsection (c) of this Section
4.02, then such provisions, together with the other provisions of this Section 4.02 (with such modifications thereto
as may be specified pursuant to Section 3.01 with respect to any Senior Debt Securities), shall be applicable to such
Senior Debt Securities, and the Company or the Guarantor may at its option by Company Order, at any time, with respect to such
Senior Debt Securities, and the Guarantees thereof, elect to have (b) (if applicable) or (c) (if applicable)
be applied to such Outstanding Senior Debt Securities upon compliance with the conditions set forth below in this Section
4.02.
(b) Upon
the Company’s or the Guarantor’s exercise of the above option applicable to this subsection (b) with
respect to any Senior Debt Securities of or within a series and the Guarantees thereof, the Company shall be deemed to have
been discharged from its obligations with respect to such Outstanding Senior Securities and the Guarantor shall be deemed to
have been discharged from its obligations with respect to the related Guarantees on the date the conditions set forth in
subsection (d) of this Section 4.02 are satisfied (hereinafter, “defeasance”). For this
purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness
represented by such Outstanding Senior Debt Securities and the Guarantor shall be deemed to have satisfied all of its
obligations under this Senior Debt Securities Indenture and with respect to the Guarantees relating to such Senior Debt
Securities, and such Senior Debt Securities shall thereafter be deemed to be “Outstanding” only for the purposes
of subsection (e) of this Section 4.02 and the other Sections of this Senior Debt Securities Indenture referred
to in clauses (i) and (ii) below, and each of the Company and the Guarantor shall be deemed to have satisfied all of its
other obligations under such Senior Debt Securities, the Guarantees thereof and this Senior Debt Securities Indenture insofar
as such Senior Debt Securities and the Guarantees thereof are concerned (and the Trustee, at the expense of the Company and
the Guarantor, shall execute proper instruments acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of such Outstanding Securities to receive, solely
from the trust fund described in subsection (d) of this Section 4.02 and as more fully set forth in such Section,
payments in respect of the principal of (and premium, if any) and interest and Additional Amounts, if any, on such Senior
Debt Securities when such payments are due, (ii) the Company’s and the Guarantor’s obligations with respect to
such Senior Debt Securities under Section 3.05, Section 3.06, Section 10.02 and Section
10.03 and with respect to the payment of Additional Amounts, if any, on such Securities as contemplated by Section
10.04, (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (iv)
this
Section 4.02. The Company or the Guarantor may exercise its option under this subsection (b) notwithstanding
the prior exercise of its option under subsection (c) of this Section 4.02 with respect to such Senior
Debt Securities.
(c) Upon
the Company’s or the Guarantor’s exercise of the above option applicable to this subsection (c) with respect
to any Senior Debt Securities of or within a series, the Company and the Guarantor shall be released from, if specified pursuant
to Section 3.01, their obligations under any other covenant, with respect to such Outstanding Senior Debt Securities
and the Guarantees thereof on and after the date the conditions set forth in subsection (d) of this Section
4.02 are satisfied (hereinafter, “covenant defeasance”), and such Senior Debt Securities shall thereafter be deemed
to be not “Outstanding” for the purposes of any direction, waiver, consent or declaration (and the consequences of
any thereof) in connection with such other covenant, but shall continue to be deemed “Outstanding” for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect to such Outstanding Senior Debt Securities, the
Company and the Guarantor may omit to comply with and shall have no liability in respect of any term, condition or limitation
set forth in any such Section or such other covenant, whether directly or indirectly, by reason of any reference elsewhere herein
to any such Section or such other covenant or by reason of reference in any such Section or such other covenant to any other provision
herein or in any other document and such omission to comply shall not constitute a default or an Event of Default, as the case
may be, but, except as specified above, the remainder of this Senior Debt Securities Indenture and such Senior Debt Securities
and the Guarantee thereof shall be unaffected thereby.
(d) The
following shall be the conditions to application of subsection (b) or (c) of this Section
4.02 to any Outstanding Senior Securities of or within a series:
(i)
The Company or the Guarantor shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 6.11 who shall agree to comply with the provisions of this Section
4.02 applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Senior Debt Securities, (A) an amount in dollars or in such Foreign
Currency in which such Senior Debt Securities are then specified as payable at Stated Maturity, or (B) U.S. Government Obligations
applicable to such Senior Debt Securities (determined on the basis of the Currency in which such Senior Debt Securities are then
specified as payable at Stated Maturity) which through the scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, not later than one day before the due date of any payment of principal of (and premium, if any)
and interest, if any, on such Senior Debt Securities, money in an amount, or (C) a combination thereof, in any case, in an amount,
sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of an internationally recognized
firm of Independent Public Accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge,
(y) the principal of (and premium, if any) and interest, if any, on such outstanding Senior Debt Securities on the Stated Maturity
of such principal or installment of principal or interest and Additional Amounts and (z) any mandatory sinking fund payments or
analogous payments applicable to such Outstanding Senior Debt Securities on the day on which such payments are due and payable
in accordance with the terms of this Senior Debt Securities Indenture and of such Senior Debt Securities.
(ii) Such
defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture
or any other material agreement or instrument to which the Company or the Guarantor is a party or by which it is bound.
(iii) No
Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to such Senior
Debt Securities shall have occurred and be continuing on the date of the establishment of such trust and, with respect to legal
defeasance only, at any time during the period ending on the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such period).
(iv) In
the case of an election under subsection (b) of this Section 4.02, the Company or the Guarantor
shall have delivered to the Trustee an opinion of counsel of recognized standing stating that (A) the Company has received from
the Internal Revenue Service a letter ruling, or there has been published by the Internal Revenue Service a Revenue Ruling, or
(B) since the date of execution of this Senior Debt Securities Indenture, there has been a change in the applicable U.S. federal
income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the beneficial owners of
such Outstanding Senior Debt Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result
of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such legal defeasance had not occurred.
(v) In
the case of an election under subsection (c) of this Section 4.02, the Company or the Guarantor
shall have delivered to the Trustee an opinion of counsel of recognized standing to the effect that the beneficial owners of such
Outstanding Senior Debt Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of
such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not occurred.
(vi) Such
defeasance or covenant defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture
Act (assuming all relevant Securities are in default within the meaning of such Act).
(vii) Such
defeasance or covenant defeasance shall not result in the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended, and rules and regulations adopted by the Commission thereunder,
unless such trust shall be registered under such Act or exempt from registration thereunder.
(viii) The
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance or covenant defeasance under subsection (b) or (c) of this Section
4.02 (as the case may be) have been complied with.
(ix) Notwithstanding
any other provisions of this subsection (d), such defeasance or covenant defeasance shall be effected in compliance
with any additional or substitute terms, conditions or limitations which may be imposed on the Company in connection therewith
pursuant to Section 3.01.
(e) Subject
to the provisions of the last paragraph of Section 10.03, all money and U.S. Government Obligations (or other property
as may be provided pursuant to Section 3.01) (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this subsection (e), the “Trustee”) pursuant to subsection
(d) of Section 4.02 in respect of any Outstanding Senior Debt Securities of any series shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Senior Debt Securities and this Senior Debt Securities Indenture,
to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee
may determine, to the Holders of such Senior Debt Securities of all sums due and to become due thereon in respect of principal
(and premium, if any) and interest and Additional Amounts, if any, but such money need not be segregated from other funds except
to the extent required by law.
(f) Unless
otherwise specified with respect to any Senior Debt Security pursuant to Section 3.01, if, after a deposit referred
to in subsection (d)(i) has been made, (i) the Holder of a Senior Debt Security in respect of which such deposit was
made is entitled to, and does, elect pursuant to Section 3.01 or the terms of such Senior Debt Security to receive
payment in a Currency other than that in which the deposit pursuant to subsection (d)(i) has been made in respect
of such Security, or (ii) a Conversion Event occurs in respect of the Foreign Currency in which the deposit pursuant to (d)(i)
has been made, the indebtedness represented by such Senior Debt Security and the Guarantee thereof shall be deemed to have been,
and will be, fully discharged and satisfied through the payment of the principal of (and premium, if any), and interest, if any,
and Additional Amounts, if any, on such Senior Debt Security as the same becomes due out of the proceeds yielded by converting
(from time to time as specified below in the case of any such election) the amount or other property deposited in respect of such
Security into the Currency in which such Security becomes payable as a result of such election or Conversion Event based on the
applicable market exchange rate for such Currency in effect on the second Business Day prior to each payment date, except, with
respect to a Conversion Event, for such Foreign Currency in effect at the time of the Conversion Event.
(g) Anything
in this Section 4.02 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company or the Guarantor
from time to time upon Company Request any money or U.S. Government Obligations (or other property and any proceeds therefrom)
held by it as provided in subsection (d) of this Section 4.02 which, in the opinion of an internationally
recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to effect a defeasance or covenant defeasance, as applicable,
in accordance with this Section 4.02.
Section 4.03.
Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.03,
all cash, U.S. Government Obligations and Foreign Government Securities deposited with the Trustee pursuant to Section
4.01 shall be held in trust and such cash and the proceeds from such U.S. Government Obligations and/or Foreign Government
Securities shall be applied by it, in accordance with the provisions of the Senior Debt Securities of such series, and this Senior
Debt Securities Indenture, to the payment, either directly or through any Paying Agent (including the Company or Guarantor acting
as Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest
for the payment of which such cash, U.S. Government Obligations and/or Foreign Government Securities have been deposited with
the Trustee.
Section 4.04.
Repayment to Company. The Trustee, the Calculation Agent and any Paying Agent promptly shall pay to the Company
upon Company Request any excess money, U.S. Government Obligations and/or Foreign Government Securities held by them at any time
with respect to any series of Senior Debt Securities.
Section 4.05.
Reinstatement. If the Trustee or any Paying Agent is unable to apply any money or U.S. Government Obligations in
accordance with this Article 4 by reason of any legal proceeding or by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company and
the Guarantor under this Senior Debt Securities Indenture, the Senior Debt Securities and the Guarantees shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 4 until such time as the Trustee or such Paying
Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 4; provided,
however, that, if the Company or the Guarantor has made any payment of principal of or interest on any Senior Debt Securities
because of the reinstatement of its obligations, the Company and the Guarantor shall be subrogated to the rights of the Holders
of such Senior Debt Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or such
Paying Agent.
Article
5
Remedies
Section 5.01.
Events of Default. (a) An Event of Default with respect to any series of Senior Debt Securities shall result if:
(i)
Non-payment: default is made in the payment of any interest or principal due in respect of the Senior Debt Securities
of that series or any of them and such default continues for a period of seven days (or such other period as may be specified
pursuant to Section 3.01); or
(ii) Breach
of other obligations: the Company or the Guarantor fails to perform or observe any of its other obligations under or in
respect of the Senior Debt Securities of such series, the relevant Guarantee or the Senior Debt Securities Indenture and (except
in any case where such failure is incapable of remedy when no such continuation as is hereinafter mentioned will be required)
the failure continues for a period of 30 days next following the service by the Trustee on the Company or the Guarantor, as applicable
of a notice requiring the same to be remedied; or
(iii) Winding
up: any order is made by any competent court or resolution
passed for the winding up or dissolution of the Company or the Guarantor (except in any such case for the purpose of reconstruction
or a merger or amalgamation which has been previously approved by the Holders of at least a majority of the outstanding principal
amount of the Senior Debt Securities of that series or a merger with another institution in this case even without being approved
by Holders of the Senior Debt Securities of such series, provided that any entity that survives or is created as a result of such
merger is given a rating by an internationally recognized rating agency at least equal to the then current rating of the Company
or the Guarantor, as the case may be, at the time of such merger); or
(iv) Cessation
of business: the Company or the Guarantor ceases or threatens to cease to carry on the whole or a substantial part of
its business, save for the purposes of a reorganization (except in any such case for the purpose of reconstruction or a
merger or amalgamation which has been previously approved by the Holders of at least a majority of the outstanding principal
amount of the Senior Debt Securities of that series or a merger with another financial institution in such case even without
being approved by Holders of the Senior Debt Securities of such series, provided that any entity that survives or is created
as a result of such merger is given a rating by an internationally recognized rating agency at least equal to the then
current rating of the Company or the Guarantor, as the case may be, at the time of such merger), or the Company or the
Guarantor stops or threatens to stop payment of, or is unable to, or admits in writing inability to, pay, its debts (or any
class thereof) as they fall due, or is deemed unable to pay its debts pursuant to or for the purposes of any applicable law,
or is adjudicated or found bankrupt or insolvent; or
(v) Insolvency
proceedings: (a) proceedings are initiated against the Company or the Guarantor under any applicable liquidation, insolvency,
composition, reorganization or other similar laws, or an application made for the appointment of an administrative or other receiver,
manager, administrator or other similar official, or an administrative or other receiver, manager, administrator or other similar
official is appointed, in relation to the Company or the Guarantor or in relation to the whole or a part of the undertaking or
assets of either of them, or an encumbrancer takes possession of the whole or a part of the undertaking or assets of either of
them, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued or put in force against
the whole or a part of the undertaking or assets or any of them and (b) in any case is not discharged within 14 days; or
(vi) Arrangements
with creditors: the Company or the Guarantor initiates or consents to judicial proceedings relating to itself under any
applicable liquidation, insolvency, composition, reorganization or other similar laws or makes a conveyance or assignment for
the benefit of, or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors);
or
(vii) Guarantee:
the guarantee with respect to such series of Senior Debt Securities ceases to be a valid and binding obligation of the Guarantor
or it becomes unlawful for the Guarantor to perform its obligations under such guarantee or such guarantee is claimed by the Company
or the Guarantor not to be in full force and effect.
(b) Neither
a reduction or cancellation, in part or in full of the Amounts Due on, the conversion thereof into another security or obligation
of the Company, the Guarantor or another person, as a result of the exercise of the Spanish Bail-in Power by the relevant resolution
authority with respect to the Guarantor, nor the exercise of the Spanish Bail-in Power by the relevant resolution authority with
respect to the Senior Debt Securities of any series will be an Event of Default.
(c) No
exercise of a resolution tool by the relevant resolution authority or any action in compliance therewith shall constitute an
Event of Default.
Section 5.02.
Acceleration of Maturity; Rescission and Annulment. If any Event of Default shall occur in relation to any series
of Senior Debt Securities, the Trustee or the Holders of at least 25% in outstanding principal amount of the Senior Debt Securities
of that series may at their discretion declare that the Senior Debt Securities of such series and all interest then accrued thereon
shall be forthwith due and payable, whereupon the same shall become immediately due and payable at its early termination amount
(the “Early Termination Amount”) (which shall be its principal amount, unless otherwise specified pursuant to Section
3.01), together with all interest (if any) accrued thereon, without presentment, demand, protest or other notice of any kind,
all of which the Company will expressly waive, anything contained in the Senior Debt Securities of such
series
to the contrary notwithstanding, unless, prior thereto, all Events of Default in respect of the Senior Debt Securities of such
series shall have been cured.
At any time
after such a declaration of acceleration with respect to Senior Debt Securities of any series has been made but before a judgment
or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holder or
Holders of a majority in aggregate principal amount of the Outstanding Senior Debt Securities of such series, by written notice
to the Company, the Guarantor and the Trustee, may rescind or annul such declaration of acceleration and its consequences (including
any Event of Default under another series of Senior Debt Securities arising therefrom) but only if
(a) the
Company or the Guarantor have paid or deposited with the Trustee a sum sufficient to pay
(i)
the principal of (and premium, if any, on) any Senior Debt Securities of such series which have become due otherwise than
by such declaration of acceleration and any due and payable interest, and overdue interest and Additional Amounts, if any, thereon
at the rate or rates prescribed therefor in such Senior Debt Securities,
(ii) all
sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(b) all
Events of Default with respect to Senior Debt Securities of such series, other than the non-payment of the principal of and any
premium and interest on, and any Additional Amounts with respect to Senior Debt Securities of such series which shall have become
due solely by such declaration of acceleration, have been cured or waived as provided by Section 5.13.
No such rescission
or annulment shall affect any subsequent default or impair any right consequent thereon.
Section 5.03.
Collection of Indebtedness and Suits for Enforcement by Trustee. If an Event of Default with respect to Senior Debt
Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights
and the rights of the Holders of Senior Debt Securities of such series by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement
in this Senior Debt Securities Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper
remedy, including the institution of proceedings in Spain (but not elsewhere) for the winding-up of the Company or the Guarantor.
The Holders
of Senior Debt Securities by their acceptance thereof will be deemed to have waived any right of set-off or counterclaim or combination
of accounts with respect to the Senior Debt Securities or this Senior Debt Securities Indenture (or between the obligations under
or in respect of any Senior Debt Securities and any liability owed
by
a Holder to the Company) that they might otherwise have against the Company or the Guarantor, whether before or during a winding
up of the Company.
Notwithstanding
the foregoing, failure to make any payment in respect of a series of Senior Debt Securities, including the Guarantee thereon,
shall not be an Event of Default in respect of such Senior Debt Securities or the Guarantee, as applicable, if such payment is
withheld or refused (i) in order to comply with any law or regulation or with the order of any court of competent jurisdiction,
in each case applicable to such payment, or (ii) in case of doubt as to the validity or applicability of any such law, regulation
or order, in accordance with advice given as to such validity or applicability at any time before the expiry of such period of
14 days by independent legal advisers acceptable to the Trustee, provided, however, that the Trustee may
by notice to the Company or the Guarantor, as applicable, require the Company or the Guarantor, as the case may be, to take such
action (including but not limited to proceedings for a declaration by a court of competent jurisdiction) as the Trustee may be
advised in an Opinion of Counsel, upon which opinion the Trustee may conclusively rely, is appropriate and reasonable in the circumstances
to resolve such doubt, in which case the Company or the Guarantor, as applicable, shall forthwith take and expeditiously proceed
with such action and shall be bound by any final resolution of the doubt resulting therefrom. If any such action results in a
determination that the relevant payment can be made without violating any applicable law, regulation or order then the provisions
of the preceding sentence shall cease to have effect and the payment shall become due and payable on the expiration of 14 days
or seven days after the Trustee gives written notice to the Company or the Guarantor, as applicable, informing it of such resolution.
No recourse
for the payment of the principal of (or premium, if any) or interest, if any, on any Senior Debt Security, or for any claim based
thereon on the Guarantee endorsed thereon or otherwise in respect thereof or of the Guarantee and no recourse under or upon any
obligation, covenant or agreement of the Company or the Guarantor in this Senior Debt Securities Indenture, or in any Senior Debt
Security, in the Guarantee endorsed thereon, or because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder (other than the Guarantor under the terms of the Guarantees), officer or director, past,
present or future, of the Company or any Guarantor of any successor corporation of either the Company, either directly or through
the Company or the Guarantor or any successor corporation of either, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that to the extent
lawful all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution
of this Senior Debt Securities Indenture and the issue of the Senior Debt Securities of a series, and the endorsement of the Guarantees
thereon.
Section 5.04.
Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition, winding-up or other judicial proceeding relative to the Company or the Guarantor
or any other obligor upon the Senior Debt Securities of any series or Guarantee or to the property of the Company or the Guarantor
or such other obligor or their creditors (other than under or in connection with a scheme of
amalgamation
or reconstruction not involving bankruptcy or insolvency), the Trustee (irrespective of whether the principal of the Senior Debt
Securities of such series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company or the Guarantor for the payment of overdue principal (and premium,
if any) or interest, if any) and Additional Amounts shall be entitled and empowered, by intervention in such proceeding or otherwise,
to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed
in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys and other property payable
or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized by each Holder of a Senior Debt Security to make
such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to such
Holders or holders, to first pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee under Section
6.08.
Subject to
Article 8 and Section
9.02, nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder of any Senior Debt Security any plan of reorganization, arrangement, adjustment, or composition affecting any Senior
Debt Securities or the rights of any Holder of any Senior Debt Security or to authorize the Trustee to vote in respect of the
claim of any such Holder in any such proceeding.
Section 5.05.
Trustee May Enforce Claims Without Possession of Senior Debt Securities. All rights of action and claims under this
Senior Debt Securities Indenture or the Senior Debt Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Senior Debt Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel be
for the ratable benefit of the Holders of the Senior Debt Securities in respect of which such judgment has been recovered.
Section 5.06.
Application of Money Collected. Any money collected by the Trustee pursuant to this Article or, after an Event of
Default, any money or other property distributable in respect of the Company’s obligations under this Senior Debt Securities
Indenture, in respect of any series of Senior Debt Securities shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of principal (and premium, if any) or interest, if any,
and Additional Amounts upon presentation of such Senior Debt Securities and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid:
FIRST: To
the payment of all amounts applicable to such series of Senior Debt Securities due and owing to the Trustee (including any predecessor
Trustee) under Section 6.08;
SECOND: To
the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest, if any, and Additional Amounts
on such series of Senior Debt Securities in respect of which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and payable on such Senior Debt Securities for principal
(and premium, if any) and interest, if any, respectively; and
THIRD: To
the payment of the balance, if any, to the Company, the Guarantor or any other Person or Persons legally entitled thereto.
Section 5.07.
Limitation on Suits. No Holder of any Senior Debt Security of any series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Senior Debt Securities Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless
(a) such
Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to Senior Debt Securities
of the same series specifying such Event of Default and stating that such notice is a “Notice of Default” hereunder;
(b) the
Holders of not less than 25% in aggregate principal amount of the Outstanding Senior Debt Securities of such series shall have
made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name, as Trustee hereunder;
(c) such
Holder of a Senior Debt Security has offered to the Trustee reasonable indemnity and/or security satisfactory to it (as
determined by the Trustee in its sole discretion) against the costs, expenses and liabilities to be incurred in compliance
with such request;
(d) the
Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding;
and
(e) no
direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Senior Debt Securities of such series;
it being understood and intended
that no one or more Holders of Senior Debt Securities of a particular series shall have any right in any manner whatever by virtue
of, or by availing of, any provision of this Senior Debt Securities Indenture to affect, disturb or prejudice the rights of any
other such Holders or holders, or to obtain or to seek to obtain priority or preference over any other such Holders or holders
or to enforce any right under this Senior Debt Securities Indenture, except in the manner herein provided and for the equal and
ratable benefit of all Holders of Senior Debt Securities of such series.
Section 5.08.
Unconditional Right of Holders to Receive Principal, Premium and Interest, if any, and Additional Amounts. Notwithstanding
any other provision in this Senior Debt Securities Indenture, the Holder of any Senior Debt Security shall have the right, which
is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Section
3.07) interest, if any, and Additional Amounts on such Senior Debt Security on the respective Stated Maturities as expressed in
such Senior Debt Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of such Holder.
Section 5.09.
Restoration of Rights and Remedies. If the Trustee or any Holder of any Senior Debt Security has instituted any
proceeding to enforce any right or remedy under this Senior Debt Securities Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, the Guarantor, the Trustee and the Holders of Senior Debt Securities shall
be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders of Senior Debt Securities shall continue as though no such proceeding had been instituted.
Section 5.10.
Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Senior Debt Securities in the last paragraph of Section 3.06, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders of Senior Debt Securities is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 5.11.
Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Senior Debt Security to
exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or
to the Holders of Senior Debt Securities may be exercised from time to time, and as often as may be deemed expedient, by the Trustee
or by the Holders of Senior Debt Securities, as the case may be.
Section 5.12.
Control by Holders. The Holders of a majority in aggregate principal amount of the Outstanding Senior Debt Securities
of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available
to the Trustee hereunder, or exercising any trust or power conferred on the Trustee hereunder with respect to the Senior Debt
Securities of such series, provided that
(a) such
direction shall not be in conflict with any rule of law or with this Senior Debt Securities Indenture or with the Senior Debt
Securities of any series;
(b) the
Trustee shall not determine that the action so directed would be unjustly prejudicial to the Holders of any Senior Debt Securities
of any series not taking part in such direction with respect to which the Trustee is acting as the Trustee; and
(c) the
Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
Section 5.13.
Waiver of Past Defaults. The Trustee may without prejudice to its rights in respect of any subsequent Event of Default
from time to time and at any time waive any Event of Default or authorize any proposed Event of Default by the Company or the
Guarantor, provided that in its opinion the interests of the Holders shall not be materially prejudiced thereby and, provided,
further, that the Trustee shall not exercise any powers conferred on it by this clause in contravention of any notice in writing
to the Company, the Guarantor and the Trustee made pursuant to Section 5.02 hereof but so that no such
notice shall affect any waiver or authorization previously given or made. The Holders of not less than a majority in
aggregate principal amount of the Outstanding Senior Debt Securities of any series may on behalf of the Holders of all the Senior
Debt Securities of such series waive any past Event of Default hereunder with respect to such series and its consequences, except
an Event of Default:
(a) in
the payment of the principal of (or premium, if any) or interest, if any, and Additional Amounts on any Senior Debt Security of
such series, or
(b) in
respect of a covenant or provision hereof which under Article 9 cannot be modified or amended without the consent
of the Holder of each Outstanding Senior Debt Security of such series affected.
Upon any
such waiver, such Event of Default shall cease to exist, and any Event of Default with respect to any series arising therefrom
shall be deemed to have been cured and not to have occurred for every purpose of this Senior Debt Securities Indenture, but no
such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
Section 5.14.
Undertaking for Costs. All parties to this Senior Debt Securities Indenture agree, and each Holder of any Senior
Debt Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Senior Debt Securities Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the filing by any party litigant to such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’
fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder or group of Holders holding in the aggregate more than 10% in principal amount of the Outstanding
Senior Debt Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal
of (or premium, if any) or interest, if any, on any Senior Debt Security on or
after
the respective Stated Maturities expressed in such Senior Debt Security (or, in the case of redemption, on or after the Redemption
Date).
Article
6
The Trustee
Section 6.01.
Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default,
(i)
the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Senior Debt Securities
Indenture, and no implied covenants or obligations shall be read into this Senior Debt Securities Indenture against the Trustee;
and
(ii)
in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of
this Senior Debt Securities Indenture; but in the case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Senior Debt Securities Indenture (but need not confirm or investigate the accuracy
of mathematical calculations or other facts, statements, opinions or conclusions stated therein).
(b)
In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Senior Debt Securities Indenture, and use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own affairs.
(c)
No provision of this Senior Debt Securities Indenture shall be construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful misconduct, except that
(i)
this subsection (c) shall not be construed to limit the effect of subsections (a)
or (d) of this Section;
(ii) the
Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the
Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the Outstanding Senior Debt Securities of any series, determined
as provided herein, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Senior
Debt Securities Indenture with respect to the Senior Debt Securities of such series.
(d) no
provision of this Senior Debt Securities Indenture shall require the Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(e) Whether
or not therein expressly so provided, every provision of this Senior Debt Securities Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the provisions of this Section
6.01.
Section 6.02.
Spanish Tax Procedures and Obligations of the Trustee. In connection with each payment made on any Payment Date
(as defined in Appendix 1 attached hereto) in respect of the issued Senior Debt Securities hereunder, the Trustee or Paying Agent
shall comply with the tax procedures set forth in Appendix 1 hereto. The Trustee or Paying Agent shall have no duty or responsibility
to comply with other Spanish tax obligations arising out of this Senior Debt Securities Indenture. The Company or the Guarantor
shall be responsible for the payment of any and all amounts due under the Senior Debt Securities. Therefore, the Trustee or Paying
Agent shall not be liable for any amounts owed to any person due to its failure to properly comply with the tax procedures referred
to in this Section 6.02 and Appendix 1 hereto, except such as may result from the negligence, willful misconduct or
fraud of the Trustee or Paying Agent or any of its agents or employees. The Trustee or Paying Agent may request and rely conclusively
upon any instructions from the Company or the Guarantor in respect of any action necessary or required to be taken by the Trustee
or Paying Agent pursuant to this Section 6.02 and Appendix 1 hereto; provided, however, in no event shall the Trustee
or Paying Agent be required to expend or risk its own funds in the performance of any of its duties pursuant to this Section
6.02 and Appendix 1 hereto, or be obligated to take any legal or other action which might in its judgment involve or cause it
to incur any expense or liability unless it shall have been furnished with acceptable indemnification and security.
Section 6.03.
Notice of Defaults. Within 90 days after the occurrence of any Event of Default hereunder with respect to Senior
Debt Securities of any series of which a Responsible Officer of the Trustee has received written notice of such Event of Default
the Trustee shall transmit in the manner and to the extent provided in Section
1.06 to Holders of Senior Debt Securities of such series notice of such Event of Default hereunder of which the Trustee has
received written notice, unless such Event of Default shall have been cured or waived; provided, however,
that, the Trustee shall be protected in withholding such notice if it determines in good faith that the withholding of such notice
is in the interest of the Holders of Senior Debt Securities of such series.
Section 6.04.
Certain Rights of Trustee. Subject to the provisions of Section 6.01:
(a) the
Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, Officer’s
Certificate, or any other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, coupon or other evidence of indebtedness or other paper or document (whether in its original or facsimile form)
believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b) any
request or direction of the Company or the Guarantor mentioned herein shall be sufficiently evidenced by a Company Request or
Company Order or Guarantor Request or Guarantor Order, as the case may be and any resolution of the Board of Directors of the
Company or the Guarantor may be sufficiently evidenced by a Board Resolution;
(c) whenever
in the administration of this Senior Debt Securities Indenture the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s Certificate and/or an Opinion of Counsel;
(d) the
Trustee may consult with counsel of its own selection and the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the
Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Senior Debt Securities
Indenture at the request or direction of any of the Holders pursuant to this Senior Debt Securities Indenture, unless such
Holders shall have offered to the Trustee reasonable security and/or indemnity satisfactory to it against the costs, expenses
and liabilities which might be incurred by it in compliance with such request or direction;
(f) the
Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon or other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled
to examine the books, records and premises of the Company, personally or by agent or attorney; at the sole reasonable cost and
expense of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation;
provided that the Trustee shall not be entitled to such information which the Company is prevented from disclosing as a matter
of law or contract;
(g) the
Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(h) the
Trustee shall not be liable for any action taken, suffered or omitted to be taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by this Senior Debt Securities Indenture, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(i) anything
in this Senior Debt Securities Indenture notwithstanding, in no event shall the Trustee be liable for special, indirect, punitive
or consequential loss or damage of any kind whatsoever (including but not limited to loss or profit), even if the Trustee has
been advised as to the likelihood of such loss or damage and regardless of whether the claim for loss or damage is made in negligence
or otherwise;
(j) the
Trustee shall not be liable with respect to any Losses arising from action taken or omitted to be taken by it in good faith in
accordance with any instruction or communication received by email from any person reasonably believed by the Trustee to be authorized
by the Company or the Guarantor to send such instruction or communication, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;
(k) the
Trustee shall not be deemed to have notice of any Event of Default unless a Responsible Officer of the Trustee has received written
notice of such an Event of Default at the Corporate Trust Office of the Trustee, and such notice references the Senior Debt Securities
and/or this Senior Debt Securities Indenture;
(l) the
Trustee shall not be liable for any failure or delay in the performance of its obligations hereunder because of circumstances
beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, strikes,
work stoppages, civil or military disturbances, nuclear or natural catastrophes, fire, riot, embargo, loss or malfunctions of
utilities, communications or computer (software and hardware) services, government action, including any laws, ordinances, regulations,
governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Senior Debt
Securities Indenture;
(m) the
rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian
and other Person employed to act hereunder; and
(n) the
Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized
at such time to take specified actions pursuant to this Senior Debt Securities Indenture, which certificate may be signed by any
person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate
previously delivered and not superseded.
Section 6.05.
Not Responsible for Recitals or Issuance of Senior Debt Securities. The recitals contained herein and in the Senior
Debt Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company and
the Guarantor, and neither the Trustee nor any Authenticating Agent assumes any
responsibility
for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Senior Debt Securities Indenture
or of the Senior Debt Securities, except that the Trustee represents and warrants that it has duly authorized, executed and delivered
this Senior Debt Securities Indenture. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application
by the Company of Senior Debt Securities or the proceeds thereof. The Trustee shall not be responsible to make any calculation
with respect to any matter under this Senior Debt Securities Indenture other than as specifically provided for herein. The Trustee
shall have no duty to monitor or investigate the Company’s compliance with or the breach of, or cause to be performed or
observed, any representation, warranty, or covenant, or agreement of any Person, other than the Trustee, made in this Senior Debt
Securities Indenture
No provision
of this Senior Debt Securities Indenture shall be deemed to impose any duty or obligation on the Trustee to perform any act or
acts, receive or obtain any interest in property or exercise any interest in property, or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, taxation or other consequences that, in the sole
determination of the Trustee, are adverse to the Trustee, or in which the Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts, to receive or obtain any such interest in property or to exercise any such
right, power, duty or obligation.
Section 6.06.
May Hold Senior Debt Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Senior Debt Security
Registrar and any Calculation Agent or any other agent of the Company or the Guarantor, in its individual or any other capacity,
may become the owner or pledgee of Senior Debt Securities and, subject to Section 6.09 and
Section 6.14, may otherwise deal with the Company or the Guarantor with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Senior Debt Security Registrar, Calculation Agent or such other agent.
Section 6.07.
Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except
to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except
as otherwise agreed with the Company.
Section 6.08.
Compensation and Reimbursement. Each of the Company and the Guarantor each agree jointly and severally:
(a) to
pay to the Trustee from time to time compensation for all services rendered by it hereunder as agreed upon in writing by the Company
from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) except
as otherwise expressly provided herein, to reimburse the Trustee for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of this Senior Debt Securities Indenture (including
the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement
or advance as shall be
determined
by a court of competent jurisdiction to have been caused by its own negligence or bad faith; and
(c) to
indemnify the Trustee (which for purposes of this subparagraph Section 6.08(c) shall be deemed to include its
directors, officers, employees and agents) or any predecessor Trustee for, and to hold it harmless against, any and all loss,
liability, claim, damage or expense (including legal fees and expenses) and taxes (other than taxes based upon, measured by
or determined by the income of the Trustee) incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts hereunder including the costs and expenses of
defending itself against any claim (whether asserted by the Company, or any Holder or any other Person) or liability in
connection with the exercise or performance of any of its powers or duties hereunder, or in connection with enforcing the
provisions of this Section, but excluding any tax liabilities of the Trustee in respect of its net profits.
In addition
to, but without prejudice to its other rights under this Senior Debt Securities Indenture, when the Trustee incurs expenses or
renders services in connection with an Event of Default specified in Section
5.01, the fees, costs and expenses (including the charges and expenses of its counsel) and the compensation for the services are
intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar
law.
The Trustee
shall notify the Company and the Guarantor in writing of the commencement of any action or claim in respect of which indemnification
may be sought promptly after a Responsible Officer of the Trustee becomes aware of such commencement (provided that the failure
to make such notification shall not affect the Trustee’s rights hereunder) and the Company shall be entitled to participate
in, and to the extent it shall wish, to assume the defense thereof, including the employment of counsel reasonably satisfactory
to the Trustee. If the Company and the Trustee are being represented by the same counsel and the Company has assumed
the defense of the claim, the Trustee shall not be authorized to settle a claim without the written consent of the Company, which
consent shall not be unreasonably withheld.
As security
for the performance of the obligations of the Company and the Guarantor under this Section, the Trustee shall have a senior lien
to which the Senior Debt Securities are hereby made subordinate, upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the payment of principal of (or premium, if any) or interest, if any, on the Senior Debt
Securities.
“Trustee”
for purposes of this Section shall include any predecessor Trustee; provided, however, that the negligence, willful misconduct
or bad faith of any Trustee hereunder shall not affect the rights of any other Trustee hereunder.
The Trustee’s
rights to payment of its fees, reimbursement and indemnity under, and its lien provided for in, this Section
6.08 shall survive the payment in full of the Senior Debt Securities, the satisfaction and discharge of this Senior Debt Securities
Indenture, the resignation or removal of the Trustee, the termination for any reason of this
Senior
Debt Securities Indenture and the exercise of the Spanish Bail-in Power and the other relevant resolution tools by the relevant
resolution authority.
Section 6.09.
Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning
of Section 310(b) of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in
the manner provided by, and subject to the provisions of, Section 310(b) of the Trust Indenture Act and this Senior Debt Securities
Indenture.
Section 6.10.
Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder with respect to each series
which shall be a Person organized and doing business under the laws of the United States, any State thereof or the District of
Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State or District of Columbia authority and having a corporate trust office
or agency in the Borough of Manhattan, The City of New York, New York. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section,
the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article
6.
Section 6.11.
Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee
in accordance with the applicable requirements of Section 6.12.
(b) The
Trustee may resign at any time with respect to the Senior Debt Securities of one or more series by giving written notice thereof
to the Company and the Guarantor. If the instrument of acceptance by a successor Trustee required by Section
6.12 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Senior
Debt Securities of such series.
(c) The
Trustee may be removed at any time with respect to the Senior Debt Securities of any series by Act of the Holders of a majority
in principal amount of the Outstanding Senior Debt Securities of such series delivered to the Trustee and to the Company and the
Guarantor. If the instrument of acceptance by a successor Trustee required by Section 6.12 shall not
have been delivered to the Trustee within 30 days after the giving of such notice of removal, the Trustee may petition at the
expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Senior
Debt Securities of such series.
(d) If
at any time:
(i)
the Trustee shall fail to comply with Section 6.09 after written request therefor by
the Company or the Guarantor or by any Holder who has been a bona fide Holder of a Senior Debt Security of the series as to which
the Trustee has a conflicting interest for at least six months, or
(ii)
the Trustee shall cease to be eligible under Section 6.10 and shall fail to resign after
written request therefor by the Company or the Guarantor or by any Holder who has been a bona fide Holder of a Senior Debt Security
for at least six months, or
(iii)
the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer shall take charge, or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iv)
the Trustee shall fail to perform its obligations to the Company or the Guarantor under the Senior Debt Securities Indenture
in any material respect,
then, in any such case, (A) the
Company or the Guarantor by a Board Resolution may remove the Trustee with respect to any or all series of Senior Debt Securities
or (B) subject to Section 5.14 (and except
in the case of subparagraph 6.11(d)(iv) above), any Holder who has been a bona fide Holder of a Senior Debt Security for at least six months
(and, in the case of clause (d)(i) above,
who is a Holder of a Senior Debt Security of the series as to which the Trustee has a conflicting interest) may, on behalf of
himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect
to all Senior Debt Securities and the appointment of a successor Trustee or Trustees.
(e) If
the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any
cause, with respect to the Senior Debt Securities of one or more series, the Company and the Guarantor, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the Senior Debt Securities of such series (it being understood
that any successor Trustee may be appointed with respect to the Senior Debt Securities of one or more or all of such series and
at any time there shall be only one Trustee with respect to the Senior Debt Securities of any particular series), and shall comply
with the applicable requirements of Section 6.12. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Senior Debt Securities of any series
shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Senior Debt Securities of such series
delivered to the Company, the Guarantor and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements of Section 6.12, become the
successor Trustee with respect to the Senior Debt Securities of such series and to that extent supersede the successor Trustee
appointed by the Company and the Guarantor. If no successor Trustee with respect to the Senior Debt Securities of any series shall
have been so appointed by the Company or the Holders of Senior Debt Securities of such series and accepted appointment in the
manner
hereinafter
required by Section 6.12, any Holder who has been a bona fide Holder of a Senior Debt Security of such series
for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the Senior Debt Securities of such series.
(f) The
Company shall give notice to Holders of each resignation and each removal of the Trustee with respect to the Senior Debt Securities
of any series and each appointment of a successor Trustee with respect to the Senior Debt Securities of any series to the Holders
in the manner and to the extent provided in Section 1.06. Each notice shall include the name of the successor
Trustee with respect to the Senior Debt Securities of such series and the address of its Corporate Trust Office.
Section 6.12.
Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect
to all Senior Debt Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company,
the Guarantor and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of
the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company, the Guarantor or
the successor Trustee, such retiring Trustee shall, upon payment of its charges and subject to its lien provided for in Section
6.08, execute and deliver an instrument transferring to such successor Trustee, all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee
hereunder.
(b) In
case of the appointment hereunder of a successor Trustee with respect to the Senior Debt Securities of one or more (but not all)
series, the Company, the Guarantor, the retiring Trustee and each successor Trustee with respect to the Senior Debt Securities
of such series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment
and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Senior Debt Securities
of such series to which the appointment of such successor Trustee relates, (ii) if the retiring Trustee is not retiring with respect
to all Senior Debt Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the Senior Debt Securities of such series as to which
the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (iii) shall add to or change any
of the provisions of this Senior Debt Securities Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery
of such supplemental indenture the resignation or removal of the retiring Trustee
shall
become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Senior Debt Securities
of such series to which the appointment of such successor Trustee relates; but, on request of the Company, the Guarantor or any
successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder with respect to the Senior Debt Securities of such series to which the appointment of
such successor Trustee relates, subject to the lien provided for in Section 6.08.
(c) Upon
request of any such successor Trustee, the Company and the Guarantor shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in subsection (a)
or (b) of this Section 6.12, as the case may be.
(d) No
successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article 6.
Section 6.13.
Merger, Conversion, Consolidation or Succession Business. Any Person into which the Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Article, without
the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Senior Debt Securities
shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation
to such authenticating Trustee may adopt such authentication and deliver the Senior Debt Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated such Senior Debt Securities.
Section 6.14.
Preferential Collection of Claims. If and when the Trustee shall be or become a creditor of the Company or the Guarantor
(or any other obligor upon the Senior Debt Securities of a series), the Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of claims against the Company or the Guarantor (or any such other obligor).
Section 6.15.
Appointment of Authenticating Agent. The Trustee may at any time appoint an Authenticating Agent or Agents with
respect to one or more series of Senior Debt Securities which shall be authorized to act on behalf of the Trustee to authenticate
Senior Debt Securities of such series upon original issue, or issued upon exchange, registration of transfer or partial redemption
thereof or in lieu of destroyed, lost or stolen Senior Debt Securities, and Senior Debt Securities so authenticated shall be entitled
to the benefits of this Senior Debt Securities Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Senior Debt Securities Indenture to the authentication and delivery
of Senior Debt Securities by the Trustee or the Trustee’s certificate of
authentication,
such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and
a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall
be acceptable to the Company and the Guarantor and shall at all times be a corporation or national banking association organized
and doing business under the laws of the United States, any State thereof or the District of Columbia, authorized under such laws
to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision
or examination by Federal or State or District of Columbia authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section 6.15, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any Person
into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to the corporate
agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such Person
shall be otherwise eligible under this Section
6.15, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating
Agent may resign at any time by giving written notice thereof to the Trustee, the Company and the Guarantor. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent, the Company
and the Guarantor. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of this Section
6.15, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and the Guarantor and
shall give notice to the Holders of Senior Debt Securities in the manner and to the extent provided in Section
1.06. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of this Section
6.15.
The Company
and the Guarantor agree to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section
6.15.
If an appointment
with respect to one or more series is made pursuant to this Section, the Senior Debt Securities of such series may have endorsed
thereon, in lieu of the Trustee’s certificate of authentication, an alternate certificate of authentication in substantively
the following form:
This is one
of the Senior Debt Securities referred to in the within-mentioned Senior Debt Securities Indenture.
THE BANK OF NEW YORK MELLON,
as Trustee |
| |
| |
| By: |
|
| |
as Authenticating Agent |
Section 6.16.
Appointment of Additional Trustees. The Company and the Guarantor may appoint a Trustee for a particular series
of Senior Debt Securities other than the Trustee named in the first paragraph of this Senior Debt Securities Indenture by executing
and delivering an indenture supplemental hereto where such Trustee accepts such appointment as contemplated by Section
3.01(w) and Section 9.01(k) (it being understood that at any time there shall be only one Trustee with respect
to the Senior Debt Securities of any particular series); provided that, at the time of such acceptance, such
Trustee shall be qualified and eligible under this Article 6. Upon such acceptance, such Trustee shall
be vested with all the rights, powers, trusts and duties of a Trustee under this Senior Debt Securities Indenture with respect
to the Senior Debt Securities of such series.
Section 6.17.
Tax Withholding. Any amounts to be paid by the Company on the Senior Debt Securities shall be paid net of any deduction
or withholding imposed or required pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended
(the “Code”), any current or future regulations or official interpretations thereof, any agreement entered
into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to
any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (or any law implementing
such an intergovernmental agreement) (a “FATCA Withholding Tax”), and the Company shall not be required to
pay Additional Amounts on account of any FATCA Withholding Tax.
Any Paying
Agent shall be entitled to make a deduction or withholding from any payment which it makes under the Senior Debt Securities and
the Senior Debt Securities Indenture for or on account of (i) any present or future taxes, duties or charges if and to the extent
so required by any applicable law and (ii) any FATCA Withholding Tax (together, “Applicable Law”). In either
case, the Paying Agent shall make any payment after a deduction or withholding has been made pursuant to Applicable Law and shall
report to the relevant authorities the amount so deducted or withheld. In all cases, the Paying Agent shall have no obligation
to gross up any payment made subject to any deduction or withholding pursuant to Applicable Law. In addition, amounts deducted
or withheld by the Paying Agent as described in this paragraph will be treated as paid to the Holder of the Senior Debt Securities,
and the Company will not pay Additional Amounts in respect of such deduction or withholding, except to the extent required under
Section 10.04.
Article
7
Holders Lists and Reports by Trustee and Company
Section 7.01.
Company and Guarantor to Furnish Trustee Names and Addresses of Holders. The Company (or the Guarantor, if applicable),
with respect to any series of Senior Debt Securities, will furnish or cause to be furnished to the Trustee
(a) not
more than 15 days after each Regular Record Date (or after each of the dates to be specified for such purpose for non-interest
bearing Senior Debt Securities and Senior Debt Securities on which interest is paid less frequently than quarterly as contemplated
by Section 3.01), a list, in such form as the Trustee may reasonably require, of the names and addresses
of the Holders of Senior Debt Securities as of such Regular Record Date or such specified date, and
(b) at
such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to the time such list is furnished.
The
Company need not furnish or cause to be furnished to the Trustee pursuant to this Section
7.01 the names and addresses of Holders of Senior Debt Securities so long as the Trustee acts as Senior Debt Security Registrar
with respect to such series of Senior Debt Securities.
Section
7.02. Preservation of Information;
Communication to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and
addresses of Holders (i) contained in the most recent list furnished to the Trustee as provided in Section
7.01 and (ii) received by the Trustee in its capacity as Paying Agent or Senior Debt Security Registrar (if so acting). The
Trustee may dispose of any list furnished to it as provided in Section 7.01 upon receipt of a new list
so furnished.
(b) The
rights of the Holders of Senior Debt Securities of any series to communicate with other Holders with respect to their rights under
this Senior Debt Securities Indenture or under the Senior Debt Securities, and the corresponding rights and privileges of the
Trustee, shall be as provided by the Trust Indenture Act.
(c) Every
Holder, by receiving and holding a Senior Debt Security, agrees with the Company, the Guarantor and the Trustee that neither the
Company, the Guarantor nor the Trustee nor any agent of any of them shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders in accordance with subsection (b) or otherwise
made pursuant to the Trust Indenture Act.
Section
7.03. Reports by Trustee.
(a) On or before May 15 in each year following the date hereof, so long as any Senior Debt Securities are Outstanding hereunder,
the Trustee shall transmit to Holders as provided in the Trust Indenture Act a
brief
report dated as of a date required by and in compliance with the Trust Indenture Act.
(b) A
copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each securities exchange
upon which the Trustee has been notified that the Senior Debt Securities are listed, with the Commission and with the Company
and the Guarantor. The Company will notify the Trustee when Senior Debt Securities are listed on any securities exchange.
Section 7.04.
Reports by the Company and the Guarantor. The Company and the Guarantor shall:
(a) file
with the Trustee, within 15 days after the Company or the Guarantor, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any
of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company or the Guarantor
may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company or
the Guarantor is not required to file information, documents or reports pursuant to either of such Sections, then it shall file
with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission,
such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations. Delivery of such reports, information and documents to the Trustee is for informational purposes
only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company’s and the Guarantor’s, as applicable, compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate);
(b) file
with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to compliance by the Company and the Guarantor, as applicable,
with the conditions and covenants of this Senior Debt Securities Indenture as may be required from time to time by such rules
and regulations. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the
Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable
from information contained therein, including the Company’s and the Guarantor’s, as applicable, compliance with any
of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate); and
(c) transmit
to Holders, in the manner and to the extent required by the Trust Indenture Act, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to
subsections
(a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission.
(d) The
Trustee may conclusively presume that the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act or otherwise is complying with such reporting requirements unless and until a Responsible Officer of the Trustee receives
at the Corporate Trust Office of the Trustee a written notification from the Company stating otherwise. The Trustee shall have
no duty to examine any information, reports or other documents filed by the Guarantor or the Company pursuant to Section 13 or
15(d) of the Exchange Act, and need make no determination as to whether they comply with the requirements of this Section
7.04, its sole duty in respect thereof being to place them in its files and make them available for inspection by any Holder upon
reasonable request during normal business hours.
Article
8
Consolidation, Merger, Conveyance or Transfer
Section 8.01.
Company or Guarantor May Consolidate, Etc. Only on Certain Terms. The Company or the Guarantor may, without the
consent of Holders of any Senior Debt Securities of any series Outstanding under this Senior Debt Securities Indenture, consolidate
or amalgamate with or merge into any other corporation or convey or transfer or lease its properties and assets substantially
as an entirety to any Person, provided that:
(a) the
corporation formed by or into which the Company or the Guarantor is consolidated, amalgamated or merged or the Person which acquires
by conveyance or transfer the properties and assets of the Company or the Guarantor substantially as an entirety (i) shall be
a company organized and existing under the laws of any part of the European Union, and (ii) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, in the case of the Company, the
due and punctual payment of the principal of (and premium, if any), interest and Additional Amounts, if any, on all the Senior
Debt Securities in accordance with the provisions of such Senior Debt Securities and this Senior Debt Securities Indenture and,
in the case of the Guarantor, the guarantee provisions in Article 12, and the performance of every covenant
of this Senior Debt Securities Indenture on the part of the Company or the Guarantor, as the case may be, to be performed or observed;
(b) immediately
after giving effect to such consolidation, amalgamation, merger, conveyance or transfer, no Event of Default and no event which,
after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing;
(c) the
Company or the Guarantor, as the case may be, shall have delivered to the Trustee an Officer’s Certificate and an Opinion
of Counsel, each stating that such consolidation, amalgamation, merger, conveyance or transfer and such supplemental indenture
comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied
with; and
(d)
if
the successor entity is not the Guarantor, the Guarantor shall, by amendment to the Senior Debt Securities Indenture, unconditionally
guarantee all of the obligations of such successor entity under the Senior Debt Securities of such series and the Senior Debt
Securities Indenture as so modified by such amendment.
Section 8.02.
Successor Corporation Substituted. In the event of any merger, consolidation, sale, conveyance permitted by Section
8.01 above, Additional Amounts under the Senior Debt Securities will thereafter be payable in respect of taxes imposed by the
acquiring corporation’s, or the resulting corporation’s, jurisdiction of incorporation or tax residence (subject to
exceptions equivalent to those that apply to the obligation to pay Additional Amounts pursuant to Section 10.04 or
the Guarantee, as the case may be, in respect of taxes imposed by the laws of the Kingdom of Spain) rather than taxes imposed
by the Kingdom of Spain. Additional Amounts with respect to payments of interest or principal due prior to the date of such merger,
consolidation, sale, conveyance or lease will be payable only in respect of taxes imposed by the Kingdom of Spain. The acquiring
or resulting corporation, as the case may be, will also be entitled to redeem the Senior Debt Securities in the circumstances
described in Section 11.08 with respect to any change or amendment to, or change in the application or official interpretation
of the laws or regulations of such jurisdiction, which change or amendment must occur subsequent to the date of any merger, consolidation,
sale, conveyance or lease permitted by Section 8.01 if the successor entity is not incorporated or tax resident in
the Kingdom of Spain. In the event of assumption of the Company’s or Guarantor’s obligations in connection with a
merger, consolidation, sale or conveyance of substantially all of its assets, the Company or the Guarantor shall be released from
all obligations and covenants under this Senior Debt Securities Indenture, the Senior Debt Securities or the Guarantee, as the
case may be, and the successor corporation formed by such consolidation or amalgamation or into which the Company or the Guarantor
is merged or to which such conveyance or transfer is made shall succeed to and be substituted for, and may exercise every right
and power of, the Company or the Guarantor, as the case may be, under this Senior Debt Securities Indenture with the same effect
as if such successor corporation had been named as the Company or the Guarantor.
Section 8.03.
Assumption of Obligations. Subject to the prior consent of the European Central Bank, if required, the Guarantor
or any wholly-owned subsidiary of the Guarantor may assume the obligations of the Company (a “successor entity”) under
the Senior Debt Securities of any series without the consent of the Holders of such series, provided that:
(a) the
successor entity shall expressly assume such obligations by an amendment to the Senior Debt Securities Indenture, executed by
the Company and such successor entity, if applicable, and delivered to the Trustee, in form satisfactory to the Trustee, and if
the successor entity is not the Guarantor, the Guarantor shall, by amendment to the Senior Debt Securities Indenture, unconditionally
guarantee (such guarantee shall be given on a Senior basis consistent with Article 12 hereof) all of the obligations
of such successor entity under the Senior Debt Securities of such series and the Senior Debt Securities Indenture as so modified
by such amendment;
(b) immediately
after giving effect to such assumption of obligations, no Event of Default and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be continuing; and
(c) the
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such assumption
complies with this Article and that all conditions precedent herein provided for relating to such assumption have been complied
with.
Upon any
such assumption, the successor entity shall succeed to, and be substituted for, and may exercise every right and power of, the
Company under this Senior Debt Securities Indenture with respect to any such Senior Debt Securities with the same effect as if
such successor entity had been named as the Company in this Senior Debt Securities Indenture, and the Company or any legal and
valid successor corporation which shall theretofore have become such in the manner prescribed herein, shall be released from all
liability as obligor upon any such Senior Debt Securities except as described in the following paragraph.
Any Senior
Debt Securities so assumed, except if assumed by the Guarantor, will have the benefit of the Guarantee. In the event of any assumption,
Additional Amounts under the Senior Debt Securities will be payable in respect of taxes imposed by the assuming corporation’s
jurisdiction of incorporation or tax residence (subject to exceptions equivalent to those that apply to the obligation to pay
Additional Amounts pursuant to Section 10.04 or the Guarantee,
as the case may be, in respect of taxes imposed by the laws of the Kingdom of Spain) on payments of interest or principal made
on or subsequent to the date of such assumption. Additional Amounts with respect to payments of interest or principal due prior
to the date of such assumption will be payable only in respect of taxes imposed by the Kingdom of Spain. The Guarantor or the
wholly-owned subsidiary thereof that assumes the obligations of the Company in such cases will also be entitled to redeem the
Securities in the circumstances described in Section 11.08
with respect to any change or amendment to, or change in the application or official interpretation of the laws or regulations
of such jurisdiction, which change or amendment must occur subsequent to the date of any such assumption if the assuming entity
is not incorporated or tax resident in the Kingdom of Spain. In the event of any such assumption, all obligations of the Company
under the Securities shall immediately be discharged.
Article
9
Supplemental Indentures
Section 9.01.
Supplemental Indentures without Consent of Holders. Without the consent of any Holders, the Company and the Guarantor,
when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:
(a) to
evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the
covenants of the Company or the Guarantor herein and in the Senior Debt Securities;
(b) to
add to the covenants of the Company or the Guarantor for the benefit of the Holders of all or any series of Senior Debt Securities
(and, if such covenants are to be for the benefit of fewer than all series of Senior Debt Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the
Company or the Guarantor;
(c) to
add any additional Events of Default;
(d) to
change or eliminate any of the provisions of the Senior Debt Securities Indenture, or any supplemental indenture, provided that
any such change or elimination shall become effective only when there is no outstanding Senior Debt Security of any series created
prior to the execution of such supplemental indenture that is entitled to the benefit of such provision or as to which such supplemental
indenture would apply;
(e) to
secure the Senior Debt Securities;
(f) to
establish the form or terms of Senior Debt Securities of any series as permitted by Section
2.01 or Section 3.01;
(g) to
change any Place of Payment, so long as the Place of Payment as required by Section
3.01 is maintained in The City of New York;
(h) to
cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision
herein or in any supplemental indenture;
(i) to
evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Senior Debt Securities
of one or more series and to add to or change any of the provisions of this Senior Debt Securities Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 6.12(b);
(j) to
change or eliminate any provision of this Senior Debt Securities Indenture as permitted by Section
1.08.
(k) to
name a Trustee for a particular series of Senior Debt Securities other than the Trustee named in the first paragraph of this Senior
Debt Securities Indenture and to provide for the appropriate changes related to such appointment for a particular series of Senior
Debt Securities; or
(l)
with respect to any Senior Debt Security (including a Global Security) issued on or after the date hereof, to amend any
such Senior Debt Security to conform to the description of the terms of such Senior Debt Security in the prospectus, prospectus
supplement, product supplement, pricing supplement or any other similar offering document related to the offering of such Senior
Debt Security.
Section 9.02.
Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Senior Debt Securities of each series affected by such supplemental Senior Debt
Securities Indenture (voting as a class), by Act of said Holders delivered to the Company, the Guarantor and the Trustee, the
Company and the Guarantor, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Senior
Debt Securities Indenture or of modifying in any manner the rights of the Holders of Senior Debt Securities of such series under
this Senior Debt Securities Indenture; provided, however, that no such supplemental indenture may, without the consent
of the Holder of each Outstanding Senior Debt Security affected thereby,
(a) change
the Stated Maturity, if any, of any principal amount or any interest amounts in respect of any such Senior Debt Security, reduce
the principal amount thereof or the rate of interest and Additional Amounts, if any, thereon, or any premium payable upon the
redemption thereof, or reduce the amount of principal of an Original Issue Discount Security that would be due and payable upon
an acceleration of the Maturity thereof pursuant to Section 5.02, or change the obligation of the Company
(or its successor) to pay Additional Amounts pursuant to Section 10.04 (except as contemplated by Section
8.01(a) and permitted by Section 9.01(a)) on the Senior Debt Securities, or the currency of payment
of the principal amount of, premium, if any, or interest on, any such Senior Debt Security, or change the Place of Payment, or
impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof or the date
any such payment is otherwise due and payable (or, in the case of redemption, on or after the Redemption Date); or
(b) reduce
the percentage in aggregate principal amount of the Outstanding Senior Debt Securities of any series, the consent of whose Holders
is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with
certain provisions of this Senior Debt Securities Indenture or of certain defaults hereunder and their consequences) provided
for in this Senior Debt Securities Indenture, or
(c) modify
any of the provisions of this Section 9.02 or Section 5.13 except to increase
any such percentage or to provide that certain other provisions of this Senior Debt Securities Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Senior Debt Security affected thereby; provided, however,
that
this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to the “Trustee”
and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Section
6.12(b) and Section 9.01(j), or
(d) change
in any manner adverse to the interests of the Holders of any Senior Debt Securities the terms and conditions of the obligations
of the Company or the Guarantor in respect of the due and punctual payment of any amounts due and payable on the Senior Debt Securities.
It shall
not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
A supplemental
indenture which changes or eliminates any covenant or other provision of this Senior Debt Securities Indenture which has expressly
been included solely for the benefit of one or more particular series of Senior Debt Securities, or which modifies the rights
of the Holders of Senior Debt Securities of such series with respect to such covenant or other provision, shall be deemed not
to affect the rights under this Senior Debt Securities Indenture of the Holders of Senior Debt Securities of any other series.
Section 9.03.
Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts created by this Senior Debt Securities Indenture,
the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Senior
Debt Securities Indenture and that such supplemental indenture constitutes a legal, valid and binding obligation of the Company
and the Guarantor subject to customary exceptions. The Trustee may, but shall not be obliged to, enter into any such supplemental
indenture which affects the Trustee’s own rights, duties or immunities under this Senior Debt Securities Indenture or otherwise.
Section 9.04.
Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Senior
Debt Securities Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this
Senior Debt Securities Indenture for all purposes; and every Holder of Senior Debt Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby, except as otherwise expressed therein.
Section 9.05.
Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform
to the requirements of the Trust Indenture Act as then in effect.
Section 9.06.
Reference in Senior Debt Securities to Supplemental Indentures. Senior Debt Securities of any series authenticated
and delivered after the execution of
any
supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by
the Trustee as to any matter provided for in such supplemental indenture. If the Company and the Guarantor shall so determine,
new Senior Debt Securities of any series so modified as to conform, in the opinion of the Trustee, the Company and the Guarantor,
to any such supplemental indenture may be prepared and executed by the Company, the Guarantees endorsed thereon may be executed
by the Guarantor and such Senior Debt Securities may be authenticated and delivered by the Trustee in exchange for Outstanding
Senior Debt Securities of such series.
Article
10
Covenants
Section 10.01.
Payment of Principal, Premium, and Interest. The Company covenants and agrees for the benefit of each series of
Senior Debt Securities that it will duly and punctually pay to the Holders the principal of (and premium, if any) and (subject
to Section 3.07) interest, if any, and Additional Amounts on the Senior Debt Securities of that series in
accordance with the terms of the Senior Debt Securities and this Senior Debt Securities Indenture. Except as otherwise specified,
as contemplated by Section 3.01 hereof, the Trustee shall act as Paying Agent with respect to any series of Senior
Debt Securities.
Section 10.02.
Maintenance of Office or Agency. The Company and the Guarantor will maintain in each Place of Payment for any series
of Senior Debt Securities an office or agency where Senior Debt Securities of that series may be presented or surrendered for
payment, where Senior Debt Securities of that series may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company or the Guarantor in respect of the Senior Debt Securities of that series and this Senior Debt
Securities Indenture may be served; provided, however, that at the option of the Company in the case of definitive
Senior Debt Securities of such series, payment of any interest thereon may be made by check mailed to the address of the Person
entitled herein as such address shall appear in the Senior Debt Security Register. With respect to the Senior Debt Securities
of any series, such office or agency in each Place of Payment shall be specified as contemplated by Section
3.01, and if not so specified, initially shall be 225 Liberty Street, New York, New York, 10286. Unless otherwise specified pursuant
to Section 3.01, the Company and the Guarantor will maintain in the Borough of Manhattan, The City of New
York, an office or agency where notices and demands to or upon the Company or the Guarantor in respect of Senior Debt Securities
of any series and this Senior Debt Securities Indenture may be served. The Company and the Guarantor will give prompt written
notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company and
the Guarantor shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
The Company and the Guarantor hereby appoints the Trustee as its agent to receive all presentations, surrenders, notices and demands.
The Company
and the Guarantor may also from time to time designate one or more other offices or agencies (in or outside the Borough of Manhattan,
The City of New York) where the Senior Debt Securities of one or more series may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company and the Guarantor of any obligation to maintain an office or agency in each Place of Payment
(except as otherwise indicated in this Section) for Senior Debt Securities of any series for such purposes. The Company and the
Guarantor will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
Section 10.03.
Money for Payments to be Held in Trust. If the Company or the Guarantor shall at any time act as Paying Agent with
respect to the Senior Debt Securities of any series, it will, on or before each due date for payment of the principal of (and
premium, if any) or interest, if any, if any, on any of the Senior Debt Securities of that series, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest, if any,
so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify
the Trustee of its failure so to act.
Whenever
the Company and the Guarantor shall have one or more Paying Agents for any series of Senior Debt Securities, it will, prior to
each due date for payment of the principal of (and premium, if any) or interest, if any, on any Senior Debt Securities of that
series deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest, if any, so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless
such Paying Agent is the Trustee) the Company or the Guarantor will promptly notify the Trustee of its action or its failure so
to act. Unless otherwise specified as contemplated by Section
3.01, the Trustee shall be the Company’s and the Guarantor’s Paying Agent. The Company and the Guarantor
will cause each Paying Agent for any series of Senior Debt Securities other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(a) hold
all sums held by it for the payment of the principal of (and premium, if any) or interest, if any, on Senior Debt Securities of
that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give
the Trustee notice of any default by the Company (or the Guarantor or any other obligor upon the Senior Debt Securities of that
series) in the making of any payment, when due and payable, or principal of (and premium, if any) or interest, if any, on Senior
Debt Securities of that series; and
(c) at
any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company
may at the time, for the purpose of obtaining the satisfaction and discharge of this Senior Debt Securities Indenture or for any
other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or
such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company
or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee such Paying Agent shall be released from all further
liability with respect to such money.
Any money
deposited with the Trustee or any Paying Agent, or then held by the Company or the Guarantor, in trust for the payment of the
principal of (and premium, if any) or interest, if any, on any Senior Debt Security of any series and remaining unclaimed for
two years after such principal (and premium, if any) or interest, if any, have become due and payable shall be paid to the Company
or the Guarantor, as the case may be, on Company Request, or (if then held by the Company or the Guarantor) shall be discharged
from such trust; and the Holder of such Senior Debt Security shall thereafter, as an unsecured general creditor, look only to
the Company or the Guarantor for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company or the Guarantor as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause
to be published at least once, in an Authorized Newspaper, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining
will be paid to the Company or the Guarantor, as the case may be.
Section 10.04.
Additional Amounts. Unless otherwise specified pursuant to Section 3.01, all amounts payable (whether
in respect of principal, redemption amount, interest or otherwise) in respect of any series of Senior Debt Securities and the
related Guarantees will be made free and clear of and without withholding or deduction for or on account of any present or future
taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the Kingdom of Spain
or any political subdivision thereof or any authority or agency therein or thereof having power to tax, unless the withholding
or deduction of such taxes, duties, assessments or governmental charges is required by law. In that event, the Company or the
Guarantor, as the case may be, shall pay such additional amounts (“Additional Amounts”) as will result in receipt
by the Holders of the Senior Debt Securities of the particular series of such amounts as would have been received by them had
no such withholding or deduction been required.
Neither the
Company nor the Guarantor shall be required to pay any Additional Amounts in respect of any series of Senior Debt Securities:
(i)
to, or to a third party on behalf of, a Holder if the Holder or the beneficial owner of Senior Debt Securities is liable
for such taxes, duties, assessments or governmental charges in respect of such Senior Debt Securities by reason of his having
some connection with Spain other than the mere holding of such Senior Debt Security; or
(ii)
to, or to a third party on behalf of, a Holder in respect of whose series of Senior Debt Securities the Company or the
Guarantor does not receive such information as may be required in order to comply with the applicable Spanish tax reporting obligations,
including but not limited to the receipt in a timely manner of a duly executed and completed certificate in accordance with Law
10/2014 and Royal Decree 1065/2007, as amended, and any implementing legislation or regulation; or
(iii)
to, or to a third party on behalf of, a Holder of Senior Debt Securities of any series if the Holder or beneficial owner
failed to make any necessary claim or to comply with any certification, identification or other requirements concerning the nationality,
residence, identity or connection with the taxing jurisdiction of such Holder or beneficial owner, if such claim or compliance
is required by statute, treaty, regulation or administrative practice of Spain as a condition to relief or exemption from such
taxes;
(iv)
presented for payment (where presentation is required) more than 30 days after the Relevant Date, except to the extent
that the relevant Holder would have been entitled to such Additional Amounts on presenting the same for payment on the expiry
of such period of 30 days; or
(v)
where the withholding or deduction is imposed pursuant to European Council Directive 2003/48/EC or any Directive amending,
supplementing or replacing such Directive or any law implementing or complying with, or introduced in order to conform to, such
Directive; or
(vi)
presented for payment (where presentation is required) by or on behalf of a Holder who would have been able to avoid such
withholding or deduction by presenting the relevant Senior Debt Security to another paying agent in a Member State of the European
Union; or
(vii)
to, or to a third party on behalf of, individuals resident for tax purposes in the Kingdom of Spain; or
(viii)
to, or to a third party on behalf of, a Spanish-resident legal entity subject to Spanish corporation tax if the Spanish
tax authorities determine that the Senior Debt Securities of such series do not comply with exemption requirements specified in
the Reply to a Consultation of the Directorate General for Taxation (Dirección General de Tributos) dated 27 July 2004
and require a withholding to be made; or
(ix)
where the withholding or deduction is required pursuant to an agreement described in Section 1471(b) of the Code
or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (“FATCA”), any regulations or agreements thereunder,
any official interpretations thereof, any intergovernmental agreements with respect thereto (including the intergovernmental agreement
between the United States and Spain on the
implementation
of FATCA), or any law implementing an intergovernmental agreement or any regulations or official interpretations relating thereto;
or
(x)
in the case of any combination of items listed in (i) through (ix) above.
Additional
Amounts will also not be paid with respect to any payment to a Holder who is a fiduciary, a partnership, a limited liability company
or person other than the sole beneficial owner of that payment, to the extent that payment would be required by the laws of Spain
(or any political subdivision thereof) to be included in the income, for tax purposes, of a beneficiary or settlor with respect
to the fiduciary, a member of that partnership, an interest holder in that limited liability company or a beneficial owner who
would not have been entitled to the Additional Amounts had it been the Holder.
For the purposes
of (iv) above, the “Relevant Date” means, in respect of any payment, the date on which such payment first becomes
due and payable, but if the full amount of the moneys payable has not been received by the Trustee on or prior to such due date,
it means the first date on which, the full amount of such moneys having been so received and being available for payment to Holders
of Senior Debt Securities, notice to that effect shall have been duly given to the Holders of the relevant series of Senior Debt
Securities in accordance with Section 1.06.
Unless the
context otherwise requires, any reference in this Section
10.04 to “principal” shall include any premium payable, or Redemption Amount and any other amounts in the nature of
principal payable pursuant to the Senior Debt Securities Indenture and “interest” shall include all amounts payable
pursuant to Section 3.07 and any other amounts in the nature
of interest payable under the Senior Debt Securities Indenture.
As used in
this Section 10.04, the term “Redemption Amount”
means, as appropriate, the Maturity Redemption Amount, Early Redemption Amount (Tax), Early Redemption Amount (Call), Early Redemption
Amount (Put) and Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or
determined in accordance with the provisions of, Section
3.01.
Unless the
context requires otherwise, any references in this Senior Debt Securities Indenture to payment of principal of or interest on
a Senior Debt Security shall be deemed to include any Additional Amounts payable with respect thereto.
In
the event that any withholding or deduction for or on account of any taxes is required, at least 10 days prior to each date of
payment of principal of or interest on the relevant series of Senior Debt Securities, or, if later, promptly after the obligation
to withhold or deduct becomes known to the Company, the Company will furnish to the Trustee and the Paying Agent, if other than
the Trustee, an Officer’s Certificate specifying the amount required to be withheld or deducted on such payments to such
Holders, certifying that the Company shall pay such amounts required to be withheld to the appropriate taxing jurisdiction and
certifying to the fact that the Additional Amounts will be payable and the amounts so payable to each Holder, and that the Company
will pay to the Trustee or the
Paying
Agent the Additional Amounts required to be paid; provided that no such Officer’s Certificate will be required prior to
any date of payment of principal of or interest on such Senior Debt Securities if there has been no change with respect to the
matters set forth in a prior Officer’s Certificate. The Trustee and Paying Agent may rely on the fact that any Officer’s
Certificate contemplated by this paragraph has not been furnished as evidence of the fact that no withholding or deduction for
or on account of any taxes is required. The Company covenants to indemnify the Trustee and Paying Agent for and to hold them harmless
against any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them in reliance on any such Officer’s Certificate furnished pursuant
to this paragraph or on the fact that any Officer’s Certificate contemplated by this paragraph has not been furnished.
Section 10.05.
Corporate Existence. Subject to Article 8, the Company and the Guarantor will do or cause to be done
all things necessary to preserve and keep in full force and effect its respective corporate existence, provided, however,
that the foregoing shall not obligate the Company or the Guarantor to preserve any such right or franchise if the Company or the
Guarantor shall determine that the preservation thereof is no longer desirable in the conduct of its business and that the loss
thereof is not disadvantageous in any material respect to any Holder.
Section 10.06.
Statement as to Compliance. The Company and the Guarantor will deliver to the Trustee, within 120 days after the
end of each fiscal year, a certificate in compliance with Section 314(a)(4) of the Trust Indenture Act.
Section 10.07.
Original Issue Document. The Company shall provide to the Trustee on a timely basis such information, if any, as
the Trustee requires to enable the Trustee to prepare and file any form required to be submitted by the Company with the Internal
Revenue Service and the Holders of the Senior Debt Securities relating to any original issue discount, including, without limitation,
Form 8281, Form 1099-OID or any successor forms.
Article
11
Redemption of Senior Debt Securities
Section 11.01.
Applicability of Article. Senior Debt Securities of any series shall be redeemable in accordance with their terms
and (except as otherwise specified pursuant to Section 3.01 for Senior Debt Securities of any series)
in accordance with this Article 11.
Section 11.02.
Election to Redeem; Notice to Trustee. The election of the Company to redeem any Senior Debt Securities shall be
evidenced by a Board Resolution. Unless otherwise provided as contemplated by Section 3.01 with
respect to any series of Senior Debt Securities, the Company shall, at least 30 days prior, but not more than 60 days prior, to
the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date, of the principal amount of Senior Debt Securities of such series to be
redeemed
and, if applicable, the tenor of the Senior Debt Securities to be redeemed. In the case of any redemption of Senior Debt Securities
of any series prior to the expiration of any provision restricting such redemption provided in the terms of such Senior Debt Securities
or elsewhere in this Senior Debt Securities Indenture, the Company shall furnish the Trustee with respect to such Senior Debt
Securities with an Officer’s Certificate evidencing compliance with or waiver of such provision.
Section 11.03.
Selection by Trustee of Senior Debt Securities to be Redeemed. Unless otherwise provided as contemplated by Section
3.01 with respect to any series of Senior Debt Securities, if less than all the Senior Debt Securities of any series are
to be redeemed, the particular Senior Debt Securities to be redeemed shall be selected not more than 60 days nor less than 30
days prior to the Redemption Date by the Trustee, from the Outstanding Senior Debt Securities of such series not previously called
for redemption, pro rata, by lot or by such method as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized denomination for Senior Debt Securities of that series or
any multiple thereof) of the principal amount of Senior Debt Securities of such series of a denomination larger than the minimum
authorized denomination for Senior Debt Securities of that series.
The Trustee
shall promptly notify the Company in writing of the Senior Debt Securities selected for redemption and, in the case of any Senior
Debt Securities selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes
of this Senior Debt Securities Indenture, unless the context otherwise requires, all provisions relating to the redemption of
Senior Debt Securities shall relate in the case of any Senior Debt Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Senior Debt Security which has been or is to be redeemed.
Section 11.04.
Notice of Redemption. Unless otherwise provided as contemplated by Section 3.01 with
respect to any series of Senior Debt Securities, notice of redemption shall be given not less than 30 nor more than 60 days prior
to the Redemption Date to each Holder of Senior Debt Securities to be redeemed in the manner and to the extent provided in Section
1.06.
All notices
of redemption shall state:
(a) the
series of Senior Debt Securities subject to redemption;
(b) the
Redemption Date;
(c) the
Redemption Price,
(d) if
less than all the Outstanding Senior Debt Securities of any series are to be redeemed, the principal amount of the Senior Debt
Securities to be redeemed,
(e) that
on the Redemption Date the Redemption Price together with any accrued but unpaid interest will become due and payable upon each
such Senior Debt Security to be redeemed and, if applicable, that interest thereon will cease to accrue on or after the said date,
(f) the
place or places where such Senior Debt Securities are to be surrendered for payment of the Redemption Price, and
(g) the
CUSIP, Common Code and/or ISIN number or numbers, if any, with respect to such Senior Debt Securities.
Any such
notice provided pursuant to this Section 11.04 shall be irrevocable,
and the delivery thereof shall oblige the Company to make the redemption therein specified (unless the Spanish Bail-in Power is
exercised by the relevant resolution authority before the occurrence of such redemption).
Notice of
redemption of Senior Debt Securities to be redeemed at the selection of the Company shall be given by the Company or, at the Company’s
request, by the Trustee in the name and at the expense of the Company, and the Company shall deliver an Officer’s Certificate
requesting that the Trustee give such and setting forth the information to be stated in such notice no less than 10 Business Days
prior to the date of the notice to Holders of Senior Debt Securities (unless a shorter notice shall be satisfactory to the Trustee).
Section 11.05.
Deposit of Redemption Price. On or prior to any Redemption Date, the Company or the Guarantor shall deposit with
the Trustee or with a Paying Agent (or, if the Company or the Guarantor is acting as Paying Agent, segregate and hold in trust
as provided in Section 10.03) an amount of money sufficient to pay the Redemption Price of, and (except
if the Redemption Date shall be an Interest Payment Date) accrued but unpaid interest on, all the Senior Debt Securities which
are to be redeemed on that date.
Section 11.06.
Senior Debt Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Senior
Debt Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified,
and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest, if
any) such Senior Debt Securities shall cease to accrue interest. Upon surrender of any such Senior Debt Security for redemption
in accordance with said notice, such Senior Debt Security shall be paid by the Company or the Guarantor at the Redemption Price,
together with accrued but unpaid interest to the Redemption Date; provided, however, that with respect to any Senior
Debt Securities, unless otherwise specified as contemplated by Section 3.01, a payment of interest which
is payable on an Interest Payment Date which is the Redemption Date, shall be payable to the Holders of such Senior Debt Securities,
or one or more Predecessor Securities, registered as such at the close of business on the relevant Regular Record Date or Special
Record Date according to the terms of the Senior Debt Securities and the provisions of Section 3.07. Senior
Debt Securities in definitive form shall be presented for redemption to the Paying Agent.
If any Senior
Debt Security called for redemption shall not be so paid upon surrender thereof for redemption, the Senior Debt Security shall,
until paid, continue to
accrue
interest from and after the Redemption Date in accordance with its terms and the provisions of Section
3.07.
Section 11.07.
Senior Debt Securities Redeemed in Part. Any Senior Debt Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, the Guarantor shall endorse
the Guarantee on, and the Trustee shall authenticate and deliver to the Holder of such Senior Debt Security without service charge,
a new Senior Debt Security or Senior Debt Securities of the same series of any authorized denomination as requested by such Holder,
in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Senior Debt Security
so surrendered. If a Global Security is surrendered, the new Senior Debt Security will also be a Global Security.
Section 11.08.
Optional Redemption for Taxation Reasons. Unless otherwise provided as contemplated by Section 3.01
with respect to any series of Senior Debt Securities, if, in relation to the Senior Debt Securities of any series, (i) as
a result of any change in the laws or regulations of Spain or of any political subdivision thereof or any authority or agency
therein or thereof having power to tax or in the interpretation or administration of any such laws or regulations which becomes
effective on or after the date of issue of the first issued Senior Debt Securities of such series or any earlier date specified
pursuant to Section 3.01 the Company or the Guarantor shall determine that (a) the Company or the Guarantor, as the
case may be, would be required to pay Additional Amounts pursuant to Section 10.04 or (b) the Company would not be
entitled to claim a deduction in computing tax liabilities in Spain in respect of any interest to be paid on the next interest
payment date on such series of Senior Debt Securities or the value of such deduction to the Company would be materially reduced
or (c) the applicable tax treatment of the Senior Debt Securities of such series changes and (ii) such circumstances are evidenced
by the delivery by the Company or the Guarantor, as the case may be, to the Trustee of a certificate signed by two directors of
the Company or the Guarantor, as the case may be, stating that such circumstances prevail and describing the facts leading thereto,
an opinion of independent legal advisers of recognized standing to the effect that such circumstances prevail the Company may,
at its option and having given no less than 30 nor more than 60 days’ notice (ending, in the case of Senior Debt Securities
which bear interest at a floating rate, on a day upon which interest is payable) to the holders of the Senior Debt Securities
of such series in accordance with Section 11.04 (which notice shall be irrevocable), redeem in whole, but not in part,
the outstanding Senior Debt Securities of such series at their early tax redemption amount (the “Early Redemption Amount
(Tax)”) (which shall be their principal amount or at such other Early Redemption Amount (Tax) as may be specified in or
determined in accordance with Section 3.01), together with accrued interest (if any) thereon; provided, however, that
in the case of (a) above, no such notice of redemption may be given earlier than 90 days (or, in the case of Senior Debt Securities
which bear interest at a floating rate a number of days which is equal to the aggregate of the number of days falling within the
then current interest period
applicable
to the Senior Debt Securities of such series plus 60 days) prior to the earliest date on which the Company or the Guarantor,
as the case may be, would be obliged to pay such Additional Amounts were a payment in respect of the Senior Debt Securities
of such series then due.
Section 11.09.
Repurchase of Senior Debt Securities. Unless otherwise provided as contemplated by Section 3.01 with
respect to the any series of Senior Debt Securities, the Company, Guarantor and any of their respective subsidiaries or any third
party designated by any of them, may at any time repurchase Senior Debt Securities of any series in the open market or otherwise
and at any price.
Section
11.10. Optional Early Redemption (Call).
Unless otherwise provided as contemplated by Section 3.01 with respect to the any series of Senior Debt
Securities, the Company may, upon the expiration of the appropriate notice pursuant to Section 11.04
redeem all (but not, some only, except as otherwise specified pursuant to Section 3.01) of the Senior Debt
Securities of any series at their call early redemption amount (the “Early Redemption Amount (Call)”) (which
shall be their principal amount or such other Early Redemption Amount (Call) as may otherwise specified in or determined
pursuant to Section 3.01), together with accrued interest (if any) thereon.
If the Senior
Debt Securities of any series are to be redeemed in part only on any date in accordance with this Section
11.10, the Senior Debt Securities of such series shall be redeemed (so far as may be practicable) pro rata to their principal
amounts, or by lot or such other method as the Trustee deems fair and appropriate, subject always as aforesaid and provided always
that the amount redeemed in respect of the Senior Debt Securities of such series shall be equal to the minimum authorized denomination
thereof or an integral multiple thereof, subject always to compliance with all applicable laws and the requirements of any clearing
system on which the Senior Debt Securities of any such series may be cleared and of any listing authority, stock exchange and/or
quotation system on which the Senior Debt Securities of such series may be listed and/or quoted.
Section 11.11.
Optional Early Redemption (Put). Unless otherwise provided as contemplated by Section 3.01 with respect
to the any series of Senior Debt Securities, the Company shall, upon the exercise of the relevant option by a holder of Senior
Debt Securities of any series, redeem the Senior Debt Securities of such series as may be specified pursuant to Section
3.01 at the put early redemption amount (the “Early Redemption Amount (Put)”) (which shall be the principal amount
or such other Early Redemption Amount (Put) as may be specified in or determined pursuant to Section 3.01), together
with accrued interest (if any) thereon. In order to exercise such option, the holder of the Senior Debt Securities of such series
must, not less than sixty days before the date so specified (or such other period as may be specified pursuant to Section
3.01), deposit a duly completed redemption notice in the form which is available from the specified office of the trustee specifying
the aggregate principal amount in respect of which such option is exercised (which must be the minimum denomination specified
in the relevant prospectus supplement or an integral multiple thereof). Such notice must also
be
delivered in accordance with the requirements of the applicable clearing system. No option exercised may be withdrawn (except
as provided in the relevant indenture).
A holder
of any series of Senior Debt Securities may not exercise its optional early redemption (put) pursuant to this Section
11.11 in respect of any series of Senior Debt Securities which is the subject of an exercise by the Company of its option to redeem
such series of Senior Debt Securities pursuant to Section
11.08 or Section 11.10.
Article
12
Guarantee
Section 12.01.
The Guarantee. The Guarantor unconditionally and irrevocably guarantees payment in full to the Holders of any Senior
Security the due and punctual payment of all the sums expressed to be payable in respect of such Senior Debt Security as specified
in such Senior Debt Security and the Senior Debt Indenture, including as may be modified pursuant to exercise of the Bail-in Power
under Article 13 of the Indenture (including any principal of (and premium, if any) and interest on such Senior Debt
Security, payments to sinking funds (if applicable), Additional Amounts or any other amounts of whatever nature which may become
payable under any of the foregoing or under the Indenture), and as and when the same shall become due under any of the foregoing,
the Guarantor will pay to such Holder, or to the Trustee for the account of such Holder, on demand the amount payable by the Company
to such Holder.
Section 12.02.
Guarantee Unconditional, Etc. The obligations of the Guarantor under the Guarantee constitute direct, unconditional,
unsubordinated and unsecured obligations of the Guarantor.
The Guarantor
hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute, irrevocable
and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Senior
Debt Security or this Senior Debt Securities Indenture, any failure to enforce the provisions of any Senior Debt Security or this
Senior Debt Securities Indenture, or any waiver, modification, consent or indulgence granted with respect thereto by the Holder
of such Senior Debt Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same,
or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor
hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any such Senior
Debt Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be
discharged except by payment in full of the principal of, any premium and interest on, and any additional amounts and sinking
fund payments required with respect to, the Senior Debt Securities and the complete performance of all other obligations contained
in the Senior Debt Securities. The Guarantor further agrees, to the fullest extent that it lawfully may do so, that, as between
the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, the maturity of the obligations guaranteed
hereby may be accelerated as
provided
in Section 5.02 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or prohibition extant under any bankruptcy, insolvency, reorganization or other similar law
of any jurisdiction preventing such acceleration in respect of the obligations guaranteed hereby.
Section 12.03.
Reinstatement. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time
payment on any Senior Debt Security, in whole or in part, is rescinded or must otherwise be restored to the Company or the Guarantor
upon the bankruptcy, liquidation or reorganization of the Company or otherwise.
Section 12.04.
Subrogation. The Guarantor shall be subrogated to all rights of the Holder of any Senior Debt Security against the
Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided,
however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right
of subrogation until the principal of, any premium and interest on, and any additional amounts and sinking fund payments required
with respect to, all Senior Debt Securities shall have been paid in full.
Section 12.05.
Assumption by Guarantor. (a) The Guarantor may, without the consent of the Holders, assume all of the rights and
obligations of the Company hereunder with respect to a series of Senior Debt Securities and under the Senior Debt Securities of
such series if, after giving effect to such assumption, no Event of Default or event which with the giving of notice or lapse
of time, or both, would become an Event of Default, shall have occurred and be continuing. Upon such an assumption,
the Guarantor shall execute a supplemental indenture evidencing its assumption of all such rights and obligations of the Company
and the Company shall be released from its liabilities hereunder and under such Senior Debt Securities as obligor on the Senior
Debt Securities of such Series.
(b) The
Guarantor shall assume all of the rights and obligations of the Company hereunder with respect to a series of Senior Debt Securities
and under the Senior Debt Securities of such series if, upon a default by the Company in the due and punctual payment of the principal,
sinking fund payment, if any, premium, if any, or interest on such Senior Debt Securities, the Guarantor is prevented by any court
order or judicial proceeding from fulfilling its obligations under Section 12.01 with respect to such
series of Senior Debt Securities. Such assumption shall result in the Senior Debt Securities of such series becoming
the direct obligations of the Guarantor and shall be effected without the consent of the Holders of the Senior Debt Securities
of any series. Upon such an assumption, the Guarantor shall execute a supplemental indenture evidencing its assumption
of all such rights and obligations of the Company, and the Company shall be released from its liabilities hereunder and under
such Senior Debt Securities as obligor on the Senior Debt Securities of such series.
Article
13
Spanish Bail-In and Resolution Actions
Section
13.01. Agreement and Acknowledgement with Respect
to the Exercise of the Spanish Bail-in Power. (a) Notwithstanding any other term of the Senior Debt Securities of any
series or any other agreements, arrangements, or understandings between the Company and any Holder of the Senior Debt
Securities of any series, by its acquisition of the Senior Debt Securities of any series, each Holder (which, for the
purposes of this clause, includes each Holder of a beneficial interest in the Senior Debt Securities of any series)
acknowledges, accepts, consents to and agrees to be bound by:
(i)
the effect of the exercise of the Spanish Bail-in Power by the relevant resolution authority which exercise may include
and result in any of the following, or some combination thereof:
(A)
the reduction of all, or a portion, of the Amounts Due on the Senior Debt Securities of such series;
(B) the
conversion of all, or a portion, of the Amounts Due on the Senior Debt Securities of such series into ordinary shares, other
securities or other obligations of the Company or the Guarantor or another person (and the issue to or conferral on
the Holder of the Senior Debt Securities of such series of such shares, securities or obligations), including by means of an
amendment, modification or variation of the terms of the Senior Debt Securities of such series;
(C)
the cancellation of the Senior Debt Securities of such series;
(D)
the amendment or alteration of the maturity of the Senior Debt Securities of such series or amendment of the amount of
interest payable on the Senior Debt Securities of such series, or the date on which the interest becomes payable, including by
suspending payment for a temporary period; and
(ii)
the variation of the terms of the Senior Debt Securities of such series, if necessary, to give effect to the exercise of
the Spanish Bail-in Power by the relevant resolution authority.
(b)
No repayment or payment of Amounts Due on the Senior Debt Securities of any series, will become due and payable or be paid after
the exercise of any Spanish Bail-in Power by the relevant resolution authority if and to the extent such amounts have been reduced,
converted, cancelled, amended or altered as a result of such exercise.
(c)
Neither a reduction or cancellation, in part or in full of the Amounts Due on, the conversion thereof into another security or
obligation of the Company, the Guarantor or another person, as a result of the exercise of the Spanish Bail-in Power by the relevant
resolution authority with respect to the Company or the Guarantor, nor the exercise of the Spanish Bail-in Power by the relevant
resolution authority with respect to the Senior Debt Securities of any series will be an Event of Default.
(d) Upon
the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to the Senior Debt Securities of any
series, the Company will provide a written notice to the Holders of the Senior Debt Securities of such series through DTC as soon
as practicable regarding such exercise of the Spanish Bail-in Power. The Company will also deliver a copy of such notice to the
Trustee for information purposes.
(e) By
its acquisition of the Senior Debt Securities of any series, each Holder of the Senior Debt Securities of such series, (which,
for the purposes of this clause, includes each holder of a beneficial interest in the Senior Debt Securities of such series),
to the extent permitted by the Trust Indenture Act, will waive any and all claims, in law and/or in equity, against the Trustee
for, agree not to initiate a suit against the Trustee in respect of, and agree that the Trustee will not be liable for, any
action that the Trustee takes, or abstains from taking, in either case in accordance with the exercise of
the
Spanish Bail-in Power by the relevant resolution authority with respect to the Senior Debt Securities of such series.
(f) Additionally,
by its acquisition of the Senior Debt Securities of any series, each holder of the Senior Debt Securities of such series acknowledges
and agrees that, upon the exercise of the Spanish Bail-in Power by the relevant resolution authority:
(i)
the Trustee will not be required to take any further directions from the Holders of the Senior Debt Securities of such
series with respect to any portion of the Senior Debt Securities of such series that are written-down, converted to equity and/or
cancelled under the Senior Debt Securities Indenture, which authorizes holders of a majority in aggregate outstanding principal
amount of the outstanding Senior Debt Securities of such series to direct certain actions relating to the Senior Debt Securities
of such series; and
(ii)
the Senior Debt Securities Indenture will not impose any duties upon the Trustee whatsoever with respect to the exercise
of the Spanish Bail-in Power by the relevant resolution authority.
provided,
however, that notwithstanding the exercise of the Spanish Bail-in Power by the relevant resolution authority, so long as the Senior
Debt Securities of any series remain outstanding, there will at all times be a Trustee for the Senior Debt Securities of such
series in accordance with the Senior Debt Securities Indenture, and the resignation and/or removal of the Trustee and the appointment
of a successor Trustee will continue to be governed by the Senior Debt Securities Indenture, including to the extent no additional
supplemental indenture or amendment is agreed upon in the event the Senior Debt Securities of such series remain outstanding following
the completion of the exercise of the Spanish Bail-in Power.
(g) By
its acquisition of the Senior Debt Securities of any series, each Holder of the Senior Debt Securities of such series acknowledges
and agrees that neither a cancellation or deemed cancellation of the principal or interest (in each case, in whole or in part),
nor the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to the Senior Debt Securities
of such series will give rise to a default for purposes of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the
Trustee in Case of Default) of the Trust Indenture Act.
(h) By
purchasing the Senior Debt Securities of any series, each Holder (including each beneficial owner) of the Senior Debt
Securities of such series shall be deemed to have authorized, directed and requested DTC and any direct participant in DTC or
other intermediary through which it holds the Senior Debt Securities of such series to take any
and
all necessary action, if required, to implement the exercise of the Spanish Bail-in Power with respect to the Senior Debt Securities
of such series as it may be imposed, without any further action or direction on the part of such Holder.
Section 13.02.
Agreement and Acknowledgement with Respect to the Exercise of Resolution Tools. (a) Notwithstanding any other term
of the Senior Debt Securities of any series or any other agreements, arrangements, or understandings between the Company and any
Holder of the Senior Debt Securities of any series, by its acquisition of the Senior Debt Securities of any series, each Holder
(which, for the purposes of this clause, includes each holder of a beneficial interest in the securities of any series) acknowledges,
accepts, consents and agrees to be bound by the effect of the exercise of any resolution tools (including but not limited to the
sale of business tool, the bridge institution tool and the asset separation tool) by the relevant resolution authority in compliance
with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of BRRD,
including but not limited to Law 11/2015, (ii) the SRM Regulation and (iii) the instruments, rules and standards created thereunder.
(b) By
its acquisition of the Senior Debt Securities of any series, each Holder of the Senior Debt Securities of such series, (which,
for the purposes of this clause, includes each holder of a beneficial interest in the Senior Debt Securities of such series),
to the extent permitted by the Trust Indenture Act, will waive any and all claims, in law and/or in equity, against the Trustee
for, agree not to initiate a suit against the Trustee in respect of, and agree that the Trustee will not be liable for, any action
that the Trustee takes, or abstains from taking, in either case in accordance with the exercise of any resolution power by the
relevant resolution authority.
(c) Additionally,
by its acquisition of the Senior Debt Securities of any series, each Holder of the Senior Debt Securities of such series acknowledges
and agrees that, upon the exercise of any resolution power by the relevant resolution authority the Senior Debt Securities Indenture
will not impose any duties upon the Trustee whatsoever with respect to the exercise of any resolution tool by the relevant resolution
authority (including no duty whatsoever to take any directions from the Holders of the Senior Debt Securities of such series),
provided, however, that notwithstanding the exercise of any resolution tool by the relevant resolution authority, so long as the
Senior Debt Securities of any series remain outstanding, there will at all times be a Trustee for the Senior Debt Securities of
such series in accordance with this Senior Debt Securities Indenture, and the resignation and/or removal of the Trustee and the
appointment of a successor Trustee will continue to be governed by the Senior Debt Securities Indenture, including to the extent
no additional supplemental indenture or amendment is agreed upon in the event the Senior Debt Securities of such series remain
outstanding following the completion of the exercise of the resolution tool.
(d) By
its acquisition of the Senior Debt Securities of any series, each Holder (including each beneficial owner) of the Senior Debt
Securities of such series shall be deemed to have authorized, directed and requested DTC and any direct participant in DTC or
other intermediary through which it holds the Senior Debt Securities of such series to take any and all necessary action, if required,
to implement the exercise of any
resolution
tool with respect to the securities of such series as it may be imposed, without any further action or direction on the part of
such Holder.
This instrument
may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument. The exchange of copies of this Senior Debt Securities Indenture and
of signature pages by facsimile or electronic format (i.e., “pdf” or “tif”) transmission shall constitute
effective execution and delivery of this Senior Debt Securities Indenture as to the parties hereto and may be used in lieu of
the original Indenture for all purposes.
IN WITNESS
WHEREOF, the parties hereto have caused this Senior Debt Securities Indenture to be duly executed, all as of the day and year
first above written.
| SANTANDER US DEBT, S.A. UNIPERSONAL |
| |
| |
| By: |
|
| |
Name: |
| |
Title: |
| |
|
| |
|
| BANCO SANTANDER, S.A. |
| |
| |
| By: |
|
| |
Name: |
| |
Title: |
| |
|
| |
|
| THE BANK OF NEW YORK MELLON, LONDON BRANCH |
| |
| |
| By: |
|
| |
Name: |
| |
Title: |
appendix
1: Procedures for Compliance with Spanish Tax Legislation
Information
Procedures and Certification Obligations of the Trustee or Paying Agent in respect of payments under the Senior Debt Securities
| 1. | Delivery
of the Payment Information Certificate: In connection with each payment of income
under the Senior Debt Securities, the Trustee or Paying Agent shall deliver to the Company
or the Guarantor by the close of business on the business day immediately preceding the
day on which such payment is made a duly completed an executed Payment Information Certificate
substantially in the form set forth in Exhibit I hereto (Form of Payment Information
Certificate). Such form may be delivered initially by email, in pdf form, or by fax,
provided that the original is delivered by the end of the following month. |
If
the Payment Information Certificate is delivered by the Trustee or Paying Agent in a timely manner to the Company or the Guarantor,
the relevant income payment will be made free and clear of Spanish withholding tax.
The
Trustee or Paying Agent shall have no duty or responsibility to comply with Spanish tax laws arising out of this Senior Debt Securities
Indenture, and may request and rely conclusively upon any instructions from the Company or the Guarantor in respect of any action
necessary or required to be taken by the Trustee or Paying Agent pursuant to this Appendix 1; provided, however,
that in no event shall the Trustee or Paying Agent be required to expend or risk its own funds in the performance of any
of its duties pursuant to this Appendix 1, or be obligated to take any legal or other action which might in its judgment involve
or cause it to incur any expense or liability unless it shall have been furnished with acceptable indemnification.
The
Company or Guarantor agrees to instruct the Trustee or Paying Agent in writing with respect to any certifications that may be
required under Spanish law, and the Trustee or Paying Agent acknowledges that this Appendix 1 shall constitute an instruction
in this regard, unless otherwise instructed in writing by the Company or the Guarantor.
| 2. | Failure
to deliver the Payment Information Certificate: In the event that the Trustee or
Paying Agent fails or for any reason is unable to deliver a timely, duly completed Payment
Information Certificate as described above to the Company or the Guarantor in respect
of a payment of income under the Senior Debt Securities, the Trustee or Paying Agent
shall withhold Spanish income tax on behalf of the Company or the Guarantor from the
relevant payment at the then-applicable rate (currently 19.5%, and 19% as of January
1, 2016 onwards). |
| 3. | If,
after the relevant payment date but before the 10th day of the month immediately following
the relevant payment date the Trustee or Paying Agent provides the duly completed Payment
Information Certificate to the Company or the Guarantor, then the Company or the Guarantor
shall instruct the Trustee or |
Paying
Agent to immediately transfer the 19.5% (19% as of January 1, 2016 onwards) withheld in respect of the relevant payment pursuant
to paragraph 1 above by way of reimbursement of the amounts withheld on the relevant payment date and completion of the corresponding
income payment in respect of payments under the Senior Debt Securities.
| 4. | If
the Trustee or Paying Agent fails or for any reason is unable to submit a duly completed
and executed Payment Information Certificate to the Company or the Guarantor by the 10th
day of the month immediately following the relevant payment date, the Trustee or Paying
Agent shall immediately return (but in any event no later than the 10th day of the month
immediately following the relevant payment date) to the Company or Guarantor any remaining
amount of the 19.5% (19% as of January 1, 2016 onwards) withheld in respect of the relevant
payment, and investors will have to apply directly to the Spanish tax authorities for
any refund to which they may be entitled. |
EXHIBIT I
Anexo
al Reglamento General de las actuaciones y los procedimientos de gestión e inspección tributaria y de desarrollo
de las normas comunes de los procedimientos de aplicación de los tributos, aprobado por Real Decreto 1065/2007
Modelo
de declaración a que se refieren los apartados 3, 4 y 5 del artículo 44 del Reglamento General de las actuaciones
y los procedimientos de gestión e inspección tributaria y de desarrollo de las normas comunes de los procedimientos
de aplicación de los tributos
Annex to
Royal Decree 1065/2007, of 27 July, approving the General Regulations of the tax inspection and management procedures and developing
the common rules of the procedures to apply taxes
Declaration
form referred to in paragraphs 3, 4 and 5 of Article 44 of the General Regulations of the tax inspection and management procedures
and developing the common rules of the procedures to apply taxes
Don (nombre),
con número de identificación fiscal (…)(1), en nombre y representación de (entidad
declarante), con número de identificación fiscal (….)(1) y domicilio en (…) en calidad
de (marcar la letra que proceda):
Mr. (name),
with tax identification number (...)(1), in the name and on behalf of (entity), with tax identification number (....)(1)
and address in (...) as (function - mark as applicable):
(a) Entidad
Gestora del Mercado de Deuda Pública en Anotaciones.
(a) Management
Entity of the Public Debt Market in book entry form.
(b) Entidad
que gestiona el sistema de compensación y liquidación de valores con sede en el extranjero.
(b) Entity
that manages the clearing and settlement system of securities resident in a foreign country.
(c) Otras
entidades que mantienen valores por cuenta de terceros en entidades de compensación y liquidación de valores domiciliadas
en territorio español.
(c) Other
entities that hold securities on behalf of third parties within clearing and settlement systems domiciled in the Spanish territory.
(d) Agente
de pagos designado por el emisor.
(d) Fiscal
Agent appointed by the issuer.
Formula
la siguiente declaración, de acuerdo con lo que consta en sus propios registros:
Makes the
following statement, according to its own records:
1. En
relación con los apartados 3 y 4 del artículo 44:
1. In relation
to paragraphs 3 and 4 of Article 44:
1.1 Identificación
de los valores…………………………………………………
1.1 Identification
of the securities……………………………………………………
1.2 Fecha
de pago de los rendimientos (o de reembolso si son valores emitidos al descuento o segregados)
1.2 Income
payment date (or refund if the securities are issued at discount or are segregated)
1.3 Importe
total de los rendimientos (o importe total a reembolsar, en todo caso, si son valores emitidos al descuento o segregados)……………………………..
1.3 Total
amount of income (or total amount to be refunded, in any case, if the securities are issued at discount or are segregated)
1.4 Importe
de los rendimientos correspondiente a contribuyentes del Impuesto sobre la Renta de las Personas Físicas, excepto cupones
segregados y principales segregados en cuyo reembolso intervenga una Entidad Gestora.................................
1.4 Amount
of income corresponding to Personal Income Tax taxpayers, except segregated coupons and segregated principals for which reimbursement
an intermediary entity is involved..................
1.5 Importe
de los rendimientos que conforme al apartado 2 del artículo 44 debe abonarse por su importe íntegro (o importe total
a reembolsar si son valores emitidos al descuento o segregados).
1.5 Amount
of income which according to paragraph 2 of Article 44 must be paid gross (or total amount to be refunded if the securities are
issued at discount or are segregated).
2. En
relación con el apartado 5 del artículo 44.
2. In relation
to paragraph 5 of Article 44.
2.1 Identificación
de los valores………………………………………………………
2.1 Identification
of the securities……………………………………………………..
2.2 Fecha
de pago de los rendimientos (o de reembolso si son valores emitidos al descuento o segregados) ……………………………………………………
2.2 Income
payment date (or refund if the securities are issued at discount or are segregated) ……………………………………………………
2.3 Importe
total de los rendimientos (o importe total a reembolsar si son valores emitidos al descuento o segregados.........……………………………………..
2.3 Total
amount of income (or total amount to be refunded if the securities are issued at discount or are segregated)
2.4 Importe
correspondiente a la entidad que gestiona el sistema de compensación y liquidación de valores con sede en el extranjero
A.
2.4 Amount
corresponding to the entity that manages the clearing and settlement system of securities resident in a foreign country A.
2.5 Importe
correspondiente a la entidad que gestiona el sistema de compensación y liquidación de valores con sede en el extranjero
B.
2.5 Amount
corresponding to the entity that manages the clearing and settlement system of securities resident in a foreign country B.
2.6 Importe
correspondiente a la entidad que gestiona el sistema de compensación y liquidación de valores con sede en el extranjero
C.
2.6 Amount
corresponding to the entity that manages the clearing and settlement system of securities resident in a foreign country C.
Lo que
declaro en..................….a …. de...................…de ….
I declare
the above in.................. .... on the.... of................... ... of....
(1)
En caso de personas, físicas o jurídicas, no residentes sin establecimiento permanente se hará constar
el número o código de identificación que corresponda de conformidad con su país de residencia
(1)
In case of non-residents (individuals or corporations) without permanent establishment in Spain it shall be included the
number or identification code which corresponds according to their country of residence.
Exhibit 4.2
SANTANDER ISSUANCES, S.A. UNIPERSONAL
as Issuer
BANCO SANTANDER, S.A.
as Guarantor
TO
THE BANK OF NEW YORK MELLON,
acting through its London Branch
as Trustee
FORM OF INDENTURE
Subordinated Debt Securities
BANCO
SANTANDER, S.A.
Reconciliation
and tie between Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, and the Subordinated Debt Securities
Indenture, dated as of [Ÿ].
Trust
Indenture Act Section |
Subordinated
Debt Securities Indenture Section |
| §310 |
(a)(1) |
6.10 |
| |
(a)(2) |
6.10 |
| |
(a)(3) |
Not Applicable |
| |
(a)(4) |
Not Applicable |
| |
(b) |
6.09,
6.11 |
| §311 |
(a) |
6.14 |
| |
(b) |
6.14 |
| §312 |
(a) |
7.01, 7.02(a) |
| |
(b) |
7.02(b) |
| |
(c) |
7.02(c) |
| §313 |
(a) |
7.03(a) |
| |
(b) |
7.03(a) |
| |
(c) |
1.06, 7.03(a) |
| |
(d) |
7.03(b) |
| § 314 |
(a) |
7.04, 10.06 |
| |
(b) |
Not Applicable |
| |
(c)(1) |
1.02 |
| |
(c)(2) |
1.02 |
| |
(c)(3) |
Not Applicable |
| |
(d) |
Not Applicable |
| |
(e) |
1.02 |
| |
(f) |
Not Applicable |
| §315 |
(a) |
6.01 |
| |
(b) |
6.03, 7.03(a) |
| |
(c) |
6.01 |
| |
(d) |
6.01 |
| |
(d)(1) |
6.01 |
| |
(d)(2) |
6.01 |
| |
(d)(3) |
6.01 |
| |
(e) |
5.14 |
| §316 |
(a)(1)(A) |
5.12 |
| |
(a)(l)(B) |
5.13 |
| |
(a)(2) |
Not Applicable |
| |
(a)(last sentence) |
1.01 |
| |
(b) |
5.08 |
| §317 |
(a)(1) |
5.03 |
| |
(a)(2) |
5.04 |
| |
(b) |
10.03 |
| §318 |
(a) |
1.08 |
NOTE: This
reconciliation and tie shall not, for any purpose, be deemed to be a part of the Subordinated Debt Securities Indenture.
TABLE
OF CONTENTS
__________________
Page
Article
1
Definitions and Other Provisions of General Application |
| Section
1.01. Definitions |
2 |
| Section
1.02. Compliance Certificates and Opinions |
12 |
| Section
1.03. Form of Documents Delivered to Trustee |
12 |
| Section
1.04. Acts of Holders |
13 |
| Section
1.05. Notices, Etc. to Trustee, Company or Guarantor |
14 |
| Section
1.06. Notice to Holders; Waiver |
15 |
| Section
1.07. Language of Notices, Etc |
16 |
| Section
1.08. Conflict with Trust Indenture Act |
16 |
| Section
1.09. Effect of Headings and Table of Contents |
16 |
| Section
1.10. Successors and Assigns |
16 |
| Section
1.11. Separability Clause |
16 |
| Section
1.12. Benefits of Subordinated Debt Securities Indenture |
16 |
| Section
1.13. Governing Law |
16 |
| Section
1.14. Business Days and Legal Holidays |
17 |
| Section
1.15. Appointment of Agent for Service |
17 |
| Section
1.16. Calculation Agent |
18 |
| Section
1.17. Waiver of Jury Trial |
18 |
| Section
1.18. Judgment Currency |
18 |
Article
2
Subordinated Debt Security Forms |
| Section
2.01. Forms Generally |
19 |
| Section
2.02. Form of Guarantee |
19 |
| Section
2.03. Form of Trustee’s Certificate of Authentication |
21 |
Article
3
The Subordinated Debt Securities |
| Section
3.01. Amount Unlimited, Issuable in Series |
22 |
| Section
3.02. Denominations |
24 |
| Section
3.03. Execution, Authentication, Delivery and Dating |
25 |
| Section
3.04. Temporary Subordinated Debt Securities |
26 |
| Section
3.05. Registration, Registration of Transfer and Exchange |
27 |
| Section
3.06. Mutilated, Destroyed, Lost and Stolen Subordinated Debt Securities |
30 |
| Section
3.07. Payment; Interest Rights Preserved |
31 |
| Section
3.08. Persons Deemed Owners |
33 |
| Section
3.09. Cancellation |
34 |
| Section
3.10. Computation of Interest |
34 |
| Section
3.11. CUSIP Numbers |
35 |
| Section
3.12. Additional Subordinated Debt Securities |
35 |
| Section
3.13. Correction of Minor Defects in or Amendment of Subordinated Debt Securities |
35 |
| Section
3.14. Payments Subject to Fiscal Laws |
35 |
Article
4
Satisfaction and Discharge |
| Section
4.01. Satisfaction and Discharge of Subordinated Debt Securities Indenture |
36 |
| Section
4.02. Defeasance and Covenant Defeasance |
37 |
| Section
4.03. Application of Trust Money |
41 |
| Section
4.04. Repayment to Company |
42 |
Article
5
Remedies |
| Section
5.01. Events of Default |
42 |
| Section
5.02. Enforcement of Remedies |
43 |
| Section
5.03. Collection of Indebtedness and Suits for Enforcement by the Trustee |
43 |
| Section
5.04. Trustee May File Proofs of Claim |
45 |
| Section
5.05. Trustee May Enforce Claims Without Possession of Subordinated Debt Securities |
45 |
| Section
5.06. Application of Money Collected |
46 |
| Section
5.07. Limitation on Suits |
46 |
| Section
5.08. Unconditional Right of Holders to Receive Principal, Premium and Interest, if any, and Additional Amounts |
47 |
| Section
5.09. Restoration of Rights and Remedies |
47 |
| Section
5.10. Rights and Remedies Cumulative |
48 |
| Section
5.11. Delay or Omission Not Waiver |
48 |
| Section
5.12. Control by Holders |
48 |
| Section
5.13. Waiver of Past Defaults |
48 |
| Section
5.14. Undertaking for Costs |
49 |
Article
6
The Trustee |
| Section
6.01. Certain Duties and Responsibilities |
49 |
| Section
6.02. Spanish Tax Procedures and Obligations of the Trustee |
50 |
| Section
6.03. Notice of Defaults |
51 |
| Section
6.04. Certain Rights of Trustee |
51 |
| Section
6.05. Not Responsible for Recitals or Issuance of Subordinated Debt Securities |
53 |
| Section
6.06. May Hold Subordinated Debt Securities |
54 |
| Section
6.07. Money Held in Trust |
54 |
| Section
6.08. Compensation and Reimbursement |
54 |
| Section
6.09. Disqualification; Conflicting Interests |
55 |
| Section
6.10. Corporate Trustee Required; Eligibility |
55 |
| Section
6.11. Resignation and Removal; Appointment of Successor |
56 |
| Section
6.12. Acceptance of Appointment by Successor |
58 |
| Section
6.13. Merger, Conversion, Consolidation or Succession to Business |
59 |
| Section
6.14. Preferential Collection of Claims |
59 |
| Section
6.15. Appointment of Authenticating Agent |
59 |
| Section
6.16. Appointment of Additional Trustees |
|
| Section
6.17 Tax Withholding |
|
Article
7
Holders Lists and Reports by Trustee and Company |
| Section
7.01. The Company or the Guarantor to Furnish Trustee Names and Addresses of Holders |
62 |
| Section
7.02. Preservation of Information; Communication to Holders |
62 |
| Section
7.03. Reports by Trustee |
62 |
| Section
7.04. Reports by the Company and the Guarantor |
63 |
Article
8
Consolidation, Merger, Conveyance or Transfer |
| Section
8.01. Company or Guarantor May Consolidate, Etc., Only on Certain Terms |
64 |
| Section
8.02. Successor Corporation Substituted |
65 |
| Section
8.03. Assumption of Obligations |
65 |
Article
9
Supplemental Indentures |
| Section
9.01. Supplemental Indentures without Consent of Holders |
67 |
| Section
9.02. Supplemental Indentures with Consent of Holders |
68 |
| Section
9.03. Execution of Supplemental Indentures |
69 |
| Section
9.04. Effect of Supplemental Indentures |
69 |
| Section
9.05. Conformity with Trust Indenture Act |
70 |
| Section
9.06. Reference in Subordinated Debt Securities to Supplemental Indentures |
70 |
Article
10
Covenants |
| Section
10.01. Payment of Principal, Premium, and Interest |
70 |
| Section
10.02. Maintenance of Office or Agency |
70 |
| Section
10.03. Money for Payments to be Held in Trust |
71 |
| Section
10.04. Additional Amounts |
72 |
| Section
10.05. Corporate Existence |
75 |
| Section
10.06. Statement as to Compliance |
75 |
| Section
10.07. Original Issue Document |
75 |
Article
11
Redemption of Subordinated Debt Securities |
| Section
11.01. Applicability of Article |
76 |
| Section
11.02. Election to Redeem; Notice to Trustee |
76 |
| Section
11.03. Selection by Trustee of Subordinated Debt Securities to Be Redeemed |
76 |
| Section
11.04. Notice of Redemption |
77 |
| Section
11.05. Deposit of Redemption Price |
77 |
| Section
11.06. Subordinated Debt Securities Payable on Redemption Date |
78 |
| Section
11.07. Subordinated Debt Securities Redeemed in Part |
78 |
| Section
11.08. Optional Redemption Due to Changes in Tax Treatment |
78 |
| Section
11.09. Optional Redemption For Capital Disqualification Event |
79 |
| Section
11.10. Optional Early Redemption (Call) |
80 |
Article
12
Subordination of Subordinated Debt Securities |
| Section
12.01. Subordinated Debt Securities Subordinate to Claims of Senior Creditors |
80 |
| Section
12.02. Status of the Subordinated Debt Securities |
81 |
| Section
12.03. Provisions Solely to Define Relative Rights |
81 |
| Section
12.04. Trustee to Effectuate Subordination |
82 |
| Section
12.05. Trustee Not Fiduciary for Senior Creditors |
82 |
| Section
12.06. Rights of Trustee as Senior Creditor; Preservation of Trustee’s Rights |
82 |
| Section
12.07. Article Applicable to Paying Agents |
82 |
Article
13
Guarantee |
| Section
13.01. The Guarantee |
83 |
| Section
13.02. Subordination of the Guarantee |
83 |
| Section
13.03. Guarantee Unconditional, Etc |
84 |
| Section
13.04. Reinstatement |
85 |
| Section
13.05. Subrogation |
85 |
| Section
13.06. Assumption By Guarantor |
85 |
Article
14
Spanish Bail-in and Resolution Actions |
| Section
14.01. Agreement with Respect to Spanish Bail-in Power |
86 |
| Section
14.02. Agreement with Respect to the Exercise of Resolution Tools |
88 |
SUBORDINATED
DEBT SECURITIES INDENTURE, dated as of [●], among SANTANDER ISSUANCES, S.A. UNIPERSONAL, a sociedad anónima incorporated
under the laws of the Kingdom of Spain (the “Company”), having its principal executive office located at Ciudad
Grupo Santander, Avenida de Cantabria s/n, 28660 Boadilla del Monte, Madrid, Spain, BANCO SANTANDER, S.A., a sociedad anónima
incorporated under the laws of the Kingdom of Spain (the “Guarantor”), having its principal executive office
located at Ciudad Grupo Santander, Avenida de Cantabria s/n, 28660 Boadilla del Monte, Madrid, Spain, and THE BANK OF NEW YORK
MELLON, acting through its London Branch, a banking corporation duly organized and existing under the laws of the State of New
York as Trustee (the “Trustee”), having its Corporate Trust Office at One Canada Square, London, E14 5AL, United
Kingdom.
RECITALS
OF THE COMPANY
The Company
has duly authorized the execution and delivery of this Subordinated Debt Securities Indenture to provide for the issuance from
time to time of its Subordinated Debt Securities (the “Subordinated Debt Securities”), to be issued in one
or more series, represented by one or more Global Securities in registered form, or represented by definitive Subordinated Debt
Securities in registered form, the amount and terms of each such series to be determined as hereinafter provided.
All things
necessary to make this Subordinated Debt Securities Indenture a valid and binding agreement of the Company, in accordance with
its terms, have been done.
All things
necessary to make the Guarantees, when executed by the Guarantor and endorsed on the Subordinated Debt Securities issued under
this Subordinated Debt Securities Indenture, and authenticated and delivered hereunder, the valid obligations of the Guarantor,
and to make this Subordinated Debt Securities Indenture a valid agreement of the Guarantor, in accordance with their and its terms,
have been done.
This Subordinated
Debt Securities Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder that are required to be part of this Subordinated Debt Securities
Indenture and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE,
THIS SUBORDINATED DEBT SECURITIES INDENTURE WITNESSETH:
For and in
consideration of the premises and the purchase of the Subordinated Debt Securities by the Holders (as defined herein) thereof,
it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of Subordinated Debt Securities of
any series as follows:
Article
1
Definitions and Other Provisions of General Application
Section 1.01.
Definitions. For all purposes of this Subordinated Debt Securities Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the
terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(2) all
other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term “generally accepted accounting principles”
with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted
in the Kingdom of Spain at the date of such computation and as applied by the Company;
(4) the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Subordinated
Debt Securities
Indenture as a whole and not to any particular Article, Section or other subdivision;
(5) any
reference to an “Article” or a “Section” refers to an Article or Section of this Subordinated
Debt Securities Indenture; and
(6) the
word “or” is always used inclusively (for example, the phrase “A or B” means “A or B or both”,
not “either A or B but not both”).
Certain terms
used principally in certain Articles hereof are defined in those Articles.
“Act”,
when used with respect to any Holder, has the meaning set forth in Section
1.04.
“Additional
Amounts” has the meaning set forth in Section 10.04.
“Additional
Subordinated Debt Securities” has the meaning set forth in Section
3.12.
“Affiliate”
of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition, “control” when used with respect
to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by
contract
or otherwise; and the terms “controlling” and “controlled” have meanings correlative to
the foregoing.
“Agents”
means the agents appointed in accordance with this Subordinated Debt Securities Indenture or applicable supplemental indenture;
“Agent
Member” means a member of, or participant in, any Depositary.
“Amounts
Due” means the principal amount of, premium, if any, together with any accrued but unpaid interest, and Additional
Amounts, if any, due on the Subordinated Debt Securities of any series. References to such amounts will include amounts that
have become due and payable, but which have not been paid, prior to the exercise of the Spanish Bail-in Power by the relevant
resolution authority.
“Applicable
Banking Regulations” means at any time the laws, regulations, requirements, guidelines and policies relating to capital
adequacy applicable to the Guarantor and/or the Group including, without limitation to the generality of the foregoing, those
regulations, requirements, guidelines and policies relating to capital adequacy then in effect of the Regulator (whether or not
such requirements, guidelines or policies have the force of law and whether or not they are applied generally or specifically
to Banco Santander and/or the Group).
“Authenticating
Agent” means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Subordinated Debt
Securities.
“Authorized
Newspaper” means a newspaper, in an official language of the place of publication or in the English language, customarily
published on each day that is a Business Day in the place of publication, whether or not published on days that are Legal Holidays
in the place of publication, and of general circulation in each place in connection with which the term is used or in the financial
community of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications
may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any
day that is a Business Day in the place of publication.
“Board
of Directors” means either the board of directors of the Company or Guarantor, as the case may be, or any committee
or Person duly authorized to act generally or in any particular respect for the Company or Guarantor hereunder.
“Board
Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary or any Person duly
authorized by the Company or the Guarantor, as the case may be, to have been duly adopted by the relevant Board of Directors
or an authorized committee thereof and to be in full force and effect on the date of such certification and delivered to
the Trustee.
“BRRD”
means Directive 2014/59/EU establishing a framework for the recovery and
resolution of credit institutions and investment firms, as amended or superseded from time to time.
“Business
Day” means, unless otherwise provided in the form of Subordinated Debt Securities for any particular series pursuant
to the provisions of this Subordinated Debt Securities Indenture, any day, other than Saturday or Sunday, that is neither a Legal
Holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in the
City of New York, London, Madrid or any other place or places where the principal of, or any premium or interest on, or any Additional
Amounts with respect to the Subordinated Debt Securities of that series are payable.
“Calculation
Agent” means the Trustee or such other person authorized by the Company as the party responsible for calculating the
rate(s) of interest and interest amount(s) and/or such other amount(s) from time to time in relation to any series of Subordinated
Debt Securities.
“Commission”
means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
“Company”
means the Person named as the “Company” in the first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Subordinated Debt Securities Indenture, and thereafter “Company”
shall mean such successor Person.
“Company
Request” and “Company Order” mean, respectively, a written request or order, as the case may be,
signed in the name of the Company by any member of the Board of Directors or any officer or representative of the Company empowered
to do so by Board Resolution, and delivered to the Trustee.
“Conversion
Event” means the cessation of use of (i) a Foreign Currency both by the government of the country which issued such
currency and for the settlement of transactions by a central bank or other public institutions of or within the international
banking community, or (ii) the euro both within the European monetary system and for the settlement of transactions by public
institutions of or within the European Union.
“Corporate Trust Office”
means the office of the Trustee at which its corporate trust business in London, England, is principally administered, which office
as of the date hereof is located at One Canada Square, London E14 5AL (Attention: Corporate Trust Administration, facsimile: +44
20 7964 2536) or, if a different Trustee is appointed for a particular series of Subordinated Debt Securities, the address set
forth in the supplemental indenture naming the Trustee for that particular series of Subordinated Debt Securities.
The term
“corporation” includes corporations, associations, companies, partnerships and business trusts.
“CRR”
means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on the prudential requirements
for credit institutions and investment firms and amending Regulation (EU) No. 648/2012 or such other regulation as may come into
effect in place thereof.
“Default
Interest” has the meaning set forth in Section
3.07.
“Depositary”
means, with respect to any series of Subordinated Debt Securities, a clearing agency that is designated to act as Depositary for
the Global Securities evidencing all or part of such Subordinated Debt Securities as contemplated by Section
3.05.
“dollar”
or “$” or any similar reference means the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
“DTC”
means The Depository Trust Company or its nominee or its or their successor.
“Early
Redemption Amount (Call)” has the meaning set forth in Section 11.10.
“Early
Redemption Amount (Capital Disqualification Event)” has the meaning set forth in Section 11.09.
“Early
Redemption Amount (Tax)” has the meaning set forth in Section 11.08.
“EUR”,
“euro” or “€” means the currency of the member states of the European Union (“EU”)
that, from time to time, have adopted the single currency in accordance with the treaty establishing the European Community, as
amended from time to time.
“Event
of Default” has the meaning specified in Section
5.01.
“Exchange
Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
by the Commission thereunder.
“Foreign
Currency” means the euro or any currency issued by the government of any country (or a group of countries or participating
member states) other than the United States which as at the time of payment is legal tender for the payment of public and private
debts.
“Foreign
Government Securities” means with respect to Subordinated Debt Securities of any series that are denominated in a Foreign
Currency, non-callable (i) direct obligations of the participating member state or government that issued such Foreign Currency
for the payment of which obligations its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of such participating member state or government, the payment of which obligations
is unconditionally guaranteed as a full faith and credit obligation of such participating member state or government. For the
avoidance of doubt, for all purposes hereof, euro shall be deemed to have been issued by each participating member state from
time to time.
“Global
Security” means one or more global certificates evidencing all or part of a series of Subordinated Debt Securities,
authenticated and delivered to or on behalf of the Holder and registered in the name of the Holder or its nominee.
“Group”
means Banco Santander, S.A. and its consolidated subsidiaries.
“Guarantees”
means the guarantees to be entered into by the Guarantor with respect to the Subordinated Debt Securities as set forth in Section
13.01 endorsed on a Subordinated Debt Security authenticated and delivered pursuant to this Subordinated Debt Securities
Indenture, set forth in Section 2.02.
“Guarantor”
means Banco Santander, S.A., until a successor Person shall have become such pursuant to the applicable provisions of the Subordinated
Debt Securities Indenture, and thereafter “Guarantor” shall mean such successor Person.
“Guarantor
Request” and “Guarantor Order” mean, respectively, a written request or order, as the case may be,
signed in the name of the Guarantor by any member of the Board of Directors or any officer or representative of the Guarantor
empowered to do so by Board Resolution, and delivered to the Trustee.
“Holder”
means a Person in whose name a Subordinated Debt Security in global or definitive form is registered in the Subordinated Debt
Security Register.
“Independent
Public Accountants” means accountants or a firm of accountants that, with respect to the Company, Guarantor and any
other obligor under the Subordinated Debt Securities, are independent public accountants within the meaning of the Securities
Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder, who may be the independent public
accountants regularly retained by the Company or Guarantor or who may be other independent public accountants.
“Interest
Payment Date”, when used with respect to any Subordinated Debt Security, means the Stated Maturity of any installment
of interest on such Subordinated Debt Security.
“Law
11/2015” means Law 11/2015, of June 18, for the recovery and resolution of credit institutions and investment
firms (Ley 11/2015, de 18 de junio, de recuperacion y resolucion de entidades de credito y empresas de servicios de inversion),
as amended from time to time.
“Legal
Holiday”, with respect to any Place of Payment or other location, means a Saturday, a Sunday or a day on which banking
institutions in such Place of Payment or other location are not authorized or obligated to be open.
“Losses”
means any and all claims, losses, liabilities, damages, costs, expenses and judgments (including legal fees and expenses) sustained
by the Company or the Trustee.
“Maturity”,
when used with respect to any Subordinated Debt Security, means the date, if any, on which the principal or any installment of
principal of such Subordinated Debt Security becomes due and payable as therein or herein provided, whether by call for redemption,
repurchase, declaration of acceleration or otherwise.
“Officer’s Certificate”
means a certificate signed by any member of the Board of Directors, the Secretary or the Deputy Secretary of the Board of Directors,
a Vice President or any officer or any other Person duly authorized by the Company or the Guarantor, that complies with the requirements
of Section 314(e) of the Trust Indenture Act and is delivered to the Trustee.
“Opinion
of Counsel” means a written opinion of legal advisors, who may be an employee of or legal advisors for the Company or
the Guarantor or other legal advisors who shall be reasonably acceptable to the Trustee and that, if required by the Trust Indenture
Act, complies therewith.
“Original
Issue Discount Security” means any Subordinated Debt Security which provides for an amount less than the principal amount
to be due and payable upon a declaration of the Maturity thereof.
“Outstanding”,
when used with respect to Subordinated Debt Securities or any series of Subordinated Debt Securities means (except as otherwise
specified pursuant to Section 3.01), as of the date of determination,
all Subordinated Debt Securities or all Subordinated Debt Securities of such series, as the case may be, theretofore authenticated
and delivered under this Subordinated Debt Securities Indenture, except:
(i) Subordinated
Debt Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
(ii)
Subordinated Debt Securities, or portions thereof, for whose payment or redemption money, U.S. Government Obligations or Foreign
Government Securities in the necessary amount have been theretofore deposited with the Trustee or any Paying Agent (other than
the Company or the Guarantor) in trust or set aside and segregated in trust by the Company or the Guarantor (if the Company shall
act as its own or authorize the Guarantor to act as, Paying Agent) for the Holders of such Subordinated Debt Securities; provided,
that, if such Subordinated Debt Securities are to be redeemed, notice of such redemption has been duly given pursuant to this
Subordinated Debt Securities Indenture or provision therefor satisfactory to the Trustee has been made;
(iii) any
such Subordinated Debt Security with respect to which the Company has effected defeasance pursuant to the terms hereof, except
to the extent provided in Section 4.02; and
(iv) Subordinated
Debt Securities which have been paid pursuant to Section
11.06 or in exchange for or in lieu of which other Subordinated Debt Securities have been authenticated and delivered pursuant
to this Subordinated Debt Securities Indenture, other than any such Subordinated Debt Securities in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such Subordinated Debt Securities are held by a bona fide purchaser
in whose hands such Subordinated Debt Securities are valid obligations of the Company;
provided, however,
that in determining whether the Holders of the requisite principal amount of the Outstanding Subordinated Debt Securities of any
series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal amount
of a Subordinated Debt Security denominated in a Foreign Currency shall be the Dollar equivalent, determined on the date of original
issuance of such Subordinated Debt Security, of the principal amount of such Subordinated Debt Security; and (ii) Subordinated
Debt Securities beneficially owned by the Company, the Guarantor or any other obligor upon the Subordinated Debt Securities or
any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or
waiver, only Subordinated Debt Securities for which a Responsible Officer of the Trustee has received an Officer’s Certificate
stating that such Subordinated Debt Securities are so beneficially owned shall be so disregarded; provided, further, however,
that Subordinated Debt Securities so beneficially owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Subordinated
Debt Securities and that the pledgee is not the Company, the Guarantor or any other obligor upon the Subordinated Debt Securities
or any Affiliate of the Company, the Guarantor or of such other obligor.
“Paying Agent”
means any Person (which may include the Company or the Guarantor) authorized by the Company to pay the principal of, or any
premium or interest on, or any Additional Amounts with respect to, any Subordinated Debt Securities on behalf of the Company.
Except as otherwise specified as contemplated by Section
3.01 hereof, The Bank of New York Mellon, acting through its London Branch will act as Principal Paying Agent in respect of
the Subordinated Debt Securities of any series.
“Payment
Statement” means the statement to be delivered to the Company or Guarantor by the Trustee, substantially in the form
set forth in Exhibit I to Appendix I, pursuant to Section
6.02.
“Person”
means any individual, company, corporation, firm, partnership, joint venture, association, organization, state or agency of a
state or other entity, whether or not having separate legal personality.
“Place of Payment”,
when used with respect to the Subordinated Debt Securities of any series, means the place or places where the principal of, or
any premium or interest on, or any Additional Amounts with respect to the Subordinated Debt Securities of that series are payable
as specified pursuant to Section 3.01 or,
if not so specified, as specified in Section 10.02.
“Predecessor
Security” of any particular Subordinated Debt Security means every previous Subordinated Debt Security evidencing all
or a portion of the same debt as that evidenced by such particular Subordinated Debt Security; and, for the purposes of this definition,
any Subordinated Debt Security authenticated and delivered under Section
3.06 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Subordinated Debt
Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Subordinated Debt Security.
“Redemption
Date”, when used with respect to any Subordinated Debt Security to be redeemed, means the date fixed for such redemption
by or pursuant to this Subordinated Debt Securities Indenture.
“Redemption
Price”, when used with respect to any Subordinated Debt Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Subordinated Debt Securities Indenture, which shall include the Early Redemption Amount (Tax), Early
Redemption Amount (Call) or Early Redemption Amount (Capital Disqualification Event), as applicable.
“Regular
Record Date” for the interest payable on any Interest Payment Date on Subordinated Debt Securities of any series means
the date specified for the purpose pursuant to Section 3.01.
“regulated
entity” means any entity to which Law 11/2015 applies as provided under article 1.2 of Law 11/2015, as amended from
time to time, which includes, certain credit institutions, investment firms, and certain of their parent or holding companies.
“Regulator”
means the European Central Bank or such other or successor authority exercising primary bank supervisory authority, in each case
with respect to prudential matters in relation to the Guarantor and/or the Group;
“relevant
resolution authority” means the Spanish Fund for the Orderly Restructuring of Banks, the European Single
Resolution Mechanism, as the case may be, according to Law 11/2015, and any other entity with the authority to exercise
the Spanish Bail-in Power from time to time.
“Responsible
Officer”, when used with respect to the Trustee, means any officer of the Trustee assigned to or working in the corporate
trust department (or any successor unit) of the Trustee located at the Corporate Trust Office of the Trustee, who shall have direct
responsibility for the administration of this Subordinated Debt Securities Indenture and, for the purposes of Section
6.01(c)(ii), shall also include any other officer of the Trustee to whom any corporate trust matter is referred because of such
officer’s knowledge of and familiarity with the particular subject.
“Senior
Creditors” means creditors of the Company whose claims are non-subordinated obligations of the Company, any Senior Subordinated
Obligations (as defined below) and any claim on the Company, which becomes subordinated as a consequence of article 92.1º
of the Spanish Insolvency Law.
“Senior
Subordinated Obligations” means any subordinated obligations of the Company which by law and/or their terms, and to
the extent permitted by Spanish law (including contractually subordinated obligations of principal related to instruments not
qualifying as Tier 2 Capital or Tier 1 Capital of Banco Santander), rank senior to the Subordinated Debt Securities of
any series.
“Spanish
Bail-in Power” means any write-down, conversion, transfer, modification, or suspension power existing from time to
time under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain,
relating to (i) the transposition of BRRD, including but not limited to Law 11/2015, and up to 31 December 2015 (inclusive),
Law 9/2012, of 14 November, on restructuring and resolution of credit institutions, (ii) the SRM Regulation and (iii) the
instruments, rules and standards created thereunder, pursuant to which any obligation of a regulated entity (or other
affiliate of such regulated entity) can be reduced, cancelled, modified, or converted into shares, other securities, or other
obligations of such regulated entity or any other person (or suspended for a temporary period).
“Spanish
Insolvency Law” means Law 22/2003 (Ley Concursal) of 9 July 2003 regulating insolvency proceedings in Spain, or an equivalent
legal provision which replaces it in the future.
“Special Record Date”,
when used for the payment of any Default Interest on Subordinated Debt Securities of any series, means the date specified by the
Company for the purpose pursuant to Section 3.07.
“SRM
Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014,
establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in
the framework of the Single Resolution Mechanism and the Single Resolution Fund and amending Regulation (EU) No. 1093/2010,
as amended or superseded from time to time.
“Stated Maturity”,
when used with respect to any Subordinated Debt Security or any installment of principal thereof or interest thereon, means the
date or dates, if any, specified in, or determined in accordance with the terms of, such Subordinated Debt Security, including
as the same may be modified pursuant to the Spanish Bail-in Power set forth in Article 13, as the fixed date or dates on which
the principal of such Subordinated Debt Security or such installment of principal or interest (and Additional Amounts, if any)
is due and payable.
“Subordinated
Debt Securities”, has the meaning set forth in the recitals of the Company herein and more particularly means any series
of Subordinated Debt Securities issued, authenticated and delivered under this Subordinated Debt Securities Indenture.
“Subordinated
Debt Securities Indenture” means this instrument as originally executed or as it may from time to time be supplemented
or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include
the terms and forms of particular series of Subordinated Debt Securities established pursuant to Section
3.01.
“Subordinated
Debt Security” means one of the Subordinated Debt Securities.
“Subordinated
Debt Security Register” and “Subordinated Debt Security Registrar” have the respective meanings specified
in Section 3.05.
“Subsidiary”
means any entity over which the Company or the Guarantor may have, directly or indirectly, control in accordance with Applicable
Banking Regulations;
“Tier
1 Capital” means at any time, with respect to the Guarantor or the Group, as the case may be, the Tier 1 capital of
the Guarantor or the Group, respectively, as calculated by the Guarantor in accordance with Chapters 1, 2 and 3 (Tier 1 Capital,
Common Equity Tier 1 Capital and Additional Tier 1 capital) of Title I (Elements of own funds) of Part Two (Own Funds) of the
CRR and/or Applicable Banking Regulations at such time, including any applicable transitional, phasing in or similar provisions;
“Tier
2 Capital” means at any time, with respect to the Company or the Group, as the case may be, the Tier 2 capital of the
Company or the Group, respectively, as calculated by the Company in accordance with Chapter 4 (Tier 2 capital) of Title I (Elements
of own funds) of Part Two (Own Funds) of the CRR and/or Applicable Banking Regulations at such time, including any applicable
transitional, phasing in or similar provisions.
“Trustee”
means the Person named as the “Trustee” in the first paragraph of this instrument until a successor trustee
shall have become such pursuant to the applicable provisions of this Subordinated Debt Securities Indenture, and thereafter “Trustee”
shall mean the Person who is then the Trustee hereunder, or, if a different Trustee is appointed for a particular series of Subordinated
Debt Securities, the Trustee named in the relevant indenture supplemental hereto as the Trustee for that particular series of
Subordinated Debt Securities and if at any time there is more than one such Person, “Trustee” shall mean and
include each such Person; and “Trustee” as used with respect to the Subordinated Debt Securities of any series
shall mean the Trustee with respect to the Subordinated Debt Securities of such series.
“Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended, as in effect at the date as of which this instrument
was executed, except as provided in Section 9.05.
“United
States” and “U.S.” mean the United States of America and, except in the case of Section
6.10 and 6.15, its territories and possessions.
“U.S.
Government Obligations” means securities that are non-callable and nonredeemable at the option of the issuer and that
are (i) direct obligations of the United States for which its full faith and credit are pledged and/or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally
guaranteed as a full faith and credit obligation of the United States, and shall also include a depository receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), which
may
include the Trustee, as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt,
provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the
specific payment of principal of or interest on or other amount with respect to the U.S. Government Obligation evidenced by such
depository receipt.
Section 1.02.
Compliance Certificates and Opinions. Unless otherwise expressly provided for in this Subordinated Debt Securities
Indenture, upon any application or request by the Company or the Guarantor to the Trustee to take any action under any provision
of this Subordinated Debt Securities Indenture, the Company or the Guarantor shall furnish to the Trustee an Officer’s Certificate
stating that all conditions precedent, if any, provided for in this Subordinated Debt Securities Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the opinion of the legal advisor rendering such opinion
all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as
to which the furnishing of such documents is specifically required by any provision of this Subordinated Debt Securities Indenture
relating to such particular application or request, no additional certificate or opinion need be furnished.
Every certificate
or opinion with respect to compliance with a condition or covenant provided for in this Subordinated Debt Securities Indenture
(other than Section 10.06) shall include:
(a)
a statement that each Person signing such certificate or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b)
a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c)
a statement that, in the opinion of each such Person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d)
a statement as to whether, in the opinion of each such Person, such condition or covenant has been complied with.
Section 1.03.
Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate
or opinion of an officer of the Company or the Guarantor may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, legal advisors, unless such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion or
representations are based are erroneous. Any such certificate or opinion of, or representations by, legal advisors may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the
Company or the Guarantor, as the case may be, stating that the information with respect to such factual matters is in the possession
of the Company or the Guarantor, as the case may be, unless such legal advisors know, or in the exercise of reasonable care should
know, that the certificate or opinion or representation with respect to such matters is erroneous.
Where any
Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Subordinated Debt Securities Indenture, they may, but need not, be consolidated and form one instrument.
Section 1.04.
Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided
by this Subordinated Debt Securities Indenture to be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to
the Trustee and, when it is hereby expressly required, to the Company or the Guarantor or to both of them. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act”
of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Subordinated Debt Securities Indenture and (subject to Section
6.01) conclusive in favor of the Trustee and the Company and the Guarantor, if made in the manner provided in this Section.
(b)
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of
deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. When such
execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
(c)
The ownership of Subordinated Debt Securities shall be proved by the Subordinated Debt Security Register.
(d)
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Subordinated Debt
Security shall bind every future Holder
of
the same Subordinated Debt Security and the Holder of every Subordinated Debt Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee,
any Subordinated Debt Security Registrar, any Paying Agent, any Authenticating Agent, the Company or the Guarantor in reliance
thereon, whether or not notation of such action is made upon such Subordinated Debt Security or such other Subordinated Debt Security.
(e)
If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or
other Act, the Company may, at its option, by or pursuant to a Board Resolution or an Officer’s Certificate, fix in advance
a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent,
waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders
of the requisite proportion of Outstanding Subordinated Debt Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Subordinated Debt
Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Subordinated
Debt Securities Indenture not later than six months after the record date.
Section 1.05.
Notices, Etc. to Trustee, Company or Guarantor. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this Subordinated Debt Securities Indenture to be made upon,
given or furnished to, or filed with,
(a)
the Trustee by any Holder or by the Company or the Guarantor shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or filed in writing (which may be via facsimile or email delivery of a copy
of such document) to the Trustee at its Corporate Trust Office, and the Trustee agrees to accept and act upon facsimile transmission
or email delivery of written instructions pursuant to this Subordinated Debt Securities Indenture, provided, however, that (x)
the party providing such written instructions, subsequent to such transmission of written instructions, shall provide the originally
executed instructions or directions to the Trustee in a timely manner, and (y) such originally executed instructions or directions
shall be signed by an authorized representative of the party providing such instructions or directions; or
(b)
the Company or the Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class air mail postage prepaid, to the Company or the Guarantor, to
the address of its principal office specified in the first paragraph of this Subordinated Debt Securities Indenture or at any
other address previously furnished in writing to the Trustee by the Company or the Guarantor.
The Trustee
agrees to accept and act upon instructions or directions pursuant to this Subordinated Debt Securities Indenture sent by unsecured
e-mail, portable document format (PDF), facsimile transmission or other similar unsecured electronic methods, provided, however,
that the Trustee shall have received from the Company an incumbency certificate listing persons designated to give such instructions
or directions and containing the titles and specimen signatures of such designated persons, which such incumbency certificate
shall be amended and replaced whenever a person is to be added or deleted from the listing, and provided further that the Trustee
shall have no obligation or responsibility to confirm or verify that the instruction or direction was in fact sent by, or on behalf
of, a person so designated to give instructions or directions. If the Company elects to give the Trustee e-mail or facsimile instructions
(or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's
understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses
arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding a conflict
or inconsistency between such instructions and a subsequent written instruction. The Company agrees to assume all risks arising
out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the
risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.
Section 1.06.
Notice to Holders; Waiver. When this Subordinated Debt Securities Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if given in writing and mailed, first-class
postage prepaid, to each Holder of a Subordinated Debt Security affected by such event in the manner and to the extent provided
in Section 313(c) of the Trust Indenture Act with respect to reports pursuant to Section 7.03(a).
For so long
as the Subordinated Debt Securities of any series are represented by Global Securities, the Company will deliver a copy of all
notices with respect to such series to the Holder (if the address of such Holder is known to the Company).
When notice
to Holders of Subordinated Debt Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Subordinated
Debt Securities Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance
upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable
to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
Section 1.07.
Language of Notices, Etc. Any notice under this Subordinated Debt Securities Indenture shall be in the English language,
except that, if the Company so elects, any published notice may be in an official language of the country of publication.
Section 1.08.
Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision
hereof which is required to be included in this Subordinated Debt Securities Indenture by any of the provisions of the Trust Indenture
Act, such required provision of the Trust Indenture Act shall control. If at any future time any provision required to be included
herein by the Trust Indenture Act as in force at the date as of which this Subordinated Debt Securities Indenture was executed
or any limitation imposed by the Trust Indenture Act at such date on any provision otherwise included herein would not be so required
or imposed (in whole or in part) if this Subordinated Debt Securities Indenture were executed at such future time, the Company,
the Guarantor and the Trustee may enter into one or more indentures supplemental hereto pursuant to Section 9.01 to
change or eliminate (in whole or in part) such provision or limitation of this Subordinated Debt Securities Indenture in conformity
with the requirements of the Trust Indenture Act as then in force, except that (subject to Article 9) no provision
or limitation required to be included herein by Sections 310(a)(1) and (a)(2), 315(a), (c), (d)(l), (d)(2), (d)(3) and (e), 316(a)(1)(A),
(a)(l)(B), (a)(2), (a) (last sentence) and (b) of the Trust Indenture Act as in force at the date as of which this Subordinated
Debt Securities Indenture was executed may be so changed or eliminated.
Section 1.09.
Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.10.
Successors and Assigns. All covenants and agreements in this Subordinated Debt Securities Indenture by the Company
or the Guarantor shall bind their respective successors and assigns, whether so expressed or not.
Section 1.11.
Separability Clause. In case any provision in this Subordinated Debt Securities Indenture or in the Subordinated
Debt Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section
1.12. Benefits of
Subordinated Debt Securities Indenture. Nothing in this Subordinated Debt Securities Indenture, in the Subordinated Debt
Securities or the Guarantees, express or implied, shall give to any Person, other than the parties hereto and any
Subordinated Debt Securities Registrars or any Paying Agent or Calculation Agent with respect to any Subordinated Debt
Securities and their successors hereunder, and the Holders of Subordinated Debt Securities, any benefit or any legal or
equitable right, remedy or claim under this Subordinated Debt Securities Indenture.
Section 1.13.
Governing Law. This Subordinated Debt Securities Indenture, the Subordinated Debt Securities and the Guarantees
shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to the choice of
law provisions),
except
for Section 12.01 and Section 13.02, which shall be governed by and construed in accordance with the
laws of Spain, and except that the authorization and execution of this Subordinated Debt Securities Indenture, the
Subordinated Debt Securities and the Guarantees shall be governed by (in addition to the laws of the State of New York
relevant to execution) the respective jurisdictions of organization of the Company, the Guarantor and the Trustee, as the
case may be.
Section 1.14.
Business Days and Legal Holidays. The terms of the Subordinated Debt Securities shall provide that, in any case
where any Interest Payment Date, Redemption Date, Maturity or Stated Maturity, of a Subordinated Debt Security shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision of this Subordinated Debt Securities Indenture
or the Subordinated Debt Securities other than a provision in the Subordinated Debt Securities that specifically states that such
provision shall apply in lieu of this Section) payments of interest, if any (and premium, if any) or principal and the exchange
of the Subordinated Debt Security need not be made at such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment (or such other Business Day as shall be provided in such Subordinated Debt Security) with
the same force and effect as if made on such Interest Payment Date, Redemption Date, Maturity or Stated Maturity, provided that
no interest shall accrue on such payment for the period from and after such Interest Payment Date, Redemption Date, Maturity or
Stated Maturity, as the case may be.
Section 1.15.
Appointment of Agent for Service. Each of the Company and the Guarantor has designated and appointed Banco Santander,
S.A., New York Branch, 45 E. 53rd Street, New York, New York 10022, as its authorized agent (the “Authorized
Agent”), upon which process may be served in any suit or proceeding in any Federal or State court
in the Borough of Manhattan, The City of New York arising out of or relating to the Subordinated Debt Securities or this Subordinated
Debt Securities Indenture, but for that purpose only, and agrees that service of process upon said Authorized Agent shall be deemed
in every respect effective service of process upon it in any such suit or proceeding in any Federal or State court in the Borough
of Manhattan, The City of New York, New York. Such appointment shall be irrevocable so long as any of the Subordinated Debt Securities
remain Outstanding until the appointment of a successor by the Company or the Guarantor and such successor’s acceptance
of such appointment. Upon such acceptance, the Company or the Guarantor shall notify the Trustee of the name and address of such
successor. Each of the Company and the Guarantor further agrees to take any and all action, including the execution and filing
of any and all such documents and instruments, as may be necessary to continue such designation and appointment of said Authorized
Agent in full force and effect so long as any of the Subordinated Debt Securities shall be Outstanding. The Trustee shall not
be obligated and shall have no responsibility with respect to any failure by the Company or the Guarantor to take any such action.
Each of the Company and the Guarantor hereby irrevocably submits (for the purposes of any such suit or proceeding) to the non-exclusive
jurisdiction of any such court in which any such suit or proceeding is so instituted, and waives, to the extent it may effectively
do so, any objection it may have now or hereafter to the laying of the venue of any such suit or proceeding. To the extent that
the Company may be entitled, in any jurisdiction in which judicial proceedings may
at
any time be commenced with respect to or arising out of this Subordinated Debt Securities Indenture to claim for itself or its
revenues, assets or properties immunity (whether by reason of sovereign immunity or otherwise) from suit, from the jurisdiction
of any court (including, but not limited to, any court of the United States of America or the State of New York) or from any legal
process with respect to itself or its property, from attachment prior to judgment, from set-off, from execution of a judgment,
from the grant of injunctive relief, whether prior to or after judgment, or from any other legal process (including, without limitation,
in relation to enforcement of any arbitration award), and to the extent that in any such jurisdiction there may be attributed
such an immunity (whether or not claimed), the Company hereby irrevocably agrees not to claim and hereby irrevocably waives such
immunity and consents to the grant of any such relief.
Section 1.16.
Calculation Agent. If the Company appoints a Calculation Agent pursuant to Section 3.01 with respect
to any series of Subordinated Debt Securities, any determination of the interest rate on, or other amounts in relation to, such
series of Subordinated Debt Securities in accordance with the terms of such series of Subordinated Debt Securities by such Calculation
Agent shall (in the absence of manifest error, bad faith or willful misconduct) be binding on the Company, the Guarantor, the
Trustee and all Holders and (in the absence of manifest error, bad faith or willful misconduct) no liability to the Holders shall
attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions.
Section 1.17.
Waiver of Jury Trial. EACH OF THE PARTIES HERETO, AND EACH HOLDER OF A SUBORDINATED DEBT SECURITY BY ITS ACCEPTANCE
THEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBORDINATED DEBT SECURITIES INDENTURE, THE SUBORDINATED DEBT SECURITIES OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 1.18.
Judgment Currency. Any payment on account of an amount that is payable in U.S. dollars (the “Required Currency”)
which is made to or for the account of any Holder or the Trustee in lawful currency of any other jurisdiction (the “Judgment
Currency”), whether as a result of any judgment or order or the enforcement thereof or the liquidation of the Company
shall constitute a discharge of the Company obligation under this Subordinated Debt Securities Indenture and the Subordinated
Debt Securities only to the extent of the amount of the Required Currency with such Holder or the Trustee, as the case may be,
could purchase in the London foreign exchange markets with the amount of the Judgment Currency in accordance with normal banking
procedures at the rate of exchange prevailing on the first Business Day following receipt of the payment in the Judgment Currency.
If the amount of the Required Currency that could be so purchased is less than the amount of the Required Currency originally
due to such Holder or the Trustee, as the case may be, the Company shall indemnify and hold harmless the Holder or the Trustee,
as the case may be, from and against all loss or damage arising out of, or as a result of, such deficiency. This indemnity shall
constitute an obligation separate and independent from the other obligations contained in this
Subordinated
Debt Securities Indenture or the Subordinated Debt Securities, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by any Holder or the Trustee from time to time and shall continue in full force
and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due hereunder or under any judgment
or order.
Article
2
Subordinated Debt Security Forms
Section 2.01.
Forms Generally. The Subordinated Debt Securities of each series shall be issuable in registered form and in such
forms as shall be established by or pursuant to a Board Resolution of the Company, an Officer’s Certificate, or in one or
more indentures supplemental hereto, pursuant to Section 3.01, in each case with such insertions, omissions, substitutions
and other variations as are required or permitted by this Subordinated Debt Securities Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any applicable
law or rule or regulation made pursuant thereto or with the rules of any securities exchange or Depositary therefor, or as may,
consistently herewith, be determined by the officers executing such Subordinated Debt Securities, all as evidenced by any such
execution.
The Trustee’s
certificates of authentication shall be in substantially the form set forth in Section 2.03 or Section 6.15.
The Guarantee
by the Guarantor to be endorsed on the Subordinated Debt Securities of each series shall be substantially in the form set forth
in this Article, or as shall be established by or pursuant to a Board Resolution or Officer’s Certificate of the Guarantor,
or in one of more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Subordinated Debt Securities Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined
by the officer or officers executing such Guarantees, as evidenced by the officer’s or officers’ execution (whether
by facsimile or otherwise) of the Guarantees.
The definitive
Subordinated Debt Securities and Guarantees shall be printed, lithographed or engraved or produced by any combination of these
methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Subordinated Debt
Securities may be listed, all as determined by the officers executing such Subordinated Debt Securities and Guarantees, as evidenced
by their execution thereof.
Section 2.02.
Form of Guarantee. The Guarantee shall be in substantially the following form:
GUARANTEE
OF BANCO SANTANDER, S.A.
This Guarantee
is made on ____,____ by BANCO SANTANDER, S.A. (herein called the “Guarantor,” which term includes any successor
person under the Indenture (as defined on the reverse hereof)) in favor of the Holder of the Subordinated Debt Security upon which
this Guarantee is endorsed (“this Security”). This Guarantee is issued subject to the provisions of the Indenture
dated [*], 2015 among Santander Issuances, S.A. Unipersonal, the Guarantor and The Bank of New York Mellon, as Trustee, as supplemented
from time to time (the “Indenture”), and each Holder of this Security, by accepting the same, agrees to and
shall be bound by such provisions.
(a) Guarantee
The Guarantor
hereby fully, unconditionally and irrevocably guarantees (the “Guarantee”) to each Holder of this Security
and to the Trustee on behalf of each such Holder the due and punctual payment of the principal of, any premium and interest on,
and any Additional Amounts with respect to the Security and the due and punctual payment of the sinking fund payments (if any)
provided for pursuant to the terms of this Security and any and all amounts of whatever nature which may become payable under
any of the foregoing or under the Indenture (including but not limited to, the fees, expenses and indemnities of the Trustee),
including as may be modified pursuant to the exercise of the Bail-in Power under Article
14 of the Indenture, and as and when the same shall become due and payable, whether at maturity, by acceleration, redemption,
repayment or otherwise, in accordance with the terms of this Security and of the Indenture, the Guarantor will pay to such Holder,
or to the Trustee for the account of such Holder, on demand the amount payable by the Company to such Holder. In case of the failure
of the Company punctually to pay any such principal, premium, interest, Additional Amounts or sinking fund payment and any and
all amounts under the Indenture, (including but not limited to, the fees, expenses and indemnities of the Trustee) the Guarantor
hereby agrees to pay, or cause any such payment to be made, punctually when and as the same shall become due and payable, whether
at maturity, upon acceleration, redemption, repayment or otherwise, and as if such payment were made by the Company in accordance
with the terms of such Subordinated Note and of the Indenture.
Unless otherwise
defined herein, all terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in
the Indenture.
IN WITNESS
WHEREOF, the Guarantor has caused this Guarantee to be duly executed.
Dated:
| BANCO SANTANDER, S.A. |
| |
| |
| By: |
|
|
| |
Name: |
|
| |
Title: |
Authorized Signatory |
| |
|
|
| |
|
|
| |
Name: |
|
| |
Title: |
Authorized Signatory |
Section 2.03.
Form of Trustee’s Certificate of Authentication. The Trustee’s certificate of authentication shall be
in substantially the following form:
CERTIFICATE
OF AUTHENTICATION
This is one
of the Subordinated Debt Securities of the series designated herein referred to in the within-mentioned Subordinated Debt Securities
Indenture.
| |
| |
| THE BANK OF NEW YORK MELLON, as Trustee |
| |
| |
| By: |
|
| |
Authorized Signatory |
Article
3
The Subordinated Debt Securities
Section 3.01.
Amount Unlimited, Issuable in Series. The aggregate principal amount of Subordinated Debt Securities which may be
authenticated and delivered under this Subordinated Debt Securities Indenture is unlimited. The Subordinated Debt Securities may
be issued in one or more series.
There shall be established by or pursuant to a Board Resolution
of the Company, or established by an Officer’s Certificate, or established in one or more indentures supplemental hereto,
prior to the initial issuance of Subordinated Debt Securities of any series,
(a)
the title of the Subordinated Debt Securities of the series (which shall distinguish the Subordinated Debt Securities of
the series from all other Subordinated Debt Securities);
(b)
the price or prices (expressed as a percentage of the principal amount thereof) at which the Subordinated Debt Securities
of the series shall be issued;
(c)
any limit upon the aggregate principal amount of the Subordinated Debt Securities of the series which may be authenticated
and delivered under this Subordinated Debt Securities Indenture (except for Subordinated Debt Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other Subordinated Debt Securities of the series pursuant
to Section 3.04, 3.05, 3.06, 9.06 or 11.07 and except for any Subordinated Debt
Securities which, pursuant to Section 3.03 are deemed never to have been authenticated and delivered hereunder);
(d)
the date or dates, if any, on which the principal of (and premium, if any, on) the Subordinated Debt Securities of the
series is payable;
(e)
the rate or rates, if any, at which the Subordinated Debt Securities of the series shall accrue interest or the manner
of calculation of such rate or rates, if any, the date or dates from which such interest shall accrue, the Interest Payment Dates
on which such interest shall be payable or the manner of determination of such Interest Payment Dates, if other than as specified
in Section 3.07 and the Regular Record Date for the interest payable on any Interest Payment Date and any dates required to be
established pursuant to Section 7.01;
(f)
whether any premium, upon redemption or otherwise, shall be payable by the Company on Subordinated Debt Securities of the
series, and whether such premium shall be redeemable at the option of the Company or the Holder;
(g)
the place or places where the principal of (and premium, if any) and any interest on Subordinated Debt Securities of the
series shall be payable, and the Paying Agent or Paying Agents who shall be authorized to pay principal of (and premium, if
any)
and interest on Subordinated Debt Securities of such series, at least one of such Paying Agents having offices or agencies in
the Borough of Manhattan, The City of New York;
(h)
other than with respect to any redemption of the Subordinated Debt Securities pursuant to Section 11.08, whether
or not such series of Subordinated Debt Securities are to be redeemable, in whole or in part, at the Company’s option and,
if so redeemable, the period or periods within which, the price or prices at which and the terms and conditions upon which, Subordinated
Debt Securities of the series may be redeemed, including the date referred to in Section 11.08;
(i)
the obligation, if any, of the Company to redeem or purchase Subordinated Debt Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or
prices at which, and the terms and conditions upon which Subordinated Debt Securities of the series shall be redeemed or purchased,
in whole or in part, pursuant to such obligation;
(j)
if other than denominations of $1,000 and any multiple thereof, the denominations in which
Subordinated Debt Securities of the series in each applicable form shall be issuable;
(k)
if other than the full principal amount thereof, the portion, or the manner of calculation of such portion, of the principal
amount of Subordinated Debt Securities of the series which shall be payable upon a declaration of acceleration or acceleration
of the Maturity thereof pursuant to Section 5.02, upon redemption of Subordinated Debt Securities of any series which
are redeemable before their Stated Maturity, or which the Trustee shall be entitled to file and prove a claim pursuant to Section
5.04;
(l)
if Additional Amounts, pursuant to Section 10.04, will not be payable;
(m)
if other than Dollars, provisions, if any, for the Subordinated Debt Securities of the series to be denominated, and payments
thereon to be made, in Foreign Currencies and specifying the Place of Payment and the manner of payment thereon and any other
terms with respect thereto;
(n)
if other than the coin or currency in which the Subordinated Debt Securities of that series are denominated, the coin or
currency in which payment of the principal of (and premium, if any) or interest, if any, on the Subordinated Debt Securities of
such series shall be payable;
(o)
if the principal of (and premium, if any) or interest, if any, on the Subordinated Debt Securities of such series are to
be payable, at the election of the Company or a Holder thereof, in a coin or currency other than that in which the Subordinated
Debt Securities are denominated, the period or periods within which, and the terms and conditions upon which, such election may
be made;
(p)
whether the Subordinated Debt Securities of the series shall be issued in whole or in part in the form of one or more Global
Securities and the initial Holder with respect to such Global Security or Subordinated Debt Securities;
(q)
if the Subordinated Debt Securities of such series are to be issuable in definitive form (whether upon original issue or
upon exchange of a temporary Subordinated Debt Security of such series or otherwise) only upon receipt of certain certificates
or other documents or satisfaction of other conditions, then the form and terms of such certificates, documents or conditions;
(r)
if the amounts of payments of principal of (and premium, if any) or interest, if any, on the Subordinated Debt Securities
of the series may be determined with reference to an index or are otherwise not fixed on the original issue date thereof, the
manner in which such amounts shall be determined and the Calculation Agent, if any, who shall be appointed and authorized to calculate
such amounts;
(s)
any other Events of Default or covenants with respect to the Subordinated Debt Securities of such series;
(t)
if other than as provided in Article 12, the subordination terms with respect to the Subordinated Debt Securities
of the series;
(u)
the forms of Subordinated Debt Securities of the series;
(v)
any other terms of the series (which terms shall not be inconsistent with the provisions of this Subordinated Debt Securities
Indenture, except as permitted by Section 9.01(d)); and
(w)
the Trustee for such series of Subordinated Debt Securities who shall also be named in an indenture supplemental hereto
for a particular series of Subordinated Debt Securities if the Trustee for such series is not the Trustee named in the first paragraph
of this Subordinated Debt Securities Indenture.
All Subordinated
Debt Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided
in or pursuant to such action or in any such Officer’s Certificate or indenture supplemental hereto.
If the forms
of Subordinated Debt Securities of any series, or any of the terms thereof, are established by action taken pursuant to a Board
Resolution, a copy of the Board Resolution in respect thereof shall be delivered to the Trustee at or prior to the delivery of
the Company Order pursuant to Section 3.03 for the authentication
and delivery of such Subordinated Debt Securities.
Section 3.02.
Denominations. The Subordinated Debt Securities of each series shall be issuable in such denominations as shall
be specified as contemplated by Section 3.01. In the absence of any such specification with respect to Subordinated
Debt Securities of any series, the Subordinated Debt Securities of each series shall be issuable
in
denominations of $1,000 each and any integral multiple thereof. Unless otherwise specified in accordance with Section
3.01, any Global Security issued and delivered to the Holder shall be issued in the form of units with each $1,000 principal amount
of such Global Security constituting one unit.
Section 3.03.
Execution, Authentication, Delivery and Dating. The Subordinated Debt Securities shall be executed on behalf of
the Company by any one of the representatives of the Company authorized to do so by Board Resolution or by any member of the Board
of Directors. The signature of any of these authorized representatives on the Subordinated Debt Securities may be manual or facsimile.
Subordinated Debt Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officer
of the Company shall bind the Company, notwithstanding that such individual has ceased to hold such office prior to the authentication
and delivery of such Subordinated Debt Securities.
At any time
and from time to time after the execution and delivery of this Subordinated Debt Securities Indenture, the Company may deliver
Subordinated Debt Securities of any series executed by the Company having endorsed thereon the Guarantee by the Guarantor to the
Trustee for authentication, together with a Company Order for the authentication and delivery of such Subordinated Debt Securities,
and the Trustee in accordance with the Company Order shall authenticate and deliver such Subordinated Debt Securities. In authenticating
such Subordinated Debt Securities and accepting the additional responsibilities under this Subordinated Debt Securities Indenture
in relation to such Subordinated Debt Securities the Trustee shall be entitled to receive, and (subject to Section
6.01) shall be fully protected in relying upon an Opinion of Counsel stating that the form and terms thereof have been established
in conformity with the provisions of this Subordinated Debt Securities Indenture.
If all the
Subordinated Debt Securities of any series are not to be issued at one time, it shall not be necessary to deliver an Opinion of
Counsel and an Officer’s Certificate at the time of issuance of each Subordinated Debt Security, but such opinion and certificate,
with appropriate modifications, shall be delivered at or before the time of issuance of the first Subordinated Debt Security of
such series. After any such first delivery, any separate request by the Company that the Trustee authenticate Subordinated Debt
Securities of such series for original issue will be deemed to be a certification by the Company that all conditions precedent
provided for in the Subordinated Debt Securities Indenture relating to authentication and delivery of such Subordinated Debt Securities
continue to have been complied with.
The Trustee
shall not be required to authenticate such Subordinated Debt Securities if the issue of such Subordinated Debt Securities pursuant
to this Subordinated Debt Securities Indenture will affect the Trustee’s own rights, duties or immunities under the Subordinated
Debt Securities and this Subordinated Debt Securities Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee.
Each Subordinated
Debt Security shall be dated the date of its authentication.
No Subordinated
Debt Security appertaining thereto shall be entitled to any benefit under this Subordinated Debt Securities Indenture or be valid
or obligatory for any purpose unless there appears on such Subordinated Debt Security a certificate of authentication substantially
in the form provided for herein executed by or on behalf of the Trustee by manual signature, and such certificate upon any Subordinated
Debt Security shall be conclusive evidence, and the only evidence, that such Subordinated Debt Security has been duly authenticated
and delivered hereunder and that such Subordinated Debt Security is entitled to the benefits of this Subordinated Debt Securities
Indenture. Notwithstanding the foregoing, if any Subordinated Debt Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such Subordinated Debt Security to the Trustee for cancellation
as provided in Section 3.09, for all purposes of this Subordinated
Debt Securities Indenture, such Subordinated Debt Security shall be deemed never to have been authenticated and delivered hereunder
and shall never be entitled to the benefit of this Subordinated Debt Securities Indenture.
Section 3.04.
Temporary Subordinated Debt Securities. Pending the preparation of definitive Subordinated Debt Securities of any
series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Subordinated Debt
Securities, having endorsed thereon the Guarantee by the Guarantor, substantially of the tenor of the definitive Subordinated
Debt Securities in lieu of which they are issued, and, if applicable, having endorsed thereon Guarantees duly executed by the
Guarantor substantially of the tenor of the definitive Guarantees, which Subordinated Debt Securities may be printed, lithographed,
typewritten, photocopied or otherwise produced. Temporary Subordinated Debt Securities shall be issuable as Subordinated Debt
Securities in registered form in any authorized denomination, and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Subordinated Debt Securities may determine, all as evidenced by such execution.
If temporary
Subordinated Debt Securities of any series are issued, the Company will cause, if so required by the terms of such temporary Subordinated
Debt Securities, definitive Subordinated Debt Securities of such series to be prepared without unreasonable delay. After the preparation
of definitive Subordinated Debt Securities of such series, the temporary Subordinated Debt Securities of such series shall be
exchangeable for definitive Subordinated Debt Securities of such series containing identical terms and provisions upon surrender
of the temporary Subordinated Debt Securities of such series at the office or agency of the Company in a Place of Payment for
that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Subordinated Debt Securities
of any series the Company shall execute, the Guarantor shall endorse the Guarantee on, and the Trustee shall authenticate and
deliver in exchange therefor, a like aggregate principal amount of definitive Subordinated Debt Securities of the same series
of authorized denominations containing identical terms and provisions. Until so exchanged, unless otherwise provided therein or
in a supplemental indenture relating thereto, the temporary Subordinated Debt Securities of any series shall in all respects be
entitled to the same benefits (but shall be subject to all the limitations of rights) under this Subordinated Debt Securities
Indenture as definitive Subordinated Debt Securities of such series.
Section 3.05.
Registration, Registration of Transfer and Exchange. (a) Global Securities. This Section 3.05(a)
shall apply to Global Securities unless otherwise specified, as contemplated by Section 3.01.
Except as
otherwise specified as contemplated by Section 3.01 hereof,
the Subordinated Debt Securities shall be initially issued and represented by one or more Global Securities in registered form
which shall be authenticated as contemplated by this Subordinated Debt Securities Indenture.
Each Global
Security authenticated under this Subordinated Debt Securities Indenture shall be registered in the name of the Depositary designated
for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and
each such Global Security shall constitute a single Subordinated Debt Security for all purposes of this Subordinated Debt Securities
Indenture. Except as otherwise specified as contemplated by Section
3.01 hereof, each Global Security authenticated under this Subordinated Debt Securities Indenture shall be initially registered
in the name of DTC or its nominee only.
Unless the
Global Security is presented by an authorized representative of the Holder to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of a nominee of the Holder and any payment is made to
such nominee, any transfer, pledge or other use of the Global Security for value or otherwise shall be wrongful since the registered
owner of such Global Security, the nominee of the Holder, has an interest in such Global Security.
Except as
otherwise specified as contemplated by Section 3.01 hereof,
any Global Security shall be exchangeable for definitive Subordinated Debt Securities only as provided in this paragraph. A Global
Security shall be exchangeable pursuant to this Section only (i) if the relevant Depositary notifies the Trustee that it is unwilling
or unable to continue to act as Depositary and a successor depositary is not appointed by the Trustee within 120 days of such
notification, (ii) if, in the event of a winding-up of the Company, the Company fails to make a payment on the Subordinated Debt
Securities when due, or (iii) at any time if the Company at its option and in its sole discretion determines that the Global Securities
of a particular series should be exchanged for definitive Subordinated Debt Securities of that series. Any Global Security that
is exchangeable pursuant to the preceding sentence shall be exchangeable for, unless otherwise specified or contemplated by Section
3.01, definitive Subordinated Debt Securities bearing interest (if any) at the same rate or pursuant to the same formula, having
the same date of issuance, the same date or dates from which such interest shall accrue, the same Interest Payment Dates on which
such interest shall be payable or the manner of determination of such Interest Payment Dates, redemption provisions, if any, specified
currency and other terms and of differing denominations aggregating a like amount as the Global Security so exchangeable. Definitive
Subordinated Debt Securities shall be registered in the names of the owners of the beneficial interests in such Global Securities
as such names are from time to time provided by the Holder to the Trustee.
Any Global
Security that is exchangeable pursuant to the preceding paragraph, unless otherwise specified as contemplated by Section
3.01, shall be exchangeable for Subordinated Debt Securities issuable in authorized denominations of a like aggregate principal
amount and tenor.
No Global
Security may be transferred except as a whole by the Holder to a nominee of the Holder or by the Holder or any such nominee to
a successor of the Holder or a nominee of such successor. Except as provided above, owners solely of beneficial interests in a
Global Security shall not be entitled to receive physical delivery of Subordinated Debt Securities in definitive form and will
not be considered the holders thereof for any purpose under this Subordinated Debt Securities Indenture.
In the event
that a Global Security is surrendered for redemption in part pursuant to Section
11.07, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Global Security, without
service charge, a new Global Security in a denomination equal to and in exchange for the unredeemed or unexchanged portion of
the principal of the Global Security so surrendered.
The Agent
Members and any other beneficial owners shall have no rights under this Subordinated Debt Securities Indenture with respect to
any Global Security held on their behalf by a Holder, and such Holder may be treated by the Company, the Guarantor, the Trustee,
and any agent of the Company, the Guarantor or the Trustee as the owner of such Global Security for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall (i) prevent the Company, the Guarantor, the Trustee, or any agent of the Company, the Guarantor
or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by a Holder or (ii) impair,
as between any such Holder or other clearance service and its Agent Members and Holders, the operation of customary practices
governing the exercise of the rights of a holder of any security, including without limitation the granting of proxies or other
authorization of participants to give or take any request, demand, authorization, direction, notice, consent, waiver or other
action which a Holder is entitled to give or take under this Subordinated Debt Securities Indenture.
In connection
with any exchange of interests in a Global Security for definitive Subordinated Debt Securities of another authorized form, as
provided in this Section 3.05, then without unnecessary delay but in any event not later than the earliest date on which
such interests may be so exchanged, the Company shall deliver to the Trustee definitive Subordinated Debt Securities in aggregate
principal amount equal to the principal amount of such Global Security or the portion to be exchanged executed by the Company.
On or after the earliest date on which such interests may be so exchanged, such Global Security shall be surrendered by the Holder
to the Trustee, as the Company’s agent for such purpose, to be exchanged, in whole or from time to time in part, for definitive
Subordinated Debt Securities without charge (in which case the Company or Trustee may require payment of any taxes or governmental
charges arising) and the Trustee shall authenticate and deliver, in exchange for each portion of such Global Security, an equal
aggregate principal amount of definitive Subordinated Debt Securities of authorized denominations as the portion of such Global
Security to be exchanged. Any
Global
Security that is exchangeable pursuant to this Section 3.05
shall be exchangeable for Subordinated Debt Securities issuable in the denominations specified as contemplated by Section
3.01 and registered in such names as the Holder of such Global Security shall direct. If a definitive Subordinated Debt Security
is issued in exchange for any portion of a Global Security after the close of business at the office or agency where such exchange
occurs on any record date and before the opening of business at such office or agency on the relevant Interest Payment Date, interest
will not be payable on such Interest Payment Date in respect of such definitive Subordinated Debt Security, but will be payable
on such Interest Payment Date only to the Person to whom payments of interest in respect of such portion of such Global Security
are payable.
A Depositary
may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent
Members, to take any action which a holder is entitled to take under this Subordinated Debt Securities Indenture with respect
to the Subordinated Debt Securities.
(b)
Except as otherwise specified pursuant to Section 3.01, Subordinated Debt Securities of any series may only
be exchanged for a like aggregate principal amount of Subordinated Debt Securities of such series of other authorized denominations
containing identical terms and provisions. Subordinated Debt Securities to be exchanged shall be surrendered at an office or agency
of the Company designated pursuant to Section 10.02 for such purpose, and the Company shall execute, and the Guarantor
shall endorse the Guarantee thereon, and the Trustee shall authenticate and deliver, in exchange therefor the Subordinated Debt
Security or Subordinated Debt Securities of the same series which the Holder making the exchange shall be entitled to receive.
Except as
otherwise specified pursuant to Section 3.01, the Company
shall cause to be kept in the principal corporate trust office of the Trustee a register (the register maintained in such office
and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the
“Subordinated Debt Security Register”) in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Subordinated Debt Securities and of transfers of such Subordinated Debt Securities.
Except as otherwise specified pursuant to Section 3.01, the Trustee is hereby appointed “Subordinated Debt Security Registrar”
for the purpose of registering Subordinated Debt Securities and transfers of Subordinated Debt Securities as herein provided.
Subordinated
Debt Securities shall be transferable only on the Subordinated Debt Security Register. Upon surrender for registration of transfer
of any Subordinated Debt Security of any series, together with the form of transfer endorsed on it, duly completed and executed
at an office or agency of the Company designated pursuant to Section
10.02 for such purpose, the Company shall execute, and the Guarantor shall endorse the Guarantee thereon, and the Trustee shall
authenticate and deliver to the address specified in the form of transfer, within three Business Days, in the name of the designated
transferee or transferees, one or more new Subordinated Debt Securities of the same series of any authorized denominations containing
identical terms and provisions, of a like aggregate principal amount. If only part of a Subordinated Debt Security is
transferred,
a new Subordinated Debt Security of an aggregate principal amount equal to the amount not being transferred shall be executed
by the Company (and the Guarantee shall be endorsed thereon by the Guarantor), and authenticated and delivered by the Trustee
to the transferor, in the name of the transferor, within three Business Days after the Trustee acting as Paying Agent pursuant
to Section 10.02 receives the Subordinated Debt Security.
The new Subordinated Debt Security will be delivered to the transferor by uninsured post at the risk of the transferor to the
address of the transferor appearing in the Subordinated Debt Security Register. A new Subordinated Debt Security of an aggregate
principal amount equal to the amount being transferred shall be delivered by the Trustee to the transferee, in the name of the
transferee, within three Business Days after the Trustee acting as Paying Agent pursuant to Section 10.02 receives the Subordinated
Debt Security. The new Subordinated Debt Security will be delivered to the transferee by uninsured post at the risk of the transferee
to the address of the transferee specified in the form of transfer.
All Subordinated
Debt Securities with a Guarantee endorsed thereon issued upon any registration of transfer or exchange of Subordinated Debt Securities
shall be the valid obligations of the Company, and the Guarantor, respectively evidencing the same debt, and entitled to the same
benefits under this Subordinated Debt Securities Indenture, as the Subordinated Debt Securities surrendered upon such registration
of transfer or exchange.
Every Subordinated
Debt Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Subordinated
Debt Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.
No
service charge shall be made for any registration of transfer or exchange of Subordinated Debt Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with
any registration of transfer or exchange of Subordinated Debt Securities, other than exchanges pursuant to Section
3.04, Section 9.06 or Section 11.07
not involving any transfer.
The Company
shall not be required (i) to issue, register the transfer of or exchange any Subordinated Debt Security of any series during a
period beginning at the opening of business 15 days before the day of the giving of a notice of redemption of Subordinated Debt
Securities of such series selected for redemption under Section
11.03 and ending at the close of business on the day of the giving of such notice, or (ii) to register the transfer of or exchange
any Subordinated Debt Security so selected for redemption in whole or in part, except the unredeemed portion of any Subordinated
Debt Securities being redeemed in part.
Section 3.06.
Mutilated, Destroyed, Lost and Stolen Subordinated Debt Securities. If any mutilated Subordinated Debt Security
(including any Global Security) is surrendered to the Trustee, the Company may execute (and the Guarantee shall be endorsed thereon
by the Guarantor) and the Trustee shall, in the case of a Subordinated Debt Security, authenticate and deliver in exchange therefor
a new Subordinated Debt
Security
of the same series containing identical terms and provisions and of like amount, and bearing a number not contemporaneously outstanding.
If there
shall be delivered to the Company, the Guarantor and to the Trustee (i) evidence to their satisfaction of the destruction,
loss or theft of any Subordinated Debt Security (including any Global Security) and (ii) such security or indemnity as may be
required by them to save each of them and any agent of any of them harmless, then, in the absence of notice to the Company, the
Guarantor or the Trustee that such Subordinated Debt Security has been acquired by a bona fide purchaser, the Company shall execute
(and the Guarantee shall be endorsed thereon by the Guarantor) and upon the Company’s request the Trustee shall authenticate
and deliver in lieu of any such destroyed, lost or stolen Subordinated Debt Security a new Subordinated Debt Security of the same
series containing identical terms and provisions and of like amount, and bearing a number not contemporaneously outstanding.
In case any
such mutilated, destroyed, lost or stolen Subordinated Debt Security has become or is about to become due and payable, the Company
in its discretion may, instead of issuing a new Subordinated Debt Security, pay such Subordinated Debt Security.
Upon the
issuance of any new Subordinated Debt Security under this Section, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every new
Subordinated Debt Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Subordinated
Debt Security shall constitute an original additional contractual obligation of the Company and the Guarantor, whether or not
the destroyed, lost or stolen Subordinated Debt Security shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Subordinated Debt Securities Indenture equally and proportionately with any and all other Subordinated
Debt Securities of that series duly issued hereunder.
The provisions
of this Section, as amended or supplemented pursuant to this Subordinated Debt Securities Indenture, are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Subordinated Debt Securities.
Section 3.07.
Payment; Interest Rights and Rights to Additional Amounts Preserved. Except as otherwise provided as contemplated
by Section 3.01 with respect to any series of Subordinated Debt Securities, interest, if any, and any Additional Amounts
on any Subordinated Debt Securities which is payable, and is paid or duly provided for, on any Interest Payment Date shall be
paid to the Holder (including through a Paying Agent of the Company designated pursuant to Section 3.01 for collection
by the Holder) at the close of business on the Regular Record Date.
In the case
of Subordinated Debt Securities where payment is to be made in Dollars, payment at any Paying Agent’s office outside The
City of New York will be made in Dollars by check drawn on, or, at the request of the Holder, by transfer to a Dollar account
maintained by the payee with, a bank in The City of New York.
In the case
of Subordinated Debt Securities where payment is to be made in a Foreign Currency, payment will be made as established pursuant
to Section 3.01.
Any interest
on and any Additional Amounts with respect to any Subordinated Debt Security of any series which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date is herein called “Default Interest”. Default Interest
on any Subordinated Debt Security of any series shall forthwith cease to be payable to the Holder on the relevant Regular Record
Date by virtue then of having been such Holder, and such Default Interest may be paid by the Company, at its election, in each
case, as provided in clause (a) or (b) below:
(a) The
Company may elect to make payment of any Default Interest to the Persons in whose names the Subordinated Debt Securities of such
series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment
of such Default Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Default Interest proposed to be paid on each Subordinated Debt Security of such series and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Default Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such
Default Interest as in this clause provided. Thereupon the Company shall fix a Special Record Date for the payment
of such Default Interest in respect of such Subordinated Debt Securities of such series which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment and not less than 10 days after it delivers to the Trustee notice
of the proposed payment. The Company shall promptly notify the Trustee of such Special Record Date and, in the name
and at the expense of the Company, the Trustee shall cause notice of the proposed payment of such Default Interest and the Special
Record Date therefor to be given in the manner and to the extent provided in Section
1.06, not less than 10 days prior to such Special Record Date. The Trustee shall, at the instruction of the Company,
in the name and at the expense of the Company, cause a similar notice to be published in an Authorized Newspaper of general circulation
in the Borough of Manhattan, The City of New York, but such publication shall be not be a condition precedent to the establishment
of such Special Record Date. Notice of the proposed payment of such Default Interest on the Subordinated Debt Securities of such
series and the Special Record Date therefor having been so given, such Default Interest on the Subordinated Debt Securities of
such series shall be paid in the case of Subordinated Debt Securities to the Persons in whose names such Subordinated Debt Securities
(or their respective Predecessor Securities) are registered in the Subordinated Debt Security Register at the close of business
on the Special Record Date, and such Default Interest shall no longer be payable pursuant to the following clause (b); or
(b) The
Company may make payment of any Default Interest on the Subordinated Debt Securities of any series to the Persons in whose names
the Subordinated Debt Securities are registered in any other lawful manner not inconsistent with the requirements of any securities
exchange on which such Subordinated Debt Securities may be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall
be deemed practicable by the Trustee.
Subject to
the foregoing provisions of this Section, each Subordinated Debt Security delivered under this Subordinated Debt Securities Indenture
upon registration of transfer of or in exchange for or in lieu of any other Subordinated Debt Security shall carry the rights
to interest accrued and unpaid, and to accrue, which were carried by such other Subordinated Debt Security.
Section 3.08.
Persons Deemed Owners. Prior to due presentment of a Subordinated Debt Security for registration of transfer, the
Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name
such Subordinated Debt Security is registered as the owner of such Subordinated Debt Security for the purpose of receiving payment
of principal of (and premium, if any) and interest, if any, on and any Additional Amounts with respect to such Subordinated Debt
Security and for all other purposes whatsoever, whether or not such Subordinated Debt Security be overdue, and neither the Company,
the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by notice to the contrary.
The aggregate principal amount of the Subordinated Debt Securities of any series shall be reflected on the books and records of
the Subordinated Debt Security Registrar.
None
of the Company, the Guarantor, the Trustee, the Paying Agent or the Subordinated Debt Security Registrar shall have
any responsibility or obligation to any beneficial owner in a Global Security, an Agent Member or other Person with respect
to the accuracy of the records of the Depositary or its nominee or of any Agent Member, with respect to any ownership
interest in the Subordinated Debt Securities or with respect to the delivery to any Agent Member, beneficial owner or other
Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or
with respect to such Subordinated Debt Securities. All notices and communications to be given to the Holders and all payments
to be made to Holders under the Subordinated Debt Securities and this Subordinated Debt Securities Indenture shall be given
or made only to or upon the order of the registered holders (which shall be the Depositary or its nominee in the case of
the Global Security). The rights of beneficial owners in the Global Security shall be exercised only through the
Depositary subject to the applicable procedures. The Company, the Guarantor, the Trustee, the Paying Agent and the
Subordinated Debt Security Registrar shall be entitled to rely and shall be fully protected in relying upon information
furnished by the Depositary with respect to its members, participants and any beneficial owners. The Company, the Trustee, the Paying Agent and the Subordinated Debt Security Registrar shall be entitled to deal with the Depositary, and
any nominee thereof, that is the registered holder of any Global Security for all purposes of this Subordinated Debt
Securities Indenture relating to such Global Security (including the payment of principal, premium, if any, and interest and
additional amounts, if any, and
the
giving of instructions or directions by or to the owner or holder of a beneficial ownership interest in such Global Security)
as the sole holder of such Global Security and shall have no obligations to the beneficial owners thereof. None of the Company,
the Guarantor, the Trustee, the Paying Agent or the Subordinated Debt Security Registrar shall have any responsibility or liability
for any acts or omissions of the Depositary with respect to such Global Security, for the records of any such Depositary, including
records in respect of beneficial ownership interests in respect of any such Global Security, for any transactions between the
Depositary and any Agent Member or between or among the Depositary, any such Agent Member and/or any holder or owner of a beneficial
interest in such Global Security, or for any transfers of beneficial interests in any such Global Security.
Notwithstanding
the foregoing, with respect to any Global Security, nothing herein shall prevent the Company, the Guarantor, the Trustee, or
any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization
furnished by any Depositary (or its nominee), as a Holder, with respect to such Global Security or shall impair, as between
such Depositary and owners of beneficial interests in such Global Security, the operation of customary practices governing
the exercise of the rights of such Depositary (or its nominee) as Holder of such Global Security.
Each
Holder and beneficial owner that acquires its Subordinated Debt Security in the secondary market shall be deemed to
acknowledge and agree to be bound by and consent to the same provisions specified in this Subordinated Debt Securities
Indenture and the Subordinated Debt Securities to the same extent as the Holders and beneficial owners of the Subordinated
Debt Securities that acquire the Subordinated Debt Securities upon their initial issuance, including, without limitation,
with respect to the acknowledgement and agreement to be bound by and consent to the terms of the Subordinated Debt
Securities, including in relation to the Spanish Bail-in Power.
Section 3.09.
Cancellation. All Subordinated Debt Securities surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled
by it. The Company or the Guarantor may at any time deliver to the Trustee for cancellation any Subordinated Debt Securities previously
authenticated and delivered hereunder and all Subordinated Debt Securities so delivered shall be promptly cancelled by the Trustee.
No Subordinated Debt Securities shall be authenticated in lieu of or in exchange for any Subordinated Debt Securities cancelled
as provided in this Section, except as expressly permitted by the provisions of the Subordinated Debt Securities of any series
or pursuant to the provisions of this Subordinated Debt Securities Indenture. The Trustee shall deliver to the Company all cancelled
Subordinated Debt Securities held by the Trustee.
Section 3.10.
Computation of Interest. Except as otherwise specified pursuant to Section 3.01 for Subordinated Debt
Securities of any series, payments of interest on the Subordinated Debt Securities of each series shall be computed on the basis
of a 360- day year of twelve 30-day months.
Section 3.11.
CUSIP Numbers. The Company in issuing any series of the Subordinated Debt Securities may use “CUSIP”,
“ISIN” and/or “Common Code” and/or other similar numbers (if then generally in use) or any
successor to such numbers and thereafter with respect to such series, the Trustee shall use “CUSIP”, “ISIN”
and/or “Common Code” and/or other similar numbers or successor numbers in notices of redemption as a convenience
to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either
as printed on the Subordinated Debt Securities or as contained in any notice of a redemption and that reliance may be placed only
on the other identification numbers printed on the Subordinated Debt Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the “CUSIP”,
“ISIN” and/or “Common Code” and/or other similar numbers or successor numbers.
Section 3.12.
Additional Subordinated Debt Securities. The Company may, from time to time, without the consent of the Holders
of the Subordinated Debt Securities of any series, issue additional Subordinated Debt Securities (“Additional Subordinated
Debt Securities”) of one or more of the series of Subordinated Debt Securities issued under this Subordinated Debt Securities
Indenture, guaranteed by the Guarantor, having the same ranking and same interest rate, Maturity, redemption terms and other terms,
except for the price to the public, original interest accrual date, issue date and first Interest Payment Date, as the Subordinated
Debt Securities; provided, however, that such Additional Subordinated Debt Securities will not have the same CUSIP, ISIN
or other identifying number as the outstanding Subordinated Debt Securities of such series unless the Additional Subordinated
Debt Securities are fungible with the Subordinated Debt Securities for U.S. federal income tax purposes. Any such Additional Subordinated
Debt Securities, together with the Subordinated Debt Securities of the applicable series, will constitute a single series of Subordinated
Debt Securities under this Subordinated Debt Securities Indenture and shall be included in the definition of “Subordinated
Debt Securities” in this Subordinated Debt Securities Indenture where the context requires.
Section 3.13.
Correction of Minor Defects in or Amendment of Subordinated Debt Securities. If, after issuance of any Subordinated
Debt Security (including any Global Security), the Company, the Guarantor or the Trustee shall become aware of any ambiguity,
defect or inconsistency in any term of a Subordinated Debt Security or Global Security, as the case may be, or, with respect to
any Subordinated Debt Security (including any Global Security) issued on or after the date hereof, the Company, the Guarantor
and the Trustee agree to amend such Subordinated Debt Security as contemplated by Section 9.01(l), the parties hereto
shall provide for the execution, authentication, delivery and dating of one or more replacement Subordinated Debt Securities or
Global Securities, as the case may be, pursuant to Section 3.03 hereto.
Section 3.14.
Payments Subject to Fiscal Laws. All payments in respect of the Subordinated Debt Securities will be subject in
all cases to any fiscal or other laws and regulations applicable thereto in the place of payment (including FATCA, any regulations
or agreements thereunder, any official interpretation thereof, any intergovernmental agreements with respect thereto, or any law
implementing an intergovernmental
agreement
or any regulations or official interpretations relating thereto), but without prejudice to the provisions of Section
10.04.
Article
4
Satisfaction and Discharge
Section 4.01.
Satisfaction and Discharge of Subordinated Debt Securities Indenture. This Subordinated Debt Securities Indenture
shall upon Company Request, cease to be of further effect with respect to Subordinated Debt Securities of any series (except as
to any surviving rights of registration of transfer or exchange of Subordinated Debt Securities of such series herein expressly
provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Subordinated Debt Securities Indenture with respect to the Subordinated Debt Securities of such series when:
(a)
either
(i)
all Subordinated Debt Securities of such series theretofore authenticated and delivered (other than (A) Subordinated Debt
Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section
3.06 and (B) Subordinated Debt Securities for whose payment money has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section
10.03) have been delivered to the Trustee for cancellation; or
(ii)
all such Subordinated Debt Securities not theretofore delivered to the Trustee for cancellation:
(A)
have become due and payable or will become due and payable at their Stated Maturity within one year, or
(B)
are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company or
the Guarantor has deposited or caused to be deposited with the Trustee, as trust funds in trust for the purpose, an amount in
cash, or U.S. Government Obligations (with respect to Subordinated Debt Securities denominated in Dollars) or Foreign Government
Securities (with respect to Subordinated Debt Securities denominated in the same Foreign Currency) maturing, in the case of (A)
and (B) above, as to principal and interest, if any, in such amounts and at such times as will ensure the availability of cash
sufficient without reinvestment, as confirmed by a letter from an internationally recognized firm of independent public accountants
(which shall not be subject to the requirements of Section 1.02) in the form of an agreed-upon procedures letter in
its then customary
form, to pay, satisfy and discharge all claims with respect to such Subordinated Debt Securities not theretofore delivered to
the Trustee for cancellation, in the case of (A) and (B) above, for principal (and premium, if any) and accrued interest, if any,
to the date of such deposit (in the case of Subordinated Debt Securities which have become due and payable) or to the Redemption
Date, as the case may be;
(b)
the Company or the Guarantor has paid or caused to be paid all other sums payable hereunder by the Company with respect
to the Subordinated Debt Securities of such series; and
(c)
the Company or the Guarantor has delivered to the Trustee an Officer’s Certificate, and an Opinion of Counsel, each
stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Subordinated Debt
Securities Indenture with respect to the Subordinated Debt Securities of such series have been complied with.
In addition,
upon the exercise of a Spanish Bail-in Power with respect to a series of Subordinated Debt Securities which results in the cancellation,
or the conversion into other securities, of all the principal amount of, and interest on such Subordinated Debt Securities or
such Subordinated Debt Securities otherwise ceasing to be outstanding, the Subordinated Debt Securities Indenture shall be satisfied
and discharged as to such series.
Notwithstanding
any satisfaction and discharge of this Subordinated Debt Securities Indenture, the obligations of the Company and the Guarantor
to the Trustee under Section 6.08, the obligations of the
Trustee to any Authenticating Agent under Section 6.15 and,
if cash, U.S. Government Obligations and/or Foreign Government Securities shall have been deposited with the Trustee pursuant
to subclause 4.01(a)(ii) of clause 4.01(a)
of this Section, the obligations of the Trustee under Section
4.02 and the last paragraph of Section 10.03 shall survive
such satisfaction and discharge, including any termination under any bankruptcy law.
Section 4.02.
Defeasance and Covenant Defeasance. (a) If, pursuant to Section 3.01, provision is made for either or both of (i)
defeasance of the Subordinated Debt Securities of or within a series under subsection (b) of this Section 4.02 or (ii) covenant
defeasance of the Subordinated Debt Securities of or within a series under subsection (c) of this Section 4.02, then such provisions,
together with the other provisions of this Section 4.02 (with such modifications thereto as may be specified pursuant to Section
3.01 with respect to any Subordinated Debt Securities), shall be applicable to such Subordinated Debt Securities, and the Company
or the Guarantor may at its option by Company Order, at any time, with respect to such Subordinated Debt Securities, and the Guarantees
thereof, elect to have Section 4.02(b) (if applicable) or Section 4.02(c) (if applicable) be applied to such Outstanding Subordinated
Debt Securities upon compliance with the conditions set forth below in this Section 4.02.
(b)
Upon the Company’s or the Guarantor’s exercise of the above option applicable to this Section 4.02(b) with
respect to any Subordinated Debt Securities of or
within
a series and the Guarantees thereof, the Company shall be deemed to have been discharged from its obligations with respect to
such Outstanding Subordinated Securities and the Guarantor shall be deemed to have been discharged from its obligations with
respect to the related Guarantees, on the date the conditions set forth in subsection (d) of this Section 4.02 are satisfied
(hereinafter, “defeasance”). For this purpose, such defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by such Outstanding Subordinated Debt Securities and the Guarantor
shall be deemed to have satisfied all of its obligations under this Subordinated Debt Securities Indenture and with respect
to the Guarantees relating to such Subordinated Debt Securities, and such Subordinated Debt Securities shall thereafter be
deemed to be “Outstanding” only for the purposes of subsection (e) of this Section 4.02 and the other Sections of
this Subordinated Debt Securities Indenture referred to in clauses (i) and (ii) below, and each of the Company and the
Guarantor shall be deemed to have satisfied all of its other obligations under such Subordinated Debt Securities, the
Guarantees thereof and this Subordinated Debt Securities Indenture insofar as such Subordinated Debt Securities and the
Guarantees thereof are concerned (and the Trustee, at the expense of the Company and the Guarantor, shall execute proper
instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of such Outstanding Subordinated Debt Securities to receive, solely from the trust fund
described in subsection (d) of this Section 4.02 and as more fully set forth in such Section, payments in respect of the
principal of (and premium, if any) and interest, if any, and Additional Amounts on such Subordinated Debt Securities when
such payments are due, (ii) the Company’s and the Guarantor’s obligations with respect to such Subordinated Debt
Securities under Section 3.05, Section 3.06, Section 10.02 and Section 10.03 and with respect to the payment of
Additional Amounts, if any, on such Subordinated Debt Securities as contemplated by Section 10.04, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (iv) this Section 4.02. The Company or the Guarantor may exercise
its option under this Section 4.02(b) notwithstanding the prior exercise of its option under subsection (c) of this Section
4.02 with respect to such Subordinated Debt Securities.
(c)
Upon the Company’s or the Guarantor’s exercise of the above option applicable to this Section 4.02(c) with
respect to any Subordinated Debt Securities of or within a series, the Company and the Guarantor shall be released from, if specified
pursuant to Section 3.01, their obligations under any other covenant, with respect to such Outstanding Subordinated Debt Securities
and the Guarantees thereof on and after the date the conditions set forth in subsection (d) of this Section 4.02 are satisfied
(hereinafter, “covenant defeasance”), and such Subordinated Debt Securities shall thereafter be deemed to be not “Outstanding”
for the purposes of any direction, waiver, consent or declaration (and the consequences of any thereof) in connection with such
other covenant, but shall continue to be deemed “Outstanding” for all other purposes hereunder. For this purpose,
such covenant defeasance means that, with respect to such Outstanding Subordinated Debt Securities, the Company and the Guarantor
may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section
or such other covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such Section or such
other covenant or by reason of reference in any such Section or such other covenant to any other provision
herein
or in any other document and such omission to comply shall not constitute a default or an Event of Default, but, except as specified
above, the remainder of this Subordinated Debt Securities Indenture and such Subordinated Debt Securities and the Guarantee thereof
shall be unaffected thereby.
(d)
The following shall be the conditions to application of subsection (b) or (c) of this Section 4.02 to any Outstanding Subordinated
Debt Securities of or within a series:
(i)
The Company or the Guarantor shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 6.11 who shall agree to comply with the provisions of this Section 4.02 applicable to it)
as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Subordinated Debt Securities, (A) an amount in Dollars or in such Foreign Currency
in which such Subordinated Debt Securities are then specified as payable at Stated Maturity, or (B) U.S. Government Obligations
applicable to such Subordinated Debt Securities (determined on the basis of the Currency in which such Subordinated Debt Securities
are then specified as payable at Stated Maturity) which through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one day before the due date of any payment of principal of (and premium,
if any) and interest, if any, on such Subordinated Debt Securities, money in an amount, or (C) a combination thereof, in any case,
in an amount, sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of an internationally
recognized firm of Independent Public Accountants expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, (y) the principal
of (and premium, if any) and interest, if any, on such outstanding Subordinated Debt Securities on the Stated Maturity of such
principal or installment of principal or interest and Additional Amounts and (z) any mandatory sinking fund payments or analogous
payments applicable to such Outstanding Subordinated Debt Securities on the day on which such payments are due and payable in
accordance with the terms of this Subordinated Debt Securities Indenture and of such Subordinated Debt Securities.
(ii)
Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this
Subordinated Debt Securities Indenture or any other material agreement or instrument to which the Company or the Guarantor is
a party or by which it is bound.
(iii)
No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to
such Subordinated Debt Securities shall have occurred and be continuing on the date of the establishment of such trust and, with
respect to legal defeasance only, at any time during the period ending on the 91st day after the date of such deposit (it being
understood
that
this condition shall not be deemed satisfied until the expiration of such period).
(iv)
In the case of an election under subsection (b) of this Section 4.02, the Company or the Guarantor shall have delivered
to the Trustee an opinion of counsel of recognized standing stating that (A) the Company has received from the Internal Revenue
Service a letter ruling, or there has been published by the Internal Revenue Service a Revenue Ruling, or (B) since the date of
execution of this Subordinated Debt Securities Indenture, there has been a change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such opinion shall confirm that, the beneficial owners of such Outstanding
Subordinated Debt Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such
legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such legal defeasance had not occurred.
(v)
In the case of an election under subsection (c) of this Section 4.02, the Company or the Guarantor shall have delivered
to the Trustee an opinion of counsel of recognized standing to the effect that the beneficial owners of such Outstanding Subordinated
Debt Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance
and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred.
(vi)
Such defeasance or covenant defeasance shall not cause the Trustee to have a conflicting interest within the meaning of
the Trust Indenture Act (assuming all relevant Securities are in default within the meaning of such Act).
(vii)
Such defeasance or covenant defeasance shall not result in the trust arising from such deposit constituting an investment
company within the meaning of the Investment Company Act of 1940, as amended, and rules and regulations adopted by the Commission
thereunder, unless such trust shall be registered under such Act or exempt from registration thereunder.
(viii)
The Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating
that all conditions precedent to the defeasance or covenant defeasance under subsection (b) or (c) of this Section 4.02 (as the
case may be) have been complied with.
(ix)
Notwithstanding any other provisions of this Section 4.02(d), such defeasance or covenant defeasance shall be effected
in compliance with any additional or substitute terms, conditions or limitations which may be imposed on the Company in connection
therewith pursuant to Section 3.01.
(e)
Subject to the provisions of the last paragraph of Section 10.03, all money and U.S. Government Obligations (or other property
as may be provided pursuant to Section 3.01) (including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 4.02(e), the “Trustee”) pursuant to subsection (d) of Section 4.02
in respect of any Outstanding Subordinated Debt Securities of any series shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Subordinated Debt Securities and this Subordinated Debt Securities Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine,
to the Holders of such Subordinated Debt Securities of all sums due and to become due thereon in respect of principal (and premium,
if any) and interest and Additional Amounts, if any, but such money need not be segregated from other funds except to the extent
required by law.
(f)
Unless otherwise specified with respect to any Subordinated Debt Security pursuant to Section 3.01, if, after a deposit
referred to in Section 4.02(d)(i) has been made, (i) the Holder of a Subordinated Debt Security in respect of which such deposit
was made is entitled to, and does, elect pursuant to Section 3.01 or the terms of such Subordinated Debt Security to receive payment
in a Currency other than that in which the deposit pursuant to Section 4.02(d)(i) has been made in respect of such Subordinated
Debt Security, or (ii) a Conversion Event occurs in respect of the Foreign Currency in which the deposit pursuant to Section 4.02(d)(i)
has been made, the indebtedness represented by such Subordinated Security and the Guarantee thereof shall be deemed to have been,
and will be, fully discharged and satisfied through the payment of the principal of (and premium, if any), interest, if any, and
Additional Amounts, if any, on such Subordinated Debt Security as the same becomes due out of the proceeds yielded by converting
(from time to time as specified below in the case of any such election) the amount or other property deposited in respect of such
Subordinated Debt Security into the Currency in which such Subordinated Debt Security becomes payable as a result of such election
or Conversion Event based on the applicable market exchange rate for such Currency in effect on the second Business Day prior
to each payment date, except, with respect to a Conversion Event, for such Foreign Currency in effect at the time of the Conversion
Event.
(g)
Anything in this Section 4.02 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company or the Guarantor
from time to time upon Company Request any money or U.S. Government Obligations (or other property and any proceeds therefrom)
held by it as provided in subsection (d) of this Section 4.02 which, in the opinion of an internationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof
which would then be required to be deposited to effect a defeasance or covenant defeasance, as applicable, in accordance with
this Section 4.02.
Section 4.03.
Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.03, all cash,
U.S. Government Obligations and Foreign Government Securities deposited with the Trustee pursuant to Section 4.01
shall be held in trust and such cash and the proceeds from such U.S. Government Obligations and/or
Foreign
Government Securities shall be applied by it, in accordance with the provisions of the Subordinated Debt Securities of such series,
and this Subordinated Debt Securities Indenture, to the payment, either directly or through any Paying Agent (including the Company
or Guarantor acting as Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium,
if any) and interest for the payment of which such cash, U.S. Government Obligations and/or Foreign Government Securities have
been deposited with the Trustee.
Section 4.04.
Repayment to Company. The Trustee, the Calculation Agent and any Paying Agent promptly shall pay to the Company
upon Company Request any excess money, U.S. Government Obligations and/or Foreign Government Securities held by them at any time
with respect to any series of Subordinated Debt Securities.
Section 4.05.
Reinstatement. If the Trustee or any Paying Agent is unable to apply any money or U.S. Government Obligations in
accordance with this Article 4 by reason of any legal proceeding or by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company and
the Guarantor under this Subordinated Debt Securities Indenture, the Subordinated Debt Securities and the Guarantees shall be
revived and reinstated as though no deposit had occurred pursuant to this Article 4 until such time as the
Trustee or such Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article
4; provided, however, that, if the Company or the Guarantor has made any payment of principal of or interest on any Subordinated
Debt Securities because of the reinstatement of its obligations, the Company and the Guarantor shall be subrogated to the rights
of the Holders of such Subordinated Debt Securities to receive such payment from the money or U.S. Government Obligations held
by the Trustee or such Paying Agent.
Article
5
Remedies
Section 5.01.
Events of Default. (a) Except as otherwise provided pursuant to Section 3.01, if any of the following events occurs
and is continuing with respect to the Subordinated Debt Securities of any series it shall constitute an “Event of Default”:
(i) Non-payment:
default is made in the payment of any interest or principal due in respect of the Subordinated Debt Securities of that series
or any of them and such default continues for a period of seven days (or such other period as may be specified pursuant to
Section 3.01).
(ii)
Winding up: any order is made by any competent court or resolution passed for the winding up or dissolution of the
Company or the Guarantor (except in any such case for the purpose of reconstruction or a merger or amalgamation which has been
previously approved by the holders of at least a majority of the outstanding principal amount of the subordinated debt securities
of that series or a merger with another institution in this case even without being
approved
by Holders of the Subordinated Debt Securities of such series, provided that any entity that survives or is created as a result
of such merger is given a rating by an internationally recognized rating agency at least equal to the then current rating of the
Company or the Guarantor, as the case may be, at the time of such merger).
(b)
Neither a reduction or cancellation, in part or in full of the Amounts Due on, the conversion thereof into another security
or obligation of the Company, the Guarantor or another person, as a result of the exercise of the Spanish Bail-in Power by the
relevant resolution authority with respect to the Guarantor, nor the exercise of the Spanish Bail-in Power by the relevant resolution
authority with respect to the Subordinated Debt Securities of any series will be an Event of Default.
(c)
No exercise of a resolution tool by the relevant resolution authority or any action in compliance therewith shall constitute
an Event of Default.
Section 5.02.
Enforcement of Remedies. (a) If an Event of Default occurs as set forth in paragraph (a)(i) of Section 5.01, then
the Trustee or the Holders of at least 25% in outstanding principal amount of the Subordinated Debt Securities of that series
may institute proceedings for the winding up or dissolution of the Company or the Guarantor but may take no further action in
respect of such default.
(b)
If an Event of Default occurs as set forth in paragraph (a)(ii) of Section 5.01, then the Trustee or the Holders of at
least 25% in outstanding principal amount of the Subordinated Debt Securities of that series may declare such Subordinated Debt
Securities of such series immediately due and payable whereupon the Subordinated Debt Securities of such series shall, when permitted
by applicable Spanish insolvency law, become immediately due and payable at their Early Termination Amount together with all interest
(if any) accrued thereon.
(c) Without
prejudice to paragraphs (a)(i) and (a)(ii) of Section 5.01, the Trustee or the holders of at least 25% in outstanding
principal amount of the Subordinated Debt Securities of any series may at their discretion and without further notice,
institute such proceedings against the Company or the Guarantor as they may think fit to enforce any obligation, condition or
provision binding on the Company or the Guarantor under the Subordinated Debt Securities of such series, provided that,
except as provided in Section 5.01(a)(ii) winding-up above, neither the Company nor the Guarantor shall as a consequence of such
proceedings be obliged to pay any sum or sums representing or measured by reference to principal or interest in respect of
the Subordinated Debt Securities of such series sooner than the same would otherwise have been payable by it or
any damages.
Section 5.03.
Collection of Indebtedness and Suits for Enforcement by the Trustee. (a) If an Event of Default with respect to
the Subordinated Debt Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of the Subordinated Debt Securities of such series by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement
of
any
covenant or agreement in this Subordinated Debt Securities Indenture or in aid of the exercise of any power granted herein, or
to enforce any other proper remedy, including the institution of proceedings in Spain (but not elsewhere) for the winding-up of
the Company or the Guarantor, provided that, except as provided in (ii) of Section 5.02 above, neither the Company nor the Guarantor
shall as a consequence of such proceedings be obliged to pay any sum or sums representing or measured by reference to principal
or interest in respect of the Subordinated Debt Securities of such series sooner than the same would otherwise have been payable
by it or any damages.
The Holders
of Subordinated Debt Securities by their acceptance thereof will be deemed to have waived any right of set-off or counterclaim
or combination of accounts with respect to the Subordinated Debt Securities or this Subordinated Debt Securities Indenture (or
between the obligations under or in respect of any Subordinated Debt Securities and any liability owed by a Holder to the Company)
that they might otherwise have against the Company or the Guarantor, whether before or during a winding up of the Company.
Notwithstanding
the foregoing, failure to make any payment in respect of a series of Subordinated Debt Securities, including under the Guarantee
thereon, shall not be an Event of Default in respect of such Subordinated Debt Securities or Guarantee, as applicable, if such
payment is withheld or refused and the Company or the Guarantor, as applicable, deliver an Opinion of Counsel concluding that
such sums were not paid in order to comply with any fiscal or other law or regulation or with the order of any court of competent
jurisdiction, provided, however, that the Trustee may by notice to the Company or the Guarantor, as applicable, require the Company
or the Guarantor, as the case may be, to take such action (including but not limited to proceedings for a declaration by a court
of competent jurisdiction) as the Trustee may be advised in an Opinion of Counsel, upon which opinion the Trustee may conclusively
rely, is appropriate and reasonable in the circumstances to resolve such doubt, in which case the Company or the Guarantor, as
applicable, shall forthwith take and expeditiously proceed with such action and shall be bound by any final resolution of the
doubt resulting therefrom. If any such action results in a determination that the relevant payment can be made without violating
any applicable law, regulation or order then the provisions of the preceding sentence shall cease to have effect and the payment
shall become due and payable on the expiration of 14 days or seven days after the Trustee gives written notice to the Company
or the Guarantor, as applicable, informing it of such resolution.
No recourse
for the payment of the principal of (or premium, if any) or interest, if any, on any Subordinated Debt Security, or for any claim
based thereon on the Guarantee endorsed thereon or otherwise in respect thereof or of the Guarantee and no recourse under or upon
any obligation, covenant or agreement of the Company or the Guarantor in this Subordinated Debt Securities Indenture, or in any
Subordinated Debt Security, in the Guarantee endorsed thereon, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder (other than the Guarantor under the terms of the Guarantee), officer or director,
past, present or future, of the Company or any Guarantor of any successor corporation of either the Company, either directly or
through the Company or the Guarantor or any successor corporation of either,
whether
by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that to the extent lawful all such liability is hereby expressly waived and released as a condition of, and
as a consideration for, the execution of this Subordinated Debt Securities Indenture and the issue of the Subordinated Debt Securities
of a series, and the endorsement of the Guarantee thereon.
Section 5.04.
Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition, winding-up or other judicial proceeding relative to the Company or the Guarantor
or any other obligor upon the Subordinated Debt Securities of any series or Guarantee or to the property of the Company or the
Guarantor or such other obligor or their creditors (other than under or in connection with a scheme of amalgamation or reconstruction
not involving bankruptcy or insolvency), the Trustee (irrespective of whether the principal of the Subordinated Debt Securities
of such series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company or the Guarantor for the payment of overdue principal (and premium, if any)
or interest, if any) and Additional Amounts shall be entitled and empowered, by intervention in such proceeding or otherwise,
to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed
in any such proceeding; provided that the Company or the Guarantor, as the case may be, shall not, as a result of the bringing
of such proceedings, be obliged to pay any sum representing or measured by reference to principal, premium or interest on the
Subordinated Debt Securities sooner than the same would otherwise have been payable by it. In particular, the Trustee shall be
authorized to collect and receive any moneys and other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder of a Subordinated Debt Security to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to such Holders or holders, to first pay to the Trustee
any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due to the Trustee under Section 6.08.
Subject to
Article 8 and Section
9.02, nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder of any Subordinated Debt Security any plan of reorganization, arrangement, adjustment, or composition affecting
any Subordinated Debt Securities or the rights of any Holder of any Subordinated Debt Security or to authorize the Trustee to
vote in respect of the claim of any such Holder in any such proceeding.
The provisions
of this Section 5.04 are subject to the provisions of Article
12.
Section 5.05.
Trustee May Enforce Claims Without Possession of Subordinated Debt Securities. All rights of action and claims under
this Subordinated Debt Securities Indenture or the Subordinated Debt Securities may be prosecuted and enforced by the
Trustee
without the possession of any of the Subordinated Debt Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery
of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel (subject, with regard to the Company, to the provisions of Article
12, and with regard to the Guarantor, to the provisions of Section
13.02) be for the ratable benefit of the Holders of the Subordinated Debt Securities in respect of which such judgment has been
recovered.Section 5.06. Application
of Money Collected. Any money collected by the Trustee pursuant to this Article or, after an Event of Default, any money or
other property distributable in respect of the Company’s obligations under this Subordinated Debt Securities Indenture,
in respect of any series of Subordinated Debt Securities shall, subject to the provisions of Section
5.03 in relation to waiver and set-off, Article 12 in relation
to subordination and Section 13.02 in relation to subordination
of the Guarantee, be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution
of such money on account of principal (and premium, if any) or interest, if any, and Additional Amounts upon presentation of such
Subordinated Debt Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully
paid:
FIRST:
To the payment of all amounts applicable to such series of Subordinated Debt Securities due and owing to the Trustee (including
any predecessor Trustee) under Section 6.08;
SECOND:
Subject to Section 12.01, to the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest,
if any, and Additional Amounts on such series of Subordinated Debt Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on
such Subordinated Debt Securities for principal (and premium, if any) and interest, if any, respectively; and
THIRD:
To the payment of the balance, if any, to the Company, the Guarantor or any other Person or Persons legally entitled thereto.
Section 5.07.
Limitation on Suits. No Holder of any Subordinated Debt Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Subordinated Debt Securities Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(a)
such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to Subordinated
Debt Securities of the same series specifying such Event of Default and stating that such notice is a “Notice of Default”
hereunder;
(b)
the Holders of not less than 25% in aggregate principal amount of the Outstanding Subordinated Debt Securities of such
series shall have made written request
to
the Trustee to institute proceedings in accordance with 5.02 to 5.05 hereof in respect of such Event of
Default in its own name, as Trustee hereunder;
(c) such
Holder of a Subordinated Debt Security has offered to the Trustee reasonable indemnity and/or security satisfactory to it
(as determined by the Trustee in its sole discretion) against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d)
the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such
proceeding; and
(e)
no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Subordinated Debt Securities of such series;
it being understood and intended
that no one or more Holders of Subordinated Debt Securities of a particular series shall have any right in any manner whatever
by virtue of, or by availing of, any provision of this Subordinated Debt Securities Indenture to affect, disturb or prejudice
the rights of any other such Holders or holders, or to obtain or to seek to obtain priority or preference over any other such
Holders or holders or to enforce any right under this Subordinated Debt Securities Indenture, except in the manner herein provided
and for the equal and ratable benefit of all Holders of Subordinated Debt Securities of such series.
Section 5.08.
Unconditional Right of Holders to Receive Principal, Premium and Interest, if any, and Additional Amounts. Subject
to Article 12 in relation to subordination of Subordinated
Debt Securities and Section 13.02 in relation to subordination
of the Guarantee, and notwithstanding any other provision in this Subordinated Debt Securities Indenture, the Holder of any Subordinated
Debt Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium,
if any) and interest, if any, and Additional Amounts on such Subordinated Debt Security on the respective Stated Maturities as
expressed in such Subordinated Debt Security (or, in the case of redemption, on the Redemption Date) and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
Section 5.09.
Restoration of Rights and Remedies. If the Trustee or any Holder of any Subordinated Debt Security has instituted
any proceeding to enforce any right or remedy under this Subordinated Debt Securities Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, the Guarantor, the Trustee and the Holders of Subordinated Debt Securities
shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders of Subordinated Debt Securities shall continue as though no such proceeding had been instituted.
Section 5.10.
Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Subordinated Debt Securities in the last paragraph of Section
3.06 and without prejudice to Section 5.02, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders of Subordinated Debt Securities is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not, subject as aforesaid, prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11.
Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Subordinated Debt Security
to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders of Subordinated Debt Securities may be exercised from time to time, and as often as may be deemed expedient,
by the Trustee or by the Holders of Subordinated Debt Securities, as the case may be.
Section 5.12.
Control by Holders. The Holders of a majority in aggregate principal amount of the Outstanding Subordinated Debt
Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee hereunder, or exercising any trust or power conferred on the Trustee hereunder with respect to the Subordinated
Debt Securities of such series, provided that
(a)
such direction shall not be in conflict with any rule of law or with this Subordinated Debt Securities Indenture or with
the Subordinated Debt Securities of any series;
(b)
the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Holders of any Subordinated
Debt Securities of any series not taking part in such direction with respect to which the Trustee is acting as the Trustee; and
(c)
the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
Section 5.13.
Waiver of Past Defaults. The Trustee may without prejudice to its rights in respect of any subsequent Event of Default
from time to time and at any time waive any Event of Default or authorize any proposed Event of Default by the Company or the
Guarantor, provided that in its opinion the interests of the Holders shall not be materially prejudiced thereby and, provided,
further, that the Trustee shall not exercise any powers conferred on it by this clause in contravention of any notice in writing
to the Company, the Guarantor and the Trustee made pursuant to Section
5.02 hereof but so that no such notice shall affect any waiver or authorization previously given or made. The Holders of not less
than a majority in aggregate principal amount of the Outstanding
Subordinated
Debt Securities of any series may on behalf of the Holders of all the Subordinated Debt Securities of such series waive any past
Event of Default hereunder with respect to such series and its consequences, except an Event of Default
(a)
in the payment of the principal of (or premium, if any) or interest, if any, and Additional Amounts on any Subordinated
Debt Security of such series, or
(b)
in respect of a covenant or provision hereof which under Article 9 cannot be modified or amended without the
consent of the Holder of each Outstanding Subordinated Debt Security of such series affected.
Upon any
such waiver, such Event of Default shall cease to exist, and any Event of Default with respect to any series arising therefrom
shall be deemed to have been cured and not to have occurred for every purpose of this Subordinated Debt Securities Indenture,
but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
Section 5.14.
Undertaking for Costs. All parties to this Subordinated Debt Securities Indenture agree, and each Holder of any
Subordinated Debt Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this Subordinated Debt Securities Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant to such suit of an undertaking
to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’
fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder or group of Holders holding in the aggregate more than 10% in principal amount of the Outstanding
Subordinated Debt Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest, if any, on any Subordinated Debt Security on or after the respective Stated Maturities
expressed in such Subordinated Debt Security (or, in the case of redemption, on or after the Redemption Date).
Article
6
The Trustee
Section 6.01.
Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default,
(i)
the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Subordinated Debt
Securities Indenture, and no implied covenants or obligations shall be read into this Subordinated Debt Securities Indenture against
the Trustee; and
(ii)
in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness
of the
opinions
expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Subordinated
Debt Securities Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Subordinated Debt Securities Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts, statements, opinions or conclusions stated therein).
(b)
In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Subordinated Debt Securities Indenture, and use the same degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the conduct of his or her own affairs.
(c)
No provision of this Subordinated Debt Securities Indenture shall be construed to relieve the Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful misconduct, except that
(i)
this paragraph (c) shall not be construed to limit the effect of paragraphs (a) or (d) of this Section;
(ii)
the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent facts; and
(iii)
the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a majority in principal amount of the Outstanding Subordinated Debt Securities of any series,
determined as provided herein, relating to the time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee, under this Subordinated Debt Securities Indenture with
respect to the Subordinated Debt Securities of such series.
(d)
No provision of this Subordinated Debt Securities Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights
or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(e)
Whether or not therein expressly so provided, every provision of this Subordinated Debt Securities Indenture relating to
the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section
6.01.
Section 6.02.
Spanish Tax Procedures and Obligations of the Trustee. In connection with each payment made on any Payment Date
(as defined in Appendix 1 attached hereto) in respect of the issued Subordinated Debt Securities hereunder, the
Trustee
or Paying Agent shall comply with the tax procedures set forth in Appendix 1 hereto. The Trustee or Paying Agent shall have no
duty or responsibility to comply with other Spanish tax obligations arising out of this Subordinated Debt Securities Indenture.
The Company or the Guarantor shall be responsible for the payment of any and all amounts due under the Subordinated Debt Securities.
Therefore, the Trustee or Paying Agent shall not be liable for any amounts owed to any person due to its failure to properly comply
with the tax procedures referred to in this Section 6.02 and Appendix 1 hereto, except such as may result from the
negligence, willful misconduct or fraud of the Trustee or Paying Agent or any of its agents or employees. The Trustee or Paying
Agent may request and rely conclusively upon any instructions from the Company or the Guarantor in respect of any action necessary
or required to be taken by the Trustee or Paying Agent pursuant to this Section 6.02 and Appendix 1 hereto; provided,
however, in no event shall the Trustee or Paying Agent be required to expend or risk its own funds in the performance of any of
its duties pursuant to this Section 6.02 and Appendix 1 hereto, or be obligated to take any legal or other action
which might in its judgment involve or cause it to incur any expense or liability unless it shall have been furnished with acceptable
indemnification and security.
Section
6.03. Notice of
Defaults. Within 90 days after the occurrence of any Event of Default hereunder with respect to Subordinated Debt
Securities of any series of which a Responsible Officer of the Trustee has received written notice of such Event of Default
the Trustee shall transmit in the manner and to the extent provided in Section
1.06 to Holders of Subordinated Debt Securities of such series notice of such Event of Default hereunder of which the
Trustee has received written notice, unless such Event of Default shall have been cured or waived; provided, however, that, the
Trustee shall be protected in withholding such notice if it determines in good faith that the withholding of such notice is
in the interest of the Holders of Subordinated Debt Securities of such series.
Section 6.04.
Certain Rights of Trustee. Subject to the provisions of Section
6.01:
(a)
the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution,
Officer’s Certificate, or any other certificate, statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon or other evidence of indebtedness or other paper or document (whether in its original or
facsimile form) believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b)
any request or direction of the Company or the Guarantor mentioned herein shall be sufficiently evidenced by a Company
Request or Company Order or a Guarantor Request or Guarantor Order, as the case may be and any resolution of the Board of Directors
of the Company or the Guarantor may be sufficiently evidenced by a Board Resolution;
(c)
whenever in the administration of this Subordinated Debt Securities Indenture the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence
be
herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s Certificate and/or
an Opinion of Counsel;
(d)
the Trustee may consult with counsel of its own selection and the advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good
faith and in conclusive reliance thereon;
(e) the
Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Subordinated
Debt Securities Indenture at the request or direction of any of the Holders pursuant to this Subordinated Debt Securities
Indenture, unless such Holders shall have offered to the Trustee reasonable security and/or indemnity satisfactory to it
against the costs, expenses and liabilities which might be incurred by it in compliance with such request or
direction;
(f)
the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon or other evidence
of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; at the sole
reasonable cost and expense of the Company and shall incur no liability or additional liability of any kind by reason of such
inquiry or investigation; provided that the Trustee shall not be entitled to such information which the Company is prevented from
disclosing as a matter of law or contract;
(g)
the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder;
(h)
the Trustee shall not be liable for any action taken, suffered or omitted to be taken by it in good faith and believed
by it to be authorized or within the discretion or rights or powers conferred upon it by this Subordinated Debt Securities Indenture,
unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(i)
anything in this Subordinated Debt Securities Indenture notwithstanding, in no event shall the Trustee be liable for special,
indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to loss or profit), even
if the Trustee has been advised as to the likelihood of such loss or damage and regardless of whether the claim for loss or damage
is made in negligence or otherwise;
(j)
the Trustee shall not be liable with respect to any Losses arising from action taken or omitted to be taken by it in good
faith in accordance with any instruction or communication received by email from any person reasonably believed by the Trustee
to be authorized by the Company or the Guarantor to send such instruction or
communication,
unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(k)
the Trustee shall not be deemed to have notice of any Event of Default unless a Responsible Officer of the Trustee has
received written notice of such an Event of Default at the Corporate Trust Office of the Trustee, and such notice references the
Subordinated Debt Securities and/or this Subordinated Debt Securities Indenture;
(l)
the Trustee shall not be liable for any failure or delay in the performance of its obligations hereunder because of circumstances
beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, strikes,
work stoppages, civil or military disturbances, nuclear or natural catastrophes, fire, riot, embargo, loss or malfunctions of
utilities, communications or computer (software and hardware) services, government action, including any laws, ordinances, regulations,
governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Subordinated
Debt Securities Indenture;
(m)
the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right
to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent,
custodian and other Person employed to act hereunder; and
(n)
the Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this Subordinated Debt Securities Indenture, which certificate
may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
Section
6.05. Not Responsible for
Recitals or Issuance of Subordinated Debt Securities. The recitals contained herein and in the Subordinated Debt
Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company and
the Guarantor, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this Subordinated Debt Securities Indenture or of
the Subordinated Debt Securities, except that the Trustee represents and warrants that it has duly authorized, executed and
delivered this Subordinated Debt Securities Indenture. Neither the Trustee nor any Authenticating Agent shall be accountable
for the use or application by the Company of Subordinated Debt Securities or the proceeds thereof. The Trustee shall not be
responsible to make any calculation with respect to any matter under this Subordinated Debt Securities Indenture other than
as specifically provided for herein. The Trustee shall have no duty to monitor or investigate the Company’s compliance
with or the breach of, or cause to be performed or observed, any representation, warranty, or covenant, or agreement of any
Person, other than the Trustee, made in this Subordinated Debt Securities Indenture. No provision of this Subordinated Debt
Securities Indenture shall be deemed to impose any duty or obligation on the Trustee to perform any act or acts, receive or
obtain any interest in property or exercise any interest in property, or exercise any right, power, duty or obligation
conferred or imposed on it in any
jurisdiction
in which it shall be illegal, taxation or other consequences that, in the sole determination of the Trustee, are adverse to the
Trustee, or in which the Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act
or acts, to receive or obtain any such interest in property or to exercise any such right, power, duty or obligation.
Section 6.06.
May Hold Subordinated Debt Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Subordinated
Debt Security Registrar and any Calculation Agent or any other agent of the Company or the Guarantor, in its individual or any
other capacity, may become the owner or pledgee of Subordinated Debt Securities and, subject to 6.09
and 6.14, may otherwise deal with the Company or the Guarantor
with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Subordinated Debt Security Registrar,
Calculation Agent or such other agent.
Section 6.07.
Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except
to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except
as otherwise agreed with the Company.
Section 6.08.
Compensation and Reimbursement.
Each of the
Company and the Guarantor each agree jointly and severally
(a)
to pay to the Trustee from time to time compensation for all services rendered by it hereunder as agreed upon in writing
by the Company from time to time (which compensation shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(b)
except as otherwise expressly provided herein, to reimburse the Trustee for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any provision of this Subordinated Debt Securities Indenture (including
the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement
or advance as shall be determined by a court of competent jurisdiction to have been caused by its own negligence or bad faith;
and
(c)
to indemnify the Trustee (which for purposes of this subparagraph Section 6.08(c) shall be deemed to include its directors,
officers, employees and agents) or any predecessor Trustee for, and to hold it harmless against, any and all loss, liability,
claim, damage or expense (including legal fees and expenses) and taxes (other than taxes based upon, measured by or determined
by the income of the Trustee) incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance
or administration of the trust or trusts hereunder including the costs and expenses of defending itself against any claim (whether
asserted by the Company, or any Holder or any other Person) or liability in connection with the exercise or performance of any
of its
powers
or duties hereunder, or in connection enforcing the provisions of this Section, but excluding any tax liabilities of the Trustee
in respect of its net profits.
In
addition to, but without prejudice to its other rights under this Subordinated Debt Securities Indenture, when the Trustee
incurs expenses or renders services in connection with an Event of Default specified in Section 5.01, the fees, costs and
expenses (including the charges and expenses of its counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law.
The Trustee
shall notify the Company and the Guarantor in writing of the commencement of any action or claim in respect of which indemnification
may be sought promptly after a Responsible Officer of the Trustee becomes aware of such commencement (provided that the failure
to make such notification shall not affect the Trustee’s rights hereunder) and the Company shall be entitled to participate
in, and to the extent it shall wish, to assume the defense thereof, including the employment of counsel reasonably satisfactory
to the Trustee. If the Company and the Trustee are being represented by the same counsel and the Company has assumed the defense
of the claim, the Trustee shall not be authorized to settle a claim without the written consent of the Company, which consent
shall not be unreasonably withheld.
As security
for the performance of the obligations of the Company and the Guarantor under this Section, the Trustee shall have a senior lien
to which the Subordinated Debt Securities are hereby made subordinate, upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the payment of principal of (or premium, if any) or interest, if any, on the Subordinated
Debt Securities.
“Trustee”
for purposes of this Section shall include any predecessor Trustee; provided, however, that the negligence, willful misconduct
or bad faith of any Trustee hereunder shall not affect the rights of any other Trustee hereunder.
The Trustee's
rights to payment of its fees, reimbursement and indemnity under, and its lien provided for in, this Section
6.08 shall survive the payment in full of the Subordinated Debt Securities, the satisfaction and discharge of this Subordinated
Debt Securities Indenture, the resignation or removal of the Trustee, the termination for any reason of this Subordinated Debt
Securities Indenture and the exercise of the Spanish Bail-in Power and the other relevant resolution tools by the relevant resolution
authority.
Section 6.09.
Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning
of Section 310(b) of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in
the manner provided by, and subject to the provisions of, Section 310(b) of the Trust Indenture Act and this Subordinated Debt
Securities Indenture.
Section 6.10.
Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder with respect to each series
which shall be a Person organized and doing business under the laws of the United States, any State thereof or the District of
Columbia,
authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State or District of Columbia authority and having a corporate trust office
or agency in the Borough of Manhattan, The City of New York, New York. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section,
the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article
6.
Section 6.11.
Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee
in accordance with the applicable requirements of Section 6.12.
(b)
The Trustee may resign at any time with respect to the Subordinated Debt Securities of one or more series by giving written
notice thereof to the Company and the Guarantor. If the instrument of acceptance by a successor Trustee required by Section
6.12 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Subordinated
Debt Securities of such series.
(c)
The Trustee may be removed at any time with respect to the Subordinated Debt Securities of any series by Act of the Holders
of a majority in principal amount of the Outstanding Subordinated Debt Securities of such series delivered to the Trustee and
to the Company and the Guarantor. If the instrument of acceptance by a successor Trustee required by Section 6.12
shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the Trustee may petition
at the expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee with respect to the
Subordinated Debt Securities of such series.
(d)
If at any time:
(i)
the Trustee shall fail to comply with Section 6.09 after written request therefor by the Company or
the Guarantor or by any Holder who has been a bona fide Holder of a Subordinated Debt Security of the series as to which the Trustee
has a conflicting interest for at least six months, or
(ii)
the Trustee shall cease to be eligible under Section 6.10 and shall fail to resign after written request
therefor by the Company or the Guarantor or by any Holder who has been a bona fide Holder of a Subordinated Debt Security for
at least six months, or
(iii)
the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer shall take charge, or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iv)
the Trustee shall fail to perform its obligations to the Company or the Guarantor under the Subordinated Debt Securities
Indenture in any material respect,
then,
in any such case, (A) the Company or the Guarantor by a Board Resolution may remove the Trustee with respect to any or all series
of Subordinated Debt Securities or (B) subject to Section
5.14 (and except in the case of subparagraph 6.11(d)(iv) above), any Holder who has been a bona fide Holder of a Subordinated
Debt Security for at least six months (and, in the case of Section
6.11(d)(i) above, who is a Holder of a Subordinated Debt Security of the series as to which the Trustee has a conflicting interest)
may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Subordinated Debt Securities and the appointment of a successor Trustee or Trustees.
(e)
If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee
for any cause, with respect to the Subordinated Debt Securities of one or more series, the Company and the Guarantor, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Subordinated Debt Securities of such series
(it being understood that any successor Trustee may be appointed with respect to the Subordinated Debt Securities of one or more
or all of such series and at any time there shall be only one Trustee with respect to the Subordinated Debt Securities of any
particular series), and shall comply with the applicable requirements of Section 6.12. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Subordinated
Debt Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Subordinated
Debt Securities of such series delivered to the Company, the Guarantor and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section
6.12, become the successor Trustee with respect to the Subordinated Debt Securities of such series and to that extent supersede
the successor Trustee appointed by the Company and the Guarantor. If no successor Trustee with respect to the Subordinated Debt
Securities of any series shall have been so appointed by the Company or the Holders of Subordinated Debt Securities of such series
and accepted appointment in the manner hereinafter required by Section 6.12, any Holder who has been a bona fide Holder
of a Subordinated Debt Security of such series for at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Subordinated Debt
Securities of such series.
(f)
The Company shall give notice to Holders of each resignation and each removal of the Trustee with respect to the Subordinated
Debt Securities of any series and each appointment of a successor Trustee with respect to the Subordinated Debt Securities
of
any series to the Holders in the manner and to the extent provided in Section 1.06. Each notice shall include the
name of the successor Trustee with respect to the Subordinated Debt Securities of such series and the address of its Corporate
Trust Office.
Section 6.12.
Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect
to all Subordinated Debt Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company,
the Guarantor and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of
the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company, the Guarantor or
the successor Trustee, such retiring Trustee shall, upon payment of its charges and subject to its lien provided for in Section
6.08, execute and deliver an instrument transferring to such successor Trustee, all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee
hereunder.
(b)
In case of the appointment hereunder of a successor Trustee with respect to the Subordinated Debt Securities of one or
more (but not all) series, the Company, the Guarantor, the retiring Trustee and each successor Trustee with respect to the Subordinated
Debt Securities of such series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall
accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm
to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the
Subordinated Debt Securities of such series to which the appointment of such successor Trustee relates, (ii) if the retiring Trustee
is not retiring with respect to all Subordinated Debt Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Subordinated Debt
Securities of such series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee,
and (iii) shall add to or change any of the provisions of this Subordinated Debt Securities Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Subordinated Debt
Securities of such series to which the appointment of such successor Trustee relates; but, on request of the Company, the Guarantor
or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder with respect to the Subordinated Debt Securities of such series to which the
appointment
of such successor Trustee relates, subject to the lien provided for in Section 6.08.
(c)
Upon request of any such successor Trustee, the Company and the Guarantor shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph
(a) or (b) of this Section 6.12, as the case may be.
(d)
No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article 6.
Section 6.13.
Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Subordinated
Debt Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication and deliver the Subordinated Debt Securities so
authenticated with the same effect as if such successor Trustee had itself authenticated such Subordinated Debt Securities.
Section 6.14.
Preferential Collection of Claims. If and when the Trustee shall be or become a creditor of the Company or the Guarantor
(or any other obligor upon the Subordinated Debt Securities of a series), the Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Company or the Guarantor (or any such other obligor).
Section 6.15.
Appointment of Authenticating Agent. The Trustee may at any time appoint an Authenticating Agent or Agents with
respect to one or more series of Subordinated Debt Securities which shall be authorized to act on behalf of the Trustee to authenticate
Subordinated Debt Securities of such series upon original issue, or issued upon exchange, registration of transfer or partial
redemption thereof or in lieu of destroyed, lost or stolen Subordinated Debt Securities, and Subordinated Debt Securities so authenticated
shall be entitled to the benefits of this Subordinated Debt Securities Indenture and shall be valid and obligatory for all purposes
as if authenticated by the Trustee hereunder. Wherever reference is made in this Subordinated Debt Securities Indenture to the
authentication and delivery of Subordinated Debt Securities by the Trustee or the Trustee’s certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and
a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall
be acceptable to the Company and the Guarantor and shall at all times be a corporation or national banking association organized
and doing business under the laws of the United States, any State thereof or the District of Columbia, authorized under such laws
to act as Authenticating Agent, having a combined
capital
and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State or District of Columbia
authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating
Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section
6.15, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
Any Person
into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to the corporate
agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such Person
shall be otherwise eligible under this Section 6.15, without
the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating
Agent may resign at any time by giving written notice thereof to the Trustee, the Company and the Guarantor. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent, the Company
and the Guarantor. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of this Section
6.15, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and the Guarantor and
shall give notice to the Holders of Subordinated Debt Securities in the manner and to the extent provided in Section
1.06. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of this Section
6.15.
The Company
and the Guarantor agree to pay to each Authenticating Agent from time to time reasonable compensation for its services under this
Section 6.15.
If an appointment
with respect to one or more series is made pursuant to this Section, the Subordinated Debt Securities of such series may have
endorsed thereon, in lieu of the Trustee’s certificate of authentication, an alternate certificate of authentication in
substantively the following form:
This is one
of the Subordinated Debt Securities referred to in the within-mentioned Subordinated Debt Securities Indenture.
| THE BANK OF NEW YORK MELLON, as Trustee |
| |
| |
| By: |
|
| |
as Authenticating Agent |
Section
6.16. Appointment of Additional Trustees. The Company and the Guarantor may appoint a Trustee for a particular
series of Subordinated Debt Securities other than the Trustee named in the first paragraph of this Subordinated Debt
Securities Indenture by executing and delivering an indenture supplemental hereto where such Trustee accepts such appointment
as contemplated by Section 3.01(w) and Section 9.01(k)
(it being understood that at any time there shall be only one Trustee with respect to the Subordinated Debt Securities of any
particular series); provided that, at the time of such acceptance, such Trustee shall be qualified and eligible under this
Article 6. Upon such acceptance, such Trustee shall be vested with all the rights, powers, trusts and duties of a
Trustee under this Subordinated Debt Securities Indenture with respect to the Subordinated Debt Securities of such
series.
Section 6.17.
Tax Withholding. Any amounts to be paid by the Company on the Subordinated Debt Securities shall be paid net of
any deduction or withholding imposed or required pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986,
as amended (the “Code”), any current or future regulations or official interpretations thereof, any agreement
entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant
to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (or any law
implementing such an intergovernmental agreement) (a “FATCA Withholding Tax”), and the Company shall not be
required to pay Additional Amounts on account of any FATCA Withholding Tax.
Any Paying
Agent shall be entitled to make a deduction or withholding from any payment which it makes under the Subordinated Debt Securities
and the Subordinated Debt Securities Indenture for or on account of (i) any present or future taxes, duties or charges if and
to the extent so required by any applicable law and (ii) any FATCA Withholding Tax (together, “Applicable Law”).
In either case, the Paying Agent shall make any payment after a deduction or withholding has been made pursuant to Applicable
Law and shall report to the relevant authorities the amount so deducted or withheld. In all cases, the Paying Agent shall have
no obligation to gross up any payment made subject to any deduction or withholding pursuant to Applicable Law. In addition, amounts
deducted or withheld by the Paying Agent as described in this paragraph will be treated as paid to the Holder of the Subordinated
Debt Securities, and the Company will not pay Additional Amounts in respect of such deduction or withholding, except to the extent
required under Section 10.04.
Article
7
Holders Lists and Reports by Trustee and Company
Section 7.01.
The Company or the Guarantor to Furnish Trustee Names and Addresses of Holders. The Company (or the Guarantor, if
applicable) with respect to any series of Subordinated Debt Securities, will furnish or cause to be furnished to the Trustee;
(a)
not more than 15 days after each Regular Record Date (or after each of the dates to be specified for such purpose for non-interest
bearing Subordinated Debt Securities and Subordinated Debt Securities on which interest is paid less frequently than quarterly
as contemplated by Section 3.01), a list, in such form as the Trustee may reasonably require, of the names and addresses
of the Holders of Subordinated Debt Securities as of such Regular Record Date or such specified date, and
(b)
at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished.
The Company
need not furnish or cause to be furnished to the Trustee pursuant to this Section
7.01 the names and addresses of Holders of Subordinated Debt Securities so long as the Trustee acts as Subordinated Debt Security
Registrar with respect to such series of Subordinated Debt Securities.
Section 7.02.
Preservation of Information; Communication to Holders.
(a)
The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders (i) contained
in the most recent list furnished to the Trustee as provided in Section 7.01 and (ii) received by the Trustee in its
capacity as Paying Agent or Subordinated Debt Security Registrar (if so acting). The Trustee may dispose of any list furnished
to it as provided in Section 7.01 upon receipt of a new list so furnished.
(b)
The rights of the Holders of Subordinated Debt Securities of any series to communicate with other Holders with respect
to their rights under this Subordinated Debt Securities Indenture or under the Subordinated Debt Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.
(c)
Every Holder, by receiving and holding a Subordinated Debt Security, agrees with the Company, the Guarantor and the Trustee
that neither the Company, the Guarantor nor the Trustee nor any agent of any of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders in accordance with Section 7.02(b)
or otherwise made pursuant to the Trust Indenture Act.
Section 7.03.
Reports by Trustee.
(a)
On or before May 15 in each year following the date hereof, so long as any Subordinated Debt Securities are Outstanding
hereunder, the Trustee shall transmit to Holders as provided in the Trust Indenture Act a brief report dated as of a date required
by and in compliance with the Trust Indenture Act.
(b)
A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each securities
exchange upon which the Trustee has been notified that the Subordinated Debt Securities are listed, with the Commission and with
the Company and the Guarantor. The Company will notify the Trustee when Subordinated Debt Securities are listed on any securities
exchange.
Section 7.04.
Reports by the Company and the Guarantor. The Company and the Guarantor shall:
(a)
file with the Trustee, within 15 days after the Company or the Guarantor, as the case may be, is required to file the same
with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company or the Guarantor
may be required to file with the Commission pursuant to Article 13 or Section 15(d) of the Exchange Act; or, if the
Company or the Guarantor is not required to file information, documents or reports pursuant to either of such Sections, then it
shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission,
such of the supplementary and periodic information, documents and reports which may be required pursuant to Article
13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations. Delivery of such reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Company’s and the Guarantor’s, as applicable, compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate);
(b)
file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with respect to compliance by the Company and the Guarantor, as
applicable, with the conditions and covenants of this Subordinated Debt Securities Indenture as may be required from time to time
by such rules and regulations. Delivery of such reports, information and documents to the Trustee is for informational purposes
only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company’s and the Guarantor’s, as applicable, compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate);
and
(c)
transmit to Holders, in the manner and to the extent required by the Trust Indenture Act, within 30 days after the filing
thereof with the Trustee, such summaries of
any
information, documents and reports required to be filed by the Company pursuant to paragraphs (a) and (b) of this Section as may
be required by rules and regulations prescribed from time to time by the Commission.
(d)
The Trustee may conclusively presume that the Company is not subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act or otherwise is complying with such reporting requirements unless and until a Responsible Officer of the Trustee
receives at the Corporate Trust Office of the Trustee a written notification from the Company stating otherwise. The Trustee shall
have no duty to examine any information, reports or other documents filed by the Guarantor or the Company pursuant to Section
13 or 15(d) of the Exchange Act, and need make no determination as to whether they comply with the requirements of this Section
7.04, its sole duty in respect thereof being to place them in its files and make them available for inspection by any Holder upon
reasonable request during normal business hours.
Article
8
Consolidation, Merger, Conveyance or Transfer
Section 8.01.
Company or Guarantor May Consolidate, Etc., Only on Certain Terms. The Company or the Guarantor may, without the
consent of Holders of any Subordinated Debt Securities of any series Outstanding under this Subordinated Debt Securities Indenture,
consolidate or amalgamate with or merge into any other corporation or convey or transfer or lease its properties and assets substantially
as an entirety to any Person, provided that:
(a)
the corporation formed by or into which the Company or the Guarantor is consolidated, amalgamated or merged or the Person
which acquires by conveyance or transfer the properties and assets of the Company or the Guarantor substantially as an entirety
(i) shall be a company organized and existing under the laws of any part of the European Union, and (ii) shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, in the case of
the Company, the due and punctual payment of the principal of (and premium, if any) and interest and Additional Amounts, if any,
on all the Subordinated Debt Securities in accordance with the provisions of such Subordinated Debt Securities and this Subordinated
Debt Securities Indenture and, in the case of the Guarantor, the guarantee provision in Article 13, and the performance of every
covenant of this Subordinated Debt Securities Indenture on the part of the Company or the Guarantor, as the case may be, to be
performed or observed;
(b)
immediately after giving effect to such consolidation, amalgamation, merger, conveyance or transfer, no Event of Default
and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing;
(c)
the Company or the Guarantor, as the case may be, shall have delivered to the Trustee an Officer’s Certificate and
an Opinion of Counsel, each stating that such consolidation, amalgamation, merger, conveyance or transfer and such supplemental
indenture
comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied
with; and
(d)
if the successor entity is not the Guarantor, the Guarantor shall, by amendment to the Subordinated Debt Securities Indenture,
unconditionally guarantee all of the obligations of such successor entity under the Subordinated Debt Securities of such series
and the Subordinated Debt Securities Indenture as so modified by such amendment.
Section 8.02.
Successor Corporation Substituted. In the event of any merger, consolidation, sale, conveyance permitted by Section
8.01 and Section 5.01 above, Additional Amounts under the Subordinated Securities will thereafter be payable in respect of taxes
imposed by the acquiring corporation’s, or the resulting corporation’s, jurisdiction of incorporation or tax residence
(subject to exceptions equivalent to those that apply to the obligation to pay Additional Amounts pursuant to Section 10.04 or
the Guarantee, as the case may be, in respect of taxes imposed by the laws of the Kingdom of Spain) rather than taxes imposed
by the Kingdom of Spain. Additional Amounts with respect to payments of interest or principal due prior to the date of such merger,
consolidation, sale, conveyance or lease will be payable only in respect of taxes imposed by the Kingdom of Spain. The acquiring
or resulting corporation, as the case may be, will also be entitled to redeem the Subordinated Debt Securities in the circumstances
described in Section 11.08 with respect to any change or amendment to, or change in the application or official interpretation
of the laws or regulations of such jurisdiction, which change or amendment must occur subsequent to the date of any merger, consolidation,
sale, conveyance or lease permitted by Section 8.01 and Section 5.01 if the successor entity is not incorporated or tax resident
in the Kingdom of Spain. In the event of assumption of the Company’s or the Guarantor’s obligations in connection
with a merger, consolidation, sale or conveyance of substantially all of its assets, the Company or the Guarantor shall be released
from all obligations and covenants under this Subordinated Debt Securities Indenture or the Subordinated Debt Securities or the
Guarantee, as the case may be, and the successor corporation formed by such consolidation or amalgamation or into which the Company
or the Guarantor is merged or to which such conveyance or transfer is made shall succeed to and be substituted for, and may exercise
every right and power of, the Company or the Guarantor, as the case may be, under this Subordinated Debt Securities Indenture
with the same effect as if such successor corporation had been named as the Company or the Guarantor.
Section 8.03.
Assumption of Obligations. Subject to the prior consent of the European Central Bank, if required, the Guarantor
or any wholly-owned subsidiary of the Guarantor may assume the obligations of the Company (a “successor entity”) under
the Subordinated Debt Securities of any series without the consent of the Holders of such series, provided that:
(a) the
successor entity shall expressly assume such obligations by an amendment to the Subordinated Debt Securities Indenture, executed
by the Company and such successor entity, if applicable, and delivered to the Trustee, in form satisfactory to the Trustee, and,
if the successor entity is not the Guarantor, the Guarantor shall, by
amendment
to the Subordinated Debt Securities Indenture, unconditionally guarantee (such guarantee shall be given on a basis
consistent with Article Twelve hereof) all of the obligations of such successor entity under the Subordinated Debt
Securities of such series and the Subordinated Debt Securities Indenture as so modified by such amendment;
(b) immediately
after giving effect to such assumption of obligations, no Event of Default and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be continuing; and
(c) the
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such assumption
complies with this Article and that all conditions precedent herein provided for relating to such assumption have been complied
with.
Upon any
such assumption, the successor entity shall succeed to, and be substituted for, and may exercise every right and power of, the
Company under this Subordinated Debt Securities Indenture with respect to any such Subordinated Debt Securities with the same
effect as if such successor entity had been named as the Company in this Subordinated Debt Securities Indenture, and the Company
or any legal and valid successor corporation which shall theretofore have become such in the manner prescribed herein, shall be
released from all liability as obligor upon any such Subordinated Debt Securities except as described in the following paragraph.
Any Subordinated
Debt Securities so assumed, except if assumed by the Guarantor, will have the benefit of the Guarantee. In the event of any assumption,
Additional Amounts under the Subordinated Debt Securities will be payable in respect of taxes imposed by the assuming corporation’s
jurisdiction of incorporation or tax residence (subject to exceptions equivalent to those that apply to the obligation to pay
Additional Amounts pursuant to Section 10.04 or the Guarantee,
as the case may be, in respect of taxes imposed by the laws of the Kingdom of Spain) on payments of interest or principal made
on or subsequent to the date of such assumption. Additional Amounts with respect to payments of interest or principal due prior
to the date of such assumption will be payable only in respect of taxes imposed by the Kingdom of Spain. The Guarantor or the
wholly-owned subsidiary thereof that assumes the obligations of the Company in such cases will also be entitled to redeem the
Securities in the circumstances described in Section 11.08
with respect to any change or amendment to, or change in the application or official interpretation of the laws or regulations
of such jurisdiction, which change or amendment must occur subsequent to the date of any such assumption if the assuming entity
is not incorporated or tax resident in the Kingdom of Spain. In the event of any such assumption, all obligations of the Company
under the Securities shall immediately be discharged.
Article
9
Supplemental Indentures
Section 9.01.
Supplemental Indentures without Consent of Holders. Without the consent of any Holders, the Company and the Guarantor,
when authorized by a Board Resolution of the Company and Guarantor, as the case may be, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following
purposes:
(a)
to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor
of the covenants of the Company or the Guarantor herein and in the Subordinated Debt Securities;
(b)
to add to the covenants of the Company or the Guarantor for the benefit of the Holders of all or any series of Subordinated
Debt Securities (and, if such covenants are to be for the benefit of fewer than all series of Subordinated Debt Securities, stating
that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein
conferred upon the Company or the Guarantor;
(c)
to add any additional Events of Default;
(d)
to change or eliminate any of the provisions of the Subordinated Debt Securities Indenture, or any supplemental indenture,
provided that any such change or elimination shall become effective only when there is no outstanding Subordinated Debt Security
of any series created prior to the execution of such supplemental indenture that is entitled to the benefit of such provision
or as to which such supplemental indenture would apply;
(e)
to secure the Subordinated Debt Securities;
(f)
to establish the form or terms of Subordinated Debt Securities of any series as permitted by Section 2.01 or
3.01;
(g)
to change any Place of Payment, so long as the Place of Payment as required by Section 3.01 is maintained in
The City of New York;
(h)
to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other
provision herein or in any supplemental indenture;
(i)
to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Subordinated
Debt Securities of one or more series and to add to or change any of the provisions of this Subordinated Debt Securities Indenture
as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 6.12(b);
(j)
to change or eliminate any provision of this Subordinated Debt Securities Indenture as permitted by Section
1.08;
(k)
to name a Trustee for a particular series of Subordinated Debt Securities other than the Trustee named in the first paragraph
of this Subordinated Debt Securities Indenture and to provide for the appropriate changes related to such appointment for a particular
series of Subordinated Debt Securities; or
(l)
with respect to any Subordinated Debt Security (including a Global Security) issued on or after the date hereof, to amend
any such Subordinated Debt Security to conform to the description of the terms of such Subordinated Debt Security in the prospectus,
prospectus supplement, product supplement, pricing supplement or any other similar offering document related to the offering of
such Subordinated Debt Security.
Section 9.02.
Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Subordinated Debt Securities of each series affected by such supplemental Subordinated
Debt Securities Indenture (voting as a class), by Act of said Holders delivered to the Company, the Guarantor and the Trustee,
the Company and the Guarantor, when authorized by a Board Resolution and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions
of this Subordinated Debt Securities Indenture or of modifying in any manner the rights of the Holders of Subordinated Debt Securities
of such series under this Subordinated Debt Securities Indenture; provided, however, that no such supplemental indenture may,
without the consent of the Holder of each Outstanding Subordinated Debt Security affected thereby,
(a)
change the Stated Maturity, if any, of any principal amount or any interest amounts in respect of any such Subordinated
Debt Security, reduce the principal amount thereof or the rate of interest and Additional Amounts, if any, thereon, or any premium
payable upon the redemption thereof, or reduce the amount of principal of an Original Issue Discount Security that would be due
and payable upon an acceleration of the Maturity thereof pursuant to Section 5.02, or change the obligation of the
Company (or its successor) to pay Additional Amounts pursuant to Section 10.04 (except as contemplated by Section
8.01(a) and permitted by Section 9.01(a)) on the Subordinated Debt Securities, or the currency of payment of the principal
amount of, premium, if any, or interest on, any such Subordinated Debt Security, or change the Place of Payment, or impair the
right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof or the date any such payment
is otherwise due and payable (or, in the case of redemption, on or after the Redemption Date); or
(b)
reduce the percentage in aggregate principal amount of the Outstanding Subordinated Debt Securities of any series, the
consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Subordinated Debt Securities Indenture or of certain defaults hereunder
and their consequences) provided for in this Subordinated Debt Securities Indenture; or
(c) modify
the subordination provisions of Article 12 or Section 13.02; or
(d) modify any of the provisions of this Section 9.02
or Section 5.13 except to increase any such percentage or to provide that certain other provisions of this
Subordinated Debt Securities Indenture cannot be modified or waived without the consent of the Holder of each Outstanding
Subordinated Debt Security affected thereby; provided, however, that this clause shall not be deemed to require the consent
of any Holder with respect to changes in the references to the “Trustee” and concomitant changes in this
Section, or the deletion of this proviso, in accordance with the requirements of Sections 6.12(b) and 9.01(j); or
(e)
change in any manner adverse to the interests of the Holders of any Subordinated Debt Securities, the subordination provisions
of the Subordinated Debt Securities or the terms and conditions of the obligations of the Company or the Guarantor in respect
of the due and punctual payment of any amounts due and payable on the Subordinated Debt Securities.
It shall
not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
A supplemental
indenture which changes or eliminates any covenant or other provision of this Subordinated Debt Securities Indenture which has
expressly been included solely for the benefit of one or more particular series of Subordinated Debt Securities, or which modifies
the rights of the Holders of Subordinated Debt Securities of such series with respect to such covenant or other provision, shall
be deemed not to affect the rights under this Subordinated Debt Securities Indenture of the Holders of Subordinated Debt Securities
of any other series.
Section 9.03.
Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts created by this Subordinated Debt Securities Indenture,
the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Subordinated
Debt Securities Indenture and that such supplemental indenture constitutes a legal, valid and binding obligation of the Company
and Guarantor subject to customary exceptions. The Trustee may, but shall not be obliged to, enter into any such supplemental
indenture which affects the Trustee’s own rights, duties or immunities under this Subordinated Debt Securities Indenture
or otherwise.
Section 9.04.
Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Subordinated
Debt Securities Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this
Subordinated Debt Securities Indenture for all purposes; and every Holder of Subordinated Debt Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby, except as otherwise expressed therein.
Section 9.05.
Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform
to the requirements of the Trust Indenture Act as then in effect.
Section 9.06.
Reference in Subordinated Debt Securities to Supplemental Indentures. Subordinated Debt Securities of any series
authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture.
If the Company shall so determine, new Subordinated Debt Securities of any series so modified as to conform, in the opinion of
the Trustee, the Company and the Guarantor, to any such supplemental indenture may be prepared and executed by the Company, the
Guarantees endorsed thereon may be executed by the Guarantor and such Subordinated Debt Securities may be authenticated and delivered
by the Trustee in exchange for Outstanding Subordinated Debt Securities of such series.
Article
10
Covenants
Section
10.01. Payment of Principal, Premium,
and Interest. The Company covenants and agrees for the benefit of each series of Subordinated Debt Securities that it
will (subject to Section 3.07 and to the subordination provisions in Article 12 and Section 13.02) duly and punctually
pay to the Holders the principal of (and premium, if any) and interest, if any, and Additional Amounts on the
Subordinated Debt Securities of that series in accordance with the terms of the Subordinated Debt Securities and this
Subordinated Debt Securities Indenture. Except as otherwise specified, as contemplated by Section 3.01 hereof,
the Trustee shall act as Paying Agent with respect to any series of Subordinated Debt Securities.
Section 10.02.
Maintenance of Office or Agency. The Company and the Guarantor will maintain in each Place of Payment for any series
of Subordinated Debt Securities an office or agency where Subordinated Debt Securities of that series may be presented or surrendered
for payment, where Subordinated Debt Securities of that series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company or the Guarantor in respect of the Subordinated Debt Securities of that series
and this Subordinated Debt Securities Indenture may be served; provided, however, that at the option of the Company in the case
of definitive Subordinated Debt Securities of such series, payment of any interest thereon may be made by check mailed to the
address of the Person entitled herein as such address shall appear in the Subordinated Debt Security Register. With respect to
the Subordinated Debt Securities of any series, such office or agency in each Place of Payment shall be specified as contemplated
by Section 3.01, and if not so specified, initially shall be 225 Liberty Street, New York, New York, 10286. Unless
otherwise specified pursuant to Section 3.01, the Company and the Guarantor will maintain in the Borough of Manhattan,
The City of New York, an office or agency where notices and demands to or upon the Company or the Guarantor in respect of Subordinated
Debt Securities of any series and this Subordinated Debt Securities Indenture may be served. The Company and the
Guarantor
will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at
any time the Company and the Guarantor shall fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee. The Company and the Guarantor hereby appoints the Trustee as its agent to receive all presentations, surrenders,
notices and demands.
The Company
and the Guarantor may also from time to time designate one or more other offices or agencies (in or outside the Borough of Manhattan,
The City of New York) where the Subordinated Debt Securities of one or more series may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company and the Guarantor of any obligation to maintain an office or agency in each Place of Payment
(except as otherwise indicated in this Section) for Subordinated Debt Securities of any series for such purposes. The Company
and the Guarantor will give prompt written notice to the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
Section 10.03.
Money for Payments to be Held in Trust. If the Company or the Guarantor shall at any time act as Paying Agent with
respect to the Subordinated Debt Securities of any series, it will, on or before each due date for payment of the principal of
(and premium, if any) or interest, if any, if any, on any of the Subordinated Debt Securities of that series, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest,
if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its failure so to act.
Whenever
the Company and the Guarantor shall have one or more Paying Agents for any series of Subordinated Debt Securities, it will, prior
to each due date for payment of the principal of (and premium, if any) or interest, if any, on any Subordinated Debt Securities
of that series deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest, if any, so
becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company or the Guarantor will promptly notify the Trustee of its action or its failure
so to act. Unless otherwise specified as contemplated by Section
3.01, the Trustee shall be the Company’s and the Guarantor’s Paying Agent. The Company and the Guarantor will cause
each Paying Agent for any series of Subordinated Debt Securities other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(a)
hold all sums held by it for the payment of the principal of (and premium, if any) or interest, if any, on Subordinated
Debt Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b)
give the Trustee notice of any default by the Company (or the Guarantor or any other obligor upon the Subordinated Debt
Securities of that series) in the making of any payment, when due and payable, or principal of (and premium, if any) or interest,
if any, on Subordinated Debt Securities of that series; and
(c) at
any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company
may at the time, for the purpose of obtaining the satisfaction and discharge of this Subordinated Debt Securities Indenture or
for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company
or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee such Paying Agent shall be released from
all further liability with respect to such money.
Any money
deposited with the Trustee or any Paying Agent, or then held by the Company or the Guarantor, in trust for the payment of the
principal of (and premium, if any) or interest, if any, on any Subordinated Debt Security of any series and remaining unclaimed
for two years after such principal (and premium, if any) or interest, if any, have become due and payable shall be paid to the
Company or the Guarantor, as the case may be, on Company Request, or (if then held by the Company or the Guarantor) shall be discharged
from such trust; and the Holder of such Subordinated Debt Security shall thereafter, as an unsecured general creditor, look only
to the Company or the Guarantor for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company or the Guarantor as trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to
be published at least once, in an Authorized Newspaper, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining
will be paid to the Company or the Guarantor, as the case may be.
Section 10.04.
Additional Amounts. Unless otherwise specified pursuant to Section 3.01, all amounts payable (whether in respect
of principal, redemption amount, interest or otherwise) in respect of any series of Subordinated Debt Securities and the related
Guarantees will be made free and clear of and without withholding or deduction for or on account of any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the Kingdom of Spain or any
political subdivision thereof or any authority or agency therein or thereof having power to tax, unless the withholding or deduction
of such taxes, duties, assessments or governmental charges is required by law. In that event, the Company or the Guarantor, as
the case may be, shall pay such additional amounts (“Additional Amounts”) as will result in receipt by the Holders
of the Subordinated Debt Securities of the particular series of such amounts as would have been received by them had no such withholding
or deduction been required.
Neither the
Company nor the Guarantor shall be required to pay any Additional Amounts in respect of any series of Subordinated Debt Securities:
(i) to,
or to a third party on behalf of, a Holder if the Holder or the beneficial owner of Subordinated Debt Securities is liable
for such taxes, duties, assessments or governmental charges in respect of such Subordinated Debt Securities by reason of his
having some connection with Spain other than the mere holding of a Subordinated Debt Security; or
(ii) to,
or to a third party on behalf of, a Holder in respect of whose series of Subordinated Debt Securities the Company or the
Guarantor does not receive such information as may be required in order to comply with the applicable Spanish tax reporting
obligations, including but not limited to the receipt in a timely manner of a duly executed and completed certificate in
accordance with Law 10/2014 and Royal Decree 1065/2007, as amended, and any implementing legislation or regulation;
or
(iii)
to, or to a third party on behalf of, a Holder of Subordinated Debt Securities of any series if the Holder or beneficial
owner failed to make any necessary claim or to comply with any certification, identification or
other requirements concerning the nationality, residence, identity or connection with the taxing jurisdiction of such Holder or
beneficial owner, if such claim or compliance is required by statute, treaty, regulation or administrative practice of Spain as
a condition to relief or exemption from such taxes;
(iv)
presented for payment (where presentation is required) more than 30 days after the Relevant Date, except to the extent
that the relevant Holder would have been entitled to such Additional Amounts on presenting the same for payment on the expiry
of such period of 30 days; or
(v)
where the withholding or deduction is imposed pursuant to European Council Directive 2003/48/EC or any Directive amending,
supplementing or replacing such Directive or any law implementing or complying with, or introduced in order to conform to, such
Directive; or
(vi)
presented for payment (where presentation is required) by or on behalf of a Holder who would have been able to avoid such
withholding or deduction by presenting the relevant Subordinated Debt Security to another paying agent in a Member State of the
European Union; or
(vii)
to, or to a third party on behalf of, individuals resident for tax purposes in the Kingdom of Spain; or
(viii)
to, or to a third party on behalf of, a Spanish-resident legal entity subject to Spanish corporation tax if the Spanish
tax authorities determine that the Subordinated Debt Securities of such series do not comply with exemption requirements specified
in the Reply to a Consultation of the Directorate General
for
Taxation (Dirección General de Tributos) dated 27 July 2004 and require a withholding to be made; or
(ix)
where the withholding or deduction is required pursuant to an agreement described in Section 1471(b) of the Code or otherwise
imposed pursuant to Sections 1471 through 1474 of the Code (“FATCA”), any regulations or agreements thereunder, any
official interpretations thereof, any intergovernmental agreements with respect thereto (including the intergovernmental agreement
between the United States and Spain on the implementation of FATCA), or any law implementing an intergovernmental agreement or
any regulations or official interpretations relating thereto; or
(x)
in the case of any combination of items listed in (i) through (ix) above.
Additional
Amounts will also not be paid with respect to any payment to a Holder who is a fiduciary, a partnership, a limited liability company
or person other than the sole beneficial owner of that payment, to the extent that payment would be required by the laws of Spain
(or any political subdivision thereof) to be included in the income, for tax purposes, of a beneficiary or settlor with respect
to the fiduciary, a member of that partnership, an interest holder in that limited liability company or a beneficial owner who
would not have been entitled to the Additional Amounts had it been the Holder.
For the purposes
of (iv) above, the “Relevant Date” means, in respect of any payment, the date on which such payment first becomes
due and payable, but if the full amount of the moneys payable has not been received by the Trustee on or prior to such due date,
it means the first date on which, the full amount of such moneys having been so received and being available for payment to Holders
of Subordinated Debt Securities, notice to that effect shall have been duly given to the Holders of the relevant series of Subordinated
Debt Securities in accordance with Section 1.06.
Unless the
context otherwise requires, any reference in this Section 10.04 to “principal” shall include any premium payable,
or Redemption Amount and any other amounts in the nature of principal payable pursuant to the Subordinated Debt Securities Indenture
and “interest” shall include all amounts payable pursuant to Section 3.07 and any other amounts in the nature of interest
payable under the Subordinated Debt Securities Indenture.
As used in
this Section 10.04, the term “Redemption Amount”
means, as appropriate, the Maturity Redemption Amount, Early Redemption Amount (Tax), Early Redemption Amount (Capital Disqualification
Event), Early Redemption Amount (Call) and Early Termination Amount or such other amount in the
nature of a redemption amount as may be specified in, or determined in accordance with the Section 3.01.
Unless the
context requires otherwise, any references in this Subordinated Debt Securities Indenture to payment of principal of or interest
on a Subordinated Debt
Security
shall be deemed to include any Additional Amounts payable with respect thereto.
In the event
that any withholding or deduction for or on account of any taxes is required, at least 10 days prior to each date of payment of
principal of or interest on the relevant series of Subordinated Debt Securities, or, if later, promptly after the obligation to
withhold or deduct becomes known to the Company, the Company will furnish to the Trustee and the Paying Agent, if other than the
Trustee, an Officer’s Certificate specifying the amount required to be withheld or deducted on such payments to such Holders,
certifying that the Company shall pay such amounts required to be withheld to the appropriate taxing jurisdiction and certifying
to the fact that the Additional Amounts will be payable and the amounts so payable to each Holder, and that the Company will pay
to the Trustee or the Paying Agent the Additional Amounts required to be paid; provided that no such Officer’s Certificate
will be required prior to any date of payment of principal of or interest on such Subordinated Debt Securities if there has been
no change with respect to the matters set forth in a prior Officer’s Certificate. The Trustee and Paying Agent may rely
on the fact that any Officer’s Certificate contemplated by this paragraph has not been furnished as evidence of the fact
that no withholding or deduction for or on account of any taxes is required. The Company covenants to indemnify the Trustee and
Paying Agent for and to hold them harmless against any loss, liability or expense reasonably incurred without negligence or bad
faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any such Officer’s
Certificate furnished pursuant to this paragraph or on the fact that any Officer’s Certificate contemplated by this paragraph
has not been furnished.
Section 10.05.
Corporate Existence. Subject to Article 8,
each of the Company and the Guarantor will do or cause to be done all things necessary to preserve and keep in full force and
effect its respective corporate existence, provided, however, that the foregoing shall not obligate the Company or the
Guarantor to preserve any such right or franchise if the Company or the Guarantor shall determine that the preservation thereof
is no longer desirable in the conduct of its business and that the loss thereof is not disadvantageous in any material respect
to any Holder.
Section 10.06.
Statement as to Compliance. The Company and the Guarantor will deliver to the Trustee, within 120 days after the
end of each fiscal year, a certificate in compliance with Section 314(a)(4) of the Trust Indenture Act.
Section 10.07.
Original Issue Document. The Company shall provide to the Trustee on a timely basis such information, if any, as
the Trustee requires to enable the Trustee to prepare and file any form required to be submitted by the Company with the Internal
Revenue Service and the Holders of the Subordinated Debt Securities relating to any original issue discount, including, without
limitation, Form 8821, Form 1099-OID or any successor forms.
Article
11
Redemption of Subordinated Debt Securities
Section 11.01.
Applicability of Article. Subordinated Debt Securities of any series shall be redeemable in accordance with their
terms and (except as otherwise specified pursuant to Section
3.01 for Subordinated Debt Securities of any series) in accordance with this Article
11. Subordinated Debt Securities of any series may not be redeemed except in accordance with provisions of applicable law. The Subordinated Debt Securities of any series may not be redeemed in whole or in part at the option of the Holder thereof.
Section 11.02.
Election to Redeem; Notice to Trustee. The election of the Company to redeem any Subordinated Debt Securities shall
be evidenced by a Board Resolution. Unless otherwise provided as contemplated by Section
3.01 with respect to any series of Subordinated Debt Securities, the Company shall, at least 30 days prior, but
not nor more than 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to
the Trustee), notify the Trustee of such Redemption Date, of the principal amount of Subordinated Debt Securities of such series
to be redeemed and, if applicable, the tenor of the Subordinated Debt Securities to be redeemed. In the case of any redemption
of Subordinated Debt Securities of any series prior to the expiration of any provision restricting such redemption provided in
the terms of such Subordinated Debt Securities or elsewhere in this Subordinated Debt Securities Indenture, the Company shall
furnish the Trustee with respect to such Subordinated Debt Securities with an Officer’s Certificate evidencing compliance
with or waiver of such provision.
Section 11.03.
Selection by Trustee of Subordinated Debt Securities to Be Redeemed. Unless otherwise provided as contemplated by
Section 3.01 with respect to any series of Subordinated Debt
Securities, if fewer than all the Subordinated Debt Securities of any series are to be redeemed, the particular Subordinated Debt
Securities to be redeemed shall be selected not less than 30 days nor more than 60 days prior to the Redemption Date by the Trustee,
from the Outstanding Subordinated Debt Securities of such series not previously called for redemption, pro rata, by lot or by
such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions
(equal to the minimum authorized denomination for Subordinated Debt Securities of that series or any multiple thereof) of the
principal amount of Subordinated Debt Securities of such series of a denomination larger than the minimum authorized denomination
for Subordinated Debt Securities of that series.
The Trustee
shall promptly notify the Company in writing of the Subordinated Debt Securities selected for redemption and, in the case of any
Subordinated Debt Securities selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes
of this Subordinated Debt Securities Indenture, unless the context otherwise requires, all provisions relating to the redemption
of Subordinated Debt
Securities
shall relate in the case of any Subordinated Debt Securities redeemed or to be redeemed only in part, to the portion of the principal
amount of such Subordinated Debt Security which has been or is to be redeemed.
Section 11.04.
Notice of Redemption. Unless otherwise provided as contemplated by Section 3.01 with respect to any series of Subordinated
Debt Securities, notice of redemption shall be given not less than 30 days nor more than 60 days prior to the
Redemption Date to each Holder of Subordinated Debt Securities to be redeemed in the manner and to the extent provided in Section
1.06.
All notices
of redemption shall state:
(a)
the series of Subordinated Debt Securities subject to redemption;
(b)
the Redemption Date;
(c)
the Redemption Price,
(d)
if fewer than all the Outstanding Subordinated Debt Securities of any series are to be redeemed, the principal amount of
the Subordinated Debt Securities to be redeemed, (except in the case of a redemption pursuant to Section 11.08 or 11.09, which
must be a redemption in full)
(e)
that on the Redemption Date the Redemption Price together with any accrued but unpaid interest will become due and payable
upon each such Subordinated Debt Security to be redeemed and, if applicable, that interest thereon will cease to accrue on or
after the said date,
(f)
the place or places where such Subordinated Debt Securities are to be surrendered for payment of the Redemption Price,
and
(g)
the CUSIP, Common Code and/or ISIN number or numbers, if any, with respect to such Subordinated Debt Securities.
Any notice
provided pursuant to this Section 11.04 shall be irrevocable, and the delivery thereof shall oblige the Company to make the redemption
therein specified (unless the Spanish Bail-in Power is exercised by the relevant resolution authority before the occurrence of
such redemption).
Notice of
redemption of Subordinated Debt Securities to be redeemed at the selection of the Company shall be given by the Company or, at
the Company’s request, by the Trustee in the name and at the expense of the Company, and the Company shall deliver an Officer’s
Certificate requesting that the Trustee give such and setting forth the information to be stated in such notice no less than 10
Business Days prior to the date of the notice to Holders of Subordinated Debt Securities (unless a shorter notice shall be satisfactory
to the Trustee).
Section 11.05.
Deposit of Redemption Price. On or prior to any Redemption Date, the Company or the Guarantor shall deposit with
the Trustee or with a Paying Agent (or, if the Company or the Guarantor is acting as Paying Agent, segregate and hold in trust
as provided in Section 10.03) an amount of money sufficient
to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment
Date)
accrued but unpaid interest on, all the Subordinated Debt Securities which are to be redeemed on that date.
Section 11.06.
Subordinated Debt Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the
Subordinated Debt Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest,
if any) such Subordinated Debt Securities shall cease to accrue interest. Upon surrender of any such Subordinated Debt Security
for redemption in accordance with said notice, such Subordinated Debt Security shall be paid by the Company or the Guarantor at
the Redemption Price, together with accrued but unpaid interest to the Redemption Date; provided, however, that with respect to
any Subordinated Debt Securities, unless otherwise specified as contemplated by Section
3.01, a payment of interest which is payable on an Interest Payment Date which is the Redemption Date, shall be payable to the
Holders of such Subordinated Debt Securities, or one or more Predecessor Securities, registered as such at the close of business
on the relevant Regular or Special Record Date according to the terms of the Subordinated Debt Securities and the provisions of
Section 3.07. Subordinated Debt Securities in definitive
form shall be presented for redemption to the Paying Agent.
If any Subordinated
Debt Security called for redemption shall not be so paid upon surrender thereof for redemption, the Subordinated Debt Security
shall, until paid, continue to accrue interest from and after the Redemption Date in accordance with its terms and the provisions
of Section 3.07.
Section 11.07.
Subordinated Debt Securities Redeemed in Part. Any Subordinated Debt Security which is to be redeemed only in part
shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Company shall execute, the Guarantor shall endorse the Guarantee on, and the Trustee
shall authenticate and deliver to the Holder of such Subordinated Debt Security without service charge, a new Subordinated Debt
Security or Subordinated Debt Securities of the same series of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the principal of the Subordinated Debt Security so surrendered.
If a Global Security is surrendered, the new Subordinated Debt Security will also be a Global Security.
Section 11.08.
Optional Redemption Due to Changes in Tax Treatment. Unless otherwise provided as contemplated by Section
3.01 with respect to any series of Subordinated Debt Securities, if, in relation to the Subordinated Debt Securities of any series,
(i) as a result of any change in the laws or regulations of Spain or of any political subdivision thereof or any authority or
agency therein or thereof having power to tax or in the interpretation or administration of any such laws or regulations which
becomes effective on or after the date of issue of the first issued Subordinated Debt Securities of
such
series or any earlier date specified pursuant to Section 3.01, the Company or the Guarantor shall determine that (a)
the Company or the Guarantor, as the case may be, would be required to pay Additional Amounts pursuant to Section 10.04 or
(b) the Company would not be entitled to claim a deduction in computing tax liabilities in Spain in respect of any interest
to be paid on the next interest payment date on such series of Subordinated Debt Securities or the value of such deduction to
the Company would be materially reduced or (c) the applicable tax treatment of the Subordinated Debt Securities of such
series changes and (ii) such circumstances are evidenced by the delivery by the Company or the Guarantor, as the case may be,
to the trustee of a certificate signed by two directors of the Company or the Guarantor, as the case may be, stating that
such circumstances prevail and describing the facts leading thereto, an opinion of independent legal advisers of
recognized standing to the effect that such circumstances prevail and a copy of the Regulator’s consent to the
redemption, the Company may, at its option and having given no less than 30 nor more than 60 days’ notice (ending, in
the case of Subordinated Debt Securities which bear interest at a floating rate, on a day upon which interest is payable) to
the Holders of the Subordinated Debt Securities of such series in accordance with Section 11.04 (which notice shall be
irrevocable), redeem in whole, but not in part, the outstanding Subordinated Debt Securities of such series (in accordance
with the requirements of Applicable Banking Regulations in force at the relevant time) at their early tax redemption amount
(the “Early Redemption Amount (Tax)”) (which shall be their principal amount or at such other Early Redemption
Amount (Tax) as may be specified in or determined pursuant to Section 3.01), together with accrued interest (if any)
thereon; provided, however, that (i) in the case of (a) above, no such notice of redemption may be given earlier than 90 days
(or, in the case of Subordinated Debt Securities which bear interest at a floating rate a number of days which is equal to
the aggregate of the number of days falling within the then current interest period applicable to the Subordinated Debt
Securities of such series plus 60 days) prior to the earliest date on which the Company or the Guarantor, as the case may be,
would be obliged to pay such Additional Amounts were a payment in respect of the Subordinated Debt Securities of such series
then due and (ii) redemption for taxation reasons pursuant to this Section 11.08 may only take place in accordance
with Applicable Banking Regulations in force at the relevant time and is subject to the prior consent of the Regulator
with respect to the Subordinated Debt Securities of such series.
Section 11.09.
Optional Redemption For Capital Disqualification Event. Unless otherwise provided as contemplated by Section
3.01 with respect to any series of Subordinated Debt Securities, if, in relation to the Subordinated Debt Securities of any series,
(i) there is a change in Spanish law, Applicable Banking Regulations or any change in the application or official interpretation
thereof that the Company or the Guarantor determines results or is likely to result in the entire outstanding aggregate principal
amount of Subordinated Debt Securities of such series ceasing to be included in, or counting towards, the Guarantor’s and/or
the Group’s Tier 2 Capital and (ii) such circumstances are evidenced by the delivery by the Company or the Guarantor, as
the case may be, to the trustee of a certificate signed by two directors of the Guarantor stating that the said circumstances
prevail and describing the facts leading thereto and a copy of the Regulator’s consent to the redemption, the Company may,
at its option and having given no less than 30 nor more than 60 days’ notice (ending, in the case of Subordinated
Debt
Securities which bear interest at a floating rate, on a day upon which interest is payable) to the holders of the
subordinated debt securities of such series in accordance with Section 11.04 (which notice shall be irrevocable), redeem in
whole but not in part the outstanding Subordinated Debt Securities of such series in accordance with the requirements
of Applicable Banking Regulations in force at the relevant time) at their early capital disqualification event redemption
amount (the “Early Redemption Amount (Capital Disqualification Event)”) (which shall be their principal amount or
at such other Early Redemption Amount (Capital Disqualification Event) except as may be specified in or determined
pursuant to Section 3.01), together with accrued interest (if any) thereon; provided, however, that the Regulator consents
to redemption of the Subordinated Debt Securities of such series.
Redemption
for regulatory reasons is subject to the prior consent of the Regulator and may only take place in accordance with Applicable
Banking Regulations in force at the relevant time.
Section 11.10.
Optional Early Redemption (Call). Unless otherwise provided as contemplated by Section
3.01 with respect to any series of Subordinated Debt Securities, the Company may, upon the expiration of the appropriate notice
pursuant to Section 11.04, and subject, to the prior consent of the Regulator, redeem in whole (but not, except as otherwise specified
pursuant to Section 3.01, in part) the Subordinated Debt Securities of such series at their call early redemption amount (the
“Early Redemption Amount (Call)”) (which shall be their principal amount or such other Early Redemption Amount (Call)
as may be specified in or determined pursuant to Section 3.01), together with accrued interest (if any) thereon.
Redemption
at the option of the Company pursuant to this Section 11.10 is subject to the prior consent of the Regulator and may only take
place in accordance with Applicable Banking Regulations in force at the relevant time.
If the Subordinated
Debt Securities of any series are to be redeemed in part only on any date in accordance with this Section
11.10, the Subordinated Debt Securities of such series shall be redeemed (so far as may be practicable) pro rata to their principal
amounts, or by lot or such other method as the Trustee deems fair and appropriate, subject always as aforesaid and provided always
that the amount redeemed in respect of the Subordinated Debt Securities of such series shall be equal to the minimum authorized
denomination thereof or an integral multiple thereof, subject always to compliance with all applicable laws and the requirements
of any clearing system on which the Subordinated Debt Securities of any such series may be cleared and of any listing authority,
stock exchange and/or quotation system on which the Subordinated Debt Securities of such series may be listed and/or quoted.
Section 11.11.
Repurchase of Subordinated Debt Securities. Unless otherwise provided as contemplated by Section
3.01 with respect to the any series of Subordinated Debt Securities, the Company, Guarantor and any of their respective subsidiaries
or any third party designated by any of them, may, in accordance with Applicable Banking Regulations, at any time repurchase Subordinated
Debt Securities of any series in the open market or otherwise and at any price.
Article
12
Subordination of Subordinated Debt Securities
Section 12.01.
Subordinated Debt Securities Subordinate to Claims of Senior Creditors. The Company, for itself, its successors
and assigns, covenants and agrees, and each Holder of the Subordinated Debt Securities of any series by his acceptance thereof,
likewise covenants and agrees, that the Subordinated Debt Securities of such series constitute direct, unconditional, subordinated
and unsecured obligations of the Company and, upon the insolvency of the Company (and unless they qualify as more subordinated
claims pursuant to the Spanish Insolvency Law or equivalent legal provisions which
replace
them in the future, and subject to any applicable legal and statutory exceptions) rank, under Article 92.2 of the Spanish Insolvency
Law (or equivalent legal provisions which replace, substitute or amend it in the future) pari passu without preference
or priority among themselves and:
(i)
senior to (1) those contractually subordinated obligations of principal related to instruments qualifying as Tier 1 Capital
of the Guarantor, (2) those subordinated obligations which qualify as subordinated claims pursuant to Articles 92.3 to 92.7 of
the Spanish Insolvency Law or equivalent legal provisions which replace them in the future and (3) any other subordinated obligations
which by law or their terms, and to the extent permitted by Spanish law, rank junior to the subordinated debt securities of such
series;
(ii)
pari passu with all of the Company’s other contractually subordinated obligations of principal related to
instruments qualifying as Tier 2 Capital of the Guarantor; and
(iii) junior to any non-subordinated obligations of the Company, any Senior Subordinated Obligations and any claim on the Company
that becomes subordinated as a consequence of article 92.1º of the Spanish Insolvency Law.
The provisions
of this Article 12 shall apply only to rights or claims payable
under any Subordinated Debt Securities of any series and nothing herein shall affect or prejudice the payment of the costs, charges,
expenses, liabilities, indemnity or remuneration of the Trustee, the first lien rights of the Trustee under Section
6.08 hereof, or the rights and remedies of the Trustee in respect thereof.
The Company
agrees with respect to any series of Subordinated Debt Securities and each Holder of Subordinated Debt Securities of any series,
by his or her acquisition of a Subordinated Debt Security will be deemed to have agreed to the subordination as described in this
Section 12.01. Each such Holder will be deemed to have irrevocably waived his or her rights of priority which would otherwise
be accorded to him or her under the laws of Spain, to the extent necessary to effectuate the subordination provisions of the Subordinated
Debt Security. In addition, each holder of Subordinated Debt Securities of any series by his or her acquisition of such Subordinated
Debt Securities authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate
to effectuate the subordination of the such Subordinated Debt Securities as provided in this Subordinated Debt Securities Indenture
and appoints the Trustee his attorney-in-fact for any and all such purposes.
Section 12.02.
Status of the Subordinated Debt Securities. The Subordinated Debt Securities of any series constitute direct, unconditional,
subordinated and unsecured obligations of the Company.
Section 12.03.
Provisions Solely to Define Relative Rights. The provisions of this Article
12 are and are intended solely for the purpose of defining the relative rights of the Holders of the Subordinated Debt Securities
of each series on the one hand and the
Senior
Creditors on the other hand. Nothing contained in this Article or elsewhere in this Subordinated Debt Securities Indenture or
in such Subordinated Debt Securities is intended to or shall (a) impair, as among the Company and the Holders of the Subordinated
Debt Securities, the obligation of the Company or the Guarantor, which is absolute and unconditional, to pay to the holders of
such claims the principal of, premium, if any, and interest, if any, on such Subordinated Debt Securities as and when the same
shall become due and payable in accordance with their terms and the terms of the subordinated guarantee and this Subordinated
Debt Securities Indenture; or (b) affect the relative rights against the Company or the Guarantor of the Holders of such Subordinated
Debt Securities; or (c) prevent the Trustee or the Holder of any Subordinated Debt Securities of the series from exercising all
remedies otherwise permitted by applicable law upon default under this Subordinated Debt Securities Indenture, subject to the
rights, if any, under this Article of the Senior Creditors to receive cash, property or securities otherwise payable or deliverable
to the Trustee or such holder.
Section 12.04.
Trustee to Effectuate Subordination. Each Holder of a Subordinated Debt Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination of
the Subordinated Debt Securities provided in this Article 12 and appoints the Trustee his attorney-in-fact for any and all such
purposes.
Section 12.05.
Trustee Not Fiduciary for Senior Creditors. With respect to the Senior Creditors, the Trustee undertakes to perform
or to observe only such of its covenants and obligations as are specifically set forth in this Subordinated Debt Indenture, and
no implied covenants or obligations with respect to the Senior Creditors shall be read into this Subordinated Debt Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the Senior Creditors and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Holders of Subordinated Debt Securities of the series or to the
Company or to any other Person cash, property or securities to which any Senior Creditors shall be entitled by virtue of this
Article or otherwise.
Section 12.06.
Rights of Trustee as Senior Creditor; Preservation of Trustee’s Rights. The Trustee in its individual capacity
shall be entitled to all the rights set forth in this Article with respect to any claims of Senior Creditors which may at any
time be held by it, to the same extent as any other Senior Creditor, and nothing in this Subordinated Debt Securities Indenture
or the Trust Indenture Act shall deprive the Trustee of any of its rights as such holder.
Nothing in
this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 5.06 and Section
6.08.
Section 12.07.
Article Applicable to Paying Agents. At all times when a Paying Agent other than the Trustee shall have been appointed
by the Company or the Guarantor and be then acting hereunder, the term “Trustee” as used in this Article shall
in such case (unless the context otherwise requires) be construed as extending to and including such
Paying
Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition
to or in place of the Trustee; provided, however, that Section
12.06 shall not apply to the Company, the Guarantor or any Affiliate of the Company or the Guarantor if the Company or the Guarantor
or such Affiliate acts as Paying Agent.
Article
13
Guarantee
Section 13.01.
The Guarantee. The Guarantor hereby unconditionally guarantees to each Holder of a Subordinated Debt Security the
due and punctual payment of the principal of, any premium and interest on, and any Additional Amounts with respect to such Subordinated
Debt Security and the due and punctual payment of the sinking fund payments (if any) provided for pursuant to the terms of such
Subordinated Debt Security and any and all amounts due under this Subordinated Debt Securities Indenture, including as may be
modified pursuant to exercise of the Bail-in Power under Article 14 of the Subordinated Debt Securities Indenture, and as and
when the same shall become due and payable, whether at maturity, by acceleration, redemption, repayment or otherwise, in accordance
with the terms of such Subordinated Debt Security and of this Subordinated Debt Securities Indenture. In case of the failure of
the Company to punctually pay any such principal, premium, interest, Additional Amounts or sinking fund payment and any and all
amounts due and owing under this Subordinated Debt Securities Indenture (including, but not limited to, the fees, expenses and
indemnities of the Trustee), the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same
shall become due and payable, whether at maturity, upon acceleration, redemption, repayment or otherwise, and as if such payment
were made by the Company.
Section 13.02.
Subordination of the Guarantee. The Company, for itself, its successors and assigns, covenants and agrees, and each
Holder of Securities by his acceptance thereof, likewise covenants and agrees, that the obligations of the Guarantor with respect
to any series of subordinated debt securities constitute direct, unconditional, subordinated and unsecured obligations of the
Guarantor which, upon the insolvency of the Guarantor (and unless they qualify as more subordinated claims pursuant to the Spanish
Insolvency Law or equivalent legal provision which replace them in the future, and subject to any applicable legal and statutory
exceptions) shall rank, under Article 92.2 of the Spanish Insolvency Law (or equivalent legal provisions which replace, substitute
or amend it in the future),
(i) senior
to (1) contractually subordinated obligations of principal related to instruments qualifying as Tier 1 Capital of the
Guarantor, (2) those subordinated obligations which qualify as subordinated claims pursuant to Articles 92.3 to 92.7 of
the Spanish Insolvency Law or equivalent legal provisions which replace them in the future and (3) any other subordinated obligations which by law or their
terms, and to the extent permitted by Spanish law, rank junior to the Guarantor’s obligations under the subordinated
guarantees;
(ii)
pari passu with all other contractually subordinated obligations of principal related to instruments qualifying
as Tier 2 Capital of the Guarantor and any other subordinated obligations which by law and/or their terms, and to the extent permitted
by Spanish law, rank pari passu with the Guarantor’s obligations under the subordinated guarantee; and
(iii)
junior to any non-subordinated obligations of the Guarantor, any other subordinated obligations which by law and/or their
terms, and to the extent permitted by Spanish law, rank senior to the Guarantor’s obligations under the subordinated guarantees
(including contractually subordinated obligations of principal related to instruments not qualifying as Tier 2 Capital or Tier
1 Capital of the Guarantor), and any claim on the Guarantor that becomes subordinated as a consequence of article 92.1º
of the Spanish Insolvency Law.
The Guarantor
agrees with respect to any series of Subordinated Debt Securities and each holder of Subordinated Debt Securities of any series,
by his or her acceptance of a Guarantee will be deemed to have agreed to the subordination of the Guarantee pursuant to this Section
13.02. Each such Holder will be deemed to have irrevocably waived his or her rights of priority which would otherwise be accorded
to him or her under the laws of Spain, to the extent necessary to effectuate the subordination provisions of the Guarantee. In
addition, each holder of Subordinated Debt Securities of any series by his or her acceptance thereof authorizes and directs the
Trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the Guarantee
as provided in this Section 13.02 and appoints the Trustee his attorney-in-fact for any and all such purposes.
Section 13.03.
Guarantee Unconditional, Etc. The obligations of the Guarantor under the Guarantee constitute direct, unconditional,
subordinated and unsecured obligations of the Guarantor.
The Guarantor
hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute, irrevocable
and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Subordinated
Debt Security or this Subordinated Debt Securities Indenture, any failure to enforce the provisions of any Subordinated Debt Security
or this Subordinated Debt Securities Indenture, or any waiver, modification, consent or indulgence granted with respect thereto
by the Holder of such Subordinated Debt Security or the Trustee, the recovery of any judgment against the Company or any action
to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor.
The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency
or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any
such Subordinated Debt Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee
will not be discharged except by payment in full of the principal of, any premium and interest on, and any additional amounts
and sinking fund payments required with respect to, the Subordinated Debt Securities and the complete performance of all other
obligations
contained
in the Subordinated Debt Securities. The Guarantor further agrees, to the fullest extent that it lawfully may do so, that, as
between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, the maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 5.02 hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or prohibition extant under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction preventing such
acceleration in respect of the obligations guaranteed hereby.
Section 13.04.
Reinstatement. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time
payment on any Subordinated Debt Security, in whole or in part, is rescinded or must otherwise be restored to the Company or the
Guarantor upon the bankruptcy, liquidation or reorganization of the Company or otherwise.
Section 13.05.
Subrogation. The Guarantor shall be subrogated to all rights of the Holder of any Subordinated Debt Security against
the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided,
however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right
of subrogation until the principal of, any premium and interest on, and any additional amounts and sinking fund payments required
with respect to, all Subordinated Debt Securities shall have been paid in full.
Section 13.06.
Assumption By Guarantor. (a) The Guarantor may, without the consent of the Holders, assume all of the rights and
obligations of the Company hereunder with respect to a series of Subordinated Debt Securities and under the Subordinated Debt
Securities of such series if, after giving effect to such assumption, no Event of Default or event which with the giving of notice
or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing. Upon such an assumption, the
Guarantor shall execute a supplemental indenture evidencing its assumption of all such rights and obligations of the Company and
the Company shall be released from its liabilities hereunder and under such Subordinated Debt Securities as obligor on the Subordinated
Debt Securities of such Series.
(b)
The Guarantor shall assume all of the rights and obligations of the Company hereunder with respect to a series of Subordinated
Debt Securities and under the Subordinated Debt Securities of such series if, upon a default by the Company in the due and punctual
payment of the principal, sinking fund payment, if any, premium, if any, or interest on such Subordinated Debt Securities, the
Guarantor is prevented by any court order or judicial proceeding from fulfilling its obligations under Section 13.01
with respect to such series of Subordinated Debt Securities. Such assumption shall result in the Subordinated Debt Securities
of such series becoming the direct obligations of the Guarantor and shall be effected without the consent of the Holders of the
Subordinated Debt Securities of any series. Upon such an assumption, the Guarantor shall execute a supplemental indenture evidencing
its assumption of all such rights and obligations of the Company, and the Company shall be released from its liabilities hereunder
and under
such
Subordinated Debt Securities as obligor on the Subordinated Debt Securities of such series.
Article
14
Spanish Bail-in and Resolution Actions
Section
14.01. Agreement and Acknowledgement with Respect to
the Exercise of the Spanish Bail-in Power. (a) Notwithstanding any other term of the Subordinated Debt Securities of
any series or any other agreements, arrangements, or understandings between the Company and any Holder of the Subordinated
Debt Securities of any series, by its acquisition of the Subordinated Debt Securities of any series, each Holder (which, for
the purposes of this clause, includes each Holder of a beneficial interest in the Subordinated Debt Securities of any
series) acknowledges, accepts, consents to and agrees to be bound by:
(i)
the effect of the exercise of the Spanish Bail-in Power by the relevant resolution authority which exercise may include
and result in any of the following, or some combination thereof:
(A)
the reduction of all, or a portion, of the Amounts Due on the Subordinated Debt Securities of such series;
(B) the
conversion of all, or a portion, of the Amounts Due on the Subordinated Debt Securities of such series into ordinary shares,
other securities or other obligations of the Company or the Guarantor or another person (and the issue to or conferral on the
Holder of the Subordinated Debt Securities of such series of such shares, securities or obligations), including by means of
an amendment, modification or variation of the terms of the Subordinated Debt Securities of such series;
(C)
the cancellation of the Subordinated Debt Securities of such series;
(D)
the amendment or alteration of the maturity of the Subordinated Debt Securities of such series or amendment of the amount
of interest payable on the Subordinated Debt Securities of such series, or the date on which the interest becomes payable, including
by suspending payment for a temporary period; and
(ii)
the variation of the terms of the Subordinated Debt Securities of such series, if necessary, to give effect to the exercise
of the Spanish Bail-in Power by the relevant resolution authority.
(b)
No repayment or payment of Amounts Due on the Subordinated Debt Securities of any series, will become due and payable
or be paid after the exercise of any Spanish Bail-in Power by the relevant resolution authority if and to the extent such amounts
have been reduced, converted, cancelled, amended or altered as a result of such exercise.
(c) Neither
a reduction or cancellation, in part or in full of the Amounts Due on, the conversion thereof into another security or
obligation of the Company, the Guarantor or another person, as a result of the exercise of the Spanish Bail-in Power by
the relevant resolution authority with respect to the Company or the Guarantor, nor the exercise of the Spanish Bail-in Power
by the relevant resolution authority with respect to the Subordinated Debt Securities of any series will be an Event of
Default.
(d)
Upon the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to the Subordinated Debt
Securities of any series, the Company or the Guarantor will provide a written notice to the holders of the Subordinated Debt Securities
of such series through DTC as soon as practicable regarding such exercise of the Spanish Bail-in Power. The Company or the Guarantor
will also deliver a copy of such notice to the Trustee for information purposes.
(e)
By its acquisition of the Subordinated Debt Securities of any series, each Holder of the Subordinated Debt Securities of
such series, (which, for the purposes of this clause, includes each holder of a beneficial interest in the Subordinated Debt Securities
of such series), to the extent permitted by the Trust Indenture Act, will waive any and all claims, in law and/or in equity, against
the Trustee for, agree not to initiate a suit
against
the trustee in respect of, and agree that the trustee will not be liable for, any action that the trustee takes, or abstains from
taking, in either case in accordance with the exercise of the Spanish Bail-in Power by the relevant resolution authority with
respect to the Subordinated Debt Securities of such series.
(f)
Additionally, by its acquisition of the Subordinated Debt Securities of any series, each holder of the Subordinated Debt
Securities of such series acknowledges and agrees that, upon the exercise of the Spanish Bail-in Power by the relevant resolution
authority:
(i)
the Trustee will not be required to take any further directions from the Holders of the Subordinated Debt Securities of
such series with respect to any portion of the Subordinated Debt Securities of such series that are written-down, converted to
equity and/or cancelled under the Subordinated Debt Securities Indenture, which authorizes holders of a majority in aggregate
outstanding principal amount of the outstanding Subordinated Debt Securities of such series to direct certain actions relating
to the Subordinated Debt Securities of such series; and
(ii)
the Subordinated Debt Securities Indenture will not impose any duties upon the trustee whatsoever with respect to the exercise
of the Spanish Bail-in Power by the relevant resolution authority;
provided, however, that notwithstanding
the exercise of the Spanish Bail-in Power by the relevant resolution authority, so long as the Subordinated Debt Securities of
any series remain outstanding, there will at all times be a Trustee for the Subordinated Debt Securities of such series in accordance
with the Subordinated Debt Securities Indenture, and the resignation and/or removal of the trustee and the appointment of a successor
trustee will continue to be governed by the Subordinated Debt Securities Indenture, including to the extent no additional supplemental
indenture or amendment is agreed upon in the event the Subordinated Debt Securities of such series remain outstanding following
the completion of the exercise of the Spanish Bail-in Power.
(g)
By its acquisition of the Subordinated Debt Securities of any series, each Holder of the Subordinated Debt Securities of
such series acknowledges and agrees that neither a cancellation or deemed cancellation of the principal or interest (in each case,
in whole or in part), nor the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to the Subordinated
Debt Securities of such series will give rise to a default for purposes of Section 315(b) (Notice of Default) and Section 315(c)
(Duties of the Trustee in Case of Default) of the Trust Indenture Act.
(h) By
purchasing the Subordinated Debt Securities of any series, each Holder (including each beneficial owner) of the Subordinated
Debt Securities of such series shall be deemed to have authorized, directed and requested DTC and any direct participant in
DTC or other intermediary through which it holds the Subordinated Debt Securities of such series to take any and all
necessary action, if required, to implement the exercise of the Spanish Bail-in Power with respect to the Subordinated Debt
Securities of such series as it may be imposed, without any further action or direction on the part of such
Holder.
Section
14.02. Agreement and Acknowledgement with Respect to the Exercise of Resolution Tools. (a)Notwithstanding any other
term of the Subordinated Debt Securities of any series or any other agreements, arrangements, or understandings between the Company
and any Holder of the Subordinated Debt Securities of any series, by its acquisition of the Subordinated Debt Securities of any
series, each Holder (which, for the purposes of this clause, includes each holder of a beneficial interest in the securities of
any series) acknowledges, accepts, consents and agrees to be bound by the effect of the exercise of any resolution tools (including
but not limited to the sale of business tool, the bridge institution tool and the asset separation tool) by the relevant resolution
authority in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain,relating to (i) the
transposition of BRRD, including but not limited to Law 11/2015, (ii) the SRM Regulation and (iii) the instruments, rules and standards
created thereunder.
(b)
By its acquisition of the Subordinated Debt Securities of any series, each Holder of the Subordinated Debt Securities of
such series, (which, for the purposes of this clause, includes each holder of a beneficial interest in the Subordinated Debt Securities
of such series), to the extent permitted by the Trust Indenture Act, will waive any and all claims, in law and/or in equity, against
the Trustee for, agree not to initiate a suit against the Trustee in respect of, and agree that the Trustee will not
be liable for, any action that the Trustee takes, or abstains from taking, in either case in accordance with the exercise of any
resolution power by the relevant resolution authority.
(c)
Additionally, by its acquisition of the Subordinated Debt Securities of any series, each Holder of the Subordinated Debt
Securities of such series acknowledges and agrees that, upon the exercise of any resolution power by the relevant resolution authority
the Subordinated Debt Securities Indenture will not impose any duties upon the Trustee whatsoever with respect to the exercise
of any resolution tool by the relevant resolution authority (including no duty whatsoever to take any directions from the Holders
of the Subordinated Debt Securities of such series), provided, however, that notwithstanding the exercise of any resolution tool
by the relevant resolution authority, so long as the Subordinated Debt Securities of any series remain outstanding, there will
at all times be a Trustee for the Subordinated Debt Securities of such series in accordance with this Subordinated Debt Securities
Indenture, and the resignation and/or removal of the Trustee and the appointment of a successor Trustee will continue to be governed
by the Subordinated Debt Securities Indenture, including to the extent no additional supplemental indenture or amendment is agreed
upon in the event the Subordinated Debt Securities of such series remain outstanding following the completion of the exercise
of the resolution tool.
(d)
By its acquisition of the Subordinated Debt Securities of any series, each Holder (including each beneficial owner) of
the Subordinated Debt Securities of such series shall be deemed to have authorized, directed and requested DTC and any direct
participant in DTC or other intermediary through which it holds the Subordinated Debt Securities of such series to take any and
all necessary action, if required, to implement the exercise of any resolution tool with respect to the securities of such series
as it may be imposed, without any further action or direction on the part of such Holder.
This instrument
may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument. The exchange of copies of this Subordinated Debt Securities Indenture
and of signature pages by facsimile or electronic format (i.e., “pdf” or “tif”) transmission shall constitute
effective execution and delivery of this Subordinated Debt Securities Indenture as to the parties hereto and may be used in lieu
of the original Indenture for all purposes.
[Signature
Page Follows]
IN WITNESS
WHEREOF, the parties hereto have caused this Subordinated Debt Securities Indenture to be duly executed, all as of the day and
year first above written.
| SANTANDER ISSUANCES, S.A. UNIPERSONAL |
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| By: |
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Name: |
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Title: |
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| BANCO SANTANDER, S.A. |
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| By: |
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Name: |
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Title: |
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| THE BANK OF NEW YORK MELLON LONDON BRANCH |
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| By: |
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Name: |
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Title: |
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appendix
1: Procedures for Compliance with Spanish Tax Legislation
Information
Procedures and Certification Obligations of the Trustee or Paying Agent in respect of payments under the Subordinated Debt Securities
| 1. | Delivery of the Payment
Information Certificate: In connection with each payment of income under the Subordinated Debt Securities, the Trustee or
Paying Agent shall deliver to the Company or the Guarantor by the close of business on the business day immediately preceding
the day on which such payment is made a duly completed an executed Payment Information Certificate substantially in the form set
forth in Exhibit I hereto (Form of Payment Information Certificate). Such form may be delivered initially by email, in
pdf form, or by fax, provided that the original is delivered by the end of the following month. |
If
the Payment Information Certificate is delivered by the Trustee or Paying Agent in a timely manner to the Company or the Guarantor,
the relevant income payment will be made free and clear of Spanish withholding tax.
The
Trustee or Paying Agent shall have no duty or responsibility to comply with Spanish tax laws arising out of this Subordinated
Debt Securities Indenture, and may request and rely conclusively upon any instructions from the Company or the Guarantor in respect
of any action necessary or required to be taken by the Trustee or Paying Agent pursuant to this Appendix 1; provided, however,
that in no event shall the Trustee or Paying Agent be required to expend or risk its own funds in the performance of any
of its duties pursuant to this Appendix 1, or be obligated to take any legal or other action which might in its judgment involve
or cause it to incur any expense or liability unless it shall have been furnished with acceptable indemnification.
The
Company or Guarantor agrees to instruct the Trustee or Paying Agent in writing with respect to any certifications that may be
required under Spanish law, and the Trustee or Paying Agent acknowledges that this Appendix 1 shall constitute an instruction
in this regard, unless otherwise instructed in writing by the Company or the Guarantor.
| 2. | Failure to deliver the
Payment Information Certificate: In the event that the Trustee or Paying Agent fails or for any reason is unable to deliver
a timely, duly completed Payment Information Certificate as described above to the Company or the Guarantor in respect of a payment
of income under the Subordinated Debt Securities, the Trustee or Paying Agent shall withhold Spanish income tax on behalf of the
Company or the Guarantor from the relevant payment at the then-applicable rate (currently 19.5%, and 19% as of January 1, 2016
onwards). |
| 3. | If, after the relevant
payment date but before the 10th day of the month immediately following the relevant payment date the Trustee or Paying Agent
provides the duly completed Payment Information Certificate to the Company or the Guarantor, then the Company or the Guarantor
shall instruct the Trustee or |
Paying
Agent to immediately transfer the 19.5% (19% as of January 1, 2016 onwards) withheld in respect of the relevant payment
pursuant to paragraph 1 above by way of reimbursement of the amounts withheld on the relevant payment date and completion of
the corresponding income payment in respect of payments under the Subordinated Debt Securities.
| 4. | If the Trustee or Paying
Agent fails or for any reason is unable to submit a duly completed and executed Payment Information Certificate to the Company
or the Guarantor by the 10th day of the month immediately following the relevant payment date, the Trustee or Paying Agent shall
immediately return (but in any event no later than the 10th day of the month immediately following the relevant payment date)
to the Company or Guarantor any remaining amount of the 19.5% (19% as of January 1, 2016 onwards) withheld in respect of the relevant
payment, and investors will have to apply directly to the Spanish tax authorities for any refund to which they may be entitled. |
EXHIBIT I
Anexo
al Reglamento General de las actuaciones y los procedimientos de gestión e inspección tributaria y de desarrollo
de las normas comunes de los procedimientos de aplicación de los tributos, aprobado por Real Decreto 1065/2007
Modelo
de declaración a que se refieren los apartados 3, 4 y 5 del artículo 44 del Reglamento General de las actuaciones
y los procedimientos de gestión e inspección tributaria y de desarrollo de las normas comunes de los procedimientos
de aplicación de los tributos
Annex to
Royal Decree 1065/2007, of 27 July, approving the General Regulations of the tax inspection and management procedures and developing
the common rules of the procedures to apply taxes
Declaration
form referred to in paragraphs 3, 4 and 5 of Article 44 of the General Regulations of the tax inspection and management procedures
and developing the common rules of the procedures to apply taxes
Don (nombre),
con número de identificación fiscal (…)(1), en nombre y representación de (entidad
declarante), con número de identificación fiscal (….)(1) y domicilio en (…) en calidad
de (marcar la letra que proceda):
Mr. (name),
with tax identification number (...)(1), in the name and on behalf of (entity), with tax identification number (....)(1)
and address in (...) as (function - mark as applicable):
(a) Entidad
Gestora del Mercado de Deuda Pública en Anotaciones.
(a) Management
Entity of the Public Debt Market in book entry form.
(b) Entidad
que gestiona el sistema de compensación y liquidación de valores con sede en el extranjero.
(b) Entity
that manages the clearing and settlement system of securities resident in a foreign country.
(c) Otras
entidades que mantienen valores por cuenta de terceros en entidades de compensación y liquidación de valores domiciliadas
en territorio español.
(c) Other
entities that hold securities on behalf of third parties within clearing and settlement systems domiciled in the Spanish territory.
(d) Agente
de pagos designado por el emisor.
(d) Fiscal
Agent appointed by the issuer.
Formula
la siguiente declaración, de acuerdo con lo que consta en sus propios registros:
Makes the
following statement, according to its own records:
1. En
relación con los apartados 3 y 4 del artículo 44:
1. In relation
to paragraphs 3 and 4 of Article 44:
1.1 Identificación
de los valores………………………………………………………
1.1 Identification
of the securities……………………………………………………
1.2 Fecha
de pago de los rendimientos (o de reembolso si son valores emitidos al descuento o segregados)
1.2 Income
payment date (or refund if the securities are issued at discount or are segregated)
1.3 Importe
total de los rendimientos (o importe total a reembolsar, en todo caso, si son valores emitidos al descuento o segregados)……………………………..
1.3 Total
amount of income (or total amount to be refunded, in any case, if the securities are issued at discount or are segregated)
1.4 Importe
de los rendimientos correspondiente a contribuyentes del Impuesto sobre la Renta de las Personas Físicas, excepto cupones
segregados y principales segregados en cuyo reembolso intervenga una Entidad Gestora.................................
1.4 Amount
of income corresponding to Personal Income Tax taxpayers, except segregated coupons and segregated principals for which reimbursement
an intermediary entity is involved..................
1.5 Importe
de los rendimientos que conforme al apartado 2 del artículo 44 debe abonarse por su importe íntegro (o importe total
a reembolsar si son valores emitidos al descuento o segregados).
1.5 Amount
of income which according to paragraph 2 of Article 44 must be paid gross (or total amount to be refunded if the securities are
issued at discount or are segregated).
2. En
relación con el apartado 5 del artículo 44.
2. In relation
to paragraph 5 of Article 44.
2.1 Identificación
de los valores………………………………………………………
2.1 Identification
of the securities……………………………………………………..
2.2 Fecha
de pago de los rendimientos (o de reembolso si son valores emitidos al descuento o segregados) ……………………………………………………
2.2 Income
payment date (or refund if the securities are issued at discount or are segregated) ……………………………………………………
2.3 Importe
total de los rendimientos (o importe total a reembolsar si son valores emitidos al descuento o segregados.........……………………………………..
2.3 Total
amount of income (or total amount to be refunded if the securities are issued at discount or are segregated)
2.4 Importe
correspondiente a la entidad que gestiona el sistema de compensación y liquidación de valores con sede en el extranjero
A.
2.4 Amount
corresponding to the entity that manages the clearing and settlement system of securities resident in a foreign country A.
2.5 Importe
correspondiente a la entidad que gestiona el sistema de compensación y liquidación de valores con sede en el extranjero
B.
2.5 Amount
corresponding to the entity that manages the clearing and settlement system of securities resident in a foreign country B.
2.6 Importe
correspondiente a la entidad que gestiona el sistema de compensación y liquidación de valores con sede en el extranjero
C.
2.6 Amount
corresponding to the entity that manages the clearing and settlement system of securities resident in a foreign country C.
Lo que
declaro en..................….a …. de...................…de ….
I declare
the above in.................. .... on the.... of................... ... of....
(1) En
caso de personas, físicas o jurídicas, no residentes sin establecimiento permanente se hará constar el número
o código de identificación que corresponda de conformidad con su país de residencia
(1) In
case of non-residents (individuals or corporations) without permanent establishment in Spain it shall be included the number or
identification code which corresponds according to their country of residence.
Exhibit 4.3
BANCO SANTANDER, S.A.
as Issuer
TO
THE BANK OF NEW YORK MELLON,
acting through its London Branch
as Trustee
FORM OF INDENTURE
Contingent Convertible Capital Securities
BANCO SANTANDER, S.A.
Reconciliation and tie between Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform Act of 1990, and this Contingent Convertible Capital Securities Indenture,
dated as of [ ].
|
Trust
Indenture
Act Section |
Contingent
Convertible Capital Securities
Indenture Section |
| §310 (a)(1) |
7.10 |
| (a)(2) |
7.10 |
| (a)(3) |
Not Applicable |
| (a)(4) |
Not Applicable |
| (b) |
7.09, 7.11 |
| §311(a) |
7.14 |
| (b) |
7.14 |
| §312(a) |
8.01, 8.02(a) |
| (b) |
8.02(b) |
| (c) |
8.02(c) |
| §313(a) |
8.03(a) |
| (b) |
8.03(a) |
| (c) |
1.06, 8.03(a) |
| (d) |
8.03(b) |
| §314(a) |
8.04, 11.06 |
| (b) |
Not Applicable |
| (c)(1) |
1.02 |
| (c)(2) |
1.02 |
| (c)(3) |
Not Applicable |
| (d) |
Not Applicable |
| (e) |
1.02 |
| (f) |
Not Applicable |
| §315(a) |
7.01 |
| (b) |
7.03, 8.03(a) |
| |
8.03(a) |
| (c) |
7.01 |
| (d) |
7.01 |
| (d)(1) |
7.01 |
| (d)(2) |
7.01 |
| (d)(3) |
7.01 |
| (e) |
6.15 |
| §316(a)(1)(A) |
6.14 |
| (a)(l)(B) |
6.16 |
| (a)(2) |
Not Applicable |
| (a)(last sentence) |
1.01 |
| (b) |
6.10 |
| §317(a)(1) |
6.04 |
| (a)(2) |
6.06 |
| (b) |
11.03 |
|
Trust
Indenture
Act Section |
Contingent
Convertible Capital Securities
Indenture Section |
NOTE: This reconciliation and tie shall
not, for any purpose, be deemed to be a part of this Contingent Convertible Capital Securities Indenture.
TABLE
OF CONTENTS
Page
| Article 1 |
| Definitions and Other Provisions of General Application |
| |
| Section 1.01. Definitions |
1 |
| Section 1.02. Compliance Certificates and Opinions |
22 |
| Section 1.03. Form of Documents Delivered to Trustee |
22 |
| Section 1.04. Acts of Holders |
23 |
| Section 1.05. Notices, Etc. to Trustee and Company |
24 |
| Section 1.06. Notice to Holders; Waiver |
25 |
| Section 1.07. Language of Notices, Etc |
26 |
| Section 1.08. Conflict with Trust Indenture Act |
26 |
| Section 1.09. Effect of Headings and Table of Contents |
26 |
| Section 1.10. Successors and Assigns |
26 |
| Section 1.11. Separability Clause |
26 |
| Section 1.12. Benefits of Contingent Convertible Capital Securities Indenture |
26 |
| Section 1.13. Governing Law |
27 |
| Section 1.14. Saturdays, Sundays and Legal Holidays |
27 |
| Section 1.15. Appointment of Agent for Service |
27 |
| Section 1.16. Calculation Agent |
28 |
| Section 1.17. Waiver of Jury Trial |
28 |
| Section 1.18. Judgment Currency |
28 |
| |
|
| Article 2 |
| Contingent Convertible Capital Security Forms |
| |
| Section 2.01. Forms Generally |
29 |
| Section 2.02. Form of Trustee’s Certificate of Authentication |
29 |
| |
|
| Article 3 |
| The Contingent Convertible Capital Securities |
| |
| Section 3.01. Amount Unlimited; Issuable in Series |
29 |
| Section 3.02. Denominations |
32 |
| Section 3.03. Execution, Authentication, Delivery and Dating |
32 |
| Section 3.04. Temporary Contingent Convertible Capital Securities |
33 |
| Section 3.05. Registration, Registration of Transfer and Exchange |
34 |
| Section 3.06. Mutilated, Destroyed, Lost and Stolen Contingent Convertible Capital Securities |
38 |
| Section 3.07. Distributions. Rights Preserved |
39 |
| Section 3.08. Distributions Discretionary |
40 |
| Section 3.09. Restrictions on Payments |
40 |
| Section 3.10. Agreement to Distribution Cancellation |
41 |
| Section 3.11. Notice of Distribution Cancellation |
41 |
| Section 3.12. Persons Deemed Owners |
42 |
| Section 3.13. Cancellation |
43 |
| Section 3.14. Computation of Distributions |
43 |
| Section 3.15. Cusip Numbers |
43 |
| Section 3.16. Additional Contingent Convertible Capital Securities |
44 |
| Section 3.17. Correction of Minor Defects in or Amendment of Contingent Convertible Capital Securities |
44 |
| Section 3.18. Payments Subject to Fiscal Laws |
45 |
| Section 3.19. Undertakings |
45 |
| |
|
| Article 4 |
| Conversion of the Contingent Convertible Capital Securities |
| |
| Section 4.01. Conversion upon Trigger Event |
46 |
| Section 4.02. Conversion Price |
48 |
| Section 4.03. Anti-Dilution Adjustment of Floor Price |
48 |
| Section 4.04. Conversion Procedures. Settlement Shares |
61 |
| Section 4.05. Agreement and Waiver with Respect to Trigger Conversion |
63 |
| Section 4.06. Settlement Procedures |
63 |
| Section 4.07. Failure to Deliver a Delivery Notice |
66 |
| Section 4.08. Delivery of ADSs |
67 |
| |
|
| Article 5 |
| Satisfaction and Discharge |
| |
| Section 5.01. Satisfaction and Discharge of Contingent Convertible Capital Securities Indenture |
67 |
| Section 5.02. Application of Trust Money |
68 |
| Section 5.03. Repayment to Company |
68 |
| Section 5.04. Reinstatement |
|
| |
|
| Article 6 |
| Remedies |
| |
| Section 6.01. Enforcement Events |
69 |
| Section 6.02. Liquidation Distribution |
69 |
| Section 6.03. Limitation of Remedies Upon an Enforcement Event |
70 |
| Section 6.04. No Other Remedies and Other Terms |
70 |
| Section 6.05. Agreement with Respect to Limitation of Remedies for Breach of a Performance Obligation |
71 |
| Section 6.06. Trustee May File Proofs of Claim |
71 |
| Section 6.07. Trustee May Enforce Claims Without Possession of Contingent Convertible Capital Securities |
72 |
| Section 6.08. Application of Money Collected |
72 |
| Section 6.09. Limitation on Suits |
73 |
| Section 6.10. Unconditional Right of Holders to Receive Liquidation Preference and Distributions |
73 |
| Section 6.11. Restoration of Rights and Remedies |
74 |
| Section 6.12. Rights and Remedies Cumulative |
74 |
| Section 6.13. Delay or Omission Not Waiver |
74 |
| Section 6.14. Control by Holders |
74 |
| Section 6.15. Undertaking for Costs |
75 |
| Section 6.16. Waiver of Past Enforcement Events |
75 |
| |
|
| Article 7 |
| The Trustee |
| |
| Section 7.01. Certain Duties and Responsibilities |
76 |
| Section 7.02. Spanish Tax Procedures and Obligations of the Trustee |
77 |
| Section 7.03. Notice of Enforcement Events |
77 |
| Section 7.04. Certain Rights of Trustee |
78 |
| Section 7.05. Not Responsible for Recitals or Issuance of Contingent Convertible Capital Securities |
80 |
| Section 7.06. May Hold Contingent Convertible Capital Securities |
80 |
| Section 7.07. Money Held in Trust |
80 |
| Section 7.08. Compensation and Reimbursement |
81 |
| Section 7.09. Disqualification; Conflicting Interests |
82 |
| Section 7.10. Corporate Trustee Required; Eligibility |
82 |
| Section 7.11. Resignation and Removal; Appointment of Successor |
82 |
| Section 7.12. Acceptance of Appointment by Successor |
84 |
| Section 7.13. Merger, Conversion, Consolidation or Succession to Business |
85 |
| Section 7.14. Preferential Collection of Claims |
86 |
| Section 7.15. Appointment of Authenticating Agent |
86 |
| Section 7.16. Appointment of Additional Trustees |
87 |
| Section 7.17. Tax Withholding |
88 |
| |
|
| Article 8 |
| Holders Lists and Reports by Trustee and Company |
| |
| Section 8.01. Company to Furnish Trustee Names and Addresses of Holders |
88 |
| Section 8.02. Preservation of Information; Communication to Holders |
89 |
| Section 8.03. Reports by Trustee |
89 |
| Section 8.04. Reports by Company |
90 |
| |
|
| Article 9 |
| Consolidation, Merger, Conveyance or Transfer |
| |
| Section 9.01. Company May Consolidate, Etc., Only on Certain Terms |
91 |
| Section 9.02. Successor Corporation Substituted |
92 |
| Section 9.03. Assumption of Obligations |
92 |
| |
|
| Article 10 |
| Supplemental Indentures |
| |
| Section 10.01. Supplemental Indenture without Consent of Holders |
93 |
| Section 10.02. Supplemental Indentures with Consent of Holders |
95 |
| Section 10.03. Execution of Supplemental Indentures |
96 |
| Section 10.04. Effect of Supplemental Indentures |
96 |
| Section 10.05. Conformity with Trust Indenture Act |
96 |
| Section 10.06. Reference in Contingent Convertible Capital Securities to Supplemental Indentures |
97 |
| |
|
| Article 11 |
| Covenants |
| |
| Section 11.01. Payment of Liquidation Preference and Distributions |
97 |
| Section 11.02. Maintenance of Office or Agency |
97 |
| Section 11.03. Money for Distributions to be Held in Trust |
98 |
| Section 11.04. Additional Amounts |
99 |
| Section 11.05. Corporate Existence |
102 |
| Section 11.06. Statement as to Compliance |
102 |
| |
|
| Article 12 |
| Redemption and Repurchase of Contingent Convertible Capital Securities |
| |
| Section 12.01. Applicability of Article |
102 |
| Section 12.02. Election to Redeem; Notice to Trustee |
102 |
| Section 12.03. Selection by Trustee of Contingent Convertible Capital Securities to be Redeemed |
103 |
| Section 12.04. Redemption Procedures; Notice of Redemption |
103 |
| Section 12.05. Deposit of Redemption Price |
104 |
| Section 12.06. Contingent Convertible Capital Securities Payable on Redemption Date |
105 |
| Section 12.07. Contingent Convertible Capital Securities Redeemed In Part |
105 |
| Section 12.08. Optional Redemption Due To Changes In Tax Treatment |
105 |
| Section 12.09. Optional Redemption Due To Capital Event |
105 |
| Section 12.10. Repurchase of Contingent Convertible Capital Securities |
106 |
| Section 12.11. Preconditions to Redemption and Optional Repurchase |
106 |
| Section 12.12. Cancelled Distributions Not Payable Upon Redemption |
106 |
| |
|
| Article 13 |
| Subordination of Contingent Convertible Capital Securities |
| |
| Section 13.01. Contingent Convertible Capital Securities Subordinate to Senior Claims |
107 |
| Section 13.02. Waiver of Right of Set-Off |
107 |
| Section 13.03. Provisions Solely to Define Relative Rights |
108 |
| Section 13.04. Trustee to Effectuate Subordination |
108 |
| Section 13.05. Trustee Not Fiduciary for Senior Creditors |
108 |
| Section 13.06. Rights of Trustee as Senior Creditor; Preservation of Trustee’s Rights |
109 |
| Section 13.07. Article Applicable to Paying Agents |
109 |
| |
|
| Article 14 |
| Spanish Bail-In and Resolution Actions |
| |
| Section 14.01. Agreement and Acknowledgment with Respect to the Exercise of the Spanish Bail-in Power |
109 |
| Section 14.02. Agreement and Acknowledgement with Respect to the Exercise of Resolution Tools |
111 |
CONTINGENT CONVERTIBLE CAPITAL SECURITIES
INDENTURE, dated as of [●] between BANCO SANTANDER, S.A., a sociedad anónima incorporated under the laws of
the Kingdom of Spain (the “Company” or “Banco Santander”), having its principal executive
office located at Ciudad Grupo Santander, Avenida de Cantabria s/n, 28660 Boadilla del Monte, Madrid, Spain, and THE BANK OF NEW
YORK MELLON, acting through its London Branch, a banking corporation duly organized and existing under the laws of the State of
New York as Trustee (the “Trustee”), having its Corporate Trust Office at One Canada Square, London, E14 5AL,
United Kingdom.
RECITALS OF THE COMPANY
The Company has duly authorized the execution
and delivery of this Contingent Convertible Capital Securities Indenture to provide for the issuance from time to time of its Contingent
Convertible Capital Securities (herein called the “Contingent Convertible Capital Securities”), to be
issued in one or more series, represented by one or more Global Securities in registered form, or represented by definitive Contingent
Convertible Capital Securities in registered form, the amount and terms of each such series to be determined as hereinafter provided.
All things necessary to make this Contingent
Convertible Capital Securities Indenture a valid and binding agreement of the Company, in accordance with its terms, have been
done.
This Contingent Convertible Capital Securities
Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder that are required to be part of this Contingent Convertible Capital Securities Indenture
and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS CONTINGENT CONVERTIBLE
CAPITAL SECURITIES INDENTURE WITNESSETH:
For and in consideration of
the premises and the purchase of the Contingent Convertible Capital Securities by the Holders (as defined herein) thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of Contingent Convertible Capital
Securities, as follows:
Article
1
Definitions and Other Provisions of General Application
Section 1.01. Definitions. For
all purposes of this Contingent Convertible Capital Securities Indenture, except as otherwise expressly provided or unless the
context otherwise requires:
(a) the
terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(b) all
other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term “generally accepted accounting principles”
with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted
in the Kingdom of Spain at the date of such computation and as applied by the Company;
(d) the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Contingent Convertible Capital Securities Indenture as a whole and not to any particular Article, Section or other
subdivision;
(e) any
reference to an “Article” or a “Section” refers to an Article or Section of this Contingent
Convertible Capital Securities Indenture; and
(f) the
word “or” is always used inclusively (for example, the phrase “A or B” means “A or B or both”,
not “either A or B but not both”).
Certain terms, used principally in certain
Articles hereof are defined in those Articles.
References to any act or statute or any
provision of any act or statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory
instrument, order or regulation made in accordance therewith or under such modification or re-enactment.
“Accounting Currency”
means euro or such other primary currency used in the presentation of the Group’s accounts from time to time;
“Act”,
when used with respect to any Holder, has the meaning specified in Section
1.04.
“Additional
Amounts” has the meaning set forth in Section
11.04, of this Agreement.
“Additional
Contingent Convertible Capital Securities” has the meaning set forth in Section 3.16.
“ADR Deposit Agreement”
means the Deposit Agreement dated as of June 1, 1987, amended and restated as of July 11, 2000, amended and restated on June 16,
2008, and as may be further amended from time to time between the Company, JPMorgan Chase Bank, N.A. and the holders from time
to time of American Depositary Receipts issued thereunder.
“ADS Depositary” means
J.P. Morgan Chase & Co., as the depositary under the ADR Deposit Agreement or any successor ADS depositary;
“Affiliate” of any specified
Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with
such
specified Person. For the purposes of this
definition, “control” when used with respect to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.
“Agents” means the agents
appointed in accordance with this Contingent Convertible Capital Securities Indenture or applicable supplemental indenture;
“Agent Member” means
a member of, or participant in, any Depositary.
“Amounts Due” means the
Liquidation Preference, together with any accrued but unpaid Distributions, and Additional Amounts, if any, due on the Contingent
Convertible Capital Securities of any series. References to such amounts will include amounts that have become due and payable,
but which have not been paid, prior to the exercise of the Spanish Bail-in Power by the relevant resolution authority.
“Applicable Banking Regulations”
means at any time the laws, regulations, requirements, guidelines and policies relating to capital adequacy applicable to the Company
and/or the Group including, without limitation to the generality of the foregoing, those regulations, requirements, guidelines
and policies relating to capital adequacy then in effect of the Regulator (whether or not such requirements, guidelines or policies
have the force of law and whether or not they are applied generally or specifically to Banco Santander and/or the Group).
“Authenticating Agent”
means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Contingent Convertible Capital Securities.
“Authorized Newspaper”
means a newspaper, in an official language of the place of publication or in the English language, customarily published on each
day that is a Business Day in the place of publication, whether or not published on days that are Legal Holidays in the place of
publication, and of general circulation in each place in connection with which the term is used or in the financial community of
each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may
be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any day
that is a Business Day in the place of publication.
“Available Distributable Items”
means, in respect of the payment of a Distribution at any time, those profits and reserves (if any) of the Company which are available,
in accordance with applicable law and regulation at that time, for the payment of such Distribution.
“Board of Directors”
means either the board of directors of the Company or any committee or Person duly authorized to act generally or in any particular
respect for the Company hereunder.
“Board Resolution”
means a copy of a resolution certified by the Secretary or a Deputy Assistant Secretary or any Person duly authorized by the
Company to have been duly adopted by the relevant Board of Directors or an authorized committee thereof and to be in full
force and effect on the date of such certification and delivered to the Trustee.
“BRRD” means Directive
2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment
firms, as amended or superseded from time to time.
“Business Day” means,
unless otherwise provided in the form of Contingent Convertible Capital Securities for any particular series pursuant to the provisions
of this Contingent Convertible Capital Securities Indenture, any day, other than Saturday or Sunday, that is neither a Legal Holiday
nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in the City of
New York, London, Madrid or any other place or places where the Liquidation Preference of, or any Distributions on, or any Additional
Amounts with respect to the Contingent Convertible Capital Securities of that series are payable.
“Calculation Agent” means
the Trustee or such other person authorized by the Company as the party responsible for calculating the Distributions and/or such
other amount(s) from time to time in relation to any series of Contingent Convertible Capital Securities.
“Capital Event” means
a change in Spanish law, Applicable Banking Regulations or any change in the application or official interpretation thereof that
the Company determines results or is likely to result in the entire outstanding aggregate Liquidation Preference of the Contingent
Convertible Capital Securities of the relevant series ceasing to be included in, or counting towards, the Group’s or the
Company’s Tier 1 Capital.
“Cash
Dividend” means (i) any Dividend which is to be paid or made in cash (in whatever currency), but other than falling within
paragraph (b) of the
definition of “Spin-Off” and (ii) any Dividend determined to be a Cash Dividend pursuant to paragraph (a)
of the definition of “Dividend”, but a Dividend falling within paragraph (c)
or (d) of the definition
of “Dividend” shall be treated as being a Non-Cash Dividend.
“CET1 Capital” means
at any time, the Common Equity Tier 1 capital of the Company or the Group, respectively, as calculated by the Company in accordance
with Chapter 2 (Common Equity Tier 1 Capital) of Title I (Elements of own funds) of Part Two (Own Funds) of the CRR and/or Applicable
Banking Regulations at such time, including any applicable transitional, phasing in or similar provisions.
“CET1 ratio” means, at
any time, with respect to the Company or the Group, as the case may be, the reported ratio (expressed as a percentage) of the aggregate
amount (in the Accounting Currency) of the CET1 Capital of the Company or the Group, respectively, at such time divided by the
Risk Weighted Assets Amount of the Company or the Group, respectively, at such time, all as calculated by the Company.
“Clearing System” means
DTC or any of the European Clearing Systems, as applicable.
“Clearing System Contingent Convertible
Capital Securities” means, for so long as any Contingent Convertible Capital Securities of a series is represented by
a global Contingent Convertible Capital Security held by or on behalf of a Clearing System, any particular Liquidation Preference
of such series of the Contingent Convertible Capital Securities shown in the records of a Clearing System as being held by a holder
of the Contingent Convertible Capital Securities of such series.
“CNMV” means the Spanish
Market Securities Commission (Comisión Nacional del Mercado de Valores).
“Commission” means the
United States Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
“Common Shares” means
ordinary shares in the capital of the Company, each of which confers on the holder one vote at general meetings of the Company
and is credited as fully paid up.
“Company” means the Person
named as the “Company” in the first paragraph of this Contingent Convertible Capital Securities Indenture until
a successor Person shall have become such pursuant to the applicable provisions of this Contingent Convertible Capital Securities
Indenture, and thereafter “Company” shall mean such successor Person.
“Company Request” and
“Company Order” mean, respectively, a written request or order, as the case may be, signed in the name of the
Company by any member of the Board of Directors or any officer or representative of the Company empowered to do so by Board Resolution,
and delivered to the Trustee.
“Contingent Convertible Capital
Securities” has the meaning set forth in the recitals of the Company herein and more particularly means any series of
Contingent Convertible Capital Securities issued, authenticated and delivered under this Contingent Convertible Capital Securities
Indenture.
“Contingent
Convertible Capital Securities Indenture” means this instrument as originally executed or as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms and forms of particular series of Contingent Convertible Capital Securities established pursuant to
Section 3.01.
“Contingent Convertible Capital
Security” means one of the Contingent Convertible Capital Securities.
“Contingent
Convertible Capital Security Register” and “Contingent Convertible Capital Security Registrar” have
the respective meanings specified in Section
3.05.
“Conversion Price” means,
in respect of the Trigger Event Notice Date, if the Common Shares are:
(a) then admitted to trading on a Relevant
Stock Exchange, the higher of:
(i) the Current Market Price of a Common
Share, translated into U.S. dollars at the Prevailing Rate;
(ii) the Floor Price; and
(iii) the nominal value of a Common Share,
in each case on the Trigger Event Notice Date, translated into U.S. dollars at the Prevailing Rate; or
(b) not then admitted to trading on a
Relevant Stock Exchange, the higher of (ii) and (iii) above;
For the avoidance of doubt, the translation
into U.S. dollars at the Prevailing Rate described above shall in no circumstances imply that any Common Share will be issued at
a price of less than its nominal value expressed in the Share Currency.
“Conversion
Settlement Date” means the date on which the relevant Common Shares are to be delivered on Trigger Conversion, which
shall be as soon as practicable and in any event not later than one month following (or such other period as Applicable Banking
Regulations may require) the Trigger Event Notice Date and notice of the expected Conversion Settlement Date and of the Conversion
Price shall be given to Holders of Contingent Convertible Capital Securities in accordance with Section
1.06 not more than 10 Business Days following the Trigger Event Notice Date.
“Conversion Shares”
means the number of Common Shares to be issued on Trigger Conversion in respect of each Contingent Convertible Capital Security
of any series to be converted.
“Contingent
Convertible Capital Securities Indenture” means this instrument as originally executed or as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms and forms of particular series of Contingent Convertible Capital Securities established pursuant to
Section 3.01.
“Conversion Event” means
the cessation of use of (i) a Foreign Currency both by the government of the country which issued such currency and for the settlement
of transactions by a central bank or other public institutions of or within the international
banking community, or (ii) the euro both within
the European monetary system and for the settlement of transactions by public institutions of or within the European Union.
“Corporate Trust Office”
means the office of the Trustee at which its corporate trust business in London, England is principally administered, which office
as of the date hereof is located at One Canada Square, London E14 5AL (Attention: Corporate Trust Administration, facsimile: +44
20 7964 2536) or, if a different Trustee is appointed for a particular series of Contingent Convertible Capital Securities, the
address set forth in the supplemental indenture naming the Trustee for that particular series of Contingent Convertible Capital
Securities.
The term “corporation”
includes corporations, associations, companies, partnerships and business trusts.
“CRD IV” means any or
any combination of the CRD IV Directive, the CRR, and any CRD IV Implementing Measures.
“CRD IV Directive” means
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions
and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives
2006/48/EC and 2006/49/EC or such other directive as may come into effect in place thereof.
“CRD IV Implementing Measures”
means any regulatory capital rules implementing the CRD IV Directive or the CRR which may from time to time be introduced, including,
but not limited to, delegated or implementing acts (regulatory technical standards) adopted by the European Commission, national
laws and regulations, and regulations and guidelines issued by the Regulator, the European Banking Authority or any other relevant
authority, which are applicable to the Company (on a standalone basis) or the Group (on a consolidated basis).
“CRR” means Regulation
(EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on the prudential requirements for credit institutions
and investment firms and amending Regulation (EU) No. 648/2012 or such other regulation as may come into effect in place thereof.
“Current Market Price”
means, in respect of a Common Share at a particular date, the average of the daily Volume Weighted Average Price of a Common Share
on each of the 5 consecutive dealing days ending on the dealing day immediately preceding such date (the “Relevant Period”)
(rounded if necessary to the nearest cent with 0.5 cents being rounded upwards); provided that if at any time during the Relevant
Period the Volume Weighted Average Price shall have been based on a price ex-Dividend (or ex-any other entitlement) and during
some other part of that period the Volume Weighted
Average Price shall have been based on a price
cum-Dividend (or cum-any other entitlement), then:
(a) if the Common Shares to be issued
and delivered do not rank for the Dividend (or entitlement) in question, the Volume Weighted Average Price on the dates on which
the Common Shares shall have been based on a price cum-Dividend (or cum-any other entitlement) shall for the purposes of this definition
be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of any such Dividend or entitlement per
Common Share as at the date of the first public announcement relating to such Dividend or entitlement; or
(b) if the Common Shares to be issued
and delivered do rank for the Dividend (or entitlement) in question, the Volume Weighted Average Price on the dates on which the
Common Shares shall have been based on a price ex-Dividend (or ex-any other entitlement) shall for the purposes of this definition
be deemed to be the amount thereof increased by an amount equal to the Fair Market Value of any such Dividend or entitlement per
Common Share as at the date of the first public announcement relating to such Dividend or entitlement,
and provided further that:
(i) if on each of the dealing days in
the Relevant Period the Volume Weighted Average Price shall have been based on a price cum-Dividend (or cum-any other entitlement)
in respect of a Dividend (or other entitlement) which has been declared or announced but the Common Shares to be issued and delivered
do not rank for that Dividend (or other entitlement) the Volume Weighted Average Price on each of such dates shall for the purposes
of this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of any such Dividend
or entitlement per Common Share as at the date of first public announcement relating to such Dividend or entitlement; and
(ii) if the Volume Weighted Average Price
of a Common Share is not available on one or more of the dealing days in the Relevant Period (disregarding for this purpose the
proviso to the definition of Volume Weighted Average Price), then the average of such Volume Weighted Average Prices which are
available in the Relevant Period shall be used (subject to a minimum of two such prices) and if only one, or no, such Volume Weighted
Average Price is available in the Relevant Period the Current Market Price shall be determined in good faith by an Independent
Financial Adviser.
In making any calculation or determination
of Current Market Price, such adjustments (if any) shall be made as an Independent Financial Adviser determines in good faith appropriate
to reflect any consolidation or sub-division of the Common Shares or any issue of Common Shares by way of capitalisation of profits
or reserves, or any like or similar event.
“dealing day” means a
day on which the Relevant Stock Exchange or relevant stock exchange or securities market is open for business and on which Common
Shares,
Securities, Spin-Off Securities, options,
warrants or other rights (as the case may be) may be dealt in (other than a day on which the Relevant Stock Exchange or relevant
stock exchange or securities market is scheduled to or does close prior to its regular weekday closing time).
“Delivery Notice” means
a notice in the form for the time being currently available from the specified office of any Paying and Conversion Agent or in
such form as may be acceptable to DTC from time to time, which contains the relevant account and related details for the delivery
of any ADSs or Common Shares and all relevant certifications and/or representations as may be required by applicable law and regulations
(or is deemed to constitute the confirmation thereof), and which are required to be delivered in connection with a conversion of
the Contingent Convertible Capital Securities and the delivery of the ADSs or Common Shares.
“Depositary”
means, with respect to any series of Contingent Convertible Capital Securities, a clearing agency that is designated to act as
Depositary for the Global Securities evidencing all or part of such Contingent Convertible Capital Securities as contemplated by
Section 3.01.
“Distribution”
means the non-cumulative cash distribution in respect of the Contingent Convertible Capital Securities and a Distribution Period
determined in accordance with Section
3.07.
“Distribution Payment Date”
shall have the meaning as determined pursuant to Section 3.01.
“Distribution Period”
means the period from and including one Distribution Payment Date (or, in the case of the first Distribution Period, the date of
issuance) to but excluding the next Distribution Payment Date.
“Distribution
Rate” means the rate at which the Contingent Convertible Capital Securities accrue Distributions in accordance with Section
3.07.
“Dividend” means any
dividend or distribution to Shareholders in respect of the Common Shares (including a Spin-Off) whether of cash, assets or other
property (and for these purposes a distribution of assets includes without limitation an issue of Common Shares or other Securities
credited as fully or partly paid up by way of capitalisation of profits or reserves), and however described and whether payable
out of share premium account, profits, retained earnings or any other capital or revenue reserve or account, and including a distribution
or payment to Shareholders upon or in connection with a reduction of capital provided that:
(a) where:
(i) a Dividend in cash is announced which
is to be, or may at the election of a Shareholder or Shareholders be, satisfied by the issue or delivery of Common Shares or
other property or assets, or where a capitalisation
of profits or reserves is announced which is to be, or may at the election of a Shareholder or Shareholders be, satisfied by the
payment of cash, then the Dividend in question shall be treated as a Cash Dividend of an amount equal to the greater of (A) the
Fair Market Value of such cash amount and (B) the Current Market Price of such Common Shares as at the first date on which the
Common Shares are traded ex-the relevant Dividend on the Relevant Stock Exchange or, as the case may be, the record date or other
due date for establishment of entitlement in respect of the relevant capitalisation or, as the case may be, the Fair Market Value
of such other property or assets as at the date of the first public announcement of such Dividend or capitalisation or, in any
such case, if later, the date on which the number of Common Shares (or amount of such other property or assets, as the case may
be) which may be issued and delivered is determined; or
(ii) there shall be any issue of Common
Shares by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve) where
such issue is or is expressed to be in lieu of a Dividend (whether or not a Cash Dividend equivalent or amount is announced or
would otherwise be payable to Shareholders, whether at their election or otherwise), the Dividend in question shall be treated
as a Cash Dividend of an amount equal to the Current Market Price of such Common Shares as at the first date on which the Common
Shares are traded ex-the relevant Dividend on the Relevant Stock Exchange or, as the case may be, the record date or other due
date for establishment of entitlement in respect of the relevant capitalisation or, in any such case, if later, the date on which
the number of Common Shares to be issued and delivered is determined;
(b) any
issue of Common Shares falling within Section 4.03(a) and Section 4.03(b) shall be disregarded;
(c) a purchase or redemption or buy back
of share capital of the Company by or on behalf of the Company in accordance with any general authority for such purchases or buy
backs approved by a general meeting of Shareholders and otherwise in accordance with the limitations prescribed under the Spanish
Companies Act for dealings generally by a company in its own shares shall not constitute a Dividend and any other purchase or redemption
or buy back of share capital of the Company by or on behalf of the Company or any member of the Group shall not constitute a Dividend
unless, in the case of a purchase or redemption or buy back of Common Shares by or on behalf of the Company or any member of the
Group, the weighted average price per Common Share (before expenses) on any one day (a “Specified Share Day”) in respect
of such purchases or redemptions or buy backs (translated, if not in the Share Currency, into the Share Currency at the Prevailing
Rate on such day) exceeds by more than 5 per cent. the average of the daily Volume Weighted Average Price of a Common Share on
the 5 dealing days immediately preceding the Specified Share Day or, where an announcement (excluding, for the avoidance of doubt
for these purposes, any general authority for such purchases, redemptions or buy backs approved by a general meeting of Shareholders
or any notice convening such a meeting of Shareholders) has been made of the intention to purchase, redeem or buy back Common Shares
at some future date at a specified price or where a tender offer is made, on the 5 dealing days immediately preceding the date
of
such announcement or the date of first public
announcement of such tender offer (and regardless of whether or not a price per Common Share, a minimum price per Common Share
or a price range or a formula for the determination thereof is or is not announced at such time), as the case may be, in which
case such purchase, redemption or buy back shall be deemed to constitute a Dividend in the Share Currency in an amount equal to
the amount by which the aggregate price paid (before expenses) in respect of such Common Shares purchased, redeemed or bought back
by the Company or, as the case may be, any member of the Group (translated where appropriate into the Share Currency as provided
above) exceeds the product of (i) 105 per cent. of the daily Volume Weighted Average Price of a Common Share determined as aforesaid
and (ii) the number of Common Shares so purchased, redeemed or bought back;
(d) if the Company or any member of the
Group shall purchase, redeem or buy back any depositary or other receipts or certificates representing Common Shares, the provisions
of paragraph ((c)) above shall be applied in respect thereof in such manner and with such modifications (if any) as shall be determined
in good faith by an Independent Financial Adviser; and
(e) where a dividend or distribution
is paid or made to Shareholders pursuant to any plan implemented by the Company for the purpose of enabling Shareholders to elect,
or which may require Shareholders, to receive dividends or distributions in respect of the Common Shares held by them from a person
other than (or in addition to) the Company, such dividend or distribution shall for the purposes of these Contingent Convertible
Capital Securities of any series be treated as a dividend or distribution made or paid to Shareholders by the Company, and the
provisions of the Contingent Convertible Capital Securities and the Contingent Convertible Capital Securities Indenture, including
references to the Company paying or making a dividend, shall be construed accordingly.
“Dollar” or “$”
or any similar reference means the coin or currency of the United States of America which as at the time of payment is legal tender
for the payment of public and private debts.
“DTC” means The Depository
Trust Company or its nominee or its or their successor.
“equity share capital”
means, in relation to any entity, its issued share capital excluding any part of that capital which, in respect of dividends and
capital, does not carry any right to participate beyond a specific amount in a distribution;
“Enforcement
Event” shall have the meaning given in Section
6.01.
“EUR”, “€”
and “euro” means currency of the member states of the European Union (“EU”) that, from time to time,
have adopted the single currency in accordance with the treaty establishing the European Community, as amended from time to time.
“European Clearing System”
means Euroclear Bank S.A./N.V. (“Euroclear Bank”), as operator of the Euroclear System (“Euroclear”)
and/or Clearstream Banking, société anonyme (“Clearstream Luxembourg”);
“Exchange Act” means
the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder.
“Existing Shareholders”
has the meaning given in the definition of “Newco Scheme”.
“Fair Market Value” means,
with respect to any property on any date, the fair market value of that property as determined by an Independent Financial Adviser
in good faith provided that (a) the Fair Market Value of a Cash Dividend shall be the amount of such Cash Dividend; (b) the Fair
Market Value of any other cash amount shall be the amount of such cash; (c) where Securities, Spin-Off Securities, options, warrants
or other rights are publicly traded on a stock exchange or securities market of adequate liquidity (as determined by an Independent
Financial Adviser in good faith), the Fair Market Value (i) of such Securities or Spin-Off Securities shall equal the arithmetic
mean of the daily Volume Weighted Average Prices of such Securities or Spin-Off Securities and (ii) of such options, warrants or
other rights shall equal the arithmetic mean of the daily closing prices of such options, warrants or other rights, in the case
of both (i) and (ii) above during the period of 5 dealing days on the relevant stock exchange or securities market commencing on
such date (or, if later, the first such dealing day such Securities, Spin-Off Securities, options, warrants or other rights are
publicly traded) or such shorter period as such Securities, Spin-Off Securities, options, warrants or other rights are publicly
traded; and (d) where Securities, Spin-Off Securities, options, warrants or other rights are not publicly traded on a stock exchange
or securities market of adequate liquidity (as aforesaid), the Fair Market Value of such Securities, Spin-Off Securities, options,
warrants or other rights shall be determined by an Independent Financial Adviser in good faith, on the basis of a commonly accepted
market valuation method and taking account of such factors as it considers appropriate, including the market price per Common Share,
the dividend yield of a Common Share, the volatility of such market price, prevailing interest rates and the terms of such Securities,
Spin-Off Securities, options, warrants or other rights, including as to the expiry date and exercise price (if any) thereof. Such
amounts shall, in the case of (a) above, be translated into the Share Currency (if such Cash Dividend is declared or paid or payable
in a currency other than the Share Currency) at the rate of exchange used to determine the amount payable to Shareholders who were
paid or are to be paid or are entitled to be paid the Cash Dividend in the Share Currency; and in any other case, shall be translated
into the Share Currency (if expressed in a currency other than the Share Currency) at the Prevailing Rate on that date. In addition,
in the case of (a) and (b) above, the Fair Market Value shall be determined on a gross basis and disregarding any withholding or
deduction required to be made for or on account of tax, and disregarding any associated tax credit;
“Final
Cancellation Date” shall have the meaning given in Section
4.06.
“Floor Price” means the
price per Common Share determined pursuant to Section 3.01, subject to adjustment in accordance with Section 4.03.
“Foreign Currency” means
the euro or any currency issued by the government of any country (or a group of countries or participating member states) other
than the United States of America which as at the time of payment is legal tender for the payment of public and private debts.
“Foreign Government Securities”
means with respect to Contingent Convertible Capital Securities, if any, of any series that are denominated in a Foreign Currency,
non-callable (i) direct obligations of the participating member state or government that issued such Foreign Currency for the payment
of which obligations its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of such participating member state or government, the payment of which obligations is unconditionally
guaranteed as a full faith and credit obligation of such participating member state or government. For the avoidance of doubt,
for all purposes hereof, euro shall be deemed to have been issued by each participating member state from time to time.
“Further Contingent Convertible
Capital Securities” means any securities which are contingently convertible into Common Shares of the Company pursuant
to their terms in the event that the CET1 ratio of the Company or the Group is less than a specified percentage.
“Global Security” means
one or more global certificates evidencing all or part of a series of Contingent Convertible Capital Securities, authenticated
and delivered to or on behalf of the Holder and registered in the name of the Holder or its nominee.
“Group” means Banco Santander,
S.A. and its consolidated subsidiaries.
“Holder” means a Person
in whose name a Contingent Convertible Capital Security in global or definitive form is registered in the Contingent Convertible
Capital Security Register.
“Iberclear” means the
Spanish clearing and settlement system (Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación
de Valores, S.A., Sociedad Unipersonal).
“Independent Financial Adviser”
means an independent financial institution of international repute appointed by the Company at its own expense.
“Initial Margin” means
the per cent per annum determined in accordance with Section 3.01.
“Law 11/2015” means
Law 11/2015, of June 18, for the recovery and resolution of credit institutions and investment firms (Ley 11/2015, de 18 de
junio, de recuperacion y resolucion de entidades de credito y empresas de servicios de inversion), as amended from time to
time.
“Legal Holiday”, with
respect to any Place of Payment or other location, means a Saturday, a Sunday or a day on which banking institutions in such Place
of Payment or other location are not authorized or obligated to be open.
“Liquidation Distribution”
means the Liquidation Preference per Contingent Convertible Capital Security plus, if applicable, where not cancelled pursuant
to, or otherwise subject to the limitations on payment set out in Section 3.08 and Section
3.09, an amount equal to accrued and unpaid Distributions for the then current Distribution Period to (but excluding) the date
of payment of the Liquidation Distribution.
“Liquidation Event” shall
have the meaning set forth in Section 6.01.
“Liquidation
Preference” shall have the meaning as determined pursuant to Section
3.01.
“Maximum Distributable Amount”
means any maximum distributable amount required to be calculated in accordance with article 48 of Law 10/2014 and articles 73 and
74 of Royal Decree 84/2015, each interpreted in light of article 141 of the CRD IV Directive.
“Newco Scheme” means
a scheme of arrangement or analogous proceeding (“Scheme of Arrangement”) which effects the interposition of
a limited liability company (“Newco”) between the Shareholders of the Company immediately prior to the Scheme
of Arrangement (the “Existing Shareholders”) and the Company, provided that:
(a) only ordinary shares of Newco or
depositary or other receipts or certificates representing ordinary shares of Newco are issued to Existing Shareholders;
(b) immediately after completion of the
Scheme of Arrangement the only shareholders of Newco or, as the case may be, the only holders of depositary or other receipts or
certificates representing ordinary shares of Newco, are Existing Shareholders and the Voting Rights in respect of Newco are held
by Existing Shareholders in the same proportions as their respective holdings of such Voting Rights immediately prior to the Scheme
of Arrangement;
(c) immediately after completion of the
Scheme of Arrangement, Newco is (or one or more wholly-owned Subsidiaries of Newco are) the only ordinary shareholder (or shareholders)
of the Company;
(d) all Subsidiaries of the Company immediately
prior to the Scheme of Arrangement (other than Newco, if Newco is then a Subsidiary) are Subsidiaries of the Company (or of Newco)
immediately after completion of the Scheme of Arrangement; and
(e) immediately after completion of the
Scheme of Arrangement, the Company (or Newco) holds, directly or indirectly, the same percentage of the ordinary share capital
and equity share capital of those Subsidiaries as was held by the Company immediately prior to the Scheme of Arrangement.
“Non-Cash Dividend” means
any Dividend which is not a Cash Dividend, and shall include a Spin-Off.
“Officer’s Certificate”
means a certificate signed by any member of the Board of Directors, the Secretary or the Deputy Secretary of the Board of Directors,
a Vice President or any officer or any other Person duly authorized by the Company, that complies with the requirements of Section
314(e) of the Trust Indenture Act and is delivered to the Trustee.
“Opinion of Counsel”
means a written opinion of legal advisors, who may be an employee of or legal advisors for the Company or other legal advisors
who shall be reasonably acceptable to the Trustee and that, if required by the Trust Indenture Act, complies therewith.
“Outstanding”, when used
with respect to Contingent Convertible Capital Securities or any series of Contingent Convertible Capital Securities means, as
of the date of determination, all Contingent Convertible Capital Securities or all Contingent Convertible Capital Securities of
such series, as the case may be, theretofore authenticated and delivered under this Contingent Convertible Capital Securities Indenture,
except:
(i) Contingent Convertible
Capital Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
(ii) Contingent
Convertible Capital Securities which have been paid pursuant to Section
12.06 or in exchange for or in lieu of which other Contingent Convertible Capital Securities have been authenticated and delivered
pursuant to this Contingent Convertible Capital Securities Indenture, other than any such Contingent Convertible Capital Securities
in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Contingent Convertible Capital
Securities are held by a bona fide purchaser in whose hands such Contingent Convertible Capital Securities are valid obligations
of the Company;
provided, however, that in determining whether the Holders
of the requisite Liquidation Preference of the Outstanding Contingent Convertible Capital Securities of any series have given any
request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the Liquidation Preference of a Contingent
Convertible Capital Security denominated in a Foreign Currency shall be the Dollar equivalent, determined on the date of original
issuance of such Contingent Convertible Capital Security, of the Liquidation Preference of such Contingent Convertible Capital
Security; and (ii) Contingent Convertible Capital Securities beneficially owned by the Company or any other obligor upon the Contingent
Convertible Capital Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be
Outstanding except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Contingent Convertible Capital Securities which a Responsible Officer of the Trustee
actually knows to be so beneficially owned shall be so disregarded; provided, further, however, that Contingent Convertible Capital
Securities so beneficially owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Contingent Convertible Capital Securities
and that the pledgee is not the Company or any other obligor upon the Contingent Convertible Capital Securities or any Affiliate
of the Company or of such other obligor.
“Parity Securities” means
any preferred securities (participaciones preferentes) issued under Law 13/1985 and/or RD-L 14/2013 and/or Law 10/2014,
such as the Contingent Convertible Capital Securities, and/or under the CRR from time to time by the Company or by any Subsidiary
and which are guaranteed by the Company or any preferential participations, preferential shares or preference shares (acciones
preferentes) ranking pari passu with any preferred securities (participaciones preferentes) issued from time
to time by the Company or by any Subsidiary and which are guaranteed by the Company or any other instrument issued or guaranteed
by the Company ranking pari passu with the Contingent Convertible Capital Securities.
“Paying and Conversion Agent”
means the Principal Paying Agent and any other paying and conversion agent appointed in accordance with the Contingent Convertible
Capital Securities Indenture or any supplemental indenture and includes any successors thereto appointed from time to time in accordance
with the Contingent Convertible Capital Securities Indenture or any supplemental indenture.
“Payment Business Day”
means (i) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including
dealing in foreign exchange and foreign currency deposits) in New York City and London and (ii) in the case of Contingent Convertible
Capital Securities in definitive form only, a day on which commercial banks and foreign exchange markets settle payments and are
open for general business (including dealing in foreign exchange and foreign currency deposits) in the relevant place of presentation.
“Payment
Statement” means the statement to be delivered to the Company by the Trustee, substantially in the form set forth in
Exhibit I to Appendix 1, pursuant to Section
7.02.
“Person” means any individual,
corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
“Place of Payment”, when
used with respect to the Contingent Convertible Capital Securities of any series, means the place or places where the Liquidation
Preference and Distributions on the Contingent Convertible Capital Securities of that
series are payable
as specified pursuant to Section
3.01 or, if not so specified, as specified in Section
11.02.
“Predecessor
Security” of any particular Contingent Convertible Capital Security means every previous Contingent Convertible Capital
Security evidencing all or a portion of the same debt as that evidenced by such particular Contingent Convertible Capital Security;
and, for the purposes of this definition, any Contingent Convertible Capital Security authenticated and delivered under Section
3.06 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Contingent Convertible Capital Security shall be deemed
to evidence the same debt as the mutilated, destroyed, lost or stolen Contingent Convertible Capital Security.
“Prevailing Rate” means,
in respect of any currencies on any day, the spot rate of exchange between the relevant currencies prevailing as at 12 noon (London
time) on that date as appearing on or derived from Reuters page ECB37 or, if not available, from any other Reference Page or, if
such a rate cannot be determined at such time, the rate prevailing as at 12 noon (London time) on the immediately preceding day
on which such rate can be so determined or, if such rate cannot be so determined by reference to the Reference Page, the rate determined
in such other manner as an Independent Financial Adviser in good faith shall prescribe.
“Principal Paying Agent”
means any Person (which may include the Company) authorized by the Company to pay the Liquidation Preference of, or Distributions
on, or any Additional Amounts with respect to, the contingent convertible capital securities of any series on behalf of the Company.
Except as otherwise specified as contemplated by Section
3.01 hereof, The Bank of New York Mellon, acting through its London Branch will act as Principal Paying Agent in respect of the
Contingent Convertible Capital Securities of any series.
“Recognised Stock Exchange”
means a regulated regularly operating, recognised stock exchange or securities market in an OECD member state.
“Redemption Date”, when
used with respect to any Contingent Convertible Capital Security to be redeemed, means the date fixed for such redemption by or
pursuant to this Contingent Convertible Capital Securities Indenture.
“Redemption Price” means,
per Contingent Convertible Capital Security, the Liquidation Preference plus, if applicable, where not cancelled pursuant to, or
otherwise subject to the limitations on payment set out in Section 3.08 and Section
3.09, an amount equal to accrued and unpaid Distributions for the then current Distribution Period to (but excluding) the date
fixed for redemption of the Contingent Convertible Capital Securities of the relevant series.
“Regular Record Date”
for the Distribution payable on any Distribution Date on registered Contingent Convertible Capital Securities of any series means
the date specified for the purpose pursuant to Section 3.01.
“regulated entity” means
any entity to which Law 11/2015 applies as provided under article 1.2 of Law 11/2015, as amended from time to time, which includes,
certain credit institutions, investment firms, and certain of their parent or holding companies;
“Regulator” means the
European Central Bank or such other or successor authority exercising primary bank supervisory authority, in each case with respect
to prudential matters in relation to the Company and/or the Group;
“Reference Page” means
the relevant page on Bloomberg or Reuters or such other information service provider that displays the relevant information.
“relevant resolution authority”
means the Spanish Fund for the Orderly Restructuring of Banks, the European Single Resolution Mechanism, as the case may be,
according to Law 11/2015, and any other entity with the authority to exercise the Spanish Bail-in Power from time to time.
“Relevant Stock Exchange”
means the Spanish Stock Exchanges or if at the relevant time the Common Shares are not at that time listed and admitted to trading
on the Spanish Stock Exchanges, the principal stock exchange or securities market on which the Common Shares are then listed, admitted
to trading or quoted or accepted for dealing.
“Responsible
Officer”, when used with respect to the Trustee, means any officer of the Trustee assigned to or working in the Corporate
Trust Administration unit (or any successor unit) of the Trustee located at the Corporate Trust Office of the Trustee, who shall
have direct responsibility for the administration of this Contingent Convertible Capital Securities Indenture and, for the purposes
of Section 7.01(c)(ii),
shall also include any other officer of the Trustee to whom any corporate trust matter is referred because of such officer’s
knowledge of and familiarity with the particular subject.
“Risk Weighted Assets Amount”
means at any time, with respect to the Company or the Group, as the case may be, the aggregate amount (in the Accounting Currency)
of the risk weighted assets of the Company or the Group, respectively, calculated in accordance with Applicable Banking Regulations
at such time.
“Scheme of Arrangement”
has the meaning given in the definition of “Newco Scheme”.
“Securities” means any
securities including, without limitation, shares in the capital of the Company, or options, warrants or other rights to subscribe
for or purchase or acquire shares in the capital of the Company.
“Securities Act” means
the United States Securities Act of 1933, as amended.
“Selling Agent” shall
have the meaning set forth in Section 4.07.
“Settlement Shares Depository”
means a reputable independent financial institution, trust company or similar entity to be appointed by the Company on or prior
to any date when a function ascribed to the Settlement Shares Depository is required to be performed to perform such functions
and who will hold Common Shares in Iberclear or any of its participating entities in a designated trust or custody account for
the benefit of
the holders of the Contingent Convertible
Capital Securities of any series and otherwise on terms consistent with the terms of the Contingent Convertible Capital Securities
and the Contingent Convertible Capital Securities Indenture.
“Share Currency” means
euro or such other currency in which the Common Shares are quoted or dealt in on the Relevant Stock Exchange at the relevant time
or for the purposes of the relevant calculation or determination.
“Shareholders” means
the holders of Common Shares.
“Spanish Bail-in
Power” means any write-down, conversion, transfer, modification, or suspension power existing from time to time
under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain,
relating to (i) the transposition of BRRD including but not limited to Law 11/2015, and up to 31 December 2015 (inclusive),
Law 9/2012, of 14 November, on restructuring and resolution of credit institutions, (ii) the SRM Regulation and (iii) the
instruments, rules and standards created thereunder, pursuant to which any obligation of a regulated entity (or other
affiliate of such regulated entity) can be reduced, cancelled, modified, or converted into shares, other securities, or other
obligations of such regulated entity or any other person (or suspended for a temporary period).
“Spanish Companies Act”
means the Royal Decree Legislative 1/2010, of 2 July 2010, approving the consolidated text of the Spanish Companies Act (Ley
de Sociedades de Capital).
“Spanish Insolvency Law”
means Law 22/2003 (Ley Concursal) of 9 July 2003 regulating insolvency proceedings in Spain, or an equivalent legal provision
which replaces it in the future.
“Spanish Stock Exchanges”
means the Madrid, Barcelona, Bilbao and Valencia stock exchanges and the Automated Quotation System -Continuous Market (Sistema
de Interconexión Bursátil -Mercado Continuo (SIBE)).
“Specified
Date” has the meanings given in clauses (a)(iv),
(a)(vi), (a)(vii),
and (a)(viii) of Section
4.03, as applicable.
“Spin-Off” means:
(a) a distribution of Spin-Off Securities
by the Company to Shareholders as a class; or
(b) any issue, transfer or delivery of
any property or assets (including cash or shares or other securities of or in or issued or allotted by any entity) by any entity
(other than the Company) to Shareholders as a class or, in the case of or in connection with a Newco Scheme, Existing Shareholders
as a class (but excluding the issue and allotment of ordinary shares (or depositary or other receipts or certificates representing
such ordinary shares) by Newco to Existing Shareholders as a class), pursuant in each case to any arrangements with the Company
or any member of the Group.
“Spin-Off Securities”
means equity share capital of an entity other than the Company or options, warrants or other rights to subscribe for or purchase
equity share capital of an entity other than the Company.
“SRM Regulation” means
Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing
uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of
the Single Resolution Mechanism and the Single Resolution Fund and amending Regulation (EU) No. 1093/2010, as amended or superseded from time to time.
“Subsidiary” means any
entity over which the Company may have, directly or indirectly, control in accordance with Applicable Banking Regulations;
“Tax Event” in respect
of any series of Contingent Convertible Capital Securities, means that as a result of any change in the laws or regulations of
Spain or in either case of any political subdivision thereof or any authority or agency therein or thereof having power to tax
or in the interpretation or administration of any such laws or regulations which becomes effective on or after the date of issue
of the contingent convertible capital securities of such series the Company shall determine that (a) the Company would not be entitled
to claim a deduction in computing taxation liabilities in Spain in respect of any Distribution to be made on the next Distribution
Payment Date or the value of such deduction to the Company would be materially reduced, or (b) the Company would be required to
pay Additional Amounts pursuant to Section 11.04, or (c) the applicable tax treatment of the Contingent Convertible Capital Securities
of such series changes.
“Tier 1 Capital” means
at any time, with respect to the Company or the Group, as the case may be, the Tier 1 capital of the Company or the Group, respectively,
as calculated by the Company in accordance with Chapters 1, 2 and 3 (Tier 1 Capital, Common Equity Tier 1 Capital and Additional
Tier 1 capital) of Title I (Elements of own funds) of Part Two (Own Funds) of the CRR and/or Applicable Banking Regulations at
such time, including any applicable transitional, phasing in or similar provisions;
“Tier 2 Capital” means
at any time, with respect to the Company or the Group, as the case may be, the Tier 2 capital of the Company or the Group, respectively,
as calculated by the Company in accordance with Chapter 4 (Tier 2 capital) of Title I (Elements of own funds) of Part Two (Own
Funds) of the CRR and/or Applicable Banking Regulations at such time, including any applicable transitional, phasing in or similar
provisions.
“Trigger Conversion”
has the meaning given in Section 4.01.
“Trigger
Event” means if, at any time, as determined by the Company, the CET1 ratio of the Company or the Group calculated in
accordance with Applicable Banking Regulations is less than 5.125 per cent.
“Trigger
Event Notice” shall have the meaning given in Section
4.04.
“Trigger Event Notice Date”
means the date on which a Trigger Event Notice is given.
“Trustee” means the Person
named as the “Trustee” in the first paragraph of this instrument until a successor trustee shall have become such pursuant
to the applicable provisions of this Contingent Convertible Capital Securities Indenture, and thereafter “Trustee”
shall mean the Person who is then the Trustee hereunder, or, if a different Trustee is appointed for a particular series of Contingent
Convertible Capital Securities, the Trustee named in the relevant indenture supplemental hereto as the Trustee for that particular
series of Contingent Convertible Capital Securities and if at any time there is more than one such Person, “Trustee”
shall mean and include each such Person; and “Trustee” as used with respect to the Contingent Convertible Capital Securities
of any series shall mean the Trustee with respect to the Contingent Convertible Capital Securities of such series.
“Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended, as in effect at the date as of which this instrument
was executed, except as provided in Section
10.05.
“United
States” and “U.S.” mean the United States of America and, except in the case of Sections 7.10
and 7.15, its territories
and possessions.
“U.S.$” and “U.S.
dollars” means the lawful currency of the United States of America.
“U.S. Government Securities Business
Day” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association
recommends that the fixed income departments of its members be closed for the entire day for the purposes of trading in U.S. government
securities.
“Volume Weighted Average Price”
means, in respect of a Common Share, Security or, as the case may be, a Spin-Off Security on any dealing day, the order book volume-weighted
average price of a Common Share, Security or, as the case may be, a Spin-Off Security published by or derived (in the case of a
Common Share) from the Reference Page or (in the case of a Security (other than Common Shares) or Spin-Off Security) from the principal
stock exchange or securities market on which such Securities or Spin-Off Securities are then listed or quoted or dealt in, if any
or, in any such case, such other source as shall be determined in good faith to be appropriate by an Independent Financial Adviser
on such dealing day, provided that if on any such dealing day such price is not available or cannot otherwise be determined as
provided above, the Volume Weighted Average Price of a Common Share, Security or a Spin-Off Security, as the case may be, in respect
of such dealing day shall be the Volume Weighted Average Price, determined as provided above, on the immediately preceding dealing
day on which the same can be so determined or as an Independent Financial Adviser might otherwise determine in good faith to be
appropriate.
“Voting Rights” means
the right generally to vote at a general meeting of Shareholders of the Company (irrespective of whether or not, at the time, stock
of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency).
Section 1.02. Compliance Certificates
and Opinions. Unless otherwise expressly provided for in this Contingent Convertible Capital Securities Indenture, upon any
application or request by the Company to the Trustee to take any action under any provision of this Contingent Convertible Capital
Securities Indenture, the Company shall furnish to the Trustee an Officer’s Certificate stating that all conditions precedent,
if any, provided for in this Contingent Convertible Capital Securities Indenture relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion of the legal advisor rendering such opinion all such conditions precedent,
if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Contingent Convertible Capital Securities Indenture relating to such
particular application or request, no additional certificate or opinion need be furnished.
Every certificate
or opinion with respect to compliance with a condition or covenant provided for in this Contingent Convertible Capital Securities
Indenture (other than Section
11.06) shall include:
(a) a
statement that each Person signing such certificate or opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a
brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c) a
statement that, in the opinion of each such Person, he has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a
statement as to whether, in the opinion of each such Person, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered
to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an officer
of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, legal
advisors, unless such officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion or representations are based are erroneous. Any such certificate
or opinion of, or representations by, legal advisors may be based, insofar as it relates to factual matters, upon a certificate
or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual
matters is in the possession of the Company, unless such legal advisors know, or in the exercise of reasonable care should know,
that the certificate or opinion or representation with respect to such matters is erroneous.
Where any Person is required to make, give
or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Contingent
Convertible Capital Securities Indenture, they may, but need not, be consolidated and form one instrument.
Section 1.04. Acts of Holders.
(a) Any
request, demand, authorization, direction, notice, consent, waiver or other action provided by this Contingent Convertible Capital
Securities Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, when it is hereby
expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Contingent Convertible
Capital Securities Indenture and (subject to Section
7.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.
(b) The
fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to him the execution thereof. When such execution is by a signer
acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of
his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The
ownership of Contingent Convertible Capital Securities shall be proved by the Contingent Convertible Capital Security
Register.
(d) Any
request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Contingent Convertible Capital
Security shall bind every future Holder of the same Contingent Convertible Capital Security and the Holder of every Contingent
Convertible Capital Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the Trustee, any Contingent Convertible Capital Security
Registrar, any Paying Agent, any Authenticating Agent or the Company in reliance thereon, whether or not notation of such action
is made upon such Contingent Convertible Capital Security or such other Contingent Convertible Capital Security.
(e) If
the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution or an Officer’s Certificate, fix in advance a record
date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver
or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of Outstanding Contingent Convertible Capital Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Contingent Convertible
Capital Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Contingent Convertible
Capital Securities Indenture not later than six months after the record date.
Section 1.05. Notices, Etc. to Trustee
and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided
or permitted by this Contingent Convertible Capital Securities Indenture to be made upon, given or furnished to, or filed with,
(a) the
Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided)
if made, given, furnished or filed in writing (which may be via facsimile or email delivery of a copy of such document) to the
Trustee at its Corporate Trust Office, and the Trustee agrees to accept and act upon facsimile transmission or email delivery of
written instructions pursuant to this Contingent Convertible Capital Securities Indenture, provided, however, that (x) the party
providing such written instructions, subsequent to such transmission of written instructions, shall provide the originally executed
instructions or directions to the Trustee in a timely manner, and (y) such originally executed instructions or directions shall
be signed by an authorized representative of the party providing such instructions or directions; or
(b) the
Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class air mail postage prepaid, to the Company, to the address of its principal office specified
in the first paragraph of this Contingent Convertible Capital Securities Indenture or at any other another address previously furnished
in writing to the Trustee by the Company.
The Trustee agrees to accept and act upon
instructions or directions pursuant to this Contingent Convertible Capital Securities Indenture sent by unsecured e-mail, portable
document format (PDF), facsimile transmission or other similar unsecured electronic methods, provided, however, that the Trustee
shall have received from the Company an incumbency certificate listing persons designated to give such instructions or directions
and containing the titles and specimen signatures of such designated persons, which such incumbency certificate shall be amended
and replaced whenever a person is to be added or deleted from the listing, and provided further that the Trustee shall have no
obligation or responsibility to confirm or verify that the instruction or direction was in fact sent by, or on behalf of, a person
so designated to give instructions or directions. If the Company elects to give the Trustee e-mail or facsimile instructions (or
instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's
understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses
arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding a conflict
or inconsistency between such instructions and a subsequent written instruction. The Company agrees to assume all risks arising
out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the
risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.
Section 1.06. Notice
to Holders; Waiver. When this Contingent Convertible Capital Securities Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly provided), if given in writing and mailed, first-class
postage prepaid, to each Holder of a Contingent Convertible Capital Security affected by such event in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act with respect to reports pursuant to Section
8.03(a).
For so long as the Contingent Convertible
Capital Securities of any series are represented by Global Securities, the Company will deliver a copy of all notices with respect
to such series to the Holder (if the address of such Holder is known to the Company).
When notice to Holders of Contingent Convertible
Capital Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Contingent Convertible Capital Securities
Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be
filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon
such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable
to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
Section 1.07. Language of Notices,
Etc. Any notice under this Contingent Convertible Capital Securities Indenture shall be in the English language, except that,
if the Company so elects, any published notice may be in an official language of the country of publication.
Section 1.08. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof
which is required to be included in this Contingent Convertible Capital Securities Indenture by any of the provisions of the Trust
Indenture Act, such required provision of the Trust Indenture Act shall control. If at any future time any provision required
to be included herein by the Trust Indenture Act as in force at the date as of which this Contingent Convertible Capital Securities
Indenture was executed or any limitation imposed by the Trust Indenture Act at such date on any provision otherwise included herein
would not be so required or imposed (in whole or in part) if this Contingent Convertible Capital Securities Indenture were executed
at such future time, the Company and the Trustee may enter into one or more indentures supplemental hereto pursuant to Section
10.01 to change or eliminate (in whole or in part) such provision or limitation of this Contingent Convertible Capital Securities
Indenture in conformity with the requirements of the Trust Indenture Act as then in force, except that (subject to Article
10) no provision or limitation required to be included herein by Sections 310(a)(1) and (a)(2), 315(a), (c), (d)(l), (d)(2), (d)(3)
and (e), 316(a)(1)(A), (a)(l)(B), (a)(2), (a) (last sentence) and (b) of the Trust Indenture Act as in force at the date as of
which this Contingent Convertible Capital Securities Indenture was executed may be so changed or eliminated.
Section 1.09. Effect of Headings and
Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Contingent Convertible Capital Securities Indenture by the Company shall bind its successors
and assigns, whether so expressed or not.
Section 1.11. Separability Clause.
In case any provision in this Contingent Convertible Capital Securities Indenture or in the Contingent Convertible Capital Securities
shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1.12. Benefits of Contingent
Convertible Capital Securities Indenture. Nothing in this Contingent Convertible Capital Securities Indenture or in the Contingent
Convertible Capital Securities, express or implied, shall give to any Person, other than the parties hereto and any Contingent
Convertible Capital Securities Registrars or Paying Agent or Calculation Agent with respect to any Contingent Convertible Capital
Securities and their successors hereunder, and the Holders of Contingent Convertible Capital Securities, any benefit or any legal
or equitable right, remedy or claim under this Contingent Convertible Capital Securities Indenture.
Section 1.13. Governing
Law. This Contingent Convertible Capital Securities Indenture and the Contingent Convertible Capital Securities shall be governed
by and construed in accordance with the laws of the State of New York, except for Section
13.01, which shall be governed by and construed in accordance with the laws of the Kingdom of Spain, and except that the authorization
and execution of this Contingent Convertible Capital Securities Indenture, the Contingent Convertible Capital Securities shall
be governed by (in addition to the laws of the State of New York relevant to execution) the respective jurisdictions of organization
of the Company and the Trustee, as the case may be.
Section 1.14. Business Days and Legal
Holidays. The terms of the Contingent Convertible Capital Securities shall provide that, in any case where any Distribution
Date or Redemption Date of a Contingent Convertible Capital Security shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Contingent Convertible Capital Securities Indenture or the Contingent Convertible
Capital Securities other than a provision in the Contingent Convertible Capital Securities that specifically states that such provision
shall apply in lieu of this Section) payments of Distributions, if any, (and premium, if any) or Liquidation Preference and the
exchange of the Contingent Convertible Capital Security need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment (or such other Business Day as shall be provided in such Contingent
Convertible Capital Security) with the same force and effect as if made on such Distribution Date or Redemption Date, provided
that no Distribution shall accrue for the period from and after such Distribution Date or Redemption Date, as the case may be.
Section 1.15. Appointment
of Agent for Service. The Company has designated and appointed Banco Santander, S.A., New York Branch, 45 E. 53rd
Street, New York, New York 10022, as its authorized agent (the “Authorized Agent”), as its authorized agent upon which
process may be served in any suit or proceeding in any Federal or State court in the Borough of Manhattan, The City of New York
arising out of or relating to the Contingent Convertible Capital Securities or this Contingent Convertible Capital Securities
Indenture, but for that purpose only, and agrees that service of process upon said Authorized Agent shall be deemed in every respect
effective service of process upon it in any such suit or proceeding in any Federal or State court in the Borough of Manhattan,
The City of New York, New York. Such appointment shall be irrevocable so long as any of the Contingent Convertible Capital Securities
remain Outstanding until the appointment of a successor by the Company and such successor’s acceptance of such
appointment.
Upon such acceptance, the Company shall notify the Trustee of the name and address of such successor. The Company further agrees
to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary
to continue such designation and appointment of said Authorized Agent in full force and effect so long as any of the Contingent
Convertible Capital Securities shall be Outstanding. The Trustee shall not be obligated and shall have no responsibility with
respect to any failure by the Company to take any such action. The Company hereby irrevocably submits (for the purposes of any
such suit or proceeding) to the non-exclusive jurisdiction of any such court in which any such suit or proceeding is so instituted,
and waives, to the extent it may effectively do so, any right to trial by jury and any objection it may have now or hereafter
to the laying of the venue of any such suit or proceeding. To the extent that the Company may be entitled, in any jurisdiction
in which judicial proceedings may at any time be commenced with respect to or arising out of this Contingent Convertible Capital
Securities Indenture to claim for itself or its revenues, assets or properties immunity (whether by reason of sovereign immunity
or otherwise) from suit, from the jurisdiction of any court (including, but not limited to, any court of the United States of
America or the State of New York) or from any legal process with respect to itself or its property, from attachment prior to judgment,
from set-off, from execution of a judgment, from the grant of injunctive relief, whether prior to or after judgment, or from any
other legal process (including, without limitation, in relation to enforcement of any arbitration award), and to the extent that
in any such jurisdiction there may be attributed such an immunity (whether or not claimed), the Company hereby irrevocably agrees
not to claim and hereby irrevocably waives such immunity and consents to the grant of any such relief.
Section
1.16. Calculation Agent. If the Company appoints a Calculation Agent pursuant to Section
3.01 with respect to any series of Contingent Convertible Capital Securities, any determination of the Distribution Rate on,
or other amounts in relation to, such series of Contingent Convertible Capital Securities in accordance with the terms of
such series of Contingent Convertible Capital Securities by such Calculation Agent shall (in the absence of manifest error,
bad faith or willful misconduct) be binding on the Company, the Trustee and all Holders and (in the absence of manifest
error, bad faith or willful misconduct) no liability to the Holders shall attach to the Calculation Agent in connection with
the exercise or non-exercise by it of its powers, duties and discretions.
Section 1.17. Waiver of Jury Trial.
EACH OF THE PARTIES HERETO, AND EACH HOLDER OF A CONTINGENT CONVERTIBLE CAPITAL SECURITY BY ITS ACCEPTANCE THEREOF, HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS CONTINGENT CONVERTIBLE CAPITAL SECURITIES INDENTURE, THE CONTINGENT CONVERTIBLE CAPITAL SECURITIES OR THE
TRANSACTION CONTEMPLATED HEREBY.
Section 1.18. Judgment Currency. Any
payment on account of an amount that is payable in U.S. dollars (the “Required Currency”) which is made to or for the
account of any Holder or the Trustee in lawful currency of any other jurisdiction (the “Judgment Currency”), whether
as a result of any judgment or order or the enforcement thereof or the liquidation of the Company shall constitute a discharge
of the Company obligation under this Contingent Convertible Capital Securities Indenture and the Contingent Convertible Capital
Securities only to the extent of the amount of the Required Currency with such Holder or the Trustee, as the case may be, could
purchase in the London foreign exchange markets with the amount of the Judgment Currency in accordance with normal banking procedures
at the rate of exchange prevailing on the first Business Day following receipt of the payment in the Judgment Currency. If the
amount of the Required Currency that could be so purchased is less than the amount of the Required Currency originally due to such
Holder or the Trustee, as the case may be, the Company shall indemnify and hold harmless the Holder or the Trustee, as the case
may be, from and against all loss or damage arising out of, or as a result of, such deficiency. This indemnity shall constitute
an obligation separate and independent from the other obligations contained in this Contingent Convertible Capital Securities Indenture
or the Contingent Convertible Capital Securities, shall give rise to a separate and independent cause of action, shall apply irrespective
of any indulgence granted by any Holder or the Trustee from time to time and shall continue in full force and effect notwithstanding
any judgment or order for a liquidated sum in respect of an amount due hereunder or under any judgment or order.
Article
2
Contingent Convertible Capital Security Forms
Section 2.01. Forms
Generally. The Contingent Convertible Capital Securities of each series shall be issuable in registered form and in such forms
as shall be established by or pursuant to a Board Resolution, an Officer’s Certificate, or in one or more indentures supplemental
hereto, pursuant to Section 3.01, in each case with such insertions, omissions, substitutions and other variations as
are required or permitted by this Contingent Convertible Capital Securities Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may be required to comply with any applicable law or
rule or regulation made pursuant thereto or with the rules of any securities exchange or Depositary therefor, or as may, consistently
herewith, be determined by the officers executing such Contingent Convertible Capital Securities, all as evidenced by any such
execution.
Section 2.02. Form of Trustee’s
Certificate of Authentication. The Trustee’s certificate of authentication shall be in substantially the following form:
CERTIFICATE OF AUTHENTICATION
This is one of the Contingent Convertible
Capital Securities of the series designated herein referred to in the within-mentioned Contingent Convertible Capital Securities
Indenture.
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THE BANK OF NEW YORK MELLON, as Trustee |
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By: |
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Authorized Signatory |
Article
3
The Contingent Convertible Capital Securities
Section 3.01. Amount Unlimited; Issuable
in Series. The aggregate Liquidation Preference of Contingent Convertible Capital Securities which may be authenticated and
delivered under this Contingent Convertible Capital Securities Indenture is unlimited. The Contingent Convertible Capital Securities
may be issued in one or more series.
There shall be established by or pursuant
to a Board Resolution of the Company, or established by an Officer’s Certificate, or established in one or more indentures
supplemental hereto, prior to the initial issuance of Contingent Convertible Capital Securities of any series,
(a) the
title of the Contingent Convertible Capital Securities of the series (which shall distinguish the Contingent Convertible Capital
Securities of the series from all other Contingent Convertible Capital Securities);
(b) any
limit upon the aggregate Liquidation Preference of the Contingent Convertible Capital Securities of the series which may be authenticated
and delivered under this Contingent Convertible Capital Securities Indenture (except for Contingent Convertible Capital Securities
authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Contingent Convertible Capital
Securities of the series pursuant to Section
3.04, Section 3.05, Section
3.06, Section 10.06 or Section
12.07) and except for any Contingent Convertible Capital Securities which, pursuant to Section
3.03 are deemed never to have been authenticated and delivered hereunder);
(c) the
date or dates, if any, on which the Liquidation Preference of the Contingent Convertible Capital Securities of the series is payable;
(d) the
rate or rates, if any, at which Distributions on the Contingent Convertible Capital Securities of the series shall accrue or the
manner of calculation of such rate or rates, if any, the date or dates from which such Distributions shall accrue, the Distribution
Dates on which such Distributions shall be payable or the manner of determination of such Distribution Dates and the Regular Record
Date for the Distributions payable on any Distribution Date and any dates required to be established pursuant to Section
8.01;
(e) whether
any premium, upon redemption or otherwise, shall be payable by the Company on Contingent Convertible Capital Securities of the
series, and whether such premium shall be redeemable at the option of the Company or the Holder;
(f) the
place or places where the Liquidation Preference of (and premium, if any) and any Distributions on Contingent Convertible Capital
Securities of the series shall be payable, and the paying agent, if other than the Principal Paying Agent, who shall be authorized
to pay Liquidation Preference of (and premium, if any) and any Distributions on Contingent Convertible Capital Securities of such
series, at least one such paying agent having an office or agency in the Borough of Manhattan, The City of New York;
(g) other
than with respect to any redemption of the Contingent Convertible Capital Securities pursuant to Section
12.08, whether or not such series of Contingent Convertible Capital Securities are to be redeemable, in whole or in part, at the
Company’s option and, if so redeemable, the period or periods within which, the price or prices at which and the terms and
conditions upon which, Contingent Convertible Capital Securities of the series may be redeemed, including the date referred to
in Section 12.08;
(h) the
obligation, if any, of the Company to redeem or purchase Contingent Convertible Capital Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or
prices at which, and the terms and conditions upon which Contingent Convertible
Capital Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such obligation;
(i) the
denominations in which Contingent Convertible Capital Securities of the series in each applicable form shall be issuable and any
provisions relating to redenomination of any Contingent Convertible Capital Securities;
(j) if
Additional Amounts, pursuant to Section 11.04,
will not be payable;
(k) if
other than Dollars, provisions, if any, for the Contingent Convertible Capital Securities of the series to be denominated, and
payments thereon to be made, in Foreign Currencies and specifying the Place of Payment and the manner of payment thereon and any
other terms with respect thereto;
(l) if
other than the coin or currency in which the Contingent Convertible Capital Securities of that series are denominated, the coin
or currency in which payment of the Liquidation Preference of and premium and Distributions on the Contingent Convertible Capital
Securities of such series shall be payable;
(m) if
the Liquidation Preference of and Distributions on the Contingent Convertible Capital Securities of such series are to be payable,
at the election of the Company or a Holder thereof, in a coin or currency other than that in which the Contingent Convertible Capital
Securities are denominated, the period or periods within which, and the terms and conditions upon which, such election may be made;
(n) whether
the Contingent Convertible Capital Securities of the series shall be issued in whole or in part in the form of one or more Global
Securities and the initial Holder with respect to such Global Security or Contingent Convertible Capital Securities;
(o) if
the Contingent Convertible Capital Securities of such series are to be issuable in definitive form (whether upon original issue
or upon exchange of a temporary Contingent Convertible Capital Security of such series or otherwise) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, then the form and terms of such certificates, documents or
conditions;
(p) if
the amounts of payments of Liquidation Preference or Distributions on the Contingent Convertible Capital Securities of the series
may be determined with reference to an index or are otherwise not fixed on the original issue date thereof, the manner in which
such amounts shall be determined and the Calculation Agent, if any, who shall be appointed and authorized to calculate such amounts;
(q) the
forms of Contingent Convertible Capital Securities of the series appertaining thereto;
(r) any
other terms of the series (which terms shall not be inconsistent with the provisions of this Contingent Convertible Capital Securities
Indenture); and
(s) the
Trustee for such series of Contingent Convertible Capital Securities who shall also be named in an indenture supplemental hereto
for a particular series of Contingent Convertible Capital Securities if the Trustee for such series is not the Trustee named in
the first paragraph of this Contingent Convertible Capital Securities Indenture
All Contingent Convertible Capital Securities
of any one series shall be substantially identical except as to denomination except as may otherwise be provided in or pursuant
to such action or in any such Officer’s Certificate or indenture supplemental hereto.
If the forms of Contingent Convertible Capital
Securities of any series, or any of the terms thereof, are established by action taken pursuant to a Board Resolution of the Company,
a copy of the Board Resolution in respect thereof shall be delivered to the Trustee at or prior to the delivery of the Company
Order pursuant to, Section 3.03 for the authentication and
delivery of such Contingent Convertible Capital Securities.
Section 3.02. Denominations.
The Contingent Convertible Capital Securities of each series shall be issuable in such denominations as shall be specified as contemplated
by Section 3.01.
Section 3.03. Execution, Authentication,
Delivery and Dating. The Contingent Convertible Capital Securities shall be executed on behalf of the Company by any one of
the representatives of the Company authorized to do so by Board Resolution or by any member of the Board of Directors. The signature
of any of these authorized representatives on the Contingent Convertible Capital Securities may be manual or facsimile. Contingent
Convertible Capital Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officer
of the Company shall bind the Company, notwithstanding that such individual has ceased to hold such office prior to the authentication
and delivery of such Contingent Convertible Capital Securities.
At any time
and from time to time after the execution and delivery of this Contingent Convertible Capital Securities Indenture, the Company
may deliver Contingent Convertible Capital Securities of any series executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such Contingent Convertible Capital Securities, and the Trustee
in accordance with the Company Order shall authenticate and deliver such Contingent Convertible Capital Securities. In authenticating
such Contingent Convertible Capital Securities and accepting the additional responsibilities under this Contingent Convertible
Capital Securities Indenture in relation to such Contingent Convertible Capital Securities the Trustee shall be entitled to receive,
and (subject to Section
7.01) shall be fully protected in relying upon, an Opinion of Counsel and an Officer’s Certificate stating that the form
and terms thereof have been established in conformity with the provisions of this Contingent Convertible Capital Securities Indenture.
The Trustee shall not be required to authenticate
such Contingent Convertible Capital Securities if the issue of such Contingent Convertible Capital Securities pursuant to this
Contingent Convertible Capital Securities Indenture will affect the Trustee’s own rights, duties or immunities under the
Contingent Convertible Capital Securities and this
Contingent Convertible Capital Securities
Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.
Each Contingent Convertible Capital Security
shall be dated the date of its authentication.
No Contingent
Convertible Capital Security shall be entitled to any benefit under this Contingent Convertible Capital Securities Indenture or
be valid or obligatory for any purpose unless there appears on such Contingent Convertible Capital Security a certificate of authentication
substantially in the form provided for herein executed by or on behalf of the Trustee by manual signature, and such certificate
upon any Contingent Convertible Capital Security shall be conclusive evidence, and the only evidence, that such Contingent Convertible
Capital Security has been duly authenticated and delivered hereunder and that such Contingent Convertible Capital Security is entitled
to the benefits of this Contingent Convertible Capital Securities Indenture. Notwithstanding the foregoing, if any Contingent Convertible
Capital Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company
shall deliver such Contingent Convertible Capital Security to the Trustee for cancellation as provided in Section
3.13, for all purposes of this Contingent Convertible Capital Securities Indenture, such Contingent Convertible Capital Security
shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefit of this Contingent
Convertible Capital Securities Indenture.
Section 3.04. Temporary Contingent
Convertible Capital Securities. Pending the preparation of definitive Contingent Convertible Capital Securities of any series,
the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Contingent Convertible Capital
Securities substantially of the tenor of the definitive Contingent Convertible Capital Securities in lieu of which they are issued,
which Contingent Convertible Capital Securities may be printed, lithographed, typewritten, photocopied or otherwise produced. Temporary
Contingent Convertible Capital Securities may be issued as registered Contingent Convertible Capital Securities in any authorized
denomination, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such
Contingent Convertible Capital Securities may determine, all as evidenced by such execution.
If temporary Contingent Convertible Capital
Securities of any series are issued, the Company will cause, if so required by the terms of such temporary Contingent Convertible
Capital Securities, definitive Contingent Convertible Capital Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Contingent Convertible Capital Securities of such series, the temporary Contingent Convertible
Capital Securities of such series shall be exchangeable for definitive Contingent Convertible Capital Securities of such series
containing identical terms and provisions upon surrender of the temporary Contingent Convertible Capital Securities of such series
at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Contingent Convertible Capital Securities of any series the Company shall execute, and
the Trustee shall authenticate and deliver in exchange therefor, a like
aggregate Liquidation Preference of definitive
Contingent Convertible Capital Securities of the same series of authorized denominations containing identical terms and provisions.
Until so exchanged, unless otherwise provided therein or in a supplemental indenture relating thereto, the temporary Contingent
Convertible Capital Securities of any series shall in all respects be entitled to the same benefits (but shall be subject to all
the limitations of rights) under this Contingent Convertible Capital Securities Indenture as definitive Contingent Convertible
Capital Securities of such series.
Section 3.05. Registration, Registration
of Transfer and Exchange.
(a) Global
Securities. This Section 3.05(a) shall apply
to Global Securities unless otherwise specified, as contemplated by Section
3.01.
Except
as otherwise specified as contemplated by Section
3.01 hereof, the Contingent Convertible Capital Securities shall be initially issued and represented by one or more Global
Securities in registered form, which shall be authenticated as contemplated by this Contingent Convertible Capital
Securities Indenture.
Each Global Security authenticated under
this Contingent Convertible Capital Securities Indenture shall be registered in the name of the Depositary designated for such
Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such
Global Security shall constitute a single Contingent Convertible Capital Security for all purposes of this Contingent Convertible
Capital Securities Indenture. Except as otherwise specified as contemplated by Section
3.01 hereof, each Global Security authenticated under this Contingent Convertible Capital Securities Indenture shall be initially
registered in the name of DTC or its nominee only.
Unless the Global Security is presented
by an authorized representative of the Holder to the Company or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of a nominee of the Holder and any payment is made to such nominee, any transfer,
pledge or other use of the Global Security for value or otherwise shall be wrongful since the registered owner of such Global Security,
the nominee of the Holder, has an interest in such Global Security.
Except as
otherwise specified as contemplated by Section
3.01 hereof, any Global Security shall be exchangeable for definitive Contingent Convertible Capital Securities only as provided
in this paragraph. A Global Security shall be exchangeable pursuant to this Section only (i) if the relevant Depositary notifies
the Company that it is unwilling or unable to continue to act as Depositary and a successor depositary is not appointed by the
Company within 120 days of such notification, (ii) if, in the event of a winding-up of the Company, the Company fails to make a
payment on the Contingent Convertible Capital Securities when due or (iii) at any time if the Company at its option and in its
sole discretion determines that the Global Securities of a particular series should be exchanged for definitive Contingent Convertible
Capital Securities of that series. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable
for, unless otherwise specified or contemplated by Section
3.01, definitive Contingent Convertible Capital Securities bearing Distributions (if any) at the same rate or pursuant
to the same formula, having the same
date of issuance, the same date or dates from which such Distributions shall accrue, the same Distribution Dates or manner of
determination of such Distribution Dates, redemption provisions, if any, specified currency and other terms and of differing
denominations aggregating a like amount as the Global Security so exchangeable. Definitive Contingent Convertible Capital
Securities shall be registered in the names of the owners of the beneficial interests in such Global Securities as such names
are from time to time provided by the Holder to the Trustee.
Any Global
Security that is exchangeable pursuant to the preceding paragraph, unless otherwise specified as contemplated by Section
3.01, shall be exchangeable for Contingent Convertible Capital Securities issuable in authorized denominations of a like aggregate
Liquidation Preference and tenor.
No Global Security may be transferred except
as a whole by the Holder to a nominee of the Holder or by the Holder or any such nominee to a successor of the Holder or a nominee
of such successor. Except as provided above, owners solely of beneficial interests in a Global Security shall not be entitled to
receive physical delivery of Contingent Convertible Capital Securities in definitive form and will not be considered the holders
thereof for any purpose under this Contingent Convertible Capital Securities Indenture.
In the event
that a Global Security is surrendered for redemption in part pursuant to Section
12.07, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Global Security, without
service charge, a new Global Security in a denomination equal to and in exchange for the unredeemed portion of the Liquidation
Preference of the Global Security so surrendered.
The Agent Members and any beneficial owners
shall have no rights under this Contingent Convertible Capital Securities Indenture with respect to any Global Security held on
their behalf by a Holder, and such Holder may be treated by the Company, the Trustee, and any agent of the Company or the Trustee
as the owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by a Holder or impair, as between any such Holder or other clearance service and its Agent Members and
Holders the operation of customary practices governing the exercise of the rights of a holder of any security, including without
limitation the granting of proxies or other authorization of participants to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action which a Holder is entitled to give or take under this Contingent Convertible Capital Securities
Indenture.
In connection
with any exchange of interests in a Global Security for definitive Contingent Convertible Capital Securities of another authorized
form, as provided in this Section 3.05(a),
then without unnecessary delay but in any event not later than the earliest date on which such interests may be so exchanged, the
Company shall deliver to the Trustee definitive Contingent Convertible Capital Securities in aggregate Liquidation Preference equal
to the Liquidation Preference of such Global Security or the
portion to be
exchanged, executed by the Company. On or after the earliest date on which such interests may be so exchanged, such Global Security
shall be surrendered by the Holder to the Trustee, as the Company’s agent for such purpose, to be exchanged, in whole or
from time to time in part, for definitive Contingent Convertible Capital Securities without charge (in which case the Company or
Trustee may require payment of any taxes or governmental charges arising) and the Trustee shall authenticate and deliver, in exchange
for each portion of such Global Security, an equal aggregate Liquidation Preference of definitive Contingent Convertible Capital
Securities of authorized denominations as the portion of such Global Security to be exchanged. Any Global Security that is exchangeable
pursuant to this Section
3.05 shall be exchangeable for Contingent Convertible Capital Securities issuable in the denominations specified as contemplated
by Section 3.01 and registered
in such names as the Holder of such Global Security shall direct. If a definitive Contingent Convertible Capital Security is issued
in exchange for any portion of a Global Security after the close of business at the office or agency where such exchange occurs
on any record date and before the opening of business at such office or agency on the relevant Distribution Date, Distributions
will not be payable on such Distribution Date in respect of such definitive Contingent Convertible Capital Security, but will be
payable on such Distribution Date only to the Person to whom Distributions in respect of such portion of such Global Security are
payable.
A Depositary may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which
a holder is entitled to take under this Contingent Convertible Capital Securities Indenture with respect to the Contingent Convertible
Capital Securities.
(b) Except
as otherwise specified pursuant to Section
3.01, Contingent Convertible Capital Securities of any series may only be exchanged for a like aggregate Liquidation Preference
of Contingent Convertible Capital Securities of such series of other authorized denominations containing identical terms and provisions.
Contingent Convertible Capital Securities to be exchanged shall be surrendered
at an office or agency of the Company designated pursuant to Section
11.02 for such purpose, and the Company shall execute, and the Trustee shall authenticate and deliver, in exchange therefor the
Contingent Convertible Capital Security or Contingent Convertible Capital Securities of the same series which the Holder making
the exchange shall be entitled to receive.
Except as
otherwise specified pursuant to Section
3.01, the Company shall cause to be kept in the Corporate Trust Office of the Trustee a register (the register maintained in such
office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as
the “Contingent Convertible Capital Security Register” in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Contingent Convertible Capital Securities and of transfers
of such Contingent Convertible Capital Securities. Except as otherwise specified pursuant to Section
3.01, the Trustee is hereby appointed “Contingent Convertible Capital Security Registrar” for the purpose of
registering Contingent Convertible Capital Securities and transfers of Contingent Convertible Capital Securities as herein provided.
Contingent
Convertible Capital Securities shall be transferable only on the Contingent Convertible Capital Security Register. Upon surrender
for registration of transfer of any Contingent Convertible Capital Security of any series, together with the form of transfer endorsed
on it, duly completed and executed at an office or agency of the Company designated pursuant to Section
11.02 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver to the address specified in the
form of transfer, within three Business Days, in the name of the designated transferee or transferees, one or more new Contingent
Convertible Capital Securities of the same series of any authorized denominations containing identical terms and provisions, of
a like aggregate Liquidation Preference. If only part of a Contingent Convertible Capital Security is transferred, a new Contingent
Convertible Capital Security of an aggregate Liquidation Preference equal to the amount not being transferred shall be executed
by the Company, and authenticated and delivered by the Trustee to the transferor, in the name of the transferor, within three Business
Days of receiving the Contingent Convertible Capital Security. The new Contingent Convertible Capital Security will be delivered
to the transferor by uninsured post at the risk of the transferor to the address of the transferor appearing in the Contingent
Convertible Capital Security Register. The new Contingent Convertible Capital Security will be delivered to the transferor by uninsured
post at the risk of the transferor to the address of the transferor appearing in the Contingent Convertible Capital Security Register.
A new Contingent Convertible Capital Security of an aggregate Liquidation Preference equal to the amount being transferred
shall be delivered by the Trustee to the transferee, in the name of the transferee, within three Business Days after the Trustee
acting as Paying Agent pursuant to Section
11.02 receives the Contingent Convertible Capital Security. The new Contingent Convertible Capital Security will be delivered to
the transferee by uninsured post at the risk of the transferee to the address of the transferee specified in the form of transfer.
All Contingent Convertible Capital Securities
issued upon any registration of transfer or exchange of Contingent Convertible Capital Securities shall be the valid obligations
of the Company, evidencing the same debt, and entitled to the same benefits under this Contingent Convertible Capital Securities
Indenture, as the Contingent Convertible Capital Securities surrendered upon such registration of transfer or exchange.
Every Contingent Convertible Capital Security
presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Contingent Convertible
Capital Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service
charge shall be made for any registration of transfer or exchange of Contingent Convertible Capital Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Contingent Convertible Capital Securities, other than exchanges pursuant to Section
3.04, 10.06 or 12.07
not involving any transfer.
The Company
shall not be required (i) to issue, register the transfer of or exchange any Contingent Convertible Capital Security of any series
during a period beginning at the opening of business 15 days before the day of the giving of a notice of redemption of Contingent
Convertible Capital Securities of such series selected for redemption under Section
12.03 and ending at the close of business on the day of the giving of such notice, or (ii) to register the transfer of or exchange
any Contingent Convertible Capital Security so selected for redemption in whole or in part, except the unredeemed portion of any
Contingent Convertible Capital Securities being redeemed in part.
Section 3.06. Mutilated, Destroyed,
Lost and Stolen Contingent Convertible Capital Securities. If any mutilated Contingent Convertible Capital Security (including
any Global Security) is surrendered to the Trustee, the Company may execute and the Trustee shall, in the case of a Contingent
Convertible Capital Security, authenticate and deliver, in exchange therefor a new Contingent Convertible Capital Security of the
same series containing identical terms and provisions and of like amount, and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company
and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Contingent Convertible Capital Security
(including any Global Security), and (ii) such security or indemnity as may be required by them to save each of them and any agent
of any of them harmless, then, in the absence of notice to the Company or the Trustee that such Contingent Convertible Capital
Security has been acquired by a bona fide purchaser, the Company shall execute and upon the Company’s request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Contingent Convertible Capital Security, if any,
a new Contingent Convertible Capital Security of the same series containing identical terms and provisions and of like amount,
and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost
or stolen Contingent Convertible Capital Security has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Contingent Convertible Capital Security pay such Contingent Convertible Capital Security.
Upon the issuance of any new Contingent
Convertible Capital Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith.
Every new Contingent Convertible Capital
Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Contingent Convertible Capital
Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen
Contingent Convertible Capital Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of
this Contingent Convertible Capital Securities Indenture equally and proportionately with any and all other Contingent Convertible
Capital Securities of that series duly issued hereunder.
The provisions of this Section, as amended
or supplemented pursuant to this Contingent Convertible Capital Securities Indenture, are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen
Contingent Convertible Capital Securities.
Section 3.07. Distributions. Rights
Preserved.
Except as otherwise provided in a supplemental
indenture:
(a) The
Company will make any payments of Distributions and Liquidation Preference on any particular series of Contingent Convertible Capital
Securities on the dates that are determined pursuant to Section
3.01.
(b) The
Contingent Convertible Capital Securities of any series will accrue non-cumulative cash distributions (“Distributions”)
as may be specified in, or determined in accordance with Section
3.01.
(c) The
Company has no obligation to make Distributions with respect to any series of Contingent Convertible Capital Securities.
(d) Except
as otherwise provided as contemplated by Section
3.01 with respect to any series of Contingent Convertible Capital Securities, Distributions, if any, on any Contingent Convertible
Capital Securities which are payable, and are paid or duly provided for, on any Distribution Payment Date shall be paid to the
Person in whose name that Contingent Convertible Capital Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such Distributions.
(e) In
the case of Contingent Convertible Capital Securities where payment is to be made in Dollars, payment at the Principal Paying Agent’s
office outside The City of New York will be made in Dollars by check drawn on, or, at the request of the Holder, by transfer to
a Dollar account maintained by the payee with, a bank in The City of New York.
(f) In
the case of Contingent Convertible Capital Securities where payment is to be made in a Foreign Currency, payment will be made as
established pursuant to Section 3.01.
(g) Subject
to the foregoing provisions of this Section
3.07, each Contingent Convertible Capital Security delivered under this Contingent Convertible Capital Securities Indenture upon
registration of transfer of or in exchange for or in lieu of any other Contingent Convertible Capital Security shall carry the
rights to accrued and unpaid Distributions, if any, and to accrue Distributions, which were carried by such other Contingent Convertible
Capital Security.
Section 3.08. Distributions Discretionary.
(a) The
Company may elect, in its sole and absolute discretion, to cancel the payment of any Distribution in whole or in part at any time
that it deems necessary or desirable, and for any reason.
(b) Distributions
on the Contingent Convertible Capital Securities will be non-cumulative. Accordingly, if any Distribution (or part thereof) is
not paid in respect of the Contingent Convertible Capital Securities of any series as a result of any election of the Company to
cancel such Distribution pursuant this Section
3.08 or the limitations on payment set out in this Section
3.08 and Section 3.09 then the right of the
Holders to receive the relevant Distribution (or part thereof) in respect of the relevant Distribution Period will be extinguished
and the Company will have no obligation to pay such Distribution (or part thereof) accrued for such Distribution Period or to pay
any interest thereon, whether or not Distributions on the Contingent Convertible Capital Securities of such series are paid in
respect of any future Distribution Period.
(c) No
such election to cancel the payment of any Distribution (or part thereof) pursuant to this Section
3.08 or non-payment of any Distribution (or part thereof) as a result of the limitations on payment set out in Section
3.09 will constitute an event of default, an Enforcement Event or the occurrence of any event related to the insolvency of the
Company or entitle holders to take any action to cause such Distribution to be paid or the liquidation, dissolution or winding-up
of the Company or in any way limit or restrict the Company from making any distribution or equivalent payment in connection with
any instrument ranking junior to the Contingent Convertible Capital Securities of such series (including, without limitation, any
CET1 Capital of the Company or the Group) or in respect of any other Parity Security or other Security.
Section 3.09. Restrictions on Payments.
(a) To
the extent that (i) the Company has insufficient Available Distributable Items to make Distributions on the Contingent Convertible
Capital Securities of such series scheduled for payment in the then current financial year and any equivalent payments scheduled
to be made in the then current financial year in respect of any other Parity Securities then outstanding, in each case excluding
any portion of such payments already accounted for in determining the Available Distributable Items, and/or (ii) the Regulator,
in accordance with Applicable Banking Regulations, requires the Company to cancel the relevant Distribution in whole or in part,
then the Company will, without prejudice to the right above to cancel at its discretion the payment of any such Distributions on
the Contingent Convertible Capital Securities of such series at any time, make partial or, as the case may be, no payment of the
relevant Distribution on the Contingent Convertible Capital Securities of such series.
(b) No
payment will be made on the Contingent Convertible Capital Securities of any series (whether by way of a repayment of the Liquidation
Preference, the payment of any Distribution or otherwise) if and to the extent that such payment would cause the
Maximum Distributable Amount (if any) then
applicable to the Company and/or the Group to be exceeded.
Section 3.10. Agreement to Distribution
Cancellation.
(a) By
acquiring contingent convertible capital securities, Holders and beneficial owners of the contingent convertible capital securities
acknowledge and agree that:
(i) Distributions are payable
solely at the Company’s discretion, and no amount of Distribution shall become or remain due and payable in respect of the
relevant Distribution Period to the extent that it has been cancelled by the Company at the Company’s sole discretion and/or
deemed cancelled as a result of our having insufficient Available Distributable Items or as a result of the Regulator requiring
the Company to cancel the Distributions or as a result of exceeding the Maximum Distributable Amount (if any) then applicable to
the Company and/or the Group; and
(ii) a
cancellation or deemed cancellation of Distributions (in each case, in whole or in part) in accordance with the terms of the Contingent
Convertible Capital Securities Indenture or applicable supplemental indenture and the Contingent Convertible Capital Securities
shall not constitute an Enforcement Event or other default under the terms of the Contingent Convertible Capital Securities or
the Capital Securities Indenture.
(b) Distributions
will only be due and payable on a Distribution Payment Date to the extent they are not cancelled or deemed cancelled previously
or thereafter in accordance with Section
3.08, Section 3.09, Section
3.10, Section 6.02 and Section
4.01. Any Distributions cancelled or deemed cancelled (in each case, in whole or in part) in the circumstances described herein
shall not be due and shall not accumulate or be payable at any time thereafter, and holders of the contingent convertible capital
securities shall have no rights thereto or to receive any additional Distributions or compensation as a result of such cancellation
or deemed cancellation.
Section 3.11. Notice of Distribution
Cancellation. If practicable, the Company will provide notice of any cancellation or deemed cancellation of Distributions (in
each case, in whole or in part) to the holders of the Contingent Convertible Capital Securities through the relevant Clearing System
(or, if the Contingent Convertible Capital Securities are held in definitive form, to the holders of the Contingent Convertible
Capital Securities directly at their addresses shown on the register for the Contingent Convertible Capital Securities) and to
the Trustee directly on or prior to the relevant Distribution Payment Date. Failure to provide such notice will have no impact
on the effectiveness of, or otherwise invalidate, any such cancellation or deemed cancellation of Distributions (and accordingly,
such Distributions will not be due and payable), or give the holders of the Contingent Convertible Capital Securities any rights
as a result of such failure.
Section 3.12.
Persons Deemed Owners. Prior to due presentment of a Contingent Convertible Capital Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Contingent Convertible
Capital Security is registered as the owner of such Contingent Convertible Capital Security for the purpose of receiving payment
of Liquidation Preference of and (subject to Section 3.05 and Section 3.07) any Distribution on such Contingent
Convertible Capital Security and for all other purposes whatsoever, whether or not such Contingent Convertible Capital Security
be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the
contrary. The aggregate Liquidation Preference of the Contingent Convertible Capital Securities of any series shall be reflected
on the books and records of the Contingent Convertible Capital Security Registrar.
None of the Company, the Trustee, the Paying
Agent or the Contingent Convertible Capital Security Registrar shall have any responsibility or obligation to any beneficial owner
in a Global Security, any Agent Member or any other Person with respect to the accuracy of the records of the Depositary or its
nominee or of any Agent Member, with respect to any ownership interest in the Contingent Convertible Capital Securities or with
respect to the delivery to any Agent Member, beneficial owner or other Person (other than the Depositary) of any notice (including
any notice of redemption) or the payment of any amount, under or with respect to such Contingent Convertible Capital Securities.
All notices and communications to be given to the Holders and all payments to be made to Holders under the Contingent Convertible
Capital Securities and this Contingent Convertible Capital Securities Indenture shall be given or made only to or upon the order
of the Holders (which shall be the Depositary or its nominee in the case of the Global Security). The rights of beneficial owners
in the Global Security shall be exercised only through the Depositary subject to the applicable procedures. The Company, the Trustee,
the Paying Agent and the Contingent Convertible Capital Security Registrar shall be entitled to rely and shall be fully protected
in relying upon information furnished by the Depositary with respect to its Agent Members and any beneficial owners. The Company,
the Trustee, the Paying Agent and the Contingent Convertible Capital Security Registrar shall be entitled to deal with the Depositary,
and any nominee thereof, that is the Holder of any Global Security for all purposes of this Contingent Convertible Capital Securities
Indenture relating to such Global Security (including the payment of Liquidation Preference and Distributions and Additional Amounts,
if any, and the giving of instructions or directions by or to the owner or holder of a beneficial ownership interest in such Global
Security) as the sole Holder and shall have no obligations to the beneficial owners thereof. None of the Company, the Trustee,
the Paying Agent or the Contingent Convertible Capital Security Registrar shall have any responsibility or liability for any acts
or omissions of the Depositary with respect to such Global Security, for the records of any such Depositary, including records
in respect of beneficial ownership interests in respect of any such Global Security, for any transactions between the Depositary
and any Agent Member or between or among the Depositary, any such Agent Member and/or any holder or owner of a beneficial interest
in such Global Security, or for any transfers of beneficial interests in any such Global Security.
Notwithstanding the foregoing, with respect
to any Global Security, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization furnished by any Depositary (or its nominee), as a Holder,
with respect to such Global Security or shall impair, as between such Depositary and owners of beneficial interests in such Global
Security, the operation of customary practices governing the exercise of the rights of such Depositary (or its nominee) as Holder
of such Global Security.
Each Holder and beneficial owner that acquires its Contingent
Convertible Capital Security in the secondary market shall be deemed to acknowledge and agree to be bound by and consent to the
same provisions specified in this Contingent Convertible Capital Securities Indenture and the Contingent Convertible Capital Securities
to the same extent as the Holders and beneficial owners of the Contingent Convertible Capital Securities that acquire the Contingent
Convertible Capital Securities upon their initial issuance, including, without limitation, with respect to the acknowledgement
and agreement to be bound by and consent to the terms of the Contingent Convertible Capital Securities, including, without limitation,
in relation to Distribution cancellation, the Trigger Conversion, the Spanish Bail-in Power and the limitations on remedies specified
in the Contingent Convertible Capital Security and Section 6.03.
Section 3.13. Cancellation. All Contingent Convertible Capital Securities surrendered for payment,
redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Contingent
Convertible Capital Securities previously authenticated and delivered hereunder, and all Contingent Convertible Capital Securities
so delivered shall be promptly cancelled by the Trustee. No Contingent Convertible Capital Securities shall be authenticated in
lieu of or in exchange for any Contingent Convertible Capital Securities cancelled as provided in this Section, except as expressly
permitted by the provisions of the Contingent Convertible Capital Securities of any series or pursuant to the provisions of this
Contingent Convertible Capital Securities Indenture. The Trustee shall deliver to the Company all cancelled Contingent Convertible
Capital Securities held by the Trustee.
Section 3.14. Computation of Distributions. Except as otherwise specified pursuant to Section
3.01 for Contingent Convertible Capital Securities of any series, Distributions on the Contingent Convertible Capital Securities
of each series shall be computed on the basis of a 360-day year of twelve 30-day months.
Section 3.15. Cusip Numbers. The Company in issuing Contingent Convertible Capital Securities may
use “CUSIP”, “ISIN” and/or “Common Code” and/or other similar numbers (if then generally in
use) or any successor to such numbers and thereafter with respect to such series, and, if so, the Trustee shall use “CUSIP”,
“ISIN” and/or “Common Code” and/or other similar numbers or successor numbers in notices of redemption
as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such
numbers either as printed on the Contingent Convertible Capital Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the Contingent Convertible Capital Securities, and any
such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee
of any change in the “CUSIP”, “ISIN” and/or “Common Code” and/or other similar numbers or successor
numbers.
Section 3.16. Additional Contingent
Convertible Capital Securities. (a) The Company may without the consent or sanction of the Holders of the Contingent Convertible
Capital Securities of any series: (i) take any action required to issue additional Parity Securities or authorize, create and issue
one or more other series of Parity Securities ranking equally with the Contingent Convertible Capital Securities of such series,
as to the participation in the profits and/or assets of the Company, without limit as to the amount; or (ii) take any action required
to authorize, create and issue one or more other classes or series of shares of the Company or securities mandatorily convertible
into Common Shares of the Company ranking junior to the Contingent Convertible Capital Securities, as to the participation in the
profits and/or assets of the Company.
(b) By
acquiring a Contingent Convertible Capital Securities, Holders of Contingent Convertible Capital Securities agree to renounce any
rights of seniority or preference that may be conferred upon it (if any) under applicable Spanish law over any Holder of such other
Parity Securities issued by the Company from time to time.
(c) The
Contingent Convertible Capital Securities do not grant the Holders of the Contingent Convertible Capital Securities of such series
pre-emption rights in respect of any possible future issues of Parity Securities or any other securities by the Company or any
Subsidiary.
(d)
The Company may, without the consent of the Holders of the Contingent Convertible Capital
Securities of any series, issue additional Contingent Convertible Capital Securities (“Additional Contingent Convertible
Capital Securities”) of one or more of the series of Contingent Convertible Capital Securities issued under this Contingent
Convertible Captial Securities Indenture having the same ranking and same Distribution Rate, redemption terms and other terms
as the Contingent Convertible Capital Securities of such series except for the price to the public, original Distribution accrual
date, issue date and first Distribution Payment Date, provided however that such Additional Contingent Convertible Capital Securities
will not have the same CUSIP, ISIN or other identifying number as the outstanding Contingent Convertible Capital Securities of
the relevant series unless the Additional Contingent Convertible Capital Securities are fungible with the outstanding Contingent
Convertible Capital Securities of the relevant series for U.S. federal income tax purposes. Any such Additional Contingent Convertible
Capital Securities, together with the Contingent Convertible Capital Securities of the relevant series, will constitute a single
series of Contingent Convertible Capital Securities under this Contingent Convertible Capital Securities Indenture.
Section 3.17. Correction of Minor
Defects in or Amendment of Contingent Convertible Capital Securities. If, after issuance of any Contingent Convertible Capital
Security (including any Global Security), the Company or the Trustee shall become aware of any ambiguity, defect or inconsistency
in any term of a Contingent Convertible Capital Security or Global Security, as the case may be, or, with respect to any Contingent
Convertible Capital Security (including any Global Security) issued on or
after the date
hereof, the Company and the Trustee agree to amend such Contingent Convertible Capital Security as contemplated by Section
10.01, the parties hereto shall provide for the execution, authentication, delivery and dating of one or more replacement Contingent
Convertible Capital Securities or Global Securities, as the case may be, pursuant to Section
3.03 hereto.
Section 3.18. Payments
Subject to Fiscal Laws. All payments in respect of the Contingent Convertible Capital Securities will be subject in all cases
to any fiscal or other laws and regulations applicable thereto in the place of payment (including FATCA, any regulations or agreements
thereunder, any official interpretation thereof, any intergovernmental agreements with respect thereto, or any law implementing
an intergovernmental agreement or any regulations or official interpretations relating thereto), but without prejudice to the provisions
of Section 11.04.
Section 3.19. Undertakings. So
long as any Contingent Convertible Capital Security remains outstanding, the Company shall, unless approved by a majority in aggregate
Liquidation Preference of such series:
(a)
not make any issue, grant or distribution or take or omit to take any other action if the effect thereof would be that, on Trigger
Conversion, Common Shares could not, under any applicable law then in effect, be legally issued as fully paid;
(b) if
any offer is made to all (or as nearly as may be practicable all) Shareholders (or all (or as nearly as may be practicable all)
such Shareholders other than the offeror and/or any associates of the offeror) to acquire all or a majority of the issued Common
Shares, or if a scheme is proposed with regard to such acquisition (other than a Newco Scheme), give notice of such offer or scheme
to the Holders at the same time as any notice thereof is sent to the Shareholders (or as soon as practicable thereafter) that details
concerning such offer or scheme may be obtained from the specified offices of the Paying and Conversion Agents and, where such
an offer or scheme has been recommended by the Board of Directors, or where such an offer has become or been declared unconditional
in all respects or such scheme has become effective, use all commercially reasonable endeavours to procure that a like offer or
scheme is extended to the holders of any Common Shares issued during the period of the offer or scheme arising out of the Trigger
Conversion;
(c) in
the event of a Newco Scheme, take (or shall procure that there is taken) all necessary action to ensure that such amendments are
made to the Contingent Convertible Capital Securities Indenture immediately after completion of the Scheme of Arrangement as are
necessary to ensure that the Contingent Convertible Capital Securities may be converted into or exchanged for ordinary shares in
Newco (or depositary or other receipts or certificates representing ordinary shares of Newco) mutatis mutandis in accordance
with and subject to the Contingent Convertible Capital Securities Indenture and the ordinary shares of Newco are:
(i) admitted to the Relevant
Stock Exchange; or
(ii) listed and/or admitted
to trading on another Recognised Stock Exchange, and the Holders of the Contingent Convertible Capital Securities of the relevant
series irrevocably authorise the Company to make such amendments to the Contingent Convertible Capital Securities Indenture without
the need for any further authorization from the holders of the Contingent Convertible Capital Securities of such series;
(d) issue,
allot and deliver Common Shares upon Trigger Conversion subject to and as provided in Section
4.01 above;
(e) use
all reasonable endeavours to ensure that its issued and outstanding Common Shares and any Common Shares issued upon Trigger Conversion
will be admitted to listing and trading on the Relevant Stock Exchange or will be listed and/or admitted to trading on another
Recognised Stock Exchange;
(f) at
all times keep in force the relevant resolutions needed for issue, free from pre-emptive rights, sufficient authorized but unissued
Common Shares to enable Trigger Conversion of the Contingent Convertible Capital Securities, and all rights of subscription and
exchange for Common Shares, to be satisfied in full; and
(g) where
the provisions of Section 4.01 require or
provide for a determination by an Independent Financial Adviser or a role to be performed by a Settlement Shares Depository or
a Paying and Conversion Agent, the Company shall use all reasonable endeavours promptly to appoint such persons for such purposes.
Article
4
Conversion of the Contingent Convertible Capital Securities
Section 4.01. Conversion upon Trigger
Event.
(a) If
the Trigger Event occurs at any time on or after the issue date of any series of Contingent Convertible Capital Securities, then
the Company will:
(i) not
declare or pay any Distribution on the Contingent Convertible Capital Securities of such series, including any accrued and unpaid
Distributions, which shall be cancelled by the Company in accordance with Section
3.08 and Section 3.09; and
(ii) irrevocably and mandatorily
(and without any requirement for the consent or approval of the Holders of Contingent Convertible Capital Securities of such series)
convert all the Contingent Convertible Capital Securities of such series into Common Shares (the “Trigger Conversion”)
to be delivered on the relevant Conversion Settlement Date. If the Trigger Event occurs, the Contingent Convertible Capital Securities
of any series will be converted in whole and not in part.
(b) For
the purposes of determining whether the Trigger Event has occurred, the Company will (i) calculate the CET1 ratio based on information
(whether or not
published) available to management of the
Company, including information internally reported within the Company pursuant to its procedures for ensuring effective ongoing
monitoring of the capital ratios of the Company and the Group and (ii) calculate and publish the CET1 ratio on at least a quarterly
basis. The Company’s calculation shall be binding on the Trustee and the Holders of the relevant series of Contingent Convertible
Capital Securities.
(c)
Subject as provided in this Section 4.01(c) with respect to fractions,
the number of Conversion Shares shall be determined by dividing the Liquidation Preference of such Contingent Convertible Capital
Security by the relevant Conversion Price in effect on the relevant Trigger Event Notice Date. Fractions of Common Shares will
not be issued on Trigger Conversion and no cash payment or other adjustment will be made in lieu thereof. Without prejudice to
the generality of the foregoing, if one or more Delivery Notices and the related Contingent Convertible Capital Securities are
received by or on behalf of the Paying and Conversion Agent such that the Conversion Shares or related ADSs to be delivered by
or on behalf of the Settlement Shares Depository are to be registered in the same name or delivered to the same Clearing Agency
participant account, the number of such Conversion Shares to be delivered in respect thereof shall be calculated on the basis
of the aggregate Liquidation Preference of such contingent convertible capital securities being so converted and rounded down
to the nearest whole number of Common Shares or related ADSs, as applicable.
(d)
Upon
any Trigger Event of any series of Contingent Convertible Capital Securities, Holders shall have no claim against the Company
in respect of (i) any Liquidation Preference of such series of Contingent Convertible Capital Securities or (ii) any accrued
and unpaid Distributions cancelled or otherwise unpaid in respect of Contingent Convertible Capital Securities of such series
and the Contingent Convertible Capital Securities of such series shall cease to represent any right other than the right to
receive Common Shares, if elected, or ADSs from or on behalf of the Settlement Shares Depository.
(e) On the Conversion Settlement Date, the Company shall deliver to the Settlement Shares
Depository such number of Common Shares as is required to satisfy in full the Company’s obligation to deliver Common Shares
in respect of the Trigger Conversion of the aggregate Liquidation Preference of Contingent Convertible Capital Securities of such
series outstanding on the Trigger Event Notice Date.
(f) The
obligation of the Company to issue and deliver Conversion Shares to a Holder of Contingent Convertible Capital Securities of any
series on the relevant Conversion Settlement Date shall be satisfied by the delivery of such Conversion Shares to the Settlement
Shares Depository on behalf of the relevant Holder. Receipt of the relevant Conversion Shares by the Settlement Shares Depository
shall discharge the Company’s obligations in respect of such Contingent Convertible Capital Securities.
(g) Holders
of any series of Contingent Convertible Capital Securities shall have recourse to the Company only for the issue and delivery of
the relevant Conversion
Shares to the
Settlement Shares Depository. After such delivery, Holders of any series of Contingent Convertible Capital Securities shall have
recourse to the Settlement Shares Depository only for the delivery to them of such Conversion Shares or related ADSs, in the circumstances
described in Section 4.06.
Section 4.02. Conversion Price.
“Conversion Price” means, on
the Trigger Event Notice Date, if the Common Shares are:
(a) then
admitted to trading on a Relevant Stock Exchange, the higher of:
(i) the Current Market Price
of a Common Share;
(ii) the Floor Price; and
(iii) the nominal value of
a Common Share, in each case on the Trigger Event Notice Date; or
(b) not
then admitted to trading on a Relevant Stock Exchange, the higher of (ii) and (iii) above.
Section
4.03. Anti-Dilution Adjustment of the Floor Price. For the purposes of this Section 4.03 only (a) references to the
“issue” of Common Shares or Common Shares being issued shall, if not otherwise expressly specified in this
Contingent Convertible Capital Securities Indenture, include the transfer and/or delivery of Common Shares, whether newly
issued and allotted or previously existing or held by or on behalf of the Company or any member of the Group, and (b) Common
Shares held by or on behalf of the Company or any member of the Group (and which, in the case of Section 4.03(a)(iv) and
Section 4.03(a)(vi), do not rank for the relevant right or other entitlement) shall not be considered as or treated as
in issue or issued or entitled to receive any Dividend, right or other entitlement.
References to any issue or offer or grant
to Shareholders or Existing Shareholders “as a class” or “by way of rights” shall be taken to be references
to an issue or offer or grant to all or substantially all Shareholders or Existing Shareholders, as the case may be, other than
Shareholders or Existing Shareholders, as the case may be, to whom, by reason of the laws of any territory or requirements of any
recognised regulatory body or any other stock exchange or securities market in any territory or in connection with fractional entitlements,
it is determined not to make such issue or offer or grant.
(a) Upon
the happening of any of the events described below and unless otherwise provided in the relevant prospectus supplement, the Floor
Price of any series of Contingent Convertible Capital Securities shall be adjusted as follows:
(i) If and whenever there
shall be a consolidation, reclassification/redesignation or subdivision affecting the number of Common Shares, the Floor Price
shall be adjusted by multiplying the Floor Price in force immediately prior to such consolidation, reclassification/redesignation
or subdivision by the following fraction:
A
B
where:
| A | is the aggregate number of Common Shares in issue immediately before such consolidation, reclassification/redesignation or
subdivision, as the case may be; and |
| B | is the aggregate number of Common Shares in issue immediately after, and as a result of, such consolidation, reclassification/redesignation
or subdivision, as the case may be. |
Such adjustment shall become effective on
the date the consolidation, reclassification/redesignation or subdivision, as the case may be, takes effect.
(ii) If and whenever the Company
shall issue any Common Shares credited as fully paid to Shareholders by way of capitalization of profits or reserves (including
any share premium account or capital redemption reserve) other than (i) where any such Common Shares are or are to be issued instead
of the whole or part of a Cash Dividend which Shareholders would or could otherwise have elected to receive, (ii) where Shareholders
may elect to receive a Cash Dividend in lieu of such Common Shares or (iii) where any such Common Shares are or are expressed to
be issued in lieu of a Dividend (whether or not a Cash Dividend equivalent or amount is announced or would otherwise be payable
to Shareholders, whether at their election or otherwise), the Floor Price shall be adjusted by multiplying the Floor Price in force
immediately prior to such issue by the following fraction:
A
B
where:
| A | is the aggregate number of Common Shares in issue immediately before such issue; and |
| B | is the aggregate number of Common Shares in issue immediately after such issue. |
Such adjustment shall become effective on
the first day on which Common Shares are traded ex-rights on the relevant Stock Exchange.
(iii) (A) If and whenever
the Company shall pay any Extraordinary Dividend to its shareholders, the Floor Price shall be adjusted by multiplying the Floor
Price in force immediately prior to the Effective Date by the following fraction:
A – B
A – C
where:
| A | is the Current Market Price of one Common Share on the Effective Date; |
| B | is the portion of the Fair Market Value of the aggregate Extraordinary Dividend attributable to one Common Share, with such
portion being determined by dividing the Fair Market Value of the aggregate Extraordinary Dividend by the number of Common Shares
entitled to receive the relevant Dividend; and |
| C | is the amount (if any) by which the Reference Amount determined in respect of the Relevant Dividend exceeds an amount equal
to the aggregate of the Fair Market Values of any previous Cash Dividends per Common Share paid or made in such Relevant Year (where
C shall equal zero if such previous Cash Dividends per Common Share are equal to, or exceed, the Reference Amount in respect of
the Relevant Year). For the avoidance of doubt, “C” shall equal the Reference Amount determined in respect of the Relevant
Dividend where no previous Cash Dividends per Common Share have been paid or made in such Relevant Year. |
Such adjustment shall become effective on
the Effective Date or, if later, the first date upon which the Fair Market Value of the relevant Extraordinary Dividend can be
determined.
“Effective
Date” means, in respect of this Section 4.03(a)(iii)(A),
the first date on which the Common Shares are traded ex-the relevant Cash Dividend on the Relevant Stock Exchange.
“Extraordinary Dividend” means
(i) any Cash Dividend which is expressly declared by the Company to be a capital distribution, extraordinary dividend, extraordinary
distribution, special dividend, special distribution or return of value to its shareholders or any analogous or similar term (including
any distribution made as a result of any capital reduction), in which case the Extraordinary Dividend shall be such Cash Dividend;
or (ii) any Cash Dividend (the “Relevant Dividend”) paid or made in a financial year of the Company (the “Relevant
Year”) if (A) the Fair Market Value of the Relevant Dividend per Common Share or (B) the sum of (I) the Fair Market Value
of the Relevant Dividend per Common Share and (II) an amount equal to the aggregate of the Fair Market Value or Fair Market Values
of any other Cash Dividend or Cash Dividends per Common Share paid or made in the Relevant Year (other than any Cash Dividend or
part thereof previously determined to be an
Extraordinary Dividend paid or made in such Relevant Year), exceeds the Reference Amount, and in that case the Extraordinary Dividend
shall be the amount by which the Reference Amount is so exceeded.
“Reference Amount” means an
amount per Ordinary Share that is consistent with the dividend policy of the Company as applied or to be applied for a period or
projected period of at least three years.
(B) If and whenever the Company
shall pay or make any Non-Cash Dividend to Shareholders, the Floor Price shall be adjusted by multiplying the Floor Price in force
immediately prior to the Effective Date by the following fraction:
A – B
A
where:
| A | is the Current Market Price of one Common Share on the Effective Date; and |
| B | is the portion of the Fair Market Value of the aggregate Non-Cash Dividend attributable to one Common Share, with such portion
being determined by dividing the Fair Market Value of the aggregate Non-Cash Dividend by the number of Common Shares entitled to
receive the relevant Non-Cash Dividend (or, in the case of a purchase, redemption or buy back of Common Shares or any depositary
or other receipts or certificates representing Common Shares by or on behalf of the Company or any member of the Group, by the
number of Common Shares in issue immediately following such purchase, redemption or buy back, and treating as not being in issue
any Common Shares, or any Common Shares represented by depositary or other receipts or certificates, purchased, redeemed or bought
back). |
Such adjustment shall become effective on
the Effective Date or, if later, the first date upon which the Fair Market Value of the relevant Non-Cash Dividend is capable of
being determined as provided herein.
“Effective
Date” means, in respect of this Section
4.03(a)(iii)(B),
the first date on which the Common Shares are traded ex-the relevant Dividend on the Relevant Stock Exchange or, in the case of
a purchase, redemption or buy back of Common Shares or any depositary or other receipts or certificates representing Common Shares
by or on behalf of the Company or any member of the Group, the date on which such purchase, redemption or buy back is made (or,
in any such case if later, the first date upon which the Fair Market Value of the relevant Dividend is capable of being determined
as provided herein) or in the case of a Spin-Off, the first date on which the Common Shares are traded ex-the relevant Spin-Off
on the Relevant Stock Exchange.
(C) For
the purposes of the above, Fair Market Value shall (subject as provided in paragraph (a)
of the definition of “Dividend” and in the definition of “Fair Market Value”) be determined as at the Effective
Date.
(D) In making any calculations
for the purposes of this Section 4.03(a)(iii), such adjustments (if any) shall be made as an Independent Financial Adviser may determine
in good faith to be appropriate to reflect (A) any consolidation or sub-division of any Common Shares or (B) the issue of Common
Shares by way of capitalisation of profits or reserves (or any like or similar event) or (C) any increase in the number of Common
Shares in issue in the Relevant Year in question.
(iv) If and whenever the Company
shall issue Common Shares to its shareholders as a class by way of rights, or the Company or any member of the Group or (at the
direction or request or pursuant to any arrangements with the Company or any member of the Group) any other company, person or
entity shall issue or grant to its shareholders as a class by way of rights, any options, warrants or other rights to subscribe
for or purchase or otherwise acquire any Common Shares, or any Securities which by their terms of issue carry (directly or indirectly)
rights of conversion into, or exchange or subscription for, or the right to acquire, any Common Shares (or shall grant any such
rights in respect of existing Securities so issued), in each case at a price per Common Share which is less than 95 per cent. of
the Current Market Price per Common Share on the Effective Date, the Floor Price shall be adjusted by multiplying the Floor Price
in force immediately prior to the Effective Date by the following fraction:
A + B
A + C
where:
| A | is the number of Common Shares in issue on the Effective Date; |
| B | is the number of Common Shares which the aggregate consideration (if any) receivable for the Common Shares issued by way of
rights, or for the Securities issued by way of rights, or for the options or warrants or other rights issued or granted by way
of rights and for the total number of Common Shares deliverable on the exercise thereof, would purchase at such Current Market
Price per Common Share; and |
| C | is the number of Common Shares to be issued or, as the case may be, the maximum number of Common Shares which may be issued
upon exercise of such options, warrants or rights calculated as at the date of issue of such options, warrants or rights or upon
conversion or exchange or exercise of rights of subscription or purchase or other rights of acquisition in respect |
thereof at the initial conversion,
exchange, subscription, purchase or acquisition price or rate,
provided that
if at the first date on which the Common Shares are traded ex-rights, ex-options or ex-warrants on the Relevant Stock Exchange
(as used in this Section
4.03(a)(iv),
the “Specified Date”) such number of Common Shares is to be determined by reference to the application of a formula
or other variable feature or the occurrence of any event at some subsequent time, then for the purposes of this Section
4.03(a)(iv),
“C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or
had occurred as at the Specified Date and as if such conversion, exchange, subscription, purchase or acquisition had taken place
on the Specified Date.
Such adjustment shall become effective on
the Effective Date.
“Effective
Date” means, in respect of this Section
4.03(a)(iv),
the first date on which the Common Shares are traded ex-rights, ex-options or ex-warrants on the Relevant Stock Exchange.
(v) If and whenever the Company
or any member of the Group or (at the direction or request or pursuant to any arrangements with the Company or any member of the
Group) any other company, person or entity shall issue any Securities (other than Common Shares or options, warrants or other rights
to subscribe for or purchase or otherwise acquire any Common Shares or Securities which by their terms carry (directly or indirectly)
rights of conversion into, or exchange or subscription for, or rights to otherwise acquire, Common Shares) to its shareholders
as a class by way of rights or grant to its shareholders as a class by way of rights any options, warrants or other rights to subscribe
for or purchase or otherwise acquire any Securities (other than Common Shares or options, warrants or other rights to subscribe
for or purchase or otherwise acquire Common Shares or Securities which by their term carry (directly or indirectly) rights of conversion
into, or exchange or subscription for, rights to otherwise acquire, Common Shares), the Floor Price shall be adjusted by multiplying
the Floor Price in force immediately prior to the Effective Date by the following fraction:
A – B
A
where:
| A | is the Current Market Price of one Common Share on the Effective Date; and |
| B | is the Fair Market Value on the Effective Date of the portion of the rights attributable to one Common Share. |
Such adjustment shall become effective on
the Effective Date.
“Effective
Date” means, in respect of this Section
4.03(a)(v),
the first date on which the Common Shares are traded ex-the relevant Securities or ex-rights, ex-option or ex-warrants on the Relevant
Stock Exchange.
(vi) If
and whenever the Company shall issue (otherwise than as mentioned in Section
4.03(a)(iv)
above) wholly for cash or for no consideration any Common Shares (other than Common Shares issued on conversion of the any
series of Contingent Convertible Capital Securities or on the exercise of any rights of conversion into, or exchange or
subscription for or purchase of, or right to otherwise acquire Common Shares) or if and whenever the Company or any member of
the Group or (at the direction or request or pursuance to any arrangements with the Company or any member of the Group) any
other company, person or entity shall issue or grant (otherwise than as mentioned in Section 4.03(a)(iv) above) wholly for cash or
for no consideration any options, warrants or other rights to subscribe for or purchase or otherwise acquire any Common
Shares (other than the Contingent Convertible Capital Securities of any series, which for this purpose include any Further
Contingent Convertible Capital Securities), in each case at a price per Common Share which is less than 95 percent of the
Current Market Price per Common Share on the date of the first public announcement of the terms of such issue or grant, the
Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to the Effective Date by the
following fraction:
A + B
A + C
where:
| A | is the number of Common Shares in issue immediately before the issue of such Common Shares or the grant of such options, warrants
or rights; |
| B | is the number of Common Shares which the aggregate consideration (if any) receivable for the issue of such Common Shares or,
as the case may be, for the Common Shares to be issued or otherwise made available upon the exercise of any such options, warrants
or rights, would purchase at such Current Market Price per Common Share on the Effective Date; and |
| C | is the number of Common Shares to be issued pursuant to such issue of such Common Shares or, as the case may be, the maximum
number of Common Shares which may be issued upon exercise of such options, warrants or rights calculated as at the date of issue
of such options, warrants or rights, |
provided that
if at the time of issue of such Common Shares or date of issue or grant of such options, warrants or rights (as used in this Section
4.03(a)(vi),
the “Specified Date”), such number of Common Shares is to be determined by reference to the application of a formula
or other variable feature or the occurrence of any event at some subsequent time, then for the purposes of this Section
4.03(a)(vi),
“C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or
had occurred as at the Specified Date and as if such conversion, exchange, subscription, purchase or acquisition had taken place
on the Specified Date.
Such adjustment shall become effective on
the Effective Date.
“Effective
Date” means, in respect of this Section
4.03(a)(vi),
the date of issue of such Common Shares or, as the case may be, the grant of such options, warrants or rights.
(vii) If
and whenever the Company or any member of the Group or (at the direction or request of or pursuant to any arrangements with the
Company or any member of the Group) any other company, person or entity (otherwise than as mentioned in Section
4.03(a)(iv),
Section 4.03(a)(v)
or Section 4.03(a)(vi))
shall issue wholly for cash or for no consideration any Securities (other than Contingent Convertible Capital Securities of any
series) which by their terms of issue carry (directly or indirectly) rights of conversion into, or exchange or subscription for,
purchase of, or rights to otherwise acquire, Common Shares (or shall grant any such rights in respect of existing Securities so
issued) or Securities which by their terms might be reclassified/redesignated as Common Shares, and the consideration per Common
Share receivable upon conversion, exchange, subscription, purchase, acquisition or redesignation is less than 95 per cent of the
Current Market Price per Common Share on the date of the first public announcement of the terms of issue of such Securities (or
the terms of such grant), the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to the Effective
Date by the following fraction:
A + B
A + C
where:
| A | is the number of Common Shares in issue immediately before such issue or grant (but where the relevant Securities carry rights
of conversion into or rights of exchange or subscription for, purchase of, or rights to otherwise acquire Common Shares which have
been issued, purchased or acquired by the Company or any member of the Group (or at the direction or request or pursuant to any
arrangements with the Company or any member of the Group) for the purposes of or in connection with such issue, less the number
of such Common Shares so issued, purchased or acquired); |
| B | is the number of Common Shares which the aggregate consideration (if any) receivable for the Common Shares to be issued or
otherwise made available upon conversion or exchange or upon exercise of the right of subscription, purchase or acquisition attached
to such Securities or, as the case may be, for the Common Shares to be issued or to arise from any such reclassification/redesignation
would purchase at such Current Market Price per Common Share; and |
| C | is the maximum number of Common Shares to be issued or otherwise made available upon conversion or exchange of such Securities
or upon the exercise of such right of subscription attached thereto at the initial conversion, exchange, subscription, purchase
or acquisition price or rate or, as the case may be, the maximum number of Common Shares which may be issued or arise from any
such reclassification/redesignation; |
provided that
if at the time of issue of the relevant Securities or date of grant of such rights (as used in this Section
4.03(a)(vii),
the “Specified Date”) such number of Common Shares is to be determined by reference to the application of a formula
or other variable feature or the occurrence of any event at some subsequent time (which may be when such Securities are converted
or exchanged or rights of subscription, purchase or acquisition are exercised or, as the case may be, such Securities are reclassified/redesignated
or at such other time as may be provided), then for the purposes of this Section
4.03(a)(vii),
“C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or
had occurred as at the Specified Date and as if such conversion, exchange, subscription, purchase or acquisition or, as the case
may be, reclassification/redesignation had taken place on the Specified Date.
Such adjustment shall become effective on
the Effective Date.
“Effective
Date” means, in respect of this Section
4.03(a)(vii),
the date of issue of such Securities or, as the case may be, the grant of such rights.
(viii) If
and whenever there shall be any modification of the rights of conversion, exchange, subscription, purchase or acquisition attaching
to any Securities (other than the Contingent Convertible Capital Securities of any series) pursuant to Section
4.03(a)(vii)
above (other than in accordance with the terms (including terms as to adjustment) applicable to such Securities upon issue) so
that following such modification the consideration per Common Share receivable has been reduced and is less than 95 per cent of
the Current Market Price per Common Share on the date of the first public announcement of the proposals for such modification,
the Floor Price shall be adjusted by multiplying the Floor Price in force immediately prior to the Effective Date by the following
fraction:
A + B
A + C
where:
| A | is the number of Common Shares in issue immediately before such modification (but where the relevant Securities carry rights
of conversion into or rights of exchange or subscription for, or purchase or acquisition of, Common Shares which have been issued,
purchased or acquired by the Company or any member of the Group (or at the direction or request or pursuant to any arrangements
with the Company or any member of the Group) for the purposes of or in connection with such Securities, less the number of such
Common Shares so issued, purchased or acquired); |
| B | is the number of Common Shares which the aggregate consideration (if any) receivable for the Common Shares to be issued or
otherwise made available upon conversion or exchange or upon exercise of the right of subscription, purchase or acquisition attached
to the Securities so modified would purchase at such Current Market Price per Common Share or, if lower, the existing conversion,
exchange, subscription, purchase or acquisition price or rate of such Securities; and |
| C | is the maximum number of Common Shares which may be issued or otherwise made available upon conversion
or exchange of such Securities or upon the exercise of such rights of subscription, purchase or acquisition attached thereto at
the modified conversion, exchange, subscription, purchase or acquisition price or rate but giving credit in such manner as an Independent
Financial Adviser in good faith shall consider appropriate for any previous adjustment under this Section
4.03(a)(viii)
or Section 4.03(a)(vii); |
provided that if at the time of such modification
(as used in this Section 4.03(a)(viii), the “Specified Date”) such number of Common Shares is to be determined by reference
to the application of a formula or other variable feature or the occurrence of any event at some subsequent time (which may be
when such Securities are converted or exchanged or rights of subscription, purchase or acquisition are exercised or at such other
time as may be provided) then for the purposes of this Section 4.03(a)(viii), “C” shall be determined by the application
of such formula or variable feature or as if the relevant event occurs or had occurred as at the Specified Date and as if such
conversion, exchange, subscription, purchase or acquisition had taken place on the Specified Date.
Such adjustment shall become effective on
the Effective Date.
“Effective Date” means, in respect
of this Section 4.03(a)(viii), the date of modification of the rights of conversion, exchange, subscription, purchase or acquisition
attaching to such Securities.
(ix) If and whenever the Company
or any member of the Group or (at the direction or request of or pursuant to any arrangements with the Company or any member of
the Group) any other company, person or entity shall offer any
Securities in connection with which
its shareholders as a class are entitled to participate in arrangements whereby such Securities may be acquired by them (except
where the Floor Price falls to be adjusted under Section 4.03(a)(ii), Section 4.03(a)(iii), Section 4.03(a)(iv), Section 4.03(a)(v),
Section 4.03(a)(v) or Section 4.03(a)(x) (or would fall to be so adjusted if the relevant issue or grant was at less than 95 per
cent of the Current Market Price per Common Share on the relevant dealing day under Section 4.03(a)(v) above)) the Floor Price shall
be adjusted by multiplying the Floor Price in force immediately before the Effective Date by the following fraction:
A – B
A
where:
A is the Current Market Price of one
Common Share on the Effective Date; and
B is the Fair Market Value on the Effective
Date of the portion of the relevant offer attributable to one Common Share.
Such adjustment shall become effective on
the Effective Date.
“Effective Date” means, in respect
of this Section 4.03(a)(ix), the first date on which the Common Shares are traded ex-rights on the Relevant Stock Exchange.
(x) If the Company determines
that a reduction to the Floor Price should be made for whatever reason, the Floor Price will be reduced (either generally or for
a specified period as notified to holders of the contingent convertible capital securities of such relevant series) in such manner
and with effect from such date as Banco Santander shall determine and notify to the holders of the relevant series of contingent
convertible capital securities.
(b) Notwithstanding
Section 4.03(a):
(i) where the events or circumstances
giving rise to any adjustment of the Floor Price have already resulted or will result in an adjustment to the Floor Price or where
the events or circumstances giving rise to any adjustment arise by virtue of any other events or circumstances which have already
given or will give rise to an adjustment to the Floor Price or where more than one event which gives rise to an adjustment to the
Floor Price occurs within such a short period of time that, in the opinion of the Company, a modification to the operation of the
adjustment provisions is required to give the intended result, such modification shall be made to the operation of the adjustment
provisions as may be determined in good faith by an Independent
Financial Adviser to be in its opinion appropriate to give the intended result; and
(ii) such modification shall
be made as may be determined in good faith by an Independent Financial Adviser to be in its opinion appropriate (A) to ensure that
an adjustment to the Floor Price or the economic effect thereof shall not be taken into account more than once and (B) to ensure
that the economic effect of a Dividend is not taken into account more than once.
(c) For
the purpose of any calculation of the consideration receivable or price pursuant to Section 4.03(a)(iv), Section 4.03(a)(vi), Section
4.03(a)(vii) and Section 4.03(a)(viii) above, the following provisions shall apply:
(i) the aggregate consideration
receivable or price for Common Shares issued for cash shall be the amount of such cash;
(ii) (A) the aggregate consideration
receivable or price for Common Shares to be issued or otherwise made available upon the conversion or exchange of any Securities
shall be deemed to be the consideration or price received or receivable for any such Securities and (B) the aggregate consideration
receivable or price for Common Shares to be issued or otherwise made available upon the exercise of rights of subscription attached
to any Securities or upon the exercise of any options, warrants or rights shall be deemed to be that part (which may be the whole)
of the consideration or price received or receivable for such Securities or, as the case may be, for such options, warrants or
rights which are attributed by the Company to such rights of subscription or, as the case may be, such options, warrants or rights
or, if no part of such consideration or price is so attributed, the Fair Market Value of such rights of subscription or, as the
case may be, such options, warrants or rights as at the relevant Effective Date as referred to in Section 4.03(a)(iv), Section
4.03(a)(vi), Section 4.03(a)(vii) or Section 4.03(a)(viii) above, as the case may be, plus in the case of each of (A) and (B) above,
the additional minimum consideration receivable or price (if any) upon the conversion or exchange of such Securities, or upon the
exercise of such rights or subscription attached thereto or, as the case may be, upon exercise of such options, warrants or rights
and (C) the consideration receivable or price per Common Share upon the conversion or exchange of, or upon the exercise of such
rights of subscription attached to, such Securities or, as the case may be, upon the exercise of such options, warrants or rights
shall be the aggregate consideration or price referred to in (A) or (B) above (as the case may be) divided by the number of Common
Shares to be issued upon such conversion or exchange or exercise at the initial conversion, exchange or subscription price or rate;
(iii) if the consideration
or price determined pursuant to (I) or (II) above (or any component thereof) shall be expressed in a currency other than the Share
Currency, it shall be converted into the Share Currency at the Prevailing Rate on the relevant Effective Date (in the case of (I)
above) or the relevant date of first public announcement (in the case of (II) above);
(iv) in determining the consideration
or price pursuant to the above, no deduction shall be made for any commissions or fees (howsoever described) or
any expenses paid or incurred for
any underwriting, placing or management of the issue of the relevant Common Shares or Securities or options, warrants or rights,
or otherwise in connection therewith; and
(v) the consideration or price
shall be determined as provided above on the basis of the consideration or price received, receivable, paid or payable regardless
of whether all or part thereof is received, receivable, paid or payable by or to the Company or another entity.
(d)
If the record date in respect of any consolidation, reclassification/ redesignation or sub-division
as is mentioned in Section 4.03(a)(i), or the record date or other due date for the establishment of entitlement for any such
issue, distribution, grant or offer (as the case may be) as is mentioned in Section 4.03(a)(ii), Section 4.03(a)(iii), Section
4.03(a)(iv), Section 4.03(a)(v) or Section 4.03(a)(ix), or the date of the first public announcement of the terms of any such
issue or grant as is mentioned in Section 4.03(a)(vi) and Section 4.03(a)(vii) above or of the terms of any such modification
as is mentioned in Section 4.03(a)(viii) above, shall be after the Trigger Event Notice Date in relation to the conversion of
any Contingent Convertible Capital Security of any series but before the date on which the resolution of issuance of the relevant
Common Shares is approved, then the Company shall procure the execution of the corresponding adjustment mechanism pursuant to
this Section 4.03 so that there shall be issued and delivered to the Settlement Shares Depository, for onward delivery
to the holders of the relevant Contingent Convertible Capital Securities, in accordance with the instructions contained in the
Delivery Notices received by the Settlement Shares Depository, such number of Common Shares that could be required to be issued
and delivered on such conversion taking into account the relevant adjustment to the Floor Price pursuant to this Section
4.03 and all references to the issue and/or delivery of Common Shares or Conversion Shares in this Contingent Convertible Capital
Securities Indenture shall be construed accordingly.
(e) If
any doubt shall arise as to whether an adjustment falls to be made to the Floor Price or as to the appropriate adjustment to the
Floor Price, and following consultation between the Company and an Independent Financial Adviser, a written determination of such
Independent Financial Adviser in respect thereof shall be conclusive and binding on all parties, save in the case of wilful default,
bad faith or manifest error.
(f) No
adjustment will be made to the Floor Price where Common Shares or other Securities (including rights, warrants and options) are
issued, offered, exercised, allotted, purchased, appropriated, modified or granted to, or for the benefit of, employees or former
employees (including directors holding or formerly holding executive or non-executive office or the personal service company of
any such person) or their spouses or relatives, in each case, of the Company or any of member of the Group or any associated company
or to a trustee or trustees or intermediary to be held for the benefit of any such person, in any such case pursuant to any share
or option or similar scheme.
(g) On
any adjustment, the resultant Floor Price, if a number of more decimal places than the initial Floor Price, shall be rounded down
to such decimal place. No adjustment shall be made to the Floor Price where such adjustment (rounded down if applicable) would
be less than 1 per cent of the Floor Price then in effect. Any adjustment not required to be made and/or any amount by which the
Floor Price has been rounded down, shall be carried forward and taken into account in any subsequent adjustment, and such subsequent
adjustment shall be made on the basis that the adjustment not required to be made had been made at the relevant time and/or, as
the case may be, that the relevant rounding down had not been made.
(h) Notice
of any adjustments to the Floor Price shall be given by the Company to holders of the Contingent Convertible Capital Securities
of any series through the filing of a relevant event (hecho relevante) announcement with the CNMV and its publication in
accordance with the rules and regulations of any applicable stock exchange or other relevant authority and in accordance with Section
1.06 promptly after the determination thereof.
Section 4.04. Conversion Procedures.
Settlement Shares.
(a) If
the Trigger Event occurs at any time on or after the issue date of any series of contingent convertible capital securities, then
the Company will notify the Regulator and holders of such series of contingent convertible capital securities immediately through
(i) the filing of a relevant event (hecho relevante) announcement with the CNMV and its publication in accordance with the rules
and regulations of any applicable stock exchange or other relevant authority and (ii) to the Regulator, Holders and Trustee in
accordance with Section 1.06 (the “Trigger
Event Notice”).
(b) A
Trigger Event Notice shall be a written notice specifying the following information:
(i) that a Trigger Event has
occurred;
(ii) the
then-prevailing Conversion Price (which Conversion Price shall remain subject to any subsequent adjustment as set forth under Section
4.03);
(iii) the Conversion Settlement
Date;
(iv) the date on which the
Company expects DTC to suspend all clearance and settlement of transactions in the Securities in accordance with its rules and
procedures (the “Suspension Date”);
(v) the contact details of
the Settlement Shares Depository (if one has been appointed) and Paying and Conversion Agent and the procedures holders of the
contingent convertible capital securities must follow to obtain delivery of the Conversion Shares or related ADSs;
(vi) if the Company has been
unable to appoint a Settlement Shares Depository, such other arrangements for the issuance and/or delivery of the Conversion Shares
to the Holders of the Contingent Convertible Capital Securities of such series as it shall consider reasonable in the circumstances;
(vii) that the Contingent
Convertible Capital Securities shall remain in existence for the sole purpose of evidencing the holder’s right to receive
Common Shares or related ADSs from or on behalf of the Settlement Shares Depository.
(c) The
date on which the Trigger Event Notice shall be deemed to have been given shall be the date on which it is dispatched by the Company
to DTC.
(d) Upon
the Company’s determination that a Trigger Event has occurred, it shall immediately inform the Regulator and shall, prior
to giving a Trigger Event Notice, deliver to the Trustee a certificate stating that a Trigger Event has occurred, which the Trustee
shall accept without any further enquiry as sufficient evidence of such matters, in which event such certificate will be conclusive
and binding on the Trustee, the Holders and beneficial owners of the contingent convertible capital securities of such series.
(e)
Within two (2) Business Days after its receipt of the Trigger Event Notice, the Trustee shall
transmit the Trigger Event Notice to DTC and promptly following its receipt of the Trigger Event Notice, pursuant to DTC’s
procedures currently in effect, DTC will post the Trigger Event Notice to its Reorganization Inquiry for Participants System.
(f) If
the Trigger Event occurs, the Contingent Convertible Capital Securities of any series will be converted in whole and not in part.
(g) Notwithstanding
anything set forth in this Contingent Convertible Capital Securities Indenture to the contrary, once the Company has delivered
a Trigger Event Notice following the occurrence of a Trigger Event, (i) subject to the right of holders of the Contingent Convertible
Capital Securities of the relevant series relating to a breach of the Performance Obligation in the event of a failure by the
Company to issue and deliver any Common Shares to the Settlement Shares Depository on the Conversion Settlement Date, the Contingent
Convertible Capital Securities Indenture shall impose no duties upon the Trustee whatsoever with regard to a Trigger Conversion
and the Holders of the Contingent Convertible Capital Securities of such series shall have no rights whatsoever under the Contingent
Convertible Capital Securities Indenture or the Contingent Convertible Capital Securities of such series to instruct the Trustee
to take any action whatsoever and (ii) as of the date of the Trigger Event Notice, except for any indemnity and/or security provided
by any holders of the Contingent Convertible Capital Securities of such series in such direction or related to such direction,
any direction previously given to the Trustee by any Holders of the Contingent Convertible Capital Securities of such series shall
cease automatically and shall be null and void and of no further effect.
(h)
The Company’s obligations to indemnify the Trustee in accordance with the Contingent Convertible Capital Securities Indenture
shall survive any Trigger Conversion.
Section 4.05.
Agreement and Waiver with Respect to Trigger Conversion. The Contingent Convertible Capital Securities of any series are not convertible
into Common Shares at the option of Holders of Contingent Convertible Capital Securities of any series at any time and are not
redeemable in cash as a result of a Trigger Event. Notwithstanding any other provision herein, by its acquisition of the Contingent
Convertible Capital Securities of any series, each Holder and beneficial owner shall be deemed to have (i) agreed to all the terms
and conditions of the Contingent Convertible Capital Securities of such series, including, without limitation, those related to
(x) Trigger Conversion following a Trigger Event and (y) the appointment of the Settlement Shares Depository, the issuance of
the Settlement Shares to the Settlement Shares Depository (or to the relevant recipient in accordance with the terms of the Contingent
Convertible Capital Securities of such series), and acknowledged that such events in (x) and (y) may occur without any further
action on the part of the Holders or beneficial owner of the Contingent Convertible Capital Securities of such series or the Trustee,
(ii) agreed that effective upon, and following, the Trigger Conversion, no amount shall be due and payable to the Holders of the
Contingent Convertible Capital Securities of such series, and the Company’s liability to pay any such amounts (including
the Liquidation Preference of, or any Distribution in respect of, the Contingent Convertible Capital Securities of such series),
except as noted under Section 4.06 with respect to certain stamp and similar taxes, shall be automatically released, and
the Holders shall not have the right to give a direction to the Trustee with respect to the Trigger Event and any related Trigger
Conversion, (iii) waived, to the extent permitted by the Trust Indenture Act, any claim against the Trustee arising out of its
acceptance of its trusteeship under, and the performance of its duties, powers and rights in respect of, the Contingent Convertible
Capital Securities Indenture and in connection with the Contingent Convertible Capital Securities of such series, including, without
limitation, claims related to or arising out of or in connection with a Trigger Event and/or any Trigger Conversion and (iv) authorized,
directed and requested DTC, the European Clearing Systems and any direct participant in DTC, the European Clearing Systems or
other intermediary through which it holds such Contingent Convertible Capital Securities to take any and all necessary action,
if required, to implement the Trigger Conversion without any further action or direction on the part of such Holder of the Contingent
Convertible Capital Securities of such series or the Trustee.
Section 4.06. Settlement
Procedures.
(a) Delivery
of the Common Shares, or, if the Holder elects, ADSs, to the Holders of the any series of Contingent Convertible Capital Securities
upon a Trigger Event shall be made in accordance with the procedures set forth in this Section
4.06, which remain subject to change to reflect changes in clearing system practices.
(b) Holders
of any series of Contingent Convertible Capital Securities cleared and settled through DTC may elect to have their Common Shares
delivered in the form of
Common Shares
or ADSs in accordance with the procedures set forth in this Section
4.06. The obligation to deliver ADSs if a Holder elects to have its Common Shares delivered in such form will apply only if at
the time of any Trigger Conversion the Company continues to maintain an ADS depositary facility.
(c) The
Trigger Event Notice shall specify the Suspension Date. On the Suspension Date, DTC shall suspend all clearance and settlement
of transactions in the relevant series of Contingent Convertible Capital Securities. As a result, Holders of the Contingent Convertible
Capital Securities of such series will not be able to settle any transfers of any Contingent Convertible Capital Securities of
such series following the Suspension Date, and any sale or other transfer of the Contingent Convertible Capital Securities of such
series that a Holder of the Contingent Convertible Capital Securities of such series may have initiated prior to the Suspension
Date that is scheduled to settle after the Suspension Date will be rejected by DTC and will not be settled through DTC. The Contingent
Convertible Capital Securities of such series may cease to be admitted to trading on any stock exchange on which the Contingent
Convertible Capital Securities of such series are then listed or admitted to trading after the Suspension Date.
(d) On
the Suspension Date, the Company shall deliver a notice in accordance with Section
1.06 to the Trustee and to the Holders of the Contingent Convertible Capital Securities of the relevant series (a “Settlement
Request Notice”) requesting that holders and beneficial owners of the Contingent Convertible Capital Securities of such
series complete a notice to be delivered to the Paying and Conversion Agent, with a copy to the Trustee (a “Delivery
Notice”). The Settlement Request Notice shall specify (i) the date by which the Delivery Notice must be received by
the Paying and Conversion Agent (the “Notice Cut-off Date”) and (ii) the date on which the Contingent Convertible
Capital Securities of such series in relation to which no Delivery Notice has been received by the Paying and Conversion Agent
on or before the Notice Cut-off Date shall be cancelled, which will be no more than twelve Business Days after the Conversion
Settlement Date (the “Final Cancellation Date”), as set forth in Section
4.07.
(e) In
order to obtain delivery of the relevant Common Shares, or, if the Holder elects, ADSs, a Holder or beneficial owner must deliver
its Contingent Convertible Capital Securities and Delivery Notice to the Paying and Conversion Agent (including, the delivery of
such Contingent Convertible Capital Securities and Delivery Notice to the Paying and Conversion Agent through DTC) on or before
the Notice Cut-off Date. If such delivery is made after the end of normal business hours at the specified office of the Paying
and Conversion Agent, such delivery shall be deemed for all purposes to have been made or given on the following Business Day.
The Delivery Notice shall contain: (i) the name of the Holder or beneficial owner of the applicable series of Contingent Convertible
Capital Securities; (ii) the aggregate Liquidation Preference held by such Holder or beneficial owner of such series of Contingent
Convertible Capital Securities on the date of such notice; (iii) the name in which the Common Shares or ADSs, as applicable, are
to be registered, if applicable (iv) whether Common Shares or ADSs are to be delivered to the Holder or beneficial owner of such
series of Contingent Convertible Capital Securities; (v) the details of the DTC, Iberclear or other clearing system account
(subject to the limitations set out below)
to which the ADSs or Common Shares are to be credited, details of the registered account in our ADS facility if direct registration
ADSs are to be issued, or, if the Common Shares are not a participating security in Iberclear or another clearing system, the address
to which the Common Shares should be delivered; and (vi) such other details as may be required by the Paying and Conversion Agent.
(f) The
Delivery Notice must be given and the Contingent Convertible Capital Securities Delivered in accordance with the applicable procedures
of DTC (which may include the notice being given to the Paying and Conversion Agent by electronic means) and in a form acceptable
to DTC and the Paying and Conversion Agent.
(g) Subject
to satisfaction of the requirements and limitations set forth in this Section
4.06 and provided the Delivery Notice is delivered on or before the Notice Cut-off Date, the Paying and Conversion Agent shall
give instructions to the Settlement Shares Depository that the Settlement Shares Depository shall deliver the relevant Common Shares
(rounded down to the nearest whole number of Common Shares) to, or shall deposit such relevant Common Shares with the ADS Depositary
on behalf of, the Holder or beneficial owner of the relevant Contingent Convertible Capital Securities completing the relevant
Delivery Notice or its nominee in accordance with the instructions given in such Delivery Notice on the applicable Conversion Settlement
Date.
(h) Any
Delivery Notice shall be irrevocable. Failure properly to complete and deliver a Delivery Notice and deliver the relevant Contingent
Convertible Capital Securities may result in such Delivery Notice being treated as null and void and the Company shall be entitled
to procure the sale of any applicable Common Shares to which the relevant holder may be entitled in accordance with Section 4.06.
Any determination as to whether any Delivery Notice has been properly completed and delivered as provided in this Section
4.06 shall be made by the Company in its sole discretion, acting in good faith, and shall, in the absence of manifest error, be
conclusive and binding on the relevant holders.
(i) A
Holder of the Contingent Convertible Capital Securities of any series or Selling Agent (as defined in Section
4.07) must pay (in the case of the Selling Agent by means of deduction from the net proceeds of sale set forth in Section
4.07) any taxes and capital, stamp, issue and registration and transfer taxes or duties arising on Trigger Conversion (other than
any taxes or capital, issue and registration and transfer taxes or stamp duties payable in Spain by the Company in respect of the
issue and delivery of the Common Shares in accordance with a Delivery Notice delivered pursuant to the Contingent Convertible Capital
Securities Indenture which shall be paid by the Company) and such holder or the Selling Agent (as the case may be) must pay (in
the case of the Selling Agent, by way of deduction from the net proceeds of sale as aforesaid) all, if any, taxes arising by reference
to any disposal or deemed disposal of a Contingent Convertible Capital Security or interest therein.
(j) If
the Company shall fail to pay any capital, stamp, issue, registration and transfer taxes and duties for which it is responsible
as provided above, the holder or Selling Agent, as the case may be, shall be entitled (but shall not be obliged) to tender
and pay the same and the Company as a separate
and independent obligation, undertakes to reimburse and indemnify each holder or Selling Agent, as the case may be, in respect
of any payment thereof and any penalties payable in respect thereof.
(k) The
Common Shares issued on Trigger Conversion will be fully paid and will in all respects rank pari passu with the fully paid
Common Shares in issue on the Trigger Event Notice Date, except in any such case for any right excluded by mandatory provisions
of applicable law and except that such Common Shares will not rank for (or, as the case may be, the relevant holder shall not be
entitled to receive) any rights, dividends or payments the record date or other due date for the establishment of entitlement for
which falls prior to the date that the resolution of issuance of the relevant Common Shares is approved.
Section 4.07. Failure to Deliver a
Delivery Notice.
(a) If
a duly completed Delivery Notice and the relevant Contingent Convertible Capital Securities are not delivered to a Paying and Conversion
Agent as provided in the Contingent Convertible Capital Securities Indenture on or before the Notice Cut-off Date, then at any
time following the Notice Cut-off Date and prior to the 10th Business Day after the Conversion Settlement Date, the Company may
in its sole and absolute discretion (and the relevant Holders of such Contingent Convertible Capital Securities shall be deemed
to agree thereto), elect to appoint a person (the “Selling Agent”) to procure that all Common Shares held by the Settlement
Shares Depository in respect of which the applicable Contingent Convertible Capital Securities and completed Delivery Notice have
not been delivered on or before the Notice Cut-off Date as aforesaid shall be sold by or on behalf of the Selling Agent as soon
as reasonably practicable.
(b)
If the applicable Contingent Convertible Capital Securities and Delivery Notice are not delivered
to the Paying and Conversion Agent on or before the Notice Cut-off Date, the Settlement Shares Depository shall continue to hold
any Conversion Shares not sold by the Selling Agent until a Delivery Notice is so delivered or the Final Cancellation Date, whichever
is earlier. However, any Holder or beneficial owner of the Contingent Convertible Capital Securities delivering a Delivery Notice
after the Notice Cut-off Date will have to provide evidence of its entitlement to the relevant Common Shares, or if the holder
elects, ADSs satisfactory to the Settlement Shares Depository in its sole and absolute discretion in order to receive delivery
of such Common Shares or ADSs (if so elected to be deposited with the ADS Depositary on its behalf).
(c) Subject
to the deduction by or on behalf of the Selling Agent of any amount payable in respect of its liability to taxation and the payment
of any capital, stamp, issue, registration and/or transfer taxes and duties (if any) and any fees or costs incurred by or on behalf
of the Selling Agent in connection with the issue, allotment and sale thereof, and the conversion of any proceeds of such sale
into U.S. dollars, the net proceeds of such sale, converted into U.S. dollars at the Prevailing Rate on the Notice Cut-off Date,
if necessary, shall as soon as reasonably practicable be distributed rateably to the relevant Holders in such manner and at such
time as the Company shall determine and notify to
the relevant
Holders. Such payment shall for all purposes discharge the obligations of the Company, the Settlement Shares Depository, the Paying
and Conversion Agent and the Selling Agent to such Holders in respect of the Trigger Conversion. The Company, the Settlement Shares
Depository and the Selling Agent shall have no liability in respect of the exercise or non-exercise of any discretion or power
pursuant to this Section 4.07 or in respect
of any sale of any Common Shares, whether for the timing of any such sale or the price at or manner in which any such Common Shares
are sold or the inability to sell any such Common Shares.
(d) If
the Company does not appoint the Selling Agent by the 10th Business Day after the Conversion Settlement Date, or if any Common
Shares are not sold by the Selling Agent in accordance with this Section
4.07, Common Shares for which a Delivery Notice has not been received will be cancelled on the Final Cancellation Date.
Section 4.08. Delivery of ADSs.
In respect of any Conversion Shares that Holders elect to receive in the form of ADSs as specified in the Delivery Notice, the
Settlement Shares Depository shall deposit with the custodian for the ADS Depositary the number of Conversion Shares to be issued
upon Trigger Conversion of the relevant series of Contingent Convertible Capital Securities, and the ADS Depositary shall issue
the corresponding number of ADSs to the DTC Participant account or registered ADS facility account specified by such Holders (per
the ADS-to-ordinary share ratio in effect on the Conversion Settlement Date). However, the issuance of the ADSs by the ADS Depositary
may be delayed until the depositary bank or the custodian receives confirmation that all required approvals have been given and
that the Conversion Shares have been duly transferred to the custodian and that all applicable depositary fees and payments have
been paid to the ADS Depositary.
Article
5
Satisfaction and Discharge
Section 5.01. Satisfaction and Discharge
of Contingent Convertible Capital Securities Indenture. This Contingent Convertible Capital Securities Indenture shall upon
Company Request cease to be of further effect with respect to the Contingent Convertible Capital Securities of any series (except
as to any surviving rights of registration of transfer of the Contingent Convertible Capital Securities herein expressly provided
for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge
of the Contingent Convertible Capital Securities Indenture with respect to the Contingent Convertible Capital Securities of any
series when:
(a) all
Contingent Convertible Capital Securities of such series theretofore authenticated and delivered (other than Contingent Convertible
Capital Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section
3.06 have been delivered to the Trustee for cancellation;
(b) the
Company has paid or caused to be paid all other sums payable hereunder (including Accrued Distributions, if any) by the Company
with respect to the Contingent Convertible Capital Securities of such series; and
(c) the
Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of the Contingent Convertible Capital Securities Indenture
with respect to the Contingent Convertible Capital Securities of such series have been complied with.
In addition, upon the exercise of a Spanish Bail-in Power with
respect to a series of Contingent Convertible Capital Securities which results in the cancellation, or the conversion into other
securities, of all the Liquidation Preference of, and Distributions on such Contingent Convertible Capital Securities or such Contingent
Convertible Capital Securities otherwise ceasing to be outstanding, the Contingent Convertible Capital Securities Indenture shall
be satisfied and discharged as to such series.
Notwithstanding any satisfaction
and discharge of the Contingent Convertible Capital Securities Indenture, the obligations of the Company to the Trustee under Section
7.08 of this Contingent Convertible Capital Securities Indenture, the obligations of the Trustee to any Authenticating Agent under
Section 7.15 of this
Contingent Convertible Capital Securities Indenture and the obligations of the Trustee under Section
5.02 of this Contingent Convertible Capital Securities Indenture and the last paragraph of Section
11.03 of the Contingent Convertible Capital Securities Indenture shall survive such satisfaction and discharge.
Section 5.02. Application
of Trust Money. Subject to the provisions of the last paragraph of Section
11.03, all cash deposited with the Trustee pursuant to Section
5.01 shall be held in trust and such cash shall be applied by it, in accordance with the provisions of the Contingent Convertible
Capital Securities of such series and this Contingent Convertible Capital Securities Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the Liquidation Preference and accrued but unpaid Distributions, if any, for the payment of which such cash has been
deposited with the Trustee.
Section 5.03. Repayment to Company.
The Trustee, the Calculation Agent and any Paying Agent promptly shall pay to the Company upon Company Request any excess money
held by them at any time with respect to any series of Contingent Convertible Capital Securities.
Section 5.04. Reinstatement. If the Trustee or any Paying Agent is unable to apply any money or U.S. Government Obligations in accordance
with this Article 5 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company under this Contingent
Convertible Capital Securities Indenture, the Contingent Convertible Capital Securities shall be revived and reinstated as though
no deposit had occurred pursuant to this Article 5 until such time as the Trustee or such Paying Agent is permitted
to apply all such money or U.S. Government Obligations in accordance with this Article 5; provided, however, that,
if the Company has made any payment of Liquidation Preference of or Distributions on any Contingent Convertible Capital Securities
because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Contingent
Convertible Capital Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or such
Paying Agent.
Article
6
Remedies
Section 6.01. Enforcement Events.
(a) Each of the
following events is an “Enforcement Event” with respect to any series of Contingent Convertible Capital Securities:
(i) non-payment
of Redemption Price on such series when due as set forth in Section 12.04;
(ii)
the breach of any term, obligation or condition binding on the Company under the Contingent Convertible Capital Securities of
such series (other than any of the Company’s payment obligations under or arising from the Contingent Convertible Capital
Securities of such series, including payment of any Liquidation Preference or Distributions, including any damages awarded for
breach of any obligations) (a “Performance Obligation”); or
(iii) the
occurrence of any voluntary or involuntary liquidation of the Company (a “Liquidation Event”) prior to the
occurrence of a Trigger Event.
(b) Neither
the exercise of the Spanish Bail-in Power nor the exercise of any other resolution tool by the relevant resolution authority or
any action in compliance therewith shall constitute an Enforcement Event.
Section
6.02. Liquidation Distribution. (a) Subject as provided in Section
6.02(b) below, in the event of any Liquidation
Event, Holders of the Contingent Convertible Capital Securities of any series (unless previously converted into Common Shares
pursuant to Section 4.01) shall be entitled
to receive out of the assets of the Company available for distribution to Holders of such series, the Liquidation Distribution.
Such entitlement will arise before any distribution of assets is made to Holders of Common Shares or any other instrument of the
Company ranking junior to the Contingent Convertible Capital Securities of such series.
(b) If,
before the occurrence of a Liquidation Event, the Trigger Event occurs but the relevant conversion of the Contingent Convertible
Capital Securities of such series into Common Shares pursuant to Section
4.01 is still to take place, Holders of the Contingent convertible Capital Securities of such series will be entitled to receive
out of the relevant assets of the Company a monetary amount equal to that which holders of such Contingent Convertible Capital
Securities of such series would have received on any distribution of the assets of the Company if such conversion had taken place
immediately prior to such liquidation.
(c) After
payment of the relevant entitlement in respect of a Contingent Convertible Capital Security as described in this Section
6.02, such Contingent Convertible Capital Security will confer no further right or claim to any of the remaining assets of the
Company.
Section 6.03. Limitation of Remedies
Upon an Enforcement Event.
The sole remedies of the holders of the
Contingent Convertible Capital Securities of a series and the Trustee under the Contingent Convertible Capital Securities of such
series upon the occurrence of an Enforcement Event shall be:
(a) to
seek enforcement of the Company’s obligation to pay the Redemption Price of the securities of such series if not paid within
14 days of the date fixed for redemption (provided that the applicable conditions described under Section
12.04 shall have been satisfied);
(b) to
seek enforcement of a Performance Obligation; and
(c) to
enforce the entitlement set forth in Section
6.02.
The foregoing shall not prevent the holders
of the Contingent Convertible Capital Securities of such series or the trustee from instituting proceedings for the bankruptcy
of Banco Santander.
Section 6.04. No Other Remedies and
Other Terms.
(a) Other
than the limited remedies specified in this Article
6, and subject to paragraph (c) below,
no remedy against the Company shall be available to the Trustee (acting on behalf of the Holders) or to the Holders of the
Contingent Convertible Capital Securities of any series, whether for the recovery of amounts owing in respect of such
Contingent Convertible Capital Securities Indenture, or in respect of any breach by the Company of any of the Company’s
obligations under or in respect of the terms of such Contingent Convertible Capital Securities in relation thereto; provided,
however, that the Company’s obligations to the Trustee under, and the Trustee’s lien provided for in Section
7.08 of the Contingent Convertible Securities Indenture and the Trustee’s rights to have money collected applied first
to pay amounts due to it under such Section pursuant to Section
6.08 of the Contingent Convertible Securities Indenture shall not be limited or impaired by this Article
6 or otherwise and expressly survive any Enforcement Event and are not subject to the subordination provisions of
Section 13.01.
(b) Notwithstanding
the limitations on remedies specified in this Article
6, (i) the Trustee shall have such powers as are required to be authorized to it under the Trust Indenture Act in respect of the
rights of the Holders under the provisions of the Contingent Convertible Capital Securities Indenture, and (ii) nothing shall impair
the right of a Holder of the Contingent Convertible Capital Securities under the Trust Indenture Act, absent such Holder’s
consent, to sue for any payment due but unpaid with respect to the Contingent Convertible Capital Securities as provided for in
Section 6.10; provided that, in the case
of (i) and (ii) above, any payments in respect of, or arising
from, the Contingent
Convertible Capital Securities, including any payments or amounts resulting or arising from the enforcement of any rights under
the Trust Indenture Act in respect of the Contingent Convertible Capital Securities, shall be subject to the subordination provisions
set forth in Section 13.01.
(c) In
furtherance of Section 7.01 of the Contingent Convertible Capital Securities Indenture:
(i) For purposes of Sections
315(a) and 315(c) of the Trust Indenture Act, the term “default” is hereby defined to mean an Enforcement Event which
has occurred and is continuing.
(ii) Notwithstanding anything
contained in the Contingent Convertible Capital Securities Indenture to the contrary, the duties and responsibilities of the Trustee
under this Contingent Convertible Capital Securities Indenture shall be subject to the protections, exculpations and limitations
on liability afforded to an indenture trustee under the provisions of the Trust Indenture Act.
Section 6.05. Agreement with Respect
to Limitation of Remedies for Breach of a Performance Obligation. By its acquisition of the Contingent Convertible Capital
Securities of any series, each Holder and beneficial owner of the Contingent Convertible Capital Securities of such series acknowledges
and agrees that such Holder and beneficial owner will not seek, and will not direct the Trustee to seek, a claim for damages against
the Company in respect of a breach by the Company of a Performance Obligation and that the sole and exclusive remedy that such
Holder and the Trustee may seek under the Contingent Convertible Capital Securities of such series and the Contingent Convertible
Capital Securities Indenture for a breach by the Company of a Performance Obligation is specific performance.
Section 6.06. Trustee May File Proofs
of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition, winding-up or other judicial proceeding relative to the Company or any other obligor upon the Contingent Convertible
Capital Securities of any series or to the property of the Company or such other obligor or their creditors (other than under or
in connection with a scheme of amalgamation or reconstruction not involving bankruptcy or insolvency), the Trustee (irrespective
of whether the Liquidation Preference of the Contingent Convertible Capital Securities of such series shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue Liquidation Preference or Distributions) shall be entitled and empowered, by intervention in such proceeding
or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the
Trustee allowed in any such proceeding; provided that the Company shall not, as a result of the bringing of such proceedings, be
obliged to pay any sum representing or measured by reference to Liquidation Preference or Distributions on the Contingent Convertible
Capital Securities sooner than the same would otherwise have been payable by it. In particular, the Trustee shall be authorized
to collect and receive any moneys and other property payable or
deliverable
on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each Holder of a Contingent Convertible Capital Security
to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to
such Holders or holders, to first pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee under Section
7.08.
Subject to
Article 9 and Section
10.02, nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder of any Contingent Convertible Capital Security any plan of reorganization, arrangement, adjustment, or composition
affecting any Contingent Convertible Capital Securities or the rights of any Holder of any Contingent Convertible Capital Security
or to authorize the Trustee to vote in respect of the claim of any such Holder in any such proceeding.
The
provisions of this Section
6.06 are subject to the provisions of Section
13.01.
Section 6.07. Trustee May Enforce Claims Without Possession of Contingent Convertible Capital Securities. All rights of action
and claims under this Contingent Convertible Capital Securities Indenture or the Contingent Convertible Capital Securities, if
any, may be prosecuted and enforced by the Trustee without the possession of any of the Contingent Convertible Capital Securities
or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel (subject, with regard to the Company,
to the provisions of Article 13) be for the ratable benefit of the Holders of the Contingent Convertible Capital Securities in
respect of which such judgment has been recovered.
Section
6.08. Application of Money Collected. Any
money collected by the Trustee pursuant to this Article or, after an Enforcement Event, any money or other property
distributable in respect of the Company’s obligations under this Contingent Convertible Capital Securities Indenture,
in respect of any series of Contingent Convertible Capital Securities shall, subject to the provisions of Section 13.02 in
relation to waiver of set-off and Section 13.01 in relation to the subordination of the Contingent Convertible Capital
Securities, be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of Liquidation Preference or Distributions upon presentation of such Contingent Convertible Capital
Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully
paid:
FIRST: To
the payment of all amounts applicable to such series of Contingent Convertible Capital Securities in respect of which or for the
benefit of which such money has been collected and due and owing to the Trustee (including any predecessor Trustee) under Section
7.08;
SECOND: To the payment of the amounts then
due and unpaid for Liquidation Preference of and Distributions on such series of Contingent Convertible Capital Securities in respect
of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Contingent Convertible Capital Securities for Liquidation Preference and Distributions,
if any, respectively; and
THIRD: To the payment of the balance, if
any, to the Company.
Section 6.09. Limitation on Suits.
No Holder of any Contingent Convertible Capital Security of any series shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Contingent Convertible Capital Securities Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless
(a) such
Holder has previously given written notice to the Trustee of a continuing Enforcement Event with respect to Contingent Convertible
Capital Securities of the same series specifying such Enforcement Event and stating that such notice is a “Notice of Enforcement
Event” hereunder;
(b) the
Holders of not less than 25% in aggregate Liquidation Preference of the Outstanding Contingent Convertible Capital Securities of
such series shall have made written request to the Trustee to institute proceedings in respect of such Enforcement Event in its
own name, as Trustee hereunder;
(c) such
Holder of a Contingent Convertible Capital Security has offered to the Trustee reasonable indemnity satisfactory to it (as determined
by the Trustee in its sole discretion) against the costs, expenses and liabilities to be incurred in compliance with such request;
(d) the
Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding;
and
(e) no
direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority
in Liquidation Preference of the Outstanding Contingent Convertible Capital Securities of such series;
it being understood and intended that no one or more Holders
of Contingent Convertible Capital Securities of a particular series shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Contingent Convertible Capital Securities Indenture to affect, disturb or prejudice the rights
of any other such Holders or holders, or to obtain or to seek to obtain priority or preference over any other such Holders or holders
or to enforce any right under this Contingent Convertible Capital Securities Indenture, except in the manner herein provided and
for the equal and ratable benefit of all Holders of Contingent Convertible Capital Securities of such series.
Section 6.10. Unconditional Right
of Holders to Receive Liquidation Preference and Distributions. Notwithstanding any other provision in this Contingent Convertible
Capital Securities Indenture, and subject to Article 13 in relation to the subordination of
the Contingent Convertible Capital Securities
of any series, the Holder of any Contingent Convertible Capital Security shall have the right, which is absolute and unconditional,
to receive payment of the Liquidation Preference of and any Distribution on such Contingent Convertible Capital Security when due
and payable in accordance with the provisions of the Contingent Convertible Capital Securities Indenture (including Article 3 and
Article 14 hereof) and as expressed in such Contingent Convertible Capital Security (or, in the case of redemption, on the Redemption
Date, as the case may be) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
Section 6.11. Restoration of Rights
and Remedies. If the Trustee or any Holder of any Contingent Convertible Capital Security has instituted any proceeding to
enforce any right or remedy under this Contingent Convertible Capital Securities Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, the Trustee and the Holders of Contingent Convertible Capital Securities
shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders of Contingent Convertible Capital Securities shall continue as though no such proceeding had been instituted.
Section 6.12. Rights
and Remedies Cumulative. Subject to the limitations on remedies provided for in this Article
6, except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Contingent Convertible
Capital Securities in the last paragraph of Section
3.06, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Contingent Convertible Capital Securities
is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion
or employment of any other appropriate right or remedy.
Section 6.13. Delay or Omission Not
Waiver. No delay or omission of the Trustee or of any Holder of any Contingent Convertible Capital Security to exercise any
right or remedy accruing upon any Enforcement Event shall impair any such right or remedy or constitute a waiver of any such Enforcement
Event or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders of Contingent
Convertible Capital Securities may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders of Contingent Convertible Capital Securities.
Section 6.14. Control by Holders.
The Holders of a majority in aggregate Liquidation Preference of the Outstanding Contingent Convertible Capital Securities of any
series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power
conferred on the Trustee with respect to the
Contingent Convertible Capital Securities of such series, provided that
(a)
such direction shall not be in conflict with any rule of law or with this Contingent Convertible Capital Securities Indenture or
with the Contingent Convertible Capital Securities of any series;
(b) the
Trustee shall not determine that the action so directed would be unjustly prejudicial to the Holders of any Contingent Convertible
Capital Securities of any series not taking part in such direction with respect to which the Trustee is acting as the Trustee;
and
(c) the
Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
Section 6.15. Undertaking for Costs.
All parties to this Contingent Convertible Capital Securities Indenture agree, and each Holder of any Contingent Convertible Capital
Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Contingent Convertible Capital Securities Indenture, or in any suit against the
Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant to such suit of an undertaking
to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’
fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Holder or group of Holders holding in the aggregate more than 10% in Liquidation Preference of the Outstanding
Contingent Convertible Capital Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment
of the Liquidation Preference of or Distributions on any Contingent Convertible Capital Security on or after the dates upon which
such Distributions become due and payable pursuant to the terms hereof or the terms expressed in such Contingent Convertible Capital
Security (or, in the case of redemption on or after the Redemption Date).
Section 6.16. Waiver
of Past Enforcement Events. (a) Holders of not less than a majority in aggregate Liquidation Preference of the Outstanding
Contingent Convertible Capital Securities may on behalf of the Holders of all of the Contingent Convertible Capital Securities
waive any past Enforcement Event that results from a breach by the Company of a Performance Obligation. Holders of a majority of
the aggregate Liquidation Preference of the Outstanding Contingent Convertible Capital Securities shall not be entitled to waive
(i) any past Enforcement Event that results from a Liquidation Event and (ii) any Enforcement Event in respect of a covenant or
provision hereof which under Article 10 cannot
be modified or amended without the consent of the Holder of each Outstanding Contingent Convertible Capital Security of such series
affected.
(b) Upon
the occurrence of any waiver permitted by paragraph (a)
above, such Enforcement Event shall cease to exist, and any Enforcement Event with respect to the Contingent Convertible Capital
Securities arising therefrom shall be deemed to have been cured and not to have occurred for every purpose of the Contingent Convertible
Capital Securities Indenture, but no such waiver shall extend to any subsequent or other Enforcement Event or impair any right
consequent thereon.
Article
7
The Trustee
Section 7.01. Certain Duties and Responsibilities.
(a) Except
during the continuance of an Enforcement Event,
(i) the Trustee undertakes
to perform such duties and only such duties as are specifically set forth in this Contingent Convertible Capital Securities Indenture,
and no implied covenants or obligations shall be read into this Contingent Convertible Capital Securities Indenture against the
Trustee; and
(ii) in the absence of bad
faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Contingent Convertible
Capital Securities Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Contingent Convertible Capital Securities Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts, statements, opinions or conclusions stated therein).
(b) In
case an Enforcement Event has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it
by this Contingent Convertible Capital Securities Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.
(c) No
provision of this Contingent Convertible Capital Securities Indenture shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that
(i) this Section 7.01(c) shall
not be construed to limit the effect of subsections (a) or (d) of this Section;
(ii) the Trustee shall not
be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not
be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in Liquidation Preference of the Outstanding Contingent Convertible Capital Securities of any series,
determined as provided herein, relating to the time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee, under this Contingent Convertible Capital Securities
Indenture with respect to the Contingent Convertible Capital Securities of such series;
(d) No
provision of this Contingent Convertible Capital Securities Indenture shall require the Trustee to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it; and
(e) Whether
or not therein expressly so provided, every provision of this Contingent Convertible Capital Securities Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
Section 7.02. Spanish
Tax Procedures and Obligations of the Trustee. In connection with each payment made on any Payment Date (as defined in Appendix
1 attached hereto) in respect of the issued Contingent Convertible Capital Securities hereunder, the Trustee or Paying Agent shall
comply with the tax procedures set forth in Appendix 1 hereto. The Trustee or Paying Agent shall have no duty or responsibility
to comply with other Spanish tax obligations arising out of this Contingent Convertible Capital Securities Indenture. The Company
shall be responsible for the payment of any and all amounts due under the Contingent Convertible Capital Securities. Therefore,
the Trustee or Paying Agent shall not be liable for any amounts owed to any person due to its failure to properly comply with the
tax procedures referred to in this Section
7.02 and Appendix 1 hereto, except such as may result from the negligence, willful misconduct or fraud of the Trustee or Paying
Agent or any of its agents or employees. The Trustee or Paying Agent may request and rely conclusively upon any instructions from
the Company in respect of any action necessary or required to be taken by the Trustee or Paying Agent pursuant to this Section
7.02 and Appendix 1 hereto; provided, however, in no event shall the Trustee or Paying Agent be required to expend or risk its
own funds in the performance of any of its duties pursuant to this Section
7.02 and Appendix 1 hereto, or be obligated to take any legal or other action which might in its judgment involve or cause it to
incur any expense or liability unless it shall have been furnished with acceptable indemnification and security.
Section 7.03. Notice
of Enforcement Events. Within 90 days after the occurrence of any Enforcement Event hereunder with respect to Contingent Convertible
Capital Securities of any series of which a Responsible Officer of the Trustee has received written notice the Trustee shall transmit
in the manner and to the extent provided in Section 1.06 to Holders of Contingent Convertible Capital Securities of
such series notice of such Enforcement Event hereunder of which the Trustee has received written notice, unless such Enforcement
Event shall have been cured or waived; provided, however, that, the Trustee shall be protected in withholding such notice if it
determines in good faith that the withholding of such notice is in the interest of the Holders of Contingent Convertible Capital
Securities of such series.
Section 7.04. Certain
Rights of Trustee. Subject to the provisions of Section
7.01:
(a) the
Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any
resolution, Officer’s Certificate, or any other certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, coupon or other evidence of indebtedness or other paper or document
(whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any
request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution;
(c) whenever
in the administration of this Contingent Convertible Capital Securities Indenture the Trustee shall deem it desirable that a matter
be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s Certificate and/or an Opinion
of Counsel;
(d) the
Trustee may consult with counsel of its own selection and the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the
Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Contingent Convertible Capital
Securities Indenture at the request or direction of any of the Holders pursuant to this Contingent Convertible Capital Securities
Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(f) the
Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon or other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled
to examine the books, records and premises of the Company, personally or by agent or attorney at the sole reasonable cost and expense
of the Company and shall incur no
liability or additional liability of any kind
by reason of such inquiry or investigation; provided that the Trustee shall not be entitled to such information which the Company
is prevented from disclosing as a matter of law or contract;
(g) the
Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(h) the
Trustee shall not be liable for any action taken, suffered or omitted to be taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by this Contingent Convertible Capital Securities Indenture,
unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(i) anything
in this Contingent Convertible Capital Securities Indenture notwithstanding, in no event shall the Trustee be liable for special,
indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to loss or profit), even if
the Trustee has been advised as to the likelihood of such loss or damage and regardless of whether the claim for loss or damage
is made in negligence or otherwise;
(j) the
Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed
by it to be authorized or within the discretion or rights or powers conferred upon it by this Contingent Convertible Capital Securities
Indenture, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(k) the
Trustee shall not be deemed to have notice of any Enforcement Event unless a Responsible Officer of the Trustee has received, at
the Corporate Trust Office of the Trustee, written notice of such an Enforcement Event and such notice references the Contingent
Convertible Capital Securities and/or this Contingent Convertible Capital Securities Indenture;
(l) the
rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified,
are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other
Person employed to act hereunder;
(m) the
Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized
at such time to take specified actions pursuant to this Contingent Convertible Capital Securities Indenture, which certificate
may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded; and
(n) the
Trustee shall not be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond
its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, strikes,
work stoppages, civil or military disturbances,
nuclear or natural catastrophes, fire, riot, embargo, loss or malfunctions of utilities, communications or computer (software and
hardware) services, government action, including any laws, ordinances, regulations, governmental action or the like which delay,
restrict or prohibit the providing of the services contemplated by this Contingent Convertible Capital Securities Indenture.
Section 7.05. Not Responsible for
Recitals or Issuance of Contingent Convertible Capital Securities. The recitals contained herein and in the Contingent Convertible
Capital Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Contingent Convertible Capital Securities Indenture or of the Contingent Convertible
Capital Securities, except that the Trustee represents and warrants that it has duly authorized, executed and delivered this Contingent
Convertible Capital Securities Indenture. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Contingent Convertible Capital Securities or the proceeds thereof. The Trustee shall not be responsible
to make any calculation with respect to any matter under this Contingent Convertible Capital Securities Indenture other than as
specifically provided for herein. The Trustee shall have no duty to monitor or investigate the Company’s compliance with
or the breach of, or cause to be performed or observed, any representation, warranty, or covenant, or agreement of any Person,
other than the Trustee, made in this Contingent Convertible Capital Securities Indenture
No provision of this Contingent Convertible
Capital Securities Indenture shall be deemed to impose any duty or obligation on the Trustee to perform any act or acts, receive
or obtain any interest in property or exercise any interest in property, or exercise any right, power, duty or obligation conferred
or imposed on it in any jurisdiction in which it shall be illegal, taxation or other consequences that, in the sole determination
of the Trustee, are adverse to the Trustee, or in which the Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts, to receive or obtain any such interest in property or to exercise any such right, power,
duty or obligation.
Section 7.06. May
Hold Contingent Convertible Capital Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Contingent Convertible
Capital Security Registrar and any Calculation Agent or any other agent of the Company, in its individual or any other capacity,
may become the owner or pledgee of Contingent Convertible Capital Securities and, subject to Section 7.11 and Section
7.15, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Contingent Convertible Capital Security Registrar, Calculation Agent or such other agent.
Section 7.07. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.
Section 7.08. Compensation and Reimbursement.
The Company agrees
(a) to
pay to the Trustee from time to time compensation for all services rendered by it hereunder as agreed upon in writing by the Company
from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(b) except
as otherwise expressly provided herein, to reimburse the Trustee for all reasonable expenses, disbursements and advances incurred
or made by the Trustee in accordance with any provision of this Contingent Convertible Capital Securities Indenture (including
the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement
or advance as shall be determined by a court of competent jurisdiction to have been caused by its own negligence or bad faith;
and
(c) to
indemnify the Trustee (which for purposes of this subsection (c) shall be deemed to include its directors, officers, employees
and agents) or any predecessor Trustee for, and to hold it harmless against, any and all loss, liability, claim, damage or expense
(including legal fees and expenses) and taxes (other than taxes based upon, measured by or determined by the income of the Trustee)
incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder including the costs and expenses of defending itself against any claim (whether asserted by the Company,
or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder,
or in connection with enforcing the provisions of this Section, but excluding any tax liabilities of the Trustee in respect of
its income.
In addition to, but without prejudice to
its other rights under this Contingent Convertible Capital Securities Indenture, when the Trustee incurs expenses or renders services
in connection with an Enforcement Event specified in Section
6.01, the fees, costs and expenses (including the charges and expenses of its counsel) and the compensation for the services are
intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar
law.
The Trustee shall notify the Company in
writing of the commencement of any action or claim in respect of which indemnification may be sought promptly after a Responsible
Officer of the Trustee becomes aware of such commencement (provided that the failure to make such notification shall not affect
the Trustee’s rights hereunder) and the Company shall be entitled to participate in, and to the extent it shall wish, to
assume the defense thereof, including the employment of counsel reasonably satisfactory to the Trustee. If the Company and the
Trustee are being represented by the same counsel and the Company has assumed the defense of the claim, the Trustee shall not be
authorized to settle a claim without the written consent of the Company, which consent shall not be unreasonably withheld.
As security for the performance of the obligations
of the Company under this Section, the Trustee shall have a senior lien to which the Contingent Convertible Capital
Securities are hereby made subordinate, upon
all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of Liquidation Preference
or Distributions on the Contingent Convertible Capital Securities.
“Trustee” for purposes of this
Section shall include any predecessor Trustee; provided, however, that the negligence, willful misconduct or bad faith of any Trustee
hereunder shall not affect the rights of any other Trustee hereunder.
The Trustee's
rights to payment of its fees, reimbursement and indemnity under, and its lien provided for in, this Section
7.08 shall survive the payment in full of the Contingent Convertible Capital Securities, the satisfaction and discharge of this
Contingent Convertible Capital Securities Indenture, the resignation or removal of the Trustee, the termination for any reason
of this Contingent Convertible Capital Securities Indenture and the exercise of the Spanish Bail-in Power and the other relevant
resolution tools by the relevant resolution authority.
Section 7.09. Disqualification; Conflicting
Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of Section 310(b) of the Trust Indenture
Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the
provisions of, Section 310(b) of the Trust Indenture Act and this Contingent Convertible Capital Securities Indenture.
Section 7.10. Corporate
Trustee Required; Eligibility. There shall at all times be a Trustee hereunder with respect to each series which shall be a
Person organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by Federal or State or District of Columbia authority and having a corporate trust office or agency
in the Borough of Manhattan, The City of New York, New York. If such Person publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital
and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in this Article
7.
Section 7.11. Resignation and Removal;
Appointment of Successor.
(a) No
resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section
7.12.
(b) The
Trustee may resign at any time with respect to the Contingent Convertible Capital Securities of one or more series by giving written
notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section
7.12 shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Contingent Convertible Capital Securities of such series.
(c) The
Trustee may be removed at any time with respect to the Contingent Convertible Capital Securities of any series by Act of the Holders
of a majority in Liquidation Preference of the Outstanding Contingent Convertible Capital Securities of such series delivered to
the Trustee and to the Company. If the instrument of acceptance by a successor Trustee required by Section
7.12 shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the Trustee may petition
at the expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee with respect to the
Contingent Convertible Capital Securities of such series.
(d) If
at any time:
(i) the
Trustee shall fail to comply with Section
7.09 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Contingent Convertible
Capital Security of the series as to which the Trustee has a conflicting interest for at least six months, or
(ii) the
Trustee shall cease to be eligible under Section
7.10 and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of
a Contingent Convertible Capital Security for at least six months, or
(iii) the Trustee shall become
incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed
or any public officer shall take charge, or control of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, or
(iv) the
Trustee shall fail to perform its obligations to the Company under the Contingent Convertible Capital Securities Indenture in
any material respect,
then, in any such case, (i) the Company by a Board Resolution may remove the Trustee with respect
to any or all series of Contingent Convertible Capital Securities or (ii) subject to Section
6.15 (and except in the case of subparagraph (d)(iv) above), any Holder who has been a bona fide Holder of a Contingent Convertible
Capital Security for at least six months (and, in the case of (i)
above, who is a Holder of a Contingent Convertible Capital Security of the series as to which the Trustee has a conflicting interest)
may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Contingent Convertible Capital Securities and the appointment of a successor Trustee or Trustees.
(e) If
the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any
cause, with respect to the Contingent Convertible Capital Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the Contingent Convertible Capital Securities of such series
(it being understood that any successor Trustee may be appointed with respect to the Contingent Convertible Capital Securities
of one or more or all of such series and at any time there shall be only one Trustee with respect to the Contingent Convertible
Capital Securities of any particular series), and shall comply with the applicable requirements of Section
7.12. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Contingent Convertible Capital Securities of any series shall be appointed by Act of the Holders of a majority
in Liquidation Preference of the Outstanding Contingent Convertible Capital Securities of such series delivered to the Company
and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section
7.12, become the successor Trustee with respect to the Contingent Convertible Capital Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Contingent Convertible Capital
Securities of any series shall have been so appointed by the Company or the Holders of Contingent Convertible Capital Securities
of such series and accepted appointment in the manner hereinafter required by Section
7.12, any Holder who has been a bona fide Holder of a Contingent Convertible Capital Security of such series for at least six months
may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of
a successor Trustee with respect to the Contingent Convertible Capital Securities of such series.
(f) The
Company shall give notice to Holders of each resignation and each removal of the Trustee with respect to the Contingent Convertible
Capital Securities of any series and each appointment of a successor Trustee with respect to the Contingent Convertible Capital
Securities of any series to the Holders in the manner and to the extent provided in Section
1.06. Each notice shall include the name of the successor Trustee with respect to the Contingent Convertible Capital Securities
of such series and the address of its Corporate Trust Office.
Section 7.12. Acceptance of Appointment
by Successor.
(a) In
case of the appointment hereunder of a successor Trustee with respect to all Contingent Convertible Capital Securities, every such
successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges
and subject to its lien provided for in Section
7.08, execute and deliver an instrument transferring to such successor Trustee, all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In
case of the appointment hereunder of a successor Trustee with respect to the Contingent Convertible Capital Securities of one or
more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Contingent Convertible
Capital Securities of such series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall
accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm
to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the
Contingent Convertible Capital Securities of such series to which the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Contingent Convertible Capital Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Contingent Convertible Capital Securities of such series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Contingent Convertible Capital
Securities Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than
one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees
of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust
or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture
the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Contingent Convertible Capital Securities of such series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer
and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Contingent
Convertible Capital Securities of such series to which the appointment of such successor Trustee relates, subject to the lien provided
for in Section 7.08.
(c) Upon
request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a)
or (b) of this Section, as the case may be.
(d) No
successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article 7.
Section 7.13. Merger, Conversion,
Consolidation or Succession to Business. Any Person into which the Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder,
provided such Person shall be otherwise qualified
and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties
hereto. In case any Contingent Convertible Capital Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Contingent Convertible Capital Securities so authenticated with the same effect as if such successor Trustee had
itself authenticated such Contingent Convertible Capital Securities.
Section 7.14. Preferential Collection
of Claims. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Contingent Convertible
Capital Securities of a series), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection
of claims against the Company (or any such other obligor).
Section 7.15. Appointment of Authenticating
Agent. The Trustee may at any time appoint an Authenticating Agent or Agents with respect to one or more series of Contingent
Convertible Capital Securities which shall be authorized to act on behalf of the Trustee to authenticate Contingent Convertible
Capital Securities of such series upon original issue, or issued upon exchange, registration of transfer or partial redemption
thereof or in lieu of destroyed, lost or stolen Contingent Convertible Capital Securities, and Contingent Convertible Capital Securities
so authenticated shall be entitled to the benefits of this Contingent Convertible Capital Securities Indenture and shall be valid
and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Contingent Convertible
Capital Securities Indenture to the authentication and delivery of Contingent Convertible Capital Securities by the Trustee or
the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation or national banking
association organized and doing business under the laws of the United States, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal or State or District of Columbia authority. If such Authenticating Agent publishes reports
of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner
and with the effect specified in this Section.
Any Person into which an Authenticating
Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation
to which such Authenticating Agent shall be a party, or any Person succeeding to the corporate agency or corporate trust business
of an Authenticating Agent,
shall continue to be an Authenticating Agent,
provided such Person shall be otherwise eligible under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating
Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable
to the Company and shall give notice to the Holders of Contingent Convertible Capital Securities in the manner and to the extent
provided in Section 1.06.
Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Company
agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section
7.15.
If an appointment with respect to one or
more series is made pursuant to this Section, the Contingent Convertible Capital Securities of such series may have endorsed thereon,
in lieu of the Trustee’s certificate of authentication, an alternate certificate of authentication in substantively the following
form:
This is one of the Contingent Convertible
Capital Securities referred to in the within-mentioned Contingent Convertible Capital Securities Indenture.
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THE BANK OF NEW YORK MELLON, as Trustee |
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By: |
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as Authenticating Agent |
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Section 7.16. Appointment
of Additional Trustees. The Company may appoint a Trustee for a particular series of Contingent Convertible Capital Securities
other than the Trustee named in the first paragraph of this Contingent Convertible Capital Securities Indenture by executing and
delivering an indenture supplemental hereto where such Trustee accepts such appointment as contemplated by Section
10.01(l) (it being understood that at any time there shall be only one Trustee with respect to the Contingent Convertible Capital
Securities of any particular series); provided that, at the time of such
acceptance, such Trustee shall be qualified
and eligible under this Article 6. Upon such acceptance, such Trustee shall be vested with all the rights, powers, trusts and duties
of a Trustee under this Contingent Convertible Capital Securities Indenture with respect to the Contingent Convertible Capital
Securities of such series.
Section 7.17. Tax Withholding.
Any amounts to be paid by the Company on the Contingent Convertible Capital Securities shall be paid net of any deduction or withholding
imposed or required pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”),
any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of
the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered
into in connection with the implementation of such Sections of the Code (or any law implementing such an intergovernmental agreement)
(a “FATCA Withholding Tax”), and the Company shall not be required to pay Additional Amounts on account of any
FATCA Withholding Tax.
Any Paying
Agent shall be entitled to make a deduction or withholding from any payment which it makes under the Contingent Convertible Capital
Securities and the Contingent Convertible Capital Securities Indenture for or on account of (i) any present or future taxes, duties
or charges if and to the extent so required by any applicable law and (ii) any FATCA Withholding Tax (together, “Applicable
Law”). In either case, the Paying Agent shall make any payment after a deduction or withholding has been made pursuant
to Applicable Law and shall report to the relevant authorities the amount so deducted or withheld. In all cases, the Paying Agent
shall have no obligation to gross up any payment made subject to any deduction or withholding pursuant to Applicable Law. In addition,
amounts deducted or withheld by the Paying Agent as described in this paragraph will be treated as paid to the Holder of the Contingent
Convertible Capital Securities, and the Company will not pay Additional Amounts in respect of such deduction or withholding, except
to the extent required under Section 11.04.
Article
8
Holders Lists and Reports by Trustee and Company
Section 8.01. Company to Furnish Trustee
Names and Addresses of Holders. The Company, with respect to any series of Contingent Convertible Capital Securities, will
furnish or cause to be furnished to the Trustee
(a) not
more than 15 days after each Regular Record Date (or after each of the dates to be specified for such purpose for non- Distribution
bearing Contingent Convertible Capital Securities and Contingent Convertible Capital Securities on which Distribution Dates occur
less frequently than quarterly as contemplated by Section
3.01), a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Contingent Convertible
Capital Securities as of such Regular Record Date or such specified date, and
(b) at
such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to the time such list is furnished.
The Company
need not furnish or cause to be furnished to the Trustee pursuant to this Section
8.01 the names and addresses of Holders of Contingent Convertible Capital Securities so long as the Trustee acts as Contingent
Convertible Capital Security Registrar with respect to such series of Contingent Convertible Capital Securities.
Section 8.02. Preservation of Information;
Communication to Holders.
(a) The
Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders (i) contained in
the most recent list furnished to the Trustee as provided in Section
8.01 and (ii) received by the Trustee in its capacity as Paying Agent or Contingent Convertible Capital Security Registrar (if
so acting). The Trustee may dispose of any list furnished to it as provided in Section
8.01 upon receipt of a new list so furnished.
(b) The
rights of the Holders of Contingent Convertible Capital Securities of any series to communicate with other Holders with respect
to their rights under this Contingent Convertible Capital Securities Indenture or under the Contingent Convertible Capital Securities,
and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.
(c) Every
Holder, by receiving and holding a Contingent Convertible Capital Security, agrees with the Company and the Trustee that neither
the Company nor the Trustee nor any agent of any of them shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Holders in accordance with Section
8.02(b) or otherwise made pursuant to the Trust Indenture Act.
Section 8.03. Reports by Trustee.
(a) On
or before May 15 in each year following the date hereof, so long as any Contingent Convertible Capital Securities are Outstanding
hereunder, the Trustee shall transmit to Holders as provided in the Trust Indenture Act a brief report dated as of a date required
by and in compliance with the Trust Indenture Act.
(b) A
copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each securities exchange
upon which the Trustee has been notified that the Contingent Convertible Capital Securities are listed, with the Commission and
with the Company. The Company will notify the Trustee when Contingent Convertible Capital Securities are listed on any securities
exchange.
(c) The
Trustee may conclusively presume that the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act or otherwise is complying with such reporting requirements unless and until a Responsible Officer of the Trustee receives at
the Corporate Trust Office of the Trustee a written notification from the Company stating otherwise. The Trustee shall have no
duty to examine any information, reports or other documents filed by the Company pursuant to Section 13 or 15(d) of the Exchange
Act, and need make no determination as to whether they comply with the requirements of this Section
8.03, its sole duty in respect thereof being to place them in its files and make them available for inspection by any Holder upon
reasonable request during normal business hours.
Section 8.04. Reports by Company.
The Company shall:
(a) file
with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section
13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant
to either of such Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required
pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations. Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee’s receipt of such shall not constitute actual or constructive notice of
any information contained therein or determinable from information contained therein, including the Company’s compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate);
(b) file
with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this
Contingent Convertible Capital Securities Indenture as may be
required from time to time by such rules and
regulations. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s
receipt of such shall not constitute actual or constructive notice of any information contained therein or determinable from information
contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled
to rely exclusively on an Officer’s Certificate); and
(c) transmit
to Holders, in the manner and to the extent required by the Trust Indenture Act, within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs 8.04(a)
and 8.04(b) of this Section as may be required
by rules and regulations prescribed from time to time by the Commission.
Article
9
Consolidation, Merger, Conveyance or Transfer
Section 9.01. Company May Consolidate,
Etc., Only on Certain Terms.
The Company may, without the
consent of Holders of any Contingent Convertible Capital Securities of any series Outstanding under this Contingent
Convertible Capital Securities Indenture, consolidate or amalgamate with or merge into any other corporation or convey or
transfer or lease its properties and assets substantially as an entirety to any Person, provided that:
(a) any successor corporation formed by any consolidation, amalgamation or merger, or any transferee or lessee
of the Company’s assets, (i) shall be a company organized and existing under the laws of any part of the European Union,
and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in the case of the
Company, in form satisfactory to the Trustee, the due and punctual payment of the Liquidation Preference and Distributions and
Additional Amounts, if any, on all the Contingent Convertible Capital Securities in accordance with the provisions of such Contingent
Convertible Capital Securities and this Contingent Convertible Capital Securities Indenture and the performance of every covenant
of this Capital Indenture on the part of the Company to be performed or observed;
(b) immediately
after giving effect to such consolidation, amalgamation, merger, conveyance or transfer, no Enforcement Event and no event which,
after notice or lapse of time or both, would become an Enforcement Event, shall have occurred and be continuing; and
(c) the
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation,
amalgamation, merger, conveyance or transfer and such supplemental indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Section 9.02. Successor Corporation
Substituted. In the event of any merger, consolidation, sale, conveyance permitted by Section 9.01 above, Additional Amounts
under the Contingent Convertible Capital Securities will thereafter be payable in respect of taxes imposed by the acquiring corporation’s,
or the resulting corporation’s, jurisdiction of incorporation or tax residence (subject to exceptions equivalent to those
that apply to the obligation to pay Additional Amounts pursuant to Section 11.04 in respect of taxes imposed by the laws of the
Kingdom of Spain) rather than taxes imposed by the Kingdom of Spain. Additional Amounts with respect to payments of Distributions
or Liquidation Preference due prior to the date of such merger, consolidation, sale, conveyance or lease will be payable only in
respect of taxes imposed by the Kingdom of Spain. The acquiring or resulting corporation, as the case may be, will also be entitled
to redeem the Contingent Convertible Capital Securities in the circumstances described in Section 12.08 with respect to any change
or amendment to, or change in the application or official interpretation of the laws or regulations of such jurisdiction, which
change or amendment must occur subsequent to the date of any merger, consolidation, sale or conveyance or lease permitted by Section
9.01 if the successor entity is not incorporated or tax resident in the Kingdom of Spain. In the event of assumption of the Company’s
obligations in connection with a merger, consolidation, sale or conveyance of substantially all of its assets, the Company shall
be released from all obligations and covenants under this Contingent Convertible Capital Securities Indenture or the Contingent
Convertible Capital Securities, as the case may be, and the successor corporation formed by such consolidation or amalgamation
or into which the Company is merged or to which such conveyance or transfer is made shall succeed to and be substituted for, and
may exercise every right and power of, the Company under this Contingent Convertible Capital Securities Indenture with the same
effect as if such successor corporation had been named as the Company.
Section 9.03. Assumption of Obligations.
Subject to the prior consent of the European Central Bank, if required, a holding company of the Company may assume the obligations
of the Company under the Contingent Convertible Capital Securities without the consent of the Holders of the Contingent Convertible
Capital Securities of such series, provided that:
(a) the
successor entity shall expressly assume such obligations by an amendment to the Contingent Convertible Capital Securities Indenture,
executed by the Company and such successor entity, if applicable, and delivered to the Trustee, in form satisfactory to the Trustee;
(b) immediately
after giving effect to such assumption of obligations, no Enforcement Event and no event which, after notice or lapse of time or
both, would become an Enforcement Event, shall have occurred and be continuing; and
(c) the
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such assumption
complies with this Article and that all conditions precedent herein provided for relating to such assumption have been complied
with.
Upon any such assumption, the successor
entity shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Contingent Convertible
Capital Securities Indenture with respect to any such Contingent Convertible Capital Securities with the same effect as if such
successor entity had been named as the Company in this Contingent Convertible Capital Securities Indenture, and the Company or
any legal and valid successor corporation which shall theretofore have become such in the manner prescribed herein, shall be released
from all liability as obligor upon any such Contingent Convertible Capital Securities except as described in the following paragraph.
In the event
of any assumption, Additional Amounts under the Contingent Convertible Capital Securities of such series will be payable in respect
of taxes imposed by the assuming corporation’s jurisdiction of incorporation or tax residence (subject to exceptions equivalent
to those that apply to the obligation to pay Additional Amounts pursuant to Section
11.04 in respect of taxes imposed by the laws of the Kingdom of Spain) on payments of Distributions or Liquidation Preference made
on or subsequent to the date of such assumption. Additional Amounts with respect to payments of Distributions or Liquidation Preference
due prior to the date of such assumption will be payable only in respect of taxes imposed by the Kingdom of Spain. The assuming
corporation will also be entitled to redeem the Contingent Convertible Capital Securities of such series in the circumstances described
in Section 12.08 with
respect to any change or amendment to, or change in the application or official interpretation of the laws or regulations of such
jurisdiction, which change or amendment must occur subsequent to the date of any such assumption if the assuming entity is not
incorporated or tax resident in the Kingdom of Spain. In the event of any such assumption, all obligations of the Company under
the Contingent Convertible Capital Securities of such series shall immediately be discharged.
Article
10
Supplemental Indentures
Section 10.01. Supplemental Indenture
without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the
Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(a) to
evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the
Company herein and in the Contingent Convertible Capital Securities;
(b) to
add to the covenants of the Company for the benefit of the Holders of all or any series of Contingent Convertible Capital Securities
(and, if such covenants are to be for the benefit of fewer than all series of Contingent Convertible Capital Securities, stating
that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein
conferred upon the Company;
(c) to
add any additional Enforcement Events;
(d) to
make changes to procedures relating to Trigger Conversion, delivery of the Common Shares, or ADSs, as applicable;
(e) to
change or eliminate any of the provisions of this Contingent Convertible Capital Securities Indenture, or any supplemental indenture,
provided that any such change or elimination shall become effective only when there is no outstanding Contingent Convertible Capital
Security of any series created prior to the execution of such supplemental indenture that is entitled to the benefit of such provision
or as to which such supplemental indenture would apply;
(f) to
secure the Contingent Convertible Capital Securities;
(g) to
establish the form or terms of Contingent Convertible Capital Securities of any series as permitted by Sections 2.01
or 3.01;
(h) to
change any Place of Payment, so long as the Place of Payment as required by Section 3.01 is maintained in The City
of New York;
(i) to
cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision
herein or in any supplemental indenture;
(j) to
evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Contingent Convertible
Capital Securities of one or more series and to add to or change any of the provisions of this Contingent Convertible Capital
Securities Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than
one Trustee, pursuant to the requirements of Section 7.12(b);
(k) to
change or eliminate any provision of this Contingent Convertible Capital Securities Indenture as permitted by Section
1.08
(l) to
name a Trustee for a particular series of Contingent Convertible Capital Securities other than the Trustee named in the first
paragraph of this Contingent Convertible Capital Securities Indenture and to provide for the appropriate changes related to such
appointment for a particular series of Contingent Convertible Capital Securities;
(m) with
respect to any Contingent Convertible Capital Security (including a Global Security) issued on or after the date hereof, to amend
any such Contingent Convertible Capital Security to conform to the description of the terms of such Contingent Convertible Capital
Security in the prospectus, prospectus supplement, product supplement, pricing supplement or any other similar offering document
related to the offering of such Contingent Convertible Capital Security; or
(n) to
change or modify any provision of the Contingent Convertible Capital Securities Indenture as necessary to ensure that the Contingent
Convertible Capital Securities of any series shall be convertible into ordinary shares of Newco in the event of a Newco Scheme.
Section 10.02. Supplemental Indentures
with Consent of Holders. With the consent of the Holders of not less than a majority in aggregate Liquidation Preference of
the Outstanding Contingent Convertible Capital Securities of each series affected by such supplemental Contingent Convertible Capital
Securities Indenture (voting as a class), by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions of this Contingent Convertible Capital Securities
Indenture or of modifying in any manner the rights of the Holders of Contingent Convertible Capital Securities of such series under
this Contingent Convertible Capital Securities Indenture; provided, however, that no such supplemental indenture may, without the
consent of the Holder of each Outstanding Contingent Convertible Capital Security affected thereby,
(a) change
the terms of any Contingent Convertible Capital Security to reduce the Liquidation Preference payable upon the redemption of, or
the Distributions payable on any Contingent Convertible Capital Security, or change the obligation of the Company (or its successor)
to pay Additional Amounts pursuant to Section
11.04 (except as contemplated by Section
9.01(a) and permitted by Section 10.01(a))
on the Contingent Convertible Capital Securities, or the currency of payment of the Liquidation Preference or Distributions on
any such Contingent Convertible Capital Security, or change the Place of Payment, or impair the right to institute suit for the
enforcement of any such payment when due and payable on or with respect to any Contingent Convertible Capital Security, or modify
the calculation of and any adjustment to, the Conversion Price; or
(b) reduce
the percentage in aggregate Liquidation Preference of the Outstanding Contingent Convertible Capital Securities of any series,
the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Contingent Convertible Capital Securities Indenture or of certain defaults
hereunder and their consequences) provided for in this Contingent Convertible Capital Securities Indenture, or
(c) modify
any of the provisions of this Section 10.02
except to increase any such percentage or to provide that certain other provisions of this Contingent Convertible Capital Securities
Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Contingent Convertible Capital Security
affected thereby;
provided,
however, that this subsection shall not be deemed to require the consent of any Holder with respect to changes in the
references to “the Trustee” and concomitant changes in this Section, or the deletion of this proviso, in
accordance with the requirements of Sections 7.12(b)
and Section 10.01(l), or
(d) change
in any manner adverse to the interests of the Holders of any Contingent Convertible Capital Securities the subordination provisions
of the Contingent Convertible Capital Securities or the terms and conditions of the obligations of the Company in respect of the
due and punctual payment of any amounts due and payable on the Contingent Convertible Capital Securities.
It shall not be necessary for any Act of
Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if
such Act shall approve the substance thereof.
A supplemental indenture which changes or
eliminates any covenant or other provision of this Contingent Convertible Capital Securities Indenture which has expressly been
included solely for the benefit of one or more particular series of Contingent Convertible Capital Securities, or which modifies
the rights of the Holders of Contingent Convertible Capital Securities of such series with respect to such covenant or other provision,
shall be deemed not to affect the rights under this Contingent Convertible Capital Securities Indenture of the Holders of Contingent
Convertible Capital Securities of any other series.
Section 10.03. Execution
of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by this Contingent Convertible Capital Securities Indenture,
the Trustee shall be entitled to receive, and (subject to Section
7.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Contingent Convertible Capital Securities Indenture and constitutes a legal, valid and binding
obligation of the Company, subject to customary exceptions. The Trustee may, but shall not be obliged to, enter into any such supplemental
indenture which affects the Trustee’s own rights, duties or immunities under this Contingent Convertible Capital Securities
Indenture or otherwise.
Section 10.04. Effect of Supplemental
Indentures. Upon the execution of any supplemental indenture under this Article, this Contingent Convertible Capital Securities
Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Contingent Convertible
Capital Securities Indenture for all purposes; and every Holder of Contingent Convertible Capital Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby, except as otherwise expressed therein.
Section 10.05. Conformity with Trust
Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust
Indenture Act as then in effect.
Section 10.06. Reference in Contingent
Convertible Capital Securities to Supplemental Indentures. Contingent Convertible Capital Securities of any series authenticated
and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Contingent Convertible Capital Securities of any series so modified as to conform, in the opinion of the Trustee
and the Company, to any such supplemental indenture may be prepared and executed by the Company and such Contingent Convertible
Capital Securities may be authenticated and delivered by the Trustee in exchange for Outstanding Contingent Convertible Capital
Securities of such series.
Article
11
Covenants
Section 11.01. Payment of Liquidation Preference and Distributions.
The Company covenants and agrees for the benefit of each series of Contingent Convertible Capital Securities that it will duly
and punctually pay the Liquidation Preference of and Distributions on, if any (subject to the subordination provisions of Section
13.01 and Section 3.01) on the Contingent Convertible Capital Securities of that series when due and payable in accordance with
the terms of the Contingent Convertible Capital Securities and this Contingent Convertible Capital Securities Indenture. Except
as otherwise specified, as contemplated by Section 3.01 hereof, the Trustee shall act as Principal Paying Agent with respect
to any series of Contingent Convertible Capital Securities.
Section 11.02. Maintenance
of Office or Agency. The Company will maintain in each Place of Payment for any series of Contingent Convertible Capital Securities
an office or agency where Contingent Convertible Capital Securities of that series may be presented or surrendered for payment,
where Contingent Convertible Capital Securities of that series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Contingent Convertible Capital Securities of that series and
this Contingent Convertible Capital Securities Indenture may be served; provided, however, that at the option of the Company in
the case of definitive Contingent Convertible Capital Securities of such series, payment of any Distributions thereon may be made
by check mailed to the address of the Person entitled herein as such address shall appear in the Contingent Convertible Capital
Security Register. With respect to the Contingent Convertible Capital Securities of any series, such office or agency in each
Place of Payment shall be specified as contemplated by Section 3.01, and if not so specified, initially shall be 225 Liberty
Street, New York, New York, 10286. Unless otherwise specified pursuant to Section 3.01, the Company will maintain in the
Borough of Manhattan, The City of New York, an office or agency where notices and demands to or upon the Company in respect of
Contingent Convertible Capital Securities of any series and this Contingent Convertible Capital Securities Indenture may be served.
The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish
the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company
hereby appoints the Trustee as its agent to receive all presentations, surrenders, notices and demands.
The Company may also from time to time designate
one or more other offices or agencies (in or outside the Borough of Manhattan, The City of New York) where the Contingent Convertible
Capital Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company
of any obligation to maintain an office or agency in each Place of Payment (except as otherwise indicated in this Section) for
Contingent Convertible Capital Securities of any series for such purposes. The Company will give prompt written notice to the Trustee
of any such designation or rescission and of any change in the location of any such other office or agency.
Section 11.03. Money for Distributions
to be Held in Trust. If the Company shall at any time act as Paying Agent with respect to the Contingent Convertible Capital
Securities of any series, it will, on or before each due date, if any, for payment of the Liquidation Preference or Distributions
on any of the Contingent Convertible Capital Securities of that series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the Liquidation Preference or Distributions so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its failure so to act.
Whenever the
Company shall have one or more Paying Agents for any series of Contingent Convertible Capital Securities, it will, prior to any
due date for payment of the Liquidation Preference or Distributions on any Contingent Convertible Capital Securities of that series
deposit with a Paying Agent a sum sufficient to pay the Liquidation Preference or Distributions so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such Liquidation Preference or Distributions, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action or its failure so to act. Unless otherwise specified
as contemplated by Section
3.01, the Trustee shall be the Company’s Paying Agent. The Company will cause each Paying Agent for any series of Contingent
Convertible Capital Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:
(a) hold
all sums held by it for the payment of the Liquidation Preference or Distributions on Contingent Convertible Capital Securities
of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give
the Trustee notice of any default by the Company (or any other obligor upon the Contingent Convertible Capital Securities of that
series) in the making of any
payment, when due and payable, or Liquidation
Preference or Distributions on Contingent Convertible Capital Securities of that series; and
(c) at
any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company may at the time, for the purpose
of obtaining the satisfaction and discharge of this Contingent Convertible Capital Securities Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent,
such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee such Paying Agent shall be released from all further liability
with respect to such money.
Any money deposited with the Trustee or
any Paying Agent, or then held by the Company, in trust for the payment of the Liquidation Preference or Distributions on any Contingent
Convertible Capital Security of any series and remaining unclaimed for two years after such Liquidation Preference or Distributions
have become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Contingent Convertible Capital Security shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published at least
once, in an Authorized Newspaper, notice that such money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be paid to
the Company.
Section 11.04. Additional Amounts.
(a) Unless
otherwise specified pursuant to Section 3.01, all payments of Distributions and other amounts payable in respect of Contingent
Convertible Capital Securities by the Company will be made free and clear of and without withholding or deduction for or on account
of any present or future taxes, duties, assessments or governmental charges (collectively “Taxes”) of whatever nature
imposed or levied by or on behalf of Spain or any political subdivision thereof or any authority or agency therein or thereof having
power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law.
In that event, the Company shall pay, in respect of any withholding or deduction imposed on payments of Distributions only (and
not Liquidation Preference), such additional amounts (“Additional Amounts”) as will result in Holders of any
series of outstanding Contingent Convertible Capital Securities receiving such amounts as they would have received had no such
withholding or deduction been required.
(b) The
Company shall not be required to pay any Additional Amounts in relation to any payment in respect of any Contingent Convertible
Capital Security:
(i) to,
or to a third party on behalf of, a Holder if the Holder or the beneficial owner of Contingent Convertible Capital Securities
of any series is liable for such Taxes in respect of such Contingent Convertible Capital Security by reason of his having some
connection with Spain other than the mere holding of such Contingent Convertible Capital Security; or
(ii) to,
or to a third party on behalf of, a Holder in respect of whose Contingent Convertible Capital Securities the Company does not
receive such information as may be required in order to comply with the applicable Spanish tax reporting obligations (as amended
or restated from time to time), including but not limited to the receipt in a timely manner of a duly executed and completed certificate
in accordance with Law 10/2014 and Royal Decree 1065/2007, as amended, and any implementing legislation or regulation; or
(iii) to,
or to a third party on behalf of, a Holder if the Holder or the beneficial owner of Contingent Convertible Capital Securities
of any series failed to make any necessary claim or to comply with any certification, identification or other requirements concerning
the nationality, residence, identity or connection with the taxing jurisdiction of such Holder or beneficial owner, if such claim
or compliance is required by statute, treaty, regulation or administrative practice of the taxing jurisdiction of the Company
as a condition to relief or exemption from such taxes; or
(iv) presented
for payment (where presentation is required) more than 30 days after the Relevant Date, except to the extent that the relevant
Holder would have been entitled to such Additional Amounts on presenting the same for payment on the expiry of such period of
30 days; or
(v) where
the withholding or deduction is imposed pursuant to European Council Directive 2003/48/EC or any Directive amending, supplementing
or replacing such Directive, or any law implementing or complying with, or introduced in order to conform to, such Directive;
or
(vi) presented
for payment (where presentation is required) by or on behalf of a Holder of a Contingent Convertible Capital Security who would
have been able to avoid such withholding or deduction by presenting the Contingent Convertible Capital Security to another paying
agent in a Member State of the European Union; or
(vii) to,
or to a third party on behalf of, individuals resident for tax purposes in the Kingdom of Spain; or
(viii) to, or to a third party
on behalf of, a Spanish-resident legal entity subject to Spanish corporation tax if the Spanish tax authorities determine that
the Contingent Convertible Capital Securities of any series do not comply with
exemption requirements specified
in the Reply to a Consultation of the Directorate General for Taxation (Dirección General de Tributos) dated 27 July 2004
and require a withholding to be made; or
(ix) where the withholding
or deduction is required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections
1471 through 1474 of the Code (“FATCA”), any regulations or agreements thereunder, any official interpretations thereof,
any intergovernmental agreements with respect thereto (including the intergovernmental agreement between the United States and
Spain on the implementation of FATCA), or any law implementing an intergovernmental agreement or any regulations or official interpretations
relating thereto.
(c) In addition, Additional Amounts will not be payable with respect to any Taxes that are imposed in respect
of any combination of the items listed in (b)(i) through (b)(ix) set forth above.
(d) Additional
Amounts will also not be paid with respect to any payment to a Holder who is a fiduciary, a partnership, a limited liability company
or person other than the sole beneficial owner of that payment, to the extent that payment would be required by the laws of Spain
(or any political subdivision thereof) to be included in the income, for tax purposes, of a beneficiary or settlor with respect
to the fiduciary, a member of that partnership, an interest holder in that limited liability company or a beneficial owner who
would not have been entitled to the Additional Amounts had it been the Holder.
For the purposes
of this Section 11.04:
“Relevant Date” means, in respect of any
payment, the date on which such payment first becomes due and payable, except that, if the full amount of the moneys payable has
not been duly received by the Principal Paying Agent on or prior to such due date, it means the date on which, the full amount
of such moneys having been so received and being available for payment to Holders, notice to that effect is duly given to the Holders
in accordance with Section 1.06.
In the event that any withholding or deduction for or on account
of any taxes by the Company is required, at least 10 days prior to each date of payment of Liquidation Preference of or Distributions
on the relevant series of Contingent Convertible Capital Securities, or, if later, promptly after the obligation to withhold or
deduct becomes known to the Company, the Company will furnish to the Trustee and the Paying Agent, if other than the Trustee, an
Officer’s Certificate specifying the amount required to be withheld or deducted on such payments to such Holders, certifying
that the Company shall pay such amounts required to be withheld to the appropriate taxing jurisdiction and certifying to the fact
that the Additional Amounts will be payable and the amounts so payable to each Holder, and that the Company will pay to the Trustee
or the Paying Agent the Additional Amounts required to be paid; provided that no such Officer’s Certificate will be required
prior to any date of payment of Liquidation Prefrence of or Distributions on such Contingent Convertible Capital Securities if
there has been no change with respect to the matters set forth in a prior Officer’s Certificate. The Trustee and Paying Agent
may rely on the fact that any Officer’s Certificate contemplated by this paragraph has not been furnished as evidence of
the fact that no withholding or deduction for or on account of any taxes is required. The Company covenants to indemnify the Trustee
and Paying Agent for and to hold them harmless against any loss, liability or expense reasonably incurred without negligence or
bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any such Officer’s
Certificate furnished pursuant to this paragraph or on the fact that any Officer’s Certificate contemplated by this paragraph
has not been furnished.
Except where the context requires otherwise,
any references in this Contingent Convertible Capital Securities Indenture to Distributions in respect of the Contingent Convertible
Capital Securities shall include any Additional Amounts payable with respect thereto.
Section 11.05. Corporate
Existence. Subject
to Article 9, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect
its corporate existence, provided, however, that the foregoing shall not obligate the Company to preserve any such
right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of its business
and that the loss thereof is not disadvantageous in any material respect to any Holder.
Section 11.06. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate in compliance with Section
314(a)(4) of the Trust Indenture Act.
Article
12
Redemption and Repurchase of Contingent Convertible Capital Securities
Section 12.01. Applicability
of Article. Contingent Convertible Capital Securities of any series shall be redeemable in accordance with their terms and
(except as otherwise specified pursuant to Section
3.01 for Contingent Convertible Capital Securities of any series) in accordance with this Article. Contingent Convertible Capital
Securities of any series may not be redeemed except in accordance with provisions of the Applicable Banking Regulations. The Contingent
Convertible Capital Securities of any series may not be redeemed in whole or in part at the option of the Holder thereof.
Section 12.02. Election
to Redeem; Notice to Trustee. The election of the Company to redeem any Contingent Convertible Capital Securities shall be
evidenced by a Board Resolution. Unless otherwise provided as contemplated by Section 3.01 with respect to any series
of Contingent Convertible Capital Securities, the Company shall, at least 30 days prior, but not more than 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the Liquidation Preference of Contingent Convertible Capital Securities of such series to be redeemed.
In the case of any redemption of Contingent Convertible Capital Securities of any series prior to the expiration of any provision
restricting such redemption provided in the terms of such Contingent Convertible Capital Securities or elsewhere in this Contingent
Convertible Capital Securities Indenture, the Company shall furnish the Trustee with respect to such Contingent Convertible Capital
Securities with an Officer’s Certificate evidencing compliance with or waiver of such provision.
Section 12.03. Selection by
Trustee of Contingent Convertible Capital Securities to be Redeemed. If less than all the Contingent Convertible Capital
Securities of any series are to be redeemed, the particular Contingent Convertible Capital Securities to be redeemed shall be
selected not less than 30 days nor more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Contingent Convertible Capital Securities of such series not previously called for redemption, pro rata, by lot or by such
method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions
(equal to the minimum authorized denomination for Contingent Convertible Capital Securities of that series or any multiple
thereof) of the Liquidation Preference of Contingent Convertible Capital Securities of such series of a denomination larger
than the minimum authorized denomination for Contingent Convertible Capital Securities of that series. Redemption in
accordance with regulations of the list authority, stock exchange and/or quotation system shall conform to the
prospectus.
The Trustee shall promptly notify the Company
in writing of the Contingent Convertible Capital Securities selected for redemption and, in the case of any Contingent Convertible
Capital Securities selected for partial redemption, the Liquidation Preference thereof to be redeemed.
For all purposes of this Contingent Convertible
Capital Securities Indenture, unless the context otherwise requires, all provisions relating to the redemption of Contingent Convertible
Capital Securities shall relate in the case of any Contingent Convertible Capital Securities redeemed or to be redeemed only in
part, to the portion of the Liquidation Preference of such Contingent Convertible Capital Security which has been or
is to be redeemed.
Section 12.04. Redemption Procedures;
Notice of Redemption.
(a) The
decision to redeem the Contingent Convertible Capital Securities must be irrevocably notified by the Company to Holders of the
Contingent Convertible Capital Securities of such series upon not less than 30 nor more than 60 days’ notice prior to the
relevant redemption date (i) through the filing of a relevant event (hecho relevante) announcement with the CNMV and its
publication in accordance with the rules and regulations of any applicable stock exchange or other relevant authority and (ii)
in accordance with Section 1.06, and to the trustee at least five (5) Business Days prior to such date, unless a shorter notice
period shall be satisfactory to the Trustee.
(b) Any
notice of redemption will state: the redemption date; that on the redemption date the Redemption Price will, subject to the satisfaction
of the conditions set forth in this Contingent Convertible Capital Securities Indenture become due and payable upon each Contingent
Convertible Capital Security being redeemed and that, subject to certain exceptions, Distributions will cease to accrue on or after
that date; the place or places where the Contingent Convertible Capital Securities are to be surrendered for payment of the redemption
price; and the CUSIP, Common Code and/or ISIN number
or numbers, if any, with respect to the Contingent
Convertible Capital Securities being redeemed.
(c) If
the Company gives notice of redemption of the Contingent Convertible Capital Securities of any series, then by 12:00 noon (London
time) on the relevant redemption date, the Company will:
(i) irrevocably deposit with
the Principal Paying Agent funds sufficient to pay the Redemption Price; and
(ii) give the Principal Paying
Agent irrevocable instructions and authority to pay the Redemption Price to the Holders.
(d) If
the notice of redemption has been given on any series of Contingent Convertible Capital Securities, and the funds deposited and
instructions and authority to pay given as required above, then on the date of such deposit:
(i) Distributions on the Contingent
Convertible Capital Securities of such series shall cease to accrue;
(ii) such Contingent Convertible
Capital Securities of such series will no longer be considered outstanding; and
(iii) the Holders of Contingent
Convertible Capital Securities of such series will no longer have any rights as holders except the right to receive the Redemption
Price.
(e) If
in connection with any series of Contingent Convertible Capital Securities either the notice of redemption has been given and the
funds are not deposited as required on the date of such deposit or if the Company improperly withholds or refuses to pay the Redemption
Price of the Contingent Convertible Capital Securities of such series, Distributions will continue to accrue, subject as provided
in Section 3.08 and Section 3.09, at the rate specified from (and including) the redemption date to (but excluding) the date of
actual payment of the Redemption Price.
(f) The
Company may not give a notice of redemption pursuant to this Section
12.04 if a Trigger Event Notice has been given. If a Trigger Event Notice is given after a notice of redemption shall have been
given by the Company but before the redemption has occurred, such notice of redemption shall automatically be revoked and be null
and void and the relevant redemption shall not be made.
Section 12.05. Deposit
of Redemption Price. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as Paying Agent, segregate and hold in trust as provided in Section
11.03) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be a Distribution
Date) accrued but unpaid Distributions on, all the Contingent Convertible Capital Securities which are to be redeemed on that date.
Section 12.06. Contingent
Convertible Capital Securities Payable on Redemption Date. Notice of redemption having been given as set forth in Section
12.04, the Contingent Convertible Capital Securities so to be redeemed shall, on the Redemption Date, become due and payable at
the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption
Price and Distributions, if any) such Contingent Convertible Capital Securities shall cease to accrue Distributions for the period
following the Redemption Date. Upon surrender of any such Contingent Convertible Capital Security for redemption in accordance
with Section 12.04, such Contingent Convertible
Capital Security shall be paid by the Company at the Redemption Price, together with accrued but unpaid Distributions, if any, accumulated to the Redemption Date; provided, however, that unless otherwise specified as contemplated by
Section 3.01, a Distribution which is payable
on a Distribution Date which is the Redemption Date, shall be payable to the Holders of such Contingent Convertible Capital Securities,
or one or more Predecessor Securities, registered as such at the close of business on the relevant Regular Record Dates according
to the terms of the Contingent Convertible Capital Securities and the provisions of Section
3.07. Contingent Convertible Capital Securities in definitive form shall be presented for redemption to the Paying Agent.
If any Contingent
Convertible Capital Security called for redemption shall not be so paid upon surrender thereof for redemption, the Contingent Convertible
Capital Security shall, until paid, continue to accrue Distributions from and after the Redemption Date in accordance with its
terms and the provisions of Section
3.07.
Section 12.07. Contingent Convertible
Capital Securities Redeemed In Part. Any Contingent Convertible Capital Security which is to be redeemed only in part shall
be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such
Contingent Convertible Capital Security without service charge, a new Contingent Convertible Capital Security or Contingent Convertible
Capital Securities of the same series of any authorized denomination as requested by such Holder, in Liquidation Preference equal
to and in exchange for the unredeemed portion of the Liquidation Preference of the Contingent Convertible Capital Security so surrendered.
Section 12.08. Optional Redemption Due To Changes In Tax Treatment.
Unless otherwise provided as contemplated by Section 3.01 with respect to the Contingent Convertible Capital Securities of any
series, if, on or after the date of issuance of any series of Contingent Convertible Capital Securities, (i) there is a Tax Event,
and (ii) such circumstances are evidenced by the delivery by the Company to the Trustee of a certificate signed by two directors
of the Company stating that the said circumstances prevail and describing the facts leading thereto and a copy of the Regulator’s
consent to the redemption, the Contingent Convertible Capital Securities of such series may be redeemed, in whole but not in part,
at the option of the Company, subject to the prior consent of the Regulator and otherwise in accordance with Applicable Banking
Regulations then in force, at any time, at the Redemption Price per Contingent Convertible Capital Security.
Section 12.09. Optional Redemption
Due To Capital Event. Unless otherwise provided as contemplated by Section 3.01 with respect to the Contingent Convertible
Capital Securities of any series, if, on or
after the issue date of the Contingent Convertible Capital Securities of any series, (i) there is a Capital Event, and (ii) such
circumstances are evidenced by the delivery by the Company to the trustee of a certificate signed by two directors of the Company
stating that the said circumstances prevail and describing the facts leading thereto and a copy of the Regulator’s consent
to the redemption, the Contingent Convertible Capital Securities of such series may be redeemed, in whole but not in part, at the
option of the Company, subject to the prior consent of the Regulator and otherwise in accordance with Applicable Banking Regulations
then in force, at any time, at the Redemption Price.
Section 12.10. Repurchase of Contingent Convertible Capital Securities.
(a) Unless otherwise provided as contemplated by Section 3.01 with respect to the Contingent Convertible Capital Securities
of any series, the Company or any member of the Group, may repurchase or otherwise acquire any of the outstanding Contingent Convertible
Capital Securities of any series at any price in the open market or otherwise in accordance with Applicable Banking Regulations
in force at the relevant time, and subject to the consent of the Regulator.
(b) Notwithstanding
any other provision of Section 4.06 and subject to compliance with the provisions of the Spanish Companies Act and/or with any
Applicable Banking Regulations, the Company or any member of the Group may exercise such rights as it may from time to time enjoy
to purchase or redeem or buy back any shares of the Company (including Common Shares) or any depositary or other receipts or certificates
representing the same without the consent of the Holders.
Section 12.11. Optional Redemption.
Unless otherwise provided as contemplated by Section 3.01 with respect to the Contingent Convertible Capital Securities of
any series, the Contingent Convertible Capital Securities of any series may be redeemed by the Company in whole but not in part,
in accordance with Applicable Banking Regulations in force at the relevant time, and subject to the consent of the Regulator.
Section 12.12. Cancelled
Distributions Not Payable Upon Redemption. Any Distributions that have been cancelled or deemed cancelled pursuant to Sections
3.08 or 3.09 hereof shall not be payable if the Contingent Convertible Capital Securities are redeemed
pursuant to Sections 12.08, 12.09 or 12.10 hereof.
Article
13
Subordination of Contingent Convertible Capital Securities
Section 13.01. Contingent
Convertible Capital Securities Subordinate to Senior Claims. (a) Unless previously converted into Common Shares pursuant
Section 4.01, the Contingent Convertible Capital Securities of any series are unsecured and subordinated obligations
of the Company and rank (i) senior to (A) those subordinated obligations which qualify as more subordinated claims pursuant to
Articles 92.3 to 92.7 of the Spanish Insolvency Law, or equivalent legal provisions which replace them in the future and (B) the
Common Shares or (C) any other instruments issued or guaranteed by the Company ranking junior to the Contingent Convertible Capital
Securities, (ii) pari passu with each other and with any Parity Securities and (iii) junior to (A) any other liabilities
of the Company including subordinated liabilities other than Parity Securities and (B) instruments issued or guaranteed by the
Company ranking senior to the Contingent Convertible Capital Securities of any series.
(b) The Company agrees with respect to any series of
Contingent Convertible Capital Securities and each holder of Contingent Convertible Capital Securities of any series, by his or
her acquisition of a Contingent Convertible Capital Security, will be deemed to have agreed to the subordination as described in
this Section 13.01. Each such holder will be deemed to have irrevocably waived his or her rights of priority which would otherwise
be accorded to him or her under the laws of Spain, to the extent necessary to effectuate the subordination provisions of the Contingent
Convertible Capital Security. In addition, each holder of Contingent Convertible Capital Securities of any series by his or her
acquisition of the securities authorizes and directs the applicable trustee on his or her behalf to take such action as may be
necessary or appropriate to effectuate the subordination of the relevant Contingent Convertible Capital Securities as provided
in the Contingent Convertible Capital Securities Indenture and as summarized herein and appoints the Trustee his attorney-in-fact
for any and all such purposes.
(c) The Company may not issue, or guarantee
the issue of, any Parity Securities or other instruments equivalent to Parity Securities ranking, either directly or through a
guarantee, senior to the Contingent Convertible Capital Securities of any series, unless the terms and conditions of the Contingent
Convertible Capital Securities of such series are amended so as to rank pari passu with any such issue of senior securities.
Section 13.02. Waiver of Right of
Set-Off. Subject to applicable law, neither any holder or beneficial owner of the Contingent Convertible Capital Securities
of any series nor the Trustee acting on behalf of the holders of the Contingent Convertible Capital Securities of such series may
exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by the Company in
respect of, or arising under, or in connection with, the Contingent Convertible Capital Securities of such series or the Contingent
Convertible Capital Securities Indenture and each Holder and beneficial owner of the Contingent Convertible Capital Securities
of such series, by virtue of its holding of any Contingent Convertible Capital Securities of such series or any interest therein,
and the Trustee acting on behalf of the holders of the Contingent
Convertible Capital Securities of such
series, shall be deemed to have waived all such rights of set-off, compensation or retention. If, notwithstanding the above,
any amounts due and payable to any holder or beneficial owner of a Contingent Convertible Capital Security of any series or
any Distributions thereon by the Company in respect of, or arising under, the Contingent Convertible Capital Securities of
such series are discharged by set-off, such holder or beneficial owner shall, subject to applicable law, immediately pay an
amount equal to the amount of such discharge to the Company (or, if a Liquidation Event shall have occurred, the liquidator
or administrator of the Company, as the case may be) and, until such time as payment is made, shall hold an amount equal to
such amount in trust (where possible) or otherwise for the Company (or the liquidator or administrator of the Company, as the
case may be) and, accordingly, any such discharge shall be deemed not to have taken place.
Section 13.03. Provisions Solely
to Define Relative Rights. The provisions of this Article 13 are and are intended solely for the purpose of defining the
relative rights of the Holders of the Contingent Convertible Capital Securities of each series on the one hand and the Senior
Creditors on the other hand. Nothing contained in this Article or elsewhere in this Contingent Convertible Capital Securities
Indenture or in such Contingent Convertible Capital Securities is intended to or shall (a) impair, as among the Company and
the Holders of the Contingent Convertible Capital Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of such claims the Liquidation Preference and Distributions on such
Contingent Convertible Capital Securities as and when the same shall become due and payable in accordance with their terms
and this Contingent Convertible Capital Securities Indenture; or (b) affect the relative rights against the Company of the
Holders of such Contingent Convertible Capital Securities; or (c) prevent the Trustee or the Holder of any Contingent
Convertible Capital Securities of the series from exercising all remedies otherwise permitted by applicable law upon default
under this Contingent Convertible Capital Securities Indenture, subject to the rights, if any, under this Article of the
Senior Creditors to receive cash, property or securities otherwise payable or deliverable to the Trustee or such holder.
Section 13.04. Trustee
to Effectuate Subordination. Each Holder of a Contingent Convertible Capital Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination of
the Contingent Convertible Capital Securities provided in this Article 13 and appoints the Trustee his attorney-in-fact
for any and all such purposes.
Section 13.05. Trustee Not Fiduciary
for Senior Creditors. With respect to the Senior Creditors, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Contingent Convertible Capital Securities Indenture, and no implied
covenants or obligations with respect to the Senior Creditors shall be read into this Contingent Convertible Capital Securities
Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the Senior Creditors and shall not
be liable to any such holders if it shall mistakenly pay over or distribute to Holders of Contingent Convertible Capital Securities
of the series or to the Company or to any other Person cash, property or securities to which any Senior Creditors shall be entitled
by virtue of this Article or otherwise.
Section 13.06. Rights of Trustee as
Senior Creditor; Preservation of Trustee’s Rights. The Trustee in its individual or any other capacity shall be entitled
to all the rights set forth in this Article with respect to any claims of Senior Creditors which may at any time be held by it,
to the same extent as any other Senior Creditor, and nothing in this Contingent Convertible Capital Securities Indenture or the
Trust Indenture Act shall deprive the Trustee of any of its rights as such holder.
Nothing in
this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section
6.08 and Section 7.08.
Section 13.07. Article
Applicable to Paying Agents. At all times when a Paying Agent other than the Trustee shall have been appointed by the Company
and be then acting hereunder, the term “Trustee” as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however,
that Section 13.06 shall not apply to the
Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Article
14
Spanish Bail-In and Resolution Actions
Section 14.01. Agreement and Acknowledgment
with Respect to the Exercise of the Spanish Bail-in Power.
(a) Notwithstanding any other term of the Contingent Convertible Capital Securities of any series or any other
agreements, arrangements, or understandings between the Company and any Holder of the Contingent Convertible Capital Securities
of any series, by its acquisition of the Contingent Convertible Capital Securities of any series, each Holder (which, for the purposes
of this Section 14.01, includes each Holder of a beneficial interest
in the Contingent Convertible Capital Securities of any series) acknowledges, accepts, consents to and agrees to be bound by:
(i) the effect of the exercise
of the Spanish Bail-in Power by the relevant resolution authority, which exercise may include and result in any of the following,
or some combination thereof:
(A) the reduction of all,
or a portion, of the Amounts Due on the Contingent Convertible Capital Securities of such series;
(B) the conversion of all,
or a portion, of the Amounts Due on the Contingent Convertible Capital Securities of such series into ordinary shares, other securities
or other obligations of the Company or another Person (and the issue to or conferral on the Holder of the Contingent Convertible
Capital Securities of such series of such shares, securities or obligations), including by means of an amendment, modification
or
variation of the terms of the Contingent
Convertible Capital Securities of such series;
(C) the
cancellation of the Contingent Convertible Capital Securities of such series;
(D) the
amendment or alteration of the Liquidation Preference of the Contingent Convertible Capital Securities of such series or amendment
of the amount of Distributions payable on the Contingent Convertible Capital Securities of such series, or the date on which the
Distributions become payable, including by suspending payment for a temporary period; and
(ii) the
variation of the terms of the Contingent Convertible Capital Securities of such series, if necessary, to give effect to the exercise
of the Spanish Bail-in Power by the relevant resolution authority.
(b) No
repayment or payment of Amounts Due on the Contingent Convertible Capital Securities of any series, will become due and payable
or be paid after the exercise of any Spanish Bail-in Power by the relevant resolution authority if and to the extent such amounts
have been reduced, converted, cancelled, amended or altered as a result of such exercise.
(c) Neither
a reduction or cancellation, in part or in full of the Amounts Due on, the conversion thereof into another security or obligation
of the Company or another person, as a result of the exercise of the Spanish Bail-in Power by the relevant resolution authority
with respect to the Company, nor the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to
the Contingent Convertible Capital Securities of any series will be an Enforcement Event.
(d) Upon
the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to the Contingent Convertible Capital
Securities of any series, the Company will provide a written notice to the holders of the Contingent Convertible Capital Securities
of such series through DTC as soon as practicable regarding such exercise of the Spanish Bail-in Power. The Company will also
deliver a copy of such notice to the Trustee for information purposes.
(e) By
its acquisition of the Contingent Convertible Capital Securities of any series, each Holder of the Contingent Convertible Capital
Securities of such series, (which, for the purposes of this Section 14.01, includes each holder of a beneficial interest in the
Contingent Convertible Capital Securities of such series), to the extent permitted by the Trust Indenture Act, will waive any
and all claims, in law and/or in equity, against the Trustee for, agree not to initiate a suit against the trustee in respect
of, and agree that the Trustee will not be liable for, any action that the Trustee takes, or abstains from taking, in either case
in accordance with the exercise of the Spanish Bail-in Power by the relevant resolution authority with respect to the Contingent
Convertible Capital Securities of such series.
(f) Additionally,
by its acquisition of the Contingent Convertible Capital Securities of any series, each Holder of the Contingent Convertible Capital
Securities of such series acknowledges and agrees that, upon the exercise of the Spanish Bail-in Power by the relevant resolution
authority:
(i) the Trustee will not be
required to take any further directions from the Holders of the Contingent Convertible Capital Securities of such series with respect
to any portion of the Contingent Convertible Capital Securities of such series that are written-down, converted to equity and/or
cancelled under the Contingent Convertible Capital Securities Indenture, which authorizes Holders of a majority in aggregate outstanding
Liquidation Preference of the outstanding Contingent Convertible Capital Securities of such series to direct certain actions relating
to the Contingent Convertible Capital Securities of such series; and
(ii) the Contingent Convertible
Capital Securities Indenture will not impose any duties upon the Trustee whatsoever with respect to the exercise of the Spanish
Bail-in Power by the relevant resolution authority.
provided, however, that notwithstanding
the exercise of the Spanish Bail-in Power by the relevant resolution authority, so long as the Contingent Convertible Capital
Securities of any series remain outstanding, there will at all times be a Trustee for this
Contingent Convertible Capital Securities
of such series in accordance with the Contingent Convertible Capital Securities Indenture, and the resignation and/or removal of
the Trustee and the appointment of a successor Trustee will continue to be governed by the Contingent Convertible Capital Securities
Indenture, including to the extent no additional supplemental indenture or amendment is agreed upon in the event the Contingent
Convertible Capital Securities of such series remain outstanding following the completion of the exercise of the Spanish Bail-in
Power.
(g) By
its acquisition of the Contingent Convertible Capital Securities of any series, each holder of the Contingent Convertible Capital
Securities of such series acknowledges and agrees that neither a cancellation or deemed cancellation of the Liquidation Preference
or Distributions (in each case, in whole or in part), nor the exercise of the Spanish Bail-in Power by the relevant resolution
authority with respect to the Contingent Convertible Capital Securities of such series will give rise to a default for purposes
of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act.
(h) By
purchasing the Contingent Convertible Capital Securities of any series, each Holder (including each beneficial owner) of the Contingent
Convertible Capital Securities of such series shall be deemed to have authorized, directed and requested DTC and any direct participant
in DTC or other intermediary through which it holds Contingent Convertible Capital Securities of such series to take any and all
necessary action, if required, to implement the exercise of the Spanish Bail-in Power with respect to the Contingent Convertible
Capital Securities of such series as it may be imposed, without any further action or direction on the part of such Holder.
Section 14.02. Agreement and Acknowledgement
with Respect to the Exercise of Resolution Tools.
(a) Notwithstanding
any other term of the Contingent Convertible Capital Securities of any series or any other agreements, arrangements, or
understandings between the Company and any Holder of the Contingent Convertible Capital Securities of any series, by its
acquisition of the Contingent Convertible Capital Securities of any series, each Holder (which, for the purposes of this
subsection, includes each holder of a beneficial interest in the Contingent Convertible Capital Securities of any
series) acknowledges, accepts, consents and agrees to be bound by the effect of the exercise of any resolution tools
(including but not limited to the sale of business tool, the bridge institution tool and the asset separation tool) by the
relevant resolution authority in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of
Spain, relating to (i) the transposition of BRRD, including but not limited to Law 11/2015, (ii) the SRM Regulation and
(iii) the instruments, rules and standards created thereunder.
(b) By
its acquisition of the Contingent Convertible Capital Securities of any series, each Holder of the Contingent Convertible Capital
Securities of such series, (which, for the purposes of this subsection, includes each holder of a beneficial interest in the Contingent
Convertible Capital Securities of such series), to the extent permitted by
the Trust Indenture Act, will waive any and
all claims, in law and/or in equity, against the Trustee for, agree not to initiate a suit against the Trustee in respect
of, and agree that the Trustee will not be liable for, any action that the Trustee takes, or abstains from taking, in either
case in accordance with the exercise of any resolution power by the relevant resolution authority.
(c) Additionally, by its acquisition of the Contingent Convertible Capital Securities of any series, each Holder of the Contingent
Convertible Capital Securities of such series acknowledges and agrees that, upon the exercise of any resolution power by the relevant
resolution authority the Contingent Convertible Capital Securities Indenture will not impose any duties upon the Trustee whatsoever
with respect to the exercise of any resolution tool by the relevant resolution authority (including no duty whatsoever to take
any directions from the Holders of the Contingent Convertible Capital Securities of such series), provided, however, that notwithstanding
the exercise of any resolution tool by the relevant resolution authority, so long as the Contingent Convertible Capital Securities
of any series remain outstanding, there will at all times be a Trustee for the Contingent Convertible Capital Securities of such
series in accordance with this Contingent Convertible Capital Securities Indenture, and the resignation and/or removal of the
Trustee and the appointment of a successor Trustee will continue to be governed by the Contingent Convertible Capital Securities
Indenture, including to the extent no additional supplemental indenture or amendment is agreed upon in the event the Contingent
Convertible Capital Securities of such series remain outstanding following the completion of the exercise of the resolution tool.
(d) By
its acquisition of the Contingent Convertible Capital Securities of any series, each Holder (including each beneficial owner) of
the Contingent Convertible Capital Securities of such series shall be deemed to have authorized, directed and requested DTC and
any direct participant in DTC or other intermediary through which it holds the Contingent Convertible Capital Securities of such
series to take any and all necessary action, if required, to implement the exercise of any resolution tool with respect to the
securities of such series as it may be imposed, without any further action or direction on the part of such Holder.
This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument. The exchange of copies of this Contingent Convertible Capital Securities Indenture and of signature
pages by facsimile or electronic format (i.e., “pdf” or “tif”) transmission shall constitute effective
execution and delivery of this Contingent Convertible Capital Securities Indenture as to the parties hereto and may be used in
lieu of the original Indenture for all purposes.
IN WITNESS WHEREOF, the Company and the
Trustee have caused this Contingent Convertible Capital Securities Indenture to be duly executed, all as of the day and year first
above written.
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BANCO SANTANDER, S.A. |
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By: |
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Name: |
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Title: |
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THE BANK OF NEW YORK MELLON, LONDON BRANCH, AS TRUSTEE |
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By: |
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Name: |
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Title: |
appendix
1: Procedures for Compliance with Spanish Tax Legislation
Information Procedures and Certification
Obligations of the Trustee or Paying Agent in respect of payments under the Contingent Convertible Capital Securities
| 1. | Delivery of the Payment Information Certificate: In connection with each payment of income
under the Contingent Convertible Capital Securities, the Trustee or Paying Agent shall deliver to the Company by the close of business
on the business day immediately preceding the day on which such payment is made a duly completed an executed Payment Information
Certificate substantially in the form set forth in Exhibit I hereto (Form of Payment Information Certificate). Such form
may be delivered initially by email, in pdf form, or by fax, provided that the original is delivered by the end of the following
month. |
If the Payment Information Certificate
is delivered by the Trustee or Paying Agent in a timely manner to the Company, the relevant income payment will be made free and
clear of Spanish withholding tax.
The Trustee or Paying Agent shall
have no duty or responsibility to comply with Spanish tax laws arising out of this Contingent Convertible Capital Securities Indenture,
and may request and rely conclusively upon any instructions from the Company in respect of any action necessary or required to
be taken by the Trustee or Paying Agent pursuant to this Appendix 1; provided, however, that in no event shall
the Trustee or Paying Agent be required to expend or risk its own funds in the performance of any of its duties pursuant to this
Appendix 1, or be obligated to take any legal or other action which might in its judgment involve or cause it to incur any expense
or liability unless it shall have been furnished with acceptable indemnification.
The Company agrees to instruct
the Trustee or Paying Agent in writing with respect to any certifications that may be required under Spanish law, and the Trustee
or Paying Agent acknowledges that this Appendix 1 shall constitute an instruction in this regard, unless otherwise instructed in
writing by the Company.
| 2. | Failure to deliver the Payment Information Certificate: In the event that the Trustee or
Paying Agent fails or for any reason is unable to deliver a timely, duly completed Payment Information Certificate as described
above to the Company in respect of a payment of income under the Contingent Convertible Capital Securities, the Trustee or Paying
Agent shall withhold Spanish income tax on behalf of the Company from the relevant payment at the then-applicable rate (currently
19.5%, and 19% as of January 1, 2016 onwards). |
| 3. | If, after the relevant payment date but before the 10th day of the month immediately following
the relevant payment date the Trustee or Paying Agent provides the duly completed Payment Information Certificate to the Company,
then the Company shall instruct the Trustee or Paying Agent to immediately |
transfer
the 19.5% (19% as of January 1, 2016 onwards) withheld in respect of the relevant payment pursuant to paragraph 0
above by way of reimbursement of the amounts withheld on the relevant payment date and completion of the corresponding income payment
in respect of payments under the Contingent Convertible Capital Securities.
| 4. | If the Trustee or Paying Agent fails or for any reason is unable to submit a duly completed and
executed Payment Information Certificate to the Company by the 10th day of the month immediately following the relevant payment
date, the Trustee or Paying Agent shall immediately return (but in any event no later than the 10th day of the month immediately
following the relevant payment date) to the Company any remaining amount of the 19.5% (19% as of January 1, 2016 onwards) withheld
in respect of the relevant payment, and investors will have to apply directly to the Spanish tax authorities for any refund to
which they may be entitled. |
Exhibit 5.1
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New York
Menlo Park
Washington DC
São Paulo
London |
Paris
Madrid
Tokyo
Beijing
Hong Kong |
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Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
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(212) 450-4000 tel
(212) 701-5800 fax
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October 13, 2015
Banco Santander, S.A.
Santander US Debt, S.A. Unipersonal
Santander Issuances, S.A. Unipersonal
Ciudad Grupo Santander
Avenida de Cantabria s/n
28660 Boadilla del Monte, Madrid, Spain
Ladies and Gentlemen:
We are acting as special United States counsel to Banco
Santander, S.A., a sociedad anónima incorporated under the laws of The Kingdom of Spain (the
“Bank” and the “Guarantor”), Santander US Debt, S.A. Unipersonal, a sociedad
anónima incorporated under the laws of The Kingdom of Spain (“Santander US Debt”), and
Santander Issuances, S.A. Unipersonal, a sociedad anónima incorporated under the laws of The Kingdom of Spain
(“Santander Issuances”), in connection with the Registration Statement on Form F-3 (the
“Registration Statement”) and the related Prospectus (the “Prospectus”) filed with the
United States Securities and Exchange Commission by the Bank, Santander US Debt and Santander Issuances for the purpose of
registering under the U.S. Securities Act of 1933, as amended (the “Securities Act”), an
indeterminate amount of the following securities: (i) contingent convertible capital securities to be issued by the Bank (the
“Contingent Convertible Capital Securities”) pursuant to an indenture (the “Contingent
Convertible Capital Securities Indenture”) to be executed by the Bank and The Bank of New York Mellon, as Trustee;
(ii) senior debt securities to be issued by Santander US Debt (the “Senior Debt Securities”) and
guaranteed by the Guarantor (the “Senior Debt Securities Guarantee”), pursuant to an indenture (the
“Senior Debt Securities Indenture”) to be executed by Santander US Debt, the Guarantor and The Bank of New
York Mellon, as Trustee; (iii) subordinated debt securities to be issued by Santander Issuances (the
“Subordinated Debt Securities” and, collectively with the Contingent Convertible Capital Securities and
the Senior Debt Securities, the “Debt Securities”) and guaranteed by the Guarantor (the
“Subordinated Debt Securities Guarantee”, and, together with the Senior Debt Securities Guarantee, the
“Guarantees”), pursuant to an indenture (the “Subordinated Debt Securities Indenture”,
and, collectively with the Contingent Convertible Capital Securities Indenture and the Senior Debt Securities Indenture, the
“Indentures”) to be
| Banco Santander, S.A. Santander US Debt, S.A. Unipersonal Santander Issuances, S.A. Unipersonal | 2 | October 13, 2015 |
executed by Santander Issuances, the Guarantor and The Bank of
New York Mellon, as Trustee; and (iv) ordinary shares to be issued by the Bank in the event of any conversion of the Contingent
Convertible Capital Securities.
We, as your United States counsel, have examined originals or
copies of such documents, corporate records, certificates of public officials and other instruments as we have deemed necessary
or advisable for the purpose of rendering this opinion.
In rendering the opinions expressed herein, we have, without
independent inquiry or investigation, assumed that (i) all documents submitted to us as originals are authentic and complete, (ii)
all documents submitted to us as copies conform to authentic, complete originals, (iii) all documents filed as exhibits to the
Registration Statement that have not been executed will conform to the forms thereof, (iv) all signatures on all documents that
we reviewed are genuine, (v) all natural persons executing documents had and have the legal capacity to do so, (vi) all statements
in certificates of public officials and officers of Santander US Debt, Santander Issuances and the Bank that we reviewed were and
are accurate and (vii) all representations made by Santander US Debt, Santander Issuances and the Bank as to matters of fact in
the documents that we reviewed were and are accurate.
Based upon the foregoing, and subject to the additional assumptions
and qualifications set forth below, we advise you that, in our opinion:
| 1) | When the Contingent Convertible Capital Securities Indenture and any supplemental indenture that will be entered into in connection
with the issuance of any Contingent Convertible Capital Securities have been duly authorized, executed and delivered by the Trustee
and the Bank; the specific terms of a particular series of Contingent Convertible Capital Securities have been duly authorized
and established in accordance with the Contingent Convertible Capital Securities Indenture; and such Contingent Convertible Capital
Securities have been duly authorized, executed, authenticated, issued and delivered in accordance with the Contingent Convertible
Capital Securities Indenture and the applicable underwriting or other agreement against payment therefor, such Contingent Convertible
Capital Securities will constitute valid and binding obligations of the Bank, enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and
equitable principles of general applicability, and subject to possible judicial actions giving effect to governmental actions or
foreign laws affecting creditors’ rights. |
| 2) | When the Senior Debt Securities Indenture and any supplemental indenture that will be entered into in connection with the issuance
of any Senior Debt Securities have been duly authorized, executed and delivered by the Trustee, Santander US Debt and the Guarantor;
the specific terms of a particular series of Senior Debt Securities have been duly authorized in accordance with the Senior Debt
Securities Indenture; and such Senior Debt Securities have been duly authorized, executed, authenticated, issued and delivered
in accordance with the Senior Debt Securities Indenture and the applicable underwriting or other agreement against payment therefor,
such Senior Debt Securities will constitute valid and binding obligations of Santander US Debt, enforceable in accordance with
their terms, subject to applicable bankruptcy, insolvency and similar |
| Banco Santander, S.A. Santander US Debt, S.A. Unipersonal Santander Issuances, S.A. Unipersonal | 3 | October 13, 2015 |
laws affecting creditors’ rights generally, concepts
of reasonableness and equitable principles of general applicability, and subject to possible judicial actions giving effect to
governmental actions or foreign laws affecting creditors’ rights.
| 3) | When the Subordinated Debt Securities Indenture and any supplemental indenture that will be entered into in connection with
the issuance of any Subordinated Debt Securities have been duly authorized, executed and delivered by the Trustee, Santander Issuances
and the Guarantor; the specific terms of a particular series of Subordinated Debt Securities have been duly authorized and established
in accordance with the Subordinated Debt Securities Indenture; and such Subordinated Debt Securities have been duly authorized,
executed, authenticated, issued and delivered in accordance with the Subordinated Debt Securities Indenture and the applicable
underwriting or other agreement against payment therefor, such Subordinated Debt Securities will constitute valid and binding obligations
of Santander Issuances, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability, and
subject to possible judicial actions giving effect to governmental actions or foreign laws affecting creditors’ rights. |
| 4) | When the Guarantees that will be delivered in connection with the issuance of any Senior Debt Securities or Subordinated Debt
Securities have been duly authorized, executed and delivered by the Guarantor, and when such Senior Debt Securities or Subordinated
Debt Securities to which the Guarantees relate have been duly authorized, executed, authenticated, issued, delivered and established
in accordance with the terms of the Senior Debt Securities Indenture or the Subordinated Debt Securities Indenture, as they case
may be, and are delivered and paid for in accordance with the applicable underwriting or other agreement against payment therefor,
such Guarantees will constitute valid and binding obligations of the Bank, enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and
equitable principles of general applicability, and subject to possible judicial actions giving effect to governmental actions or
foreign laws affecting creditors’ rights. |
In connection with the opinions expressed above, we have assumed
that at or prior to the time of the delivery of any Contingent Convertible Capital Securities, Senior Debt Securities, Subordinated
Debt Securities or Guarantees, as the case may be, (i) the Board of Directors of Santander US Debt, Santander Issuances or the
Bank, as the case may be, shall have duly established the terms of the Contingent Convertible Capital Securities, the Senior Debt
Securities, the Subordinated Debt Securities or the Guarantees, as the case may be, and duly authorized the issuance and sale of
the Contingent Convertible Capital Securities, the Senior Debt Securities or the Subordinated Debt Securities, as the case may
be and such authorization shall not have been modified or rescinded; (ii) each of Santander US Debt, Santander Issuances or the
Bank is, and shall remain, validly existing as a sociedad anónima incorporated under the laws of The Kingdom of Spain;
(iii) the Trustee is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; (iv)
the Registration Statement shall have become effective and such effectiveness shall not have been terminated or rescinded; (v)
the Indentures, the Contingent Convertible Capital Securities, the Senior Debt Securities, the
| Banco Santander, S.A. Santander US Debt, S.A. Unipersonal Santander Issuances, S.A. Unipersonal | 4 | October 13, 2015 |
Subordinated Debt Securities and the Guarantees, as the case
may be, are each valid, binding and enforceable agreements of each party thereto (other than as expressly covered above in respect
of the Bank, Santander US Debt and Santander Issuances); and (vi) there shall not have occurred any change in law affecting the
validity or enforceability of the Indentures, the Contingent Convertible Capital Securities, the Senior Debt Securities, the Subordinated
Debt Securities and the Guarantees, as the case may be. We have also assumed that the execution, delivery and performance by Santander
US Debt, Santander Issuances or the Bank, as the case may be, of any Contingent Convertible Capital Security, Senior Debt Security,
Subordinated Debt Security or Guarantee, as the case may be, whose terms are established subsequent to the date hereof, and the
execution, delivery and performance by the Trustee of the Contingent Convertible Capital Securities Indenture, the Senior Debt
Securities Indenture or the Subordinated Debt Securities Indenture, as the case may be, (a) are within the corporate powers of
Santander US Debt, Santander Issuances and the Bank, as the case may be, and the Trustee, (b) do not contravene, or constitute
a default under, the certificate of incorporation or bylaws or other constitutive documents of the Bank, Santander US Debt, Santander
Issuances or the Trustee, (c) require no action by or in respect of, or filing with, any governmental body, agency or official
and (d) do not contravene, or constitute a default under, any provision of applicable law, regulation, public policy or any judgment,
injunction, order or decree or any agreement or other instrument binding upon Santander US Debt, Santander Issuances, the Bank
or the Trustee.
We express no opinion as to (i) any provisions in the Indentures
that purport to waive objections to venue, claims that a particular jurisdiction is an inconvenient forum or the like, (ii) whether
a United States federal court would have subject-matter or personal jurisdiction over a controversy arising under the Indentures,
the Debt Securities or the Guarantees, as the case may be, or (iii) the effectiveness of any service of process made other than
in accordance with applicable law.
We express no opinion as to (i) whether a New York State or United
States federal court would render or enforce a judgment in a currency other than U.S. Dollars or (ii) the exchange rate that such
a court would use in rendering a judgment in U.S. Dollars in respect of an obligation in any other currency.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of the United States, except that we express no opinion
as to any law, rule or regulation that is applicable to the Bank, Santander US Debt and Santander Issuances, or the Contingent
Convertible Capital Securities, the Debt Securities, the Guarantees or the Indentures (collectively, the “Documents”)
or such transactions solely because such law, rule or regulation is part of a regulatory regime applicable to any party to any
of the Documents, or any of its affiliates due to the specific assets or business of such party or such affiliate. Insofar as the
foregoing opinion involves matters governed by the laws of the Kingdom of Spain, we have relied, without independent inquiry or
investigation, on the opinion of Uría Menéndez Spanish legal counsel to Santander US Debt, Santander Issuances and
the Bank, dated as of October 13, 2015 to be filed as an exhibit to the Registration Statement concurrently with this opinion.
Our opinion is, insofar as Spanish law is concerned, subject to the assumptions, qualifications and exceptions contained in such
opinion.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement referred to above and further consent to the reference to our name under the caption “Legal
| Banco Santander, S.A. Santander US Debt, S.A. Unipersonal Santander Issuances, S.A. Unipersonal | 5 | October 13, 2015 |
Opinions” in the Prospectus. In giving this consent, we
do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
/s/ Davis Polk & Wardwell LLP
Exhibit 5.2
Banco
Santander, S.A.
Ciudad Grupo
Santander, Avenida de Cantabria s/n
28660 Boadilla
del Monte Madrid
Spain
Santander
Issuances, S.A.U.
Ciudad Grupo
Santander, Avenida de Cantabria s/n
28660 Boadilla
del Monte Madrid
Spain
Santander
US Debt, S.A.U.
Ciudad Grupo
Santander, Avenida de Cantabria s/n
28660 Boadilla
del Monte Madrid
Spain
Madrid,
October 13, 2015
Dear
Sirs,
Banco
Santander, S.A. - Santander Issuances, S.A.U. - Santander US Debt, S.A.U.
Registration
Statement on Form F-3
We
have acted as Spanish counsel to Banco Santander, S.A. (“Banco Santander”), Santander Issuances, S.A.U.
(“Santander Issuances”) and Santander US Debt, S.A.U. (“Santander US Debt”, and together
with Santander Issuances, the “Companies”), for purposes, among others, of issuing a legal opinion addressed
to you in connection with the preparation and filing with the United States Securities and Exchange Commission (the “Commission”)
under the United States Securities Act of 1933, as amended, of the Companies’ and Banco Santander’s registration statement
on Form F-3 dated October 13, 2015 (the “Registration Statement”) relating to the offering from time to time,
as set forth in the Registration Statement, of Banco Santander’s contingent convertible capital securities (the “CoCos
Notes”), of Santander Issuances’ unsecured subordinated debt securities (the “Subordinated Notes”)
and of Santander US Debt’s unsecured debt securities (the “Senior Notes”, and together with the CoCos
Notes and the Subordinated Notes, the “Notes”). The Subordinated Notes and the Senior Notes will be fully and
unconditionally guaranteed by Banco Santander.
A. Documents
reviewed
In
arriving at our opinions, we have reviewed the following documents:
| (a) | a
copy of the Registration Statement; |
| (b) | a
copy of the form of indenture to be entered into by Banco Santander and The Bank of New
York Mellon (the “CoCo Indenture”); |
| (c) | a
copy of the form of indenture to be entered into by Santander Issuances, Banco Santander
and The Bank of New York Mellon (the “Subordinated Indenture”), which
includes a form of guarantee (the guarantees to be executed by Banco Santander pursuant
to the Subordinated Indenture, the “Subordinated Guarantees”); |
| (d) | a
copy of the form of indenture to be entered into by Santander US Debt, Banco Santander
and The Bank of New York Mellon (the “Senior Indenture”, and together
with the CoCo Indenture and the Subordinated Indenture, the “Indentures”),
which includes a form of guarantee (the guarantees to be executed by Banco Santander
pursuant to the Senior Indenture, the “Senior Guarantees”, and together
with the Subordinated Guarantees, the “Guarantees”); |
| (e) | a
copy of the articles of association (estatutos) of Banco Santander, as publicly
available at the web page of Banco Santander (www.santander.com) on October 8, 2015; |
| (f) | a
certification with respect to Banco Santander regarding its due existence and the composition
of its Board of Directors issued by the Commercial Registry of Santander on September
25, 2015, a literal certification with respect to Santander Issuances issued by the Commercial
Registry of Madrid on September 23, 2015 and a literal certification with respect to
Santander US Debt issued by the Commercial Registry of Madrid on September 23, 2015; |
| (g) | the
information publicly available on the website of the Spanish Central Commercial Registry
(www.rmc.es) with respect to the corporate entries of Banco Santander and the Companies
on October 13, 2015; |
| (h) | a
copy of certifications of certain resolutions approved by the General Shareholders’
Meeting of Banco Santander on March 27, 2015; |
| (i) | a
copy of a certification of certain resolutions approved by the Board of Directors of
Banco Santander at its meeting held on March 27, 2015; |
| (j) | a
copy of a certification of certain resolutions approved by the Executive Commission of
Banco Santander at its meeting held on September 28, 2015; |
| (k) | a
copy of a certification of certain resolutions adopted by Banco Santander as sole shareholder
(accionista único) of Santander Issuances on September 28, 2015; |
| (l) | a
copy of a certification of certain resolutions approved by the Board of Directors of
Santander Issuances at its meeting held on September 28, 2015; |
| (m) | a
copy of a certification of certain resolutions adopted by Banco Santander as sole shareholder
(accionista único) of Santander US Debt on September 28, 2015; and |
| (n) | a
copy of a certification of certain resolutions approved by the Board of Directors of
Santander US Debt at its meeting held on September 28, 2015. |
The
Indentures, the Notes and the Guarantees will be hereinafter collectively referred to as the “Documents”.
B. Assumptions
Our
opinions are based on the following assumptions:
| (a) | all
signatures, stamps and seals in the documents reviewed are genuine; |
| (b) | the
original documents we have received are authentic and complete. Any copies we have received
are complete and correspond to the originals; |
| (c) | the
drafts of the documents reviewed are the same as the documents finally subscribed and
approved; |
| (d) | all
the parties to the Documents (other than Banco Santander and the Companies) were, or
will have been, as applicable, duly incorporated and validly exist, or will exist, as
applicable, under the laws of their respective countries of incorporation at the time
of execution of the Documents; |
| (e) | all
the parties (other than Banco Santander and the Companies) have, or will have, as applicable,
the power and authority to execute, and have duly executed or will duly execute, as applicable,
the Documents and that such execution will bind such parties (other than Banco Santander
and the Companies) and that the performance thereof is, or will be, as applicable, within
the capacity and powers of each of the parties thereto (other than Banco Santander and
the Companies); |
| (f) | each
person who signed or signs, as applicable, the Documents on behalf of Banco Santander
or the Companies had, or will have, as applicable, the legal capacity (capacidad de
obrar) to do so at the time; |
| (g) | the
Documents will be executed and delivered by Mr. José García Cantera,
Mr. Jaime Pérez-Renovales, Mr. Francisco Javier Illescas Fernández-Bermejo,
Mr. José Antonio Soler Ramos, Ms. Natalia Butragueño Rodríguez-Borlado,
Mr. Antonio Torío Martín, Ms. María Visitación Díaz
Varona or Ms. Silvana Leticia Borgatti Casale on behalf of Banco Santander or, as
applicable, the Companies, and by each of the other parties thereto, in the form conforming
to the drafts filed as exhibits to the Registration Statement; |
| (h) | all
the documents that should have been filed with the Commercial Registry of Santander by
Banco Santander and with the Commercial Registry of Madrid by the Companies had been
filed on the date of our search, and subsequent to this no other documents have been
submitted nor have any registrations taken place that could bear any relevance on the
opinions expressed in this document. The content of the certifications issued by the
Commercial Registry of Santander in relation to Banco Santander on September 25, 2015,
and by the Commercial Registry of Madrid in relation to the Companies on September 23,
2015, and the online excerpts downloaded from the website of the Spanish Central Commercial
Registry (www.rmc.es) in relation to Banco Santander and the Companies on October
13, 2015, accurately |
reflect
the entries in the relevant registry in relation to Banco Santander and the Companies. The information held at the Commercial
Registry is assumed to be correct and valid pursuant to article 7 of the Commercial Registry Rules;
| (i) | the
certifications reviewed are true and accurate and correspond to resolutions that have
been validly approved in duly convened, constituted and quorate meetings; |
| (j) | there
are and there will be no contractual or other limitations that any of the parties are
bound by and that are included in any document that we have not reviewed but that could
affect this opinion, nor are there any agreements between any of the parties to the Documents
which fully or partially annul, modify or supersede the contents of such documents; |
| (k) | there
are and there will be no decisions or resolutions adopted or passed by the corporate
bodies of Banco Santander or the Companies that revoke or amend the decisions and resolutions
reviewed; |
| (l) | there
are and there will be no factual circumstances that have not been disclosed to us and
that could affect our conclusions; |
| (m) | the
articles of association (estatutos sociales) of Banco Santander and the Companies
that we have reviewed are those in force on today’s date; |
| (n) | the
Documents are and will be legal, valid, binding and enforceable under the laws of the
state of New York, and the obligations deriving from the Documents that must be complied
with in a jurisdiction other than Spain, or that could be affected in any way by the
laws of such other jurisdiction, will not be invalid or ineffective by virtue of the
said laws, or contrary to its public policy; |
| (o) | the
aggregate principal amount of Notes to be issued pursuant to any Indenture and any supplemental
indenture thereto does not exceed and will not exceed the maximum aggregate principal
amount of Notes authorized to be issued and/or guaranteed (as applicable) by Banco Santander
and the Companies, from time to time; |
| (p) | the
aggregate principal amount of ordinary shares (acciones) to be issued upon conversion
(if applicable) of the CoCos Notes does not exceed and will not exceed the maximum aggregate
principal amount of ordinary shares authorized to be issued by Banco Santander, from
time to time; |
| (q) | the
Notes and the Guarantees will be issued, executed, paid and delivered pursuant to the
terms of the Indentures; |
| (r) | with
respect to any series of Notes, a public deed of issuance (escritura de emisión) will be executed and registered
with the Commercial Registry; and in relation to any issuance of CoCos Notes, and announcement will be published in the Official
Bulletin of the Commercial Registry (Boletín Oficial del Registro Mercantil); |
| (s) | with
respect to any series of CoCos Notes, (i) the resolution of the general shareholders meeting of Banco Santander and, in case of
delegation, of the board of directors and/ or executive committee of Banco Santander approving the issuance will comply with article
414 of the Spanish Corporate Law and concordant articles; (ii) the securities will not be issued for an amount lower than their
face value (valor nominal) and will not be convertible into ordinary shares of Banco Santander when their face value is
below the ordinary shares’ face value; and (iii) the shareholders pre-emptive rights will be observed (in accordance with
art. 416 of the Spanish Corporate Act and concordant articles) or, if suppressed, that suppression will be done in accordance
with article 417 and 511 of the Spanish Corporate Law; and |
| (t) |
with respect to the issuance
of ordinary shares of Banco Santander upon the conversion of the CoCos Notes, if applicable, the following will take place: (i)
the formalisation of the capital increase by means of a public deed of issuance of the shares granted before a Spanish notary public,
the filing thereof together with the relevant tax form relating to the transfer tax (Impuesto de Transmisiones Patrimoniales
y Actos Jurídicos Documentados) by Banco Santander with the competent Spanish tax authorities and the registration of
such public deed with the Commercial Registry of Cantabria, (ii) the registration of the shares with the Sociedad de Gestión
de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.U., (iii) the positive verification of
the listing of the shares on the Spanish Stock Exchanges by the Spanish Securities and Exchange Commission (Comisión
Nacional del Mercado de Valores) (“CNMV”), (iv) the approval of the listing of the shares by the managing
entities (Sociedades Rectoras) of each of the Spanish Stock Exchanges where Banco Santander’s shares are listed, and
(v) the approval of the admission of the shares to trading on the Spanish Automated Quotation System - Continuous Market (Sistema
de Interconexión Bursátil – Mercado Continuo) by the CNMV.
|
Where
we have not independently verified facts material to the opinions, we have examined and relied on certifications issued by duly
authorized representatives of Banco Santander or the Companies.
C. Opinion
We
do not represent ourselves to be familiar with the laws of any jurisdiction other than Spain as they stand at present
and therefore express no opinion on matters arising under any laws other than the laws of Spain currently in force. This
legal opinion is issued on the basis that all related-matters will be governed by, and construed in accordance with Spanish
law, and that all matters between the addressees of this legal opinion and ourselves (in particular, those regarding interpretation)
will be brought before the Spanish courts.
Our
involvement in the transaction described has been limited to our role as Spanish counsel to Banco Santander and the Companies,
and we therefore assume no obligation to advise any other party to the transaction. Furthermore, we assume no obligation to advise
you or any other party of any changes to the law or facts that may occur after today’s date, regardless of whether they
affect the legal analysis or conclusions in this legal opinion.
Legal
concepts are expressed in the documents in English terms and may not be identical or equivalent to the Spanish legal terms used.
Based
on the above, and subject to the additional exceptions, limitations and qualifications set out below, it is our opinion that:
Each
of Banco Santander, Santander Issuances and Santander US Debt was duly incorporated and validly exists as a “sociedad
anónima” under the laws of Spain.
Banco
Santander has the necessary corporate power to authorize, execute and deliver the CoCos Notes and the CoCo Indenture.
Santander
Issuance has the necessary corporate power to authorize, execute and deliver the Subordinated Notes and the Subordinated Indenture.
Santander
US Debt has the necessary corporate power to authorize, execute and deliver the Senior Notes and the Senior Indenture.
Banco
Santander has the necessary corporate power to authorize, execute and deliver the Guarantees.
When
the issuance of Notes of a new series by Banco Santander or the relevant Company has been duly authorized by the general shareholders’
meeting and/or the competent governing bodies of Banco Santander or the relevant Company, the issue of the Notes of such series
will be duly authorized by Banco Santander or the relevant Company, as applicable.
The
execution of the Guarantees has been duly authorized by all necessary corporate action by Banco Santander.
| 4. |
Issuance
of ordinary shares of Banco Santander upon conversion of the Cocos Notes
Upon
conversion of duly authorized and issued CoCos Notes in accordance with the terms of the Coco Indenture, the issuance of
the ordinary shares of Banco Santander to be delivered as a consequence of such conversion, when duly authorized by the competent
governing body of Banco Santander, will be duly authorized and validly issued and fully paid.
|
The
choice of NY law as the governing law of the Indentures and the terms and conditions of the Notes is valid and should be recognized
and enforced by the Spanish courts subject to the terms of Regulation (EC) No 593/2008 of the European Parliament and of the Council
of 17 June 2008 on the law applicable to contractual obligations (“Rome I”). The effectiveness of this choice is subject
to the NY law being evidenced to the Spanish courts pursuant to article 281 of the Spanish Civil Procedure Law.
The
opinions above are subject to the following:
| (a) | Our
opinions above are subject to the effects and outcome of transactions that may derive
from insolvency or any other similar proceedings that affect creditors’ rights
generally as well as to any principles of public policy (orden público). |
| (b) | The
choice of NY law as the governing law of the Indentures and the terms and conditions
of the Notes will not restrict the application of the Spanish “overriding mandatory
provisions”, as defined in article 9.1 of Regulation (EC) No 593/2008 of the European
Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations
(“Rome I”). Furthermore, Spanish courts may refuse to apply a provision of
the chosen law if such application is manifestly incompatible with Spanish public policy.
Spanish courts may also give effect to the overriding mandatory provisions of the law
of the country in which the obligations arising from the contract have been performed
or must be performed. |
This
opinion letter is rendered to the addressees identified herein in connection with the above described transaction. Without prejudice
the foregoing, we hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our
name under the caption “Legal Opinions” in the prospectus included in the Registration Statement. In giving this consent,
we do not admit that we are experts under the Securities Act or the rules and regulations of the Commission issued thereunder
with respect to any part of the Registration Statement, including this opinion.
This
opinion shall be governed exclusively by Spanish law and the courts of the city of Madrid (Spain) shall have exclusive jurisdiction
to settle any dispute relating to this opinion.
Very
truly yours,
/s/
Jaime Pereda
Jaime
Pereda
Exhibit 23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent
to the incorporation by reference in this Registration Statement on Form F-3 of our reports dated April 29, 2015, relating to
the consolidated financial statements of Banco Santander, S.A. (the “Bank”) and companies composing, together with
the Bank, the Santander Group (the “Group”), and the effectiveness of the Group’s internal control over financial
reporting, appearing in the Annual Report on Form 20-F of the Group for the year ended December 31, 2014, and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement.
/s/
Deloitte, S.L.
Deloitte, S.L.
Madrid, Spain
October 13, 2015
Exhibit 25.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ___
_________________
The Bank Of New York Mellon
(Exact name of trustee as specified in its charter)
|
New York
(Jurisdiction of incorporation
if not a U.S. national bank) |
13-5160382
(I.R.S. Employer
Identification No.) |
| |
|
|
225 Liberty Street
New York, New York
(Address of principal executive
offices) |
10286
(Zip code)
|
Legal Department
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
(212) 635-1270
(Name, address and telephone number of agent
for service)
Santander US Debt, S.A. Unipersonal
Banco Santander, S.A.
(Exact name of obligor as specified in its charter)
|
Kingdom of Spain
(State or other jurisdiction
of incorporation or organization)
|
Not Applicable
(I.R.S. Employer
Identification No.) |
| |
|
|
Ciudad Grupo Santander,
Avenida de Cantabria s/n
28660 Boadilla del Monte (Madrid), Spain
(Address of principal executive offices)
|
Not Applicable
(Zip code)
|
_________________
Senior Debt Securities
(Title of the indenture securities)
Item 1. General Information.
Furnish the following information as to
the Trustee:
| (a) | Name and address of each examining or supervising
authority to which it is subject. |
| Superintendent of the Department of Financial |
One State Street, New York, N.Y. 10004-1417 |
| Services of the State of New York |
and Albany, N.Y. 12203 |
| Federal Reserve Bank of New York |
33 Liberty Plaza, New York, N.Y. 10045 |
| Federal Deposit Insurance Corporation |
550 17th Street, N.W., Washington, D.C. 20429 |
| New York Clearing House Association |
New York, N.Y. 10005 |
| (b) | Whether it is authorized to exercise corporate trust
powers. |
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
None.
Item 16. List of Exhibits.
Exhibits identified in parentheses below,
on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust
Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
| 1. |
- |
A copy of the Organization Certificate of The Bank of New York Mellon (formerly known as The Bank of New York, formerly known as Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672, Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637, Exhibit 1 to Form T-1 filed with Registration Statement No. 333-121195 and Exhibit 1 to Form T-1 filed as Exhibit 25.1 to Current Report on Form 8-K of Nevada Power Company, Date of Report (Date of Earliest Event Reported) July 25, 2008 (File No. 000-52378).) |
| |
|
|
| 4. |
- |
A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 with Registration Statement No. 333-155238.) |
| |
|
|
| 6. |
- |
The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 333-152856.) |
| |
|
|
| 7. |
- |
A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. |
SIGNATURE
Pursuant to the requirements of the Act,
the Trustee, The Bank of New York Mellon, a corporation organized and existing under the laws of the State of New York, has duly
caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in London,
United Kingdom, on the 13th day of October, 2015.
| |
THE BANK OF NEW YORK MELLON |
| |
|
| |
By: |
/s/ Maria Bertolin |
| |
|
Name:
Maria Bertolin |
| |
|
Title: Vice President |
EXHIBIT 7
(Page i of iii)
Consolidated Report of Condition of
THE BANK OF NEW YORK MELLON
of 225 Liberty Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
June 30, 2015, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
ASSETS | |
| Dollar amounts in thousands | |
| | |
| | |
| Cash and balances due from depository institutions: | |
| | |
| Noninterest-bearing balances and currency and coin | |
| 7,835,000 | |
| Interest-bearing balances | |
| 115,236,000 | |
| Securities: | |
| | |
| Held-to-maturity securities | |
| 42,679,000 | |
| Available-for-sale securities | |
| 76,620,000 | |
| Federal funds sold and securities purchased under agreements to resell: | |
| | |
| Federal funds sold in domestic offices | |
| 0 | |
| Securities purchased under agreements to resell | |
| 14,211,000 | |
| Loans and lease financing receivables: | |
| | |
| Loans and leases held for sale | |
| 264,000 | |
| Loans and leases, net of unearned income | |
| 35,026,000 | |
| LESS: Allowance for loan and lease losses | |
| 162,000 | |
| Loans and leases, net of unearned income and allowance | |
| 34,864,000 | |
| Trading assets | |
| 5,134,000 | |
| Premises and fixed assets (including capitalized leases) | |
| 1,065,000 | |
| Other real estate owned | |
| 5,000 | |
| Investments in unconsolidated subsidiaries and associated companies | |
| 533,000 | |
| Direct and indirect investments in real estate ventures | |
| 0 | |
| Intangible assets: | |
| | |
| Goodwill | |
| 6,352,000 | |
| Other intangible assets | |
| 1,097,000 | |
| Other assets | |
| 14,309,000 | |
| Total assets | |
| 320,204,000 | |
EXHIBIT 7
(Page ii of iii)
| LIABILITIES | |
| | |
| Deposits: | |
| | |
| In domestic offices | |
| 155,532,000 | |
| Noninterest-bearing | |
| 106,199,000 | |
| Interest-bearing | |
| 49,333,000 | |
| In foreign offices, Edge and Agreement subsidiaries, and IBFs | |
| 122,363,000 | |
| Noninterest-bearing | |
| 7,932,000 | |
| Interest-bearing | |
| 114,431,000 | |
| Federal funds purchased and securities sold under agreements to repurchase: | |
| | |
| Federal funds purchased in domestic offices | |
| 68,000 | |
| Securities sold under agreements to repurchase | |
| 1,380,000 | |
| Trading liabilities | |
| 4,985,000 | |
Other borrowed money:
(includes mortgage indebtedness and obligations under capitalized leases) | |
| 7,008,000 | |
| Not applicable | |
| | |
| Not applicable | |
| | |
| Subordinated notes and debentures | |
| 765,000 | |
| Other liabilities | |
| 6,825,000 | |
| Total liabilities | |
| 298,926,000 | |
| | |
| | |
EQUITY CAPITAL | |
| | |
| Perpetual preferred stock and related surplus | |
| 0 | |
| Common stock | |
| 1,135,000 | |
| Surplus (exclude all surplus related to preferred stock) | |
| 10,184,000 | |
| Retained earnings | |
| 11,326,000 | |
| Accumulated other comprehensive income | |
| -1,717,000 | |
| Other equity capital components | |
| 0 | |
| Total bank equity capital | |
| 20,928,000 | |
Noncontrolling (minority) interests in
consolidated subsidiaries | |
| 350,000 | |
| Total equity capital | |
| 21,278,000 | |
| Total liabilities and equity capital | |
| 320,204,000 | |
EXHIBIT 7
(Page iii of iii)
I, Thomas P. Gibbons, Chief Financial Officer of the above-named
bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.
Thomas P. Gibbons,
Chief Financial Officer
We, the undersigned directors, attest to the correctness of
this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief
has been prepared in conformance with the instructions and is true and correct.
Gerald L. Hassell
Catherine A. Rein
Michael J. Kowalski |
|
Directors |
Exhibit 25.2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ___
_________________
The Bank Of New York Mellon
(Exact name of trustee as specified in its charter)
|
New York
(Jurisdiction of incorporation
if not a U.S. national bank)
|
13-5160382
(I.R.S. Employer
Identification No.)
|
| |
|
|
225 Liberty Street
New York, New York
(Address of principal executive offices)
|
10286
(Zip code)
|
Legal Department
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
(212) 635-1270
(Name, address and telephone number of agent
for service)
Santander Issuances, S.A. Unipersonal
Banco Santander, S.A.
(Exact name of obligor as specified in its charter)
|
Kingdom of Spain
(State or other jurisdiction
of incorporation or organization)
|
Not Applicable
(I.R.S. Employer
Identification No.) |
| |
|
|
Ciudad Grupo Santander,
Avenida de Cantabria s/n
28660 Boadilla del Monte (Madrid),
Spain
(Address of principal executive offices)
|
Not Applicable
(Zip code)
|
_________________
Subordinated Debt Securities
(Title of the indenture securities)
Item 1. General Information.
Furnish the following information as to
the Trustee:
| (a) | Name and address of each examining or supervising
authority to which it is subject. |
| Superintendent of the Department of Financial |
One State Street, New York, N.Y. 10004-1417 |
| Services of the State of New York |
and Albany, N.Y. 12203 |
| Federal Reserve Bank of New York |
33 Liberty Plaza, New York, N.Y. 10045 |
| Federal Deposit Insurance Corporation |
550 17th Street, N.W., Washington, D.C. 20429 |
| New York Clearing House Association |
New York, N.Y. 10005 |
| (b) | Whether it is authorized to exercise corporate trust
powers. |
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
None.
Item 16. List of Exhibits.
Exhibits identified in parentheses below,
on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust
Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
| 1. |
- |
A copy of the Organization Certificate of The Bank of New York Mellon (formerly known as The Bank of New York, formerly known as Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672, Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637, Exhibit 1 to Form T-1 filed with Registration Statement No. 333-121195 and Exhibit 1 to Form T-1 filed as Exhibit 25.1 to Current Report on Form 8-K of Nevada Power Company, Date of Report (Date of Earliest Event Reported) July 25, 2008 (File No. 000-52378).) |
| |
|
|
| 4. |
- |
A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 with Registration Statement No. 333-155238.) |
| |
|
|
| 6. |
- |
The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 333-152856.) |
| |
|
|
| 7. |
- |
A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. |
SIGNATURE
Pursuant to the requirements of the Act,
the Trustee, The Bank of New York Mellon, a corporation organized and existing under the laws of the State of New York, has duly
caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in London,
United Kingdom, on the 13th day of October, 2015.
| |
THE BANK OF NEW YORK MELLON |
| |
|
| |
By: |
/s/ Maria Bertolin |
| |
|
Name:
Maria Bertolin |
| |
|
Title: Vice President |
EXHIBIT 7
(Page i of iii)
Consolidated Report of Condition of
THE BANK OF NEW YORK MELLON
of 225 Liberty Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
June 30, 2015, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
ASSETS | |
| Dollar amounts in thousands | |
| | |
| | |
| Cash and balances due from depository institutions: | |
| | |
| Noninterest-bearing balances and currency and coin | |
| 7,835,000 | |
| Interest-bearing balances | |
| 115,236,000 | |
| Securities: | |
| | |
| Held-to-maturity securities | |
| 42,679,000 | |
| Available-for-sale securities | |
| 76,620,000 | |
| Federal funds sold and securities purchased under agreements to resell: | |
| | |
| Federal funds sold in domestic offices | |
| 0 | |
| Securities purchased under agreements to resell | |
| 14,211,000 | |
| Loans and lease financing receivables: | |
| | |
| Loans and leases held for sale | |
| 264,000 | |
| Loans and leases, net of unearned income | |
| 35,026,000 | |
| LESS: Allowance for loan and lease losses | |
| 162,000 | |
| Loans and leases, net of unearned income and allowance | |
| 34,864,000 | |
| Trading assets | |
| 5,134,000 | |
| Premises and fixed assets (including capitalized leases) | |
| 1,065,000 | |
| Other real estate owned | |
| 5,000 | |
| Investments in unconsolidated subsidiaries and associated companies | |
| 533,000 | |
| Direct and indirect investments in real estate ventures | |
| 0 | |
| Intangible assets: | |
| | |
| Goodwill | |
| 6,352,000 | |
| Other intangible assets | |
| 1,097,000 | |
| Other assets | |
| 14,309,000 | |
| Total assets | |
| 320,204,000 | |
EXHIBIT 7
(Page ii of iii)
| LIABILITIES | |
| | |
| Deposits: | |
| | |
| In domestic offices | |
| 155,532,000 | |
| Noninterest-bearing | |
| 106,199,000 | |
| Interest-bearing | |
| 49,333,000 | |
| In foreign offices, Edge and Agreement subsidiaries, and IBFs | |
| 122,363,000 | |
| Noninterest-bearing | |
| 7,932,000 | |
| Interest-bearing | |
| 114,431,000 | |
| Federal funds purchased and securities sold under agreements to repurchase: | |
| | |
| Federal funds purchased in domestic offices | |
| 68,000 | |
| Securities sold under agreements to repurchase | |
| 1,380,000 | |
| Trading liabilities | |
| 4,985,000 | |
Other borrowed money:
(includes mortgage indebtedness and obligations under capitalized leases) | |
| 7,008,000 | |
| Not applicable | |
| | |
| Not applicable | |
| | |
| Subordinated notes and debentures | |
| 765,000 | |
| Other liabilities | |
| 6,825,000 | |
| Total liabilities | |
| 298,926,000 | |
| | |
| | |
EQUITY CAPITAL | |
| | |
| Perpetual preferred stock and related surplus | |
| 0 | |
| Common stock | |
| 1,135,000 | |
| Surplus (exclude all surplus related to preferred stock) | |
| 10,184,000 | |
| Retained earnings | |
| 11,326,000 | |
| Accumulated other comprehensive income | |
| -1,717,000 | |
| Other equity capital components | |
| 0 | |
| Total bank equity capital | |
| 20,928,000 | |
| Noncontrolling (minority) interests in consolidated subsidiaries | |
| 350,000 | |
| Total equity capital | |
| 21,278,000 | |
| Total liabilities and equity capital | |
| 320,204,000 | |
EXHIBIT 7
(Page iii of iii)
I, Thomas P. Gibbons, Chief Financial Officer of the above-named
bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.
Thomas P. Gibbons,
Chief Financial Officer
We, the undersigned directors, attest to the correctness of
this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief
has been prepared in conformance with the instructions and is true and correct.
Gerald L. Hassell
Catherine A. Rein
Michael J. Kowalski |
|
Directors |
Exhibit 25.3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ___
_________________
The Bank Of New York Mellon
(Exact name of trustee as specified in its charter)
|
New York
(Jurisdiction of incorporation
if not a U.S. national bank)
|
13-5160382
(I.R.S. Employer
Identification No.) |
| |
|
|
225 Liberty Street
New York, New York
(Address of principal executive offices)
|
10286
(Zip code)
|
Legal Department
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
(212) 635-1270
(Name, address and telephone number of agent
for service)
Banco Santander, S.A.
(Exact name of obligor as specified in its charter)
|
Kingdom of Spain
(State or other jurisdiction
of incorporation or organization)
|
Not Applicable
(I.R.S. Employer
Identification No.)
|
| |
|
|
Ciudad Grupo Santander,
Avenida de Cantabria s/n
28660 Boadilla del Monte (Madrid), Spain
(Address of principal executive offices)
|
Not Applicable
(Zip code)
|
_________________
Convertible Capital Securities
(Title of the indenture securities)
Item 1. General Information.
Furnish the following information as to
the Trustee:
| (a) | Name and address of each examining or supervising
authority to which it is subject. |
| Superintendent of the Department of Financial |
One State Street, New York, N.Y. 10004-1417 |
| Services of the State of New York |
and Albany, N.Y. 12203 |
| Federal Reserve Bank of New York |
33 Liberty Plaza, New York, N.Y. 10045 |
| Federal Deposit Insurance Corporation |
550 17th Street, N.W., Washington, D.C. 20429 |
| New York Clearing House Association |
New York, N.Y. 10005 |
| (b) | Whether it is authorized to exercise corporate trust
powers. |
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
None.
Item 16. List of Exhibits.
Exhibits identified in parentheses below,
on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust
Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
| 1. |
- |
A copy of the Organization Certificate of The Bank of New York Mellon (formerly known as The Bank of New York, formerly known as Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672, Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637, Exhibit 1 to Form T-1 filed with Registration Statement No. 333-121195 and Exhibit 1 to Form T-1 filed as Exhibit 25.1 to Current Report on Form 8-K of Nevada Power Company, Date of Report (Date of Earliest Event Reported) July 25, 2008 (File No. 000-52378).) |
| |
|
|
| 4. |
- |
A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 with Registration Statement No. 333-155238.) |
| |
|
|
| 6. |
- |
The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 333-152856.) |
| |
|
|
| 7. |
- |
A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. |
SIGNATURE
Pursuant to the requirements of the Act,
the Trustee, The Bank of New York Mellon, a corporation organized and existing under the laws of the State of New York, has duly
caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in London,
United Kingdom, on the 13th day of October, 2015.
| |
THE BANK OF NEW YORK MELLON |
| |
|
| |
By: |
/s/ Maria Bertolin |
| |
|
Name:
Maria Bertolin |
| |
|
Title: Vice President |
EXHIBIT 7
(Page i of iii)
Consolidated Report of Condition of
THE BANK OF NEW YORK MELLON
of 225 Liberty Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
June 30, 2015, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
ASSETS | |
| Dollar amounts in thousands | |
| | |
| | |
| Cash and balances due from depository institutions: | |
| | |
| Noninterest-bearing balances and currency and coin | |
| 7,835,000 | |
| Interest-bearing balances | |
| 115,236,000 | |
| Securities: | |
| | |
| Held-to-maturity securities | |
| 42,679,000 | |
| Available-for-sale securities | |
| 76,620,000 | |
| Federal funds sold and securities purchased under agreements to resell: | |
| | |
| Federal funds sold in domestic offices | |
| 0 | |
| Securities purchased under agreements to resell | |
| 14,211,000 | |
| Loans and lease financing receivables:
| |
| | |
| Loans and leases held for sale | |
| 264,000 | |
| Loans and leases, net of unearned income | |
| 35,026,000 | |
| LESS: Allowance for loan and lease losses | |
| 162,000 | |
| Loans and leases, net of unearned income and allowance | |
| 34,864,000 | |
| Trading assets | |
| 5,134,000 | |
| Premises and fixed assets (including capitalized leases) | |
| 1,065,000 | |
| Other real estate owned | |
| 5,000 | |
| Investments in unconsolidated subsidiaries and associated companies | |
| 533,000 | |
| Direct and indirect investments in real estate ventures | |
| 0 | |
| Intangible assets: | |
| | |
| Goodwill | |
| 6,352,000 | |
| Other intangible assets | |
| 1,097,000 | |
| Other assets | |
| 14,309,000 | |
| Total assets | |
| 320,204,000 | |
EXHIBIT 7
(Page ii of iii)
| LIABILITIES | |
| | |
| Deposits: | |
| | |
| In domestic offices | |
| 155,532,000 | |
| Noninterest-bearing | |
| 106,199,000 | |
| Interest-bearing | |
| 49,333,000 | |
| In foreign offices, Edge and Agreement subsidiaries, and IBFs | |
| 122,363,000 | |
| Noninterest-bearing | |
| 7,932,000 | |
| Interest-bearing | |
| 114,431,000 | |
| Federal funds purchased and securities sold under agreements to repurchase: | |
| | |
| Federal funds purchased in domestic offices | |
| 68,000 | |
| Securities sold under agreements to repurchase | |
| 1,380,000 | |
| Trading liabilities | |
| 4,985,000 | |
Other borrowed money:
(includes mortgage indebtedness and obligations under capitalized leases) | |
| 7,008,000 | |
| Not applicable | |
| | |
| Not applicable | |
| | |
| Subordinated notes and debentures | |
| 765,000 | |
| Other liabilities | |
| 6,825,000 | |
| Total liabilities | |
| 298,926,000 | |
| | |
| | |
EQUITY CAPITAL | |
| | |
| Perpetual preferred stock and related surplus | |
| 0 | |
| Common stock | |
| 1,135,000 | |
| Surplus (exclude all surplus related to preferred stock) | |
| 10,184,000 | |
| Retained earnings | |
| 11,326,000 | |
| Accumulated other comprehensive income | |
| -1,717,000 | |
| Other equity capital components | |
| 0 | |
| Total bank equity capital | |
| 20,928,000 | |
| Noncontrolling (minority) interests in consolidated subsidiaries | |
| 350,000 | |
| Total equity capital | |
| 21,278,000 | |
| Total liabilities and equity capital | |
| 320,204,000 | |
EXHIBIT 7
(Page iii of iii)
I, Thomas P. Gibbons, Chief Financial Officer of the above-named
bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.
Thomas P. Gibbons,
Chief Financial Officer
We, the undersigned directors, attest to the correctness of
this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief
has been prepared in conformance with the instructions and is true and correct.
Gerald L. Hassell
Catherine A. Rein
Michael J. Kowalski |
|
Directors |
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