Document:

Exhibit 4.1

 

______________________

 

 

GRUPO
FINANCIERO SANTANDER MÉXICO, S.A.B. DE C.V.

as Company,

and

THE BANK OF NEW YORK MELLON

as Trustee, Transfer Agent, Contingent Convertible Security Registrar and Paying Agent

 

______________________

 

FIRST
SUPPLEMENTAL INDENTURE

dated as of December 27, 2016

to

CONTINGENT CONVERTIBLE SECURITIES INDENTURE

dated as of December 27, 2016

in respect of

U.S.$500,000,000 8.500% Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes

 

 

     

     

    

TABLE
OF CONTENTS

 

 

Page

 

	Article 1
	Definitions
	 
	Section 1.01.	Definition of Terms	2
	Section 1.02.	Separability Clause	14
	Section 1.03.	Benefits of Instrument	14
	Section 1.04.	Relation to Contingent Convertible Securities Indenture	14
	 	 	 
	Article 2
	The Notes
	 
	Section 2.01.	Form, Title, Terms and Payments	14
	Section 2.02.	Interest	16
	Section 2.03.	Interest Payments Discretionary and Non-cumulative	17
	Section 2.04.	Mandatory Cancellation of Interest Payments	17
	Section 2.05.	Agreement to Interest Cancellation	18
	Section 2.06.	Notice of Interest Cancellation	19
	Section 2.07.	Other Restrictions on Certain Payments	19
	Section 2.08.	Payment of Principal, Interest and Other Amounts	19
	Section 2.09.	Optional Redemption	20
	Section 2.10.	Withholding Tax Redemption	21
	Section 2.11.	Special Event Redemption	21
	Section 2.12.	Redemption Procedures	22
	Section 2.13.	Canceled Interest Not Payable upon Redemption	22
	Section 2.14.	Optional Repurchase	22
	Section 2.15.	Automatic Conversion upon Conversion Trigger Event	23
	Section 2.16.	Settlement Shares	27
	Section 2.17.	Settlement Procedure	28
	Section 2.18.	Failure to Deliver a Settlement Notice	30
	Section 2.19.	Delivery of ADSs	30
	 	 	 
	Article 3
	Anti-Dilution
	 
	Section 3.01.	Adjustment of Conversion Price	31
	Section 3.02.	Recapitalization, Reclassification and Changes of the Ordinary
    Shares	36
	Section 3.03.	Adjustment of Prices	37
	 	 	 
	Article 4
	Enforcement Events and Remedies
	 
	Section 4.01.	Enforcement Events	37
	Section 4.02.	Liquidation Event	37
	Section 4.03.	Principal Non-Payment Event	37
	Section 4.04.	Breach of a Performance Obligation	38

 

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	Section 4.05.	No Other Remedies and Other Terms	38
	Section 4.06.	Waiver of Past Defaults	39
	 	 	 
	Article 5
	Subordination
	 
	Section 5.01.	Agreement to Subordinate	39
	Section 5.02.	Default on Senior Indebtedness	40
	Section 5.03.	Liquidation Distribution	40
	Section 5.04.	Waiver of Right to Set-off	41
	 	 	 
	Article 6
	Satisfaction and Discharge
	 
	Section 6.01.	Satisfaction and Discharge of Indenture	41
	Section 6.02.	Additional Interest Obligations	42
	 	 	 
	Article 7
	Supplemental Indentures
	 
	Section 7.01.	Amendments or Supplements without Consent of Holders	42
	Section 7.02.	Amendments or Supplements with Consent of Holders	42
	Section 7.03.	Holders’ Approval of Amendments	42
	Section 7.04.	Banco de México Authorization	42
	 	 	 
	Article 8
	Additional Interest
	 
	Section 8.01.	Additional Interest	43
	 	 	 
	Article 9
	Consolidation, Merger, Sale or Transfer of Assets
	 
	Section 9.01.	Company May Consolidate, etc., Only on Certain Terms	45
	Section 9.02.	Successor Corporation Substituted	46
	 	 	 
	Article 10
	Miscellaneous
	 
	Section 10.01.	Effect of Supplemental Indenture	47
	Section 10.02.	Other Documents to Be Given to the Trustee	47
	Section 10.03.	Survival	47
	Section 10.04.	Confirmation of Indenture	47
	Section 10.05.	Concerning the Trustee	48
	Section 10.06.	Governing Law	48
	Section 10.07.	Representations by the Company	48
	Section 10.08.	Reports	49
	Section 10.09.	Entire Agreement	49
	Section 10.10.	Counterparts	49

 

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EXHIBITS

 

	Exhibit A 	Form of Note
	 	 
	Exhibit B	Conversion Trigger Notice
	 	 
	Exhibit C 	Officer’s Certificate to be given in connection with a Conversion Trigger Notice
	 	 
	Exhibit D 	Settlement Request Notice
	 	 
	Exhibit E 	Settlement Notice
	 	 
	Exhibit F	Unaudited Interim Condensed Consolidated Financial Statements for the Nine Monthes ended
    September 30, 2016 and 2015 and the Audited Consolidated Financial Statements for the years ended December 31, 2015 and 2014
    

 

 

    iii 

     

    

This FIRST
SUPPLEMENTAL INDENTURE (“First Supplemental Indenture”), dated as of December 27, 2016, between GRUPO FINANCIERO
SANTANDER MÉXICO, S.A.B. DE C.V., a publicly traded variable corporation (sociedad anónima bursátil de
capital variable) incorporated in accordance with the laws of the United Mexican States, as issuer (the “Company”),
and THE BANK OF NEW YORK MELLON, a banking corporation duly organized and existing under the laws of the State of New York, as
trustee under the Contingent Convertible Securities Indenture (together with its successors hereunder, the “Trustee”),
transfer agent (in such capacity, together with its successors hereunder, the “Transfer Agent”), contingent
convertible securities registrar (in such capacity, together with its successors hereunder, the “Contingent Convertible
Security Registrar”) and as paying agent (in such capacity, together with its successors hereunder, the “Paying
Agent”).

 

WITNESSETH:

 

WHEREAS,
the Company and the Trustee have executed and delivered a Contingent Convertible Securities Indenture, dated as of December 27,
2016 (the “Contingent Convertible Securities Indenture” and, together with this First Supplemental Indenture,
the “Indenture”), to provide for the issuance of the Company’s Contingent Convertible Securities;

 

WHEREAS,
the Company desires to issue a series of securities to be known as the U.S.$500,000,000 8.500% Perpetual Subordinated Non-Preferred
Contingent Convertible Additional Tier 1 Capital Notes (the “Notes”);

 

WHEREAS,
the parties hereto desire to establish that the Notes shall be issued in the form of one of more Global Notes substantially in
the form of Exhibit A to this First Supplemental Indenture pursuant to Sections 2.01 and 3.01 of the Contingent Convertible Securities
Indenture;

 

WHEREAS,
Section 8.02(f) of the Contingent Convertible Securities Indenture permits the Company and the Trustee to enter into a supplemental
indenture to establish the forms or terms of Securities of a series as permitted under Sections 2.01 and 3.01 of the Contingent
Convertible Securities Indenture without the consent of Holders;

 

WHEREAS,
Section 8.02(d) of the Contingent Convertible Securities Indenture permits the Company and the Trustee to add to, change
or eliminate any provisions of the Contingent Convertible Securities Indenture, subject to certain conditions, without the consent
of Holders;

 

WHEREAS,
this First Supplemental Indenture shall amend and supplement the Contingent Convertible Securities Indenture but only with respect
to the Notes; to the extent that the terms of the Contingent Convertible Securities Indenture are inconsistent with such provisions
of this First Supplemental Indenture, the terms of this First Supplemental Indenture shall govern, but only with respect to the
Notes;

 

WHEREAS,
there are no debt securities outstanding of any series created prior to the execution of this First Supplemental Indenture that
are entitled to the benefit of the provisions set forth herein or would be adversely affected by such provisions;

 

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WHEREAS,
the entry into this First Supplemental Indenture has been authorized pursuant to a Board Resolution, as required by Section 8.02
of the Contingent Convertible Securities Indenture;

 

WHEREAS,
as of December 27, 2016, no series other than the series established hereby has been created; and

 

WHEREAS,
the Company has requested and does hereby request that the Trustee execute and deliver this First Supplemental Indenture, and
whereas all actions required by the Company to be taken in order to make this First Supplemental Indenture a valid, binding and
enforceable instrument in accordance with its terms, have been taken and performed, and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects,

 

NOW, THEREFORE,
the Company and the Trustee mutually covenant and agree as follows:

 

Article
1

Definitions

 

Section 1.01.     
Definition of Terms. For all purposes of this First Supplemental Indenture:

 

(a)            
a term defined anywhere in this First Supplemental Indenture has the same meaning throughout;

 

(b)            
capitalized terms used herein but not otherwise defined shall have the meanings assigned to them in the Contingent Convertible
Securities Indenture;

 

(c)            
the singular includes the plural and vice versa;

 

(d)            
headings are for convenience of reference only and do not affect interpretation;

 

(e)            
for purposes of this First Supplemental Indenture and the Contingent Convertible Securities Indenture, the term “series”
shall mean the series of Securities designated as the Notes as defined in this First Supplemental Indenture;

 

(f)            
the words “hereof”, “herein” and “hereunder” and words of similar
import, when used in this First Supplemental Indenture, refer to this First Supplemental Indenture as a whole and not to any particular
provision of this First Supplemental Indenture;

 

(g)            
the terms “dollars” and “U.S.$” mean United States Dollars;

 

(h)            
the terms “pesos” and “Ps.” mean Mexican pesos, the legal currency in Mexico;

 

(i)            
 references herein to a specific Section, Article or Exhibit refer to Sections or Articles of, or an Exhibit to, this First
Supplemental Indenture;

 

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(j)            
wherever the words “include”, “includes” or “including” are used
in this First Supplemental Indenture, they shall be deemed to be followed by the words “without limitation”;

 

(k)            the use of “or” is not intended to be exclusive unless expressly indicated otherwise;

 

(l)            
for purposes of this First Supplemental Indenture, references therein to any act or statute or any provision of any act
or statute shall be deemed also to refer to any statutory modification or reenactment thereof or any statutory instrument, order
or regulation made thereunder or under such modification or reenactment; and

 

(m)           references to any issue or offer or grant to 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, other than Shareholders to whom,
by reason of the laws of any territory or requirements of any recognized 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.

 

“Accrued
Interest” means any accrued and unpaid interest on the Notes, excluding any interest which has been canceled in accordance
with the terms of this First Supplemental Indenture.

 

“Additional
Notes” has the meaning set forth in ‎Section 2.01(c).

 

“Additional
Tier 1 Capital (capital básico no fundamental)” means the amount of the non-core capital of Tier 1 Capital
(capital básico), as such term is determined based on the Mexican Capitalization Requirements, also known as non-fundamental
basic capital (capital básico no fundamental), as such determination may be amended from time to time.

 

“ADS”
means the American Depositary Shares that are the subject of the ADS Depository Facility.

 

“ADS
Depository Facility” means the deposit agreement among the Company, JPMorgan Chase Bank, N.A. and all holders from time
to time of ADSs issued thereunder.

 

“ADS
Depositary” means JPMorgan Chase Bank, N.A., as the depositary under the Company’s ADS Depository Facility.

 

“Assets”
means the unconsolidated gross assets of the Company, as shown in the latest published audited balance sheet of the Company, adjusted
for subsequent events in such manner as the directors of the Company may determine.

 

“Automatic
Conversion” means the irrevocable and automatic release of all of the Company’s obligations under the Notes in
consideration of the Company’s delivery of the Settlement Shares at the Conversion Price on the Conversion Date to the Settlement
Share Depositary (on behalf of the Holders and Beneficial Owners) in accordance with the terms of the Notes or the Indenture.

 

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The “Back-to-Back
Note” means the perpetual subordinated non-preferred contingent capital note issued by the Bank to the Company in the
same principal amount as the aggregate principal amount of the Notes and with substantially the same terms and conditions as the
Notes, issued pursuant to an indenture that is substantially the same as the Indenture.

 

The “Bank”
means Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero Santander México,
the Company’s licensed banking subsidiary.

 

“Beneficial
Owners” shall mean (a) with respect to Global Notes, the owners of beneficial interests in the Notes prior to the occurrence
of the Final Cancellation Date and (b) with respect to definitive Notes, the Holders in whose names the Notes are registered in
the Contingent Convertible Security Register.

 

“Business
Day” means any day other than a Saturday or a Sunday, or a day on which banking institutions in The City of New York
or Mexico City are authorized or required by law, regulation or executive order to remain closed.

 

“Cancellation
Date” means (i) with respect to any Note for which a Settlement Notice is received by the Settlement Share Depositary
on or before the Notice Cut-Off Date, the applicable Settlement Date and (ii) with respect to any Note for which a Settlement
Notice is not received by the Settlement Share Depositary on or before the Notice Cut-Off Date, the Final Cancellation Date.

 

A “Capital
Event” shall occur if, in the Company’s reasonable determination, that, as a result of (a) the occurrence of any
amendment to or change in the laws or any regulations thereunder of Mexico or (b) any official administrative pronouncement or
judicial decision interpreting or applying these laws or regulations, which amendment or change is effective or which pronouncement
or decision is announced on or after the Issue Date, there is more than an insubstantial risk that the Bank will not be entitled
to treat the Back-to-Back Note as Tier 1 Capital (capital básico), or the then-equivalent of Tier 1 Capital (capital
básico) for purposes of the Mexican Capitalization Requirements, as then in effect and applicable to the Bank.

 

“Capital
Supplement” means the Countercyclical Capital Supplement and the D-SIBs Capital Supplement, together with any other
additional capital conservation or loss absorbency capital required to be constituted by Mexican banks pursuant to the Mexican
Banking Law and the Mexican Capitalization Requirements.

 

“Cash
Dividend” means any dividend or distribution in respect of the Ordinary Shares which is to be paid or made to the Shareholders
as a class in cash (in whatever currency) 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 the Shareholders upon
or in connection with a reduction of capital.

 

“CNBV”
means the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) or any successor
thereof.

 

“Conversion
Amount” means (i) a conversion of the then Current Principal Amount of Notes in an amount that would be sufficient,
together with the simultaneous conversion of the

 

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Back-to-Back
Note issued by the Bank to the Company by the same Conversion Amount and any concurrent pro rata write-down or conversion of any
other Subordinated Non-Preferred Indebtedness issued by the Bank and then outstanding, to return the Bank’s Fundamental
Capital Ratio to the then-applicable Fundamental Capital Ratio required by the CNBV in accordance with section iv, c), 1 of Annex
1-R of the general rules applicable to Mexican banks or any successor regulation, which as of the Issue Date is 7.0% (plus the
amount required to restore any Countercyclical Capital Supplement and any Systemically Important Bank Capital Supplement to the
minimum amounts required under the Mexican Capitalization Requirements on such Conversion Date); or, if no such amount, together
with any such concurrent pro rata write-down or conversion, would be sufficient to so restore the Bank’s Fundamental Capital
Ratio to the aforementioned amount, then (ii) conversion of the then Current Principal Amount of Notes in the amount necessary
to reduce the principal amount of each outstanding Note to zero.

 

“Conversion
Date” means, with respect to any Automatic Conversion resulting from a Conversion Trigger Event, the date specified
in the Conversion Trigger Notice relating to such Conversion Trigger Event, which shall occur without delay upon, and in any event
within one month of, the occurrence of such Conversion Trigger Event.

 

“Conversion
Price” means, if the Ordinary Shares are (i) then admitted to trading on the Mexican Stock Exchange, the higher of (a)
the volume weighted average of the Ordinary Shares closing price on the Mexican Stock Exchange for the thirty (30) consecutive
Business Days immediately preceding the Conversion Date, with each closing price for the thirty (30) consecutive Business Days
being converted from pesos into U.S. dollars at the then-prevailing exchange rate or (b) the floor price of Ps.20.30 converted
into U.S. dollars at the then-prevailing exchange rate; or (ii) not then admitted to trading on the Mexican Stock Exchange, the
floor price of Ps.20.30 converted into U.S. dollars at the then-prevailing exchange rate.

 

“Conversion
Trigger Event” has the meaning set forth in ‎Section
2.15(c).

 

“Conversion
Trigger Notice” means the written notice to be delivered by the Company to DTC, the Trustee and the Holders in accordance
with Section 1.06 of the Contingent Convertible Securities Indenture and in the form of Exhibit B attached hereto following
the occurrence of the Conversion Trigger Event. The date on which the Conversion Trigger Notice shall be deemed to have been given
shall be the date on which it is dispatched by the Company to DTC, the Trustee and the Holders. The Conversion Trigger Notice
shall specify (i) that the Conversion Trigger Event has occurred, (ii) the Conversion Date, (iii) the then-prevailing Conversion
Price (which Conversion Price shall remain subject to any subsequent adjustment pursuant to ‎Article
3 up to the Conversion Date), (iv) the method of calculation for the relevant Conversion Amount, (v) the contact details of any
Settlement Share Depositary, or, if the Company has been unable to appoint a Settlement Share Depositary, such other arrangements
for the delivery of the Settlement Shares or, if the Holder elects, ADSs to the Holders as it shall consider reasonable in the
circumstances, and (vi) the Suspension Date and that the Notes shall remain in existence for the sole purpose of evidencing the
Holder’s right to receive Settlement Shares or, if the Holder elects, ADSs from the Settlement Share Depositary and that
the Notes may continue to be transferable until the Suspension Date.

 

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“Converted
Principal Amount” means the amount by which the principal of any Note has been converted by any one or more Automatic
Conversions.

 

“Countercyclical
Capital Supplement” means any applicable additional countercyclical amount of capital that may be required from Mexican
banks, as determined by the CNBV pursuant to the Mexican Banking Law and the Mexican Capitalization Requirements.

 

“Current
Market Price” means, in respect of an Ordinary Share at a particular date, the average of the daily Volume Weighted
Average Price of an Ordinary Share on each of the five (5) consecutive Dealing Days ending on the Dealing Day immediately preceding
such date; provided that, if at any time during the said five (5) Dealing-Day 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:

 

(i)       if
the Ordinary Shares to be created, issued, transferred or delivered are not entitled to the dividend (or entitlement) in question,
the Volume Weighted Average Price on the dates on which the Ordinary 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 Ordinary Share as at the date of first public announcement
relating to such dividend or entitlement, in any such case, determined on a gross basis and disregarding any withholding or deduction
required to be made on account of tax, and disregarding any associated tax credit; or

 

(ii)      if
the Ordinary Shares to be created, issued, transferred or delivered are entitled to the dividend (or entitlement) in question,
the Volume Weighted Average Price on the dates on which the Ordinary 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 Ordinary Share as at the date of first public announcement relating
to such dividend or entitlement, in any such case, determined on a gross basis and disregarding any withholding or deduction required
to be made on account of tax, and disregarding any associated tax credit;

 

and provided
further that, if on each of the said five (5) Dealing Days, 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 Ordinary Shares to be delivered are not entitled to 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 Ordinary Share as at the date of first public announcement
relating to such dividend or entitlement, in any such case, determined on a gross basis and disregarding any withholding or deduction
required to be made on account of tax, and disregarding any associated tax credit;

 

and provided
further that, if the Volume Weighted Average Price of an Ordinary Share is not available on one or more of the said five (5) Dealing
Days (disregarding for this purpose the proviso to the definition of Volume Weighted Average Price), then the average of such
Volume

 

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Weighted Average
Prices which are available in that five (5) Dealing-Day 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.

 

“Current
Principal Amount” means in respect of each Note, at any time, the outstanding principal amount of such Note, being the
Original Principal Amount of such Note as such amount may be reduced, on one or more occasions, as a result of an Automatic Conversion
or a redemption of the Notes, as the case may be.

 

“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 Ordinary Shares or Other Instruments 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).

 

“D-SIB”
means any domestic systemically important bank, as determined by the CNBV annually pursuant to the Mexican Banking Law and the
Mexican Capitalization Requirements.

 

“D-SIBs
Capital Supplement” means the additional loss absorbency capital to be constituted by D-SIBs to reflect the greater
risk that they pose to the domestic financial system, as determined by the CNBV pursuant to the Mexican Banking Law and the Mexican
Capitalization Requirements.

 

“DTC”
means The Depository Trust Company, or any successor clearing system.

 

“Enforcement
Event” has the meaning set forth in ‎Section 4.01.

 

“Excess
Settlement Shares” has the meaning set forth in ‎Section
2.16(c).

 

“Extraordinary
Dividend” means any Cash Dividend that 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 as a class,
or any analogous or similar term, in which case the Extraordinary Dividend shall be such Cash Dividend.

 

“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 (i) the Fair Market Value of a Cash Dividend shall be the amount
of such Cash Dividend; (ii) the Fair Market Value of any other cash amount shall be the amount of such cash; (iii) where Other
Instruments are publicly traded on a stock exchange or securities market of adequate liquidity (as determined in good faith by
an Independent Financial Adviser), the Fair Market Value of such Other Instruments shall equal the arithmetic mean of the daily
Volume Weighted Average Prices of such Other Instruments, during the period of five (5) Dealing Days on the relevant stock exchange
or securities market commencing on such date (or, if later, the first such Dealing Day such Other Instruments are publicly traded)
or such shorter period as such Other Instruments are publicly traded; and (iv) where Other Instruments are not publicly traded
on a stock exchange or securities market of adequate liquidity (as aforesaid), the Fair Market Value of such Other Instruments
shall be determined in good faith by an Independent Financial Adviser,

 

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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 Ordinary Share, the dividend yield of an Ordinary Share, the volatility of such market price, prevailing
interest rates and the terms of such Other Instruments, including as to the expiry date and exercise price (if any) thereof. Such
amounts shall, in the case of (i) above, be translated into the Relevant Currency (if declared, announced, made, paid or payable
in a currency other than the Relevant Currency, and if the relevant dividend is payable at the option of the Company or a Shareholder
in any currency additional to the Relevant Currency, the relevant dividend shall be treated as payable in the Relevant 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 Relevant Currency; and, in any other case, shall be translated into the Relevant Currency (if
expressed in a currency other than the Relevant Currency) at the Prevailing Rate on that date. In addition, in the case of (i)
and (ii) above, the Fair Market Value shall be determined on a gross basis and disregarding any withholding or deduction required
to be made on account of tax, and disregarding any associated tax credit.

 

“Final
Cancellation Date” means the date, as specified in the Settlement Request Notice, on which the Converted Principal Amount
of the Notes in relation to which no Settlement Notice has been received by the Settlement Share Depositary on or before the Notice
Cut-Off Date shall be canceled, which date may be up to twelve (12) Business Days following the Notice Cut-Off Date.

 

“First
Call Date” means January 20, 2022.

 

“Fundamental
Capital (capital fundamental)” means capital fundamental, as calculated pursuant to the applicable Mexican
Capitalization Requirements.

 

“Fundamental
Capital Ratio” means, with respect to the Bank, the ratio of Fundamental Capital (capital fundamental) to risk
weighted assets expressed as a percentage applicable to Mexican banks calculated pursuant to the Mexican Capitalization Requirements.

 

“Group”
means Grupo Financiero Santander México, S.A.B. de C.V., together with its consolidated subsidiaries.

 

“H.15”
means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of
the United States Federal Reserve System, and most recent H.15 means the H.15 published closest in time but prior to the close
of business on the third Business Day prior to the applicable Reset Date.

 

“Holder”
means a Person in whose name a Note in global or definitive form is registered in the Contingent Convertible Security Register.

 

“Indebtedness
for Money Borrowed” means any obligation of, or any obligation guaranteed by the Company (to the extent permitted under
applicable law) for the repayment of borrowed money, whether or not evidenced by notes, debentures, debt securities or other written
instruments, but shall not include (a) any trade accounts payable in the ordinary course of business, (b) any such indebtedness
that by its terms ranks junior in right of payment and in liquidation to Subordinated Non-Preferred Indebtedness, (c) indebtedness
to any of the

 

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Company’s
employees, (d) indebtedness which, when incurred, was without recourse to the Company, and (e) any other indebtedness
that would otherwise qualify as Indebtedness for Money Borrowed to the extent that such indebtedness, by its terms, ranks pari
passu with or junior in right of payment and in liquidation to any of the indebtedness described in clause (a) or
(b) above.

 

“Independent
Financial Adviser” means an independent financial institution of international repute appointed by the Company at its
own expense.

 

“INDEVAL”
means the Mexican securities clearing system S.D. Indeval Institución para el Depósito de Valores, S.A. de C.V.

 

“Interest
Cancellation Event” has the meaning set forth in ‎Section
2.04.

 

“Interest
Payment Date” means each of January 20, April 20, July 20 and October 20 of each year, commencing on April 20, 2017.

 

“ISE”
means The Irish Stock Exchange plc.

 

“Issue
Date” means the date on which the Notes are initially issued, which is expected to be December 29, 2016.

 

“Liquidation
Distribution” means the Liquidation Preference per Note without any accrued interest, which shall be canceled upon the
occurrence of a Liquidation Event.

 

“Liquidation
Event” has the meaning set forth in ‎Section 5.03(a).

 

“Liquidation
Preference” means the then Current Principal Amount of each Note at the time the Liquidation Distribution is paid.

 

“Mexican
Banking Law” means the Ley de Instituciones de Crédito of Mexico, as replaced or amended, or any successor
thereof.

 

“Mexican
Bankruptcy Law” means the Ley de Concursos Mercantiles, as replaced or amended, or any successor thereof.

 

“Mexican
Capitalization Requirements” means the capitalization requirements for commercial banks, including the Bank, set forth
under the Mexican Banking Law and the general rules applicable to Mexican banks, as such laws and regulations may be amended or
superseded.

 

“Mexican
Financial Groups Law” means the Ley para Regular las Agrupaciones Financieras, as replaced or amended, or any
successor thereof.

 

“Mexican
Securities Market Law” means the Ley del Mercado de Valores, as replaced or amended, or any successor thereof.

 

“Mexican
Stock Exchange” means the Bolsa Mexicana de Valores, S.A.B. de C.V.

 

     9

     

    

“Notice
Cut-Off Date” means the date by which the Settlement Notice must be received by the Settlement Share Depositary, as
specified as such in the Settlement Request Notice.

 

“Ordinary
Shares” means the Company’s Series B and Series F shares, collectively.

 

“Original
Principal Amount” means, in respect of each Note, the amount of the denomination of such Note on the Issue Date.

 

“Other
Instruments” means options, warrants, rights, convertible securities, exchangeable securities or other similar securities
granting a right to subscribe for or purchase or acquire ordinary shares in the capital of the Company(and each an “Other
Instrument”).

 

“Performance
Obligation” has the meaning specified in ‎Section
4.04.

 

“Person”
means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof or other entity.

 

“Prevailing
Rate” means, in respect of any currencies on any day, the spot rate of exchange between the relevant currencies prevailing
as at or about 12:00 noon (New York time) on that date as appearing on or derived from the Relevant Page or, if such a rate cannot
be determined at such time, the rate prevailing as at or about 12:00 noon (New York 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 Relevant Page, the rate determined
in such other manner as an Independent Financial Adviser shall in good faith prescribe.

 

“Principal
Non-Payment Event” has the meaning specified in ‎Section
4.03.

 

“Prospectus”
means the base prospectus on Form F-3 related to the offering and sale of the Notes dated December 21, 2016, as supplemented by
the prospectus supplement dated December 23, 2016 and as may be further amended or supplemented.

 

“Record
Date” means the 15th calendar day preceding each Interest Payment Date, whether or not such day is a Business Day.

 

“Relevant
Currency” means pesos or, if at the relevant time or for the purposes of the relevant calculation or determination the
Mexican Stock Exchange is not the Relevant Stock Exchange, the currency in which the Ordinary Shares are quoted or dealt in on
the Relevant Stock Exchange at such time.

 

“Relevant
Page” means the relevant page on Bloomberg or such other information service provider that displays the relevant mid-price
information.

 

“Relevant
Stock Exchange” means the Mexican Stock Exchange or, if at the relevant time the Ordinary Shares are not at that time
listed and admitted to trading on the Mexican Stock Exchange, the principal stock exchange or securities market on which the Ordinary
Shares are then listed, admitted to trading or quoted or accepted for dealing.

 

     10

     

    

“Reset
Date” means the First Call Date and every fifth anniversary thereafter.

 

“Reset
Determination Date” means, with respect to any Reset Date, the second Business Day immediately preceding such Reset
Date.

 

“Reset
Period” shall have the meaning set forth in ‎Section
2.02.

 

“Santander
España” means Banco Santander, S.A., the Spanish bank that is the controlling shareholder of the Company.

 

“Senior
Indebtedness” means all Indebtedness for Money Borrowed, whether outstanding on the date of execution of the Indenture
or thereafter created, assumed or incurred, unless the terms thereof specifically provide that it is not superior in right of
payment and in liquidation to the Subordinated Preferred Indebtedness, and any deferrals, renewals or extensions of such Senior
Indebtedness.

 

“Settlement
Date” means:

 

(i)       with
respect to any Note in relation to which a Settlement Notice is received by the Settlement Share Depositary on or before the Notice
Cut-Off Date, the date that is two (2) Business Days after the latter of (x) the Conversion Date and (y) the date on which the
relevant Settlement Notice has been received by the Settlement Share Depositary; and

 

(ii)       with
respect to any Note in relation to which a Settlement Notice is not so received by the Settlement Share Depositary on or before
the Notice Cut-Off Date, the date on which the Settlement Share Depositary delivers the relevant Settlement Shares, or, if the
Holder elects, ADSs to the relevant Holders or Beneficial Owners.

 

“Settlement
Notice” means a written notice (substantially in the form attached hereto as Exhibit E) to be delivered by a Holder
or Beneficial Owner (or custodian, broker, nominee or other representative thereof) to the Settlement Share Depositary on or before
the Notice Cut-Off Date containing the following information: (i) the name of the Holder or Beneficial Owner (or custodian, broker,
nominee or other representative thereof), (ii) the Tradable Amount of the book-entry interests in the Notes held by such
Holder or Beneficial Owner (or custodian, broker, nominee or other representative thereof) on the date of such notice, (iii) the
name to be entered in the Company’s share register or in records maintained by INDEVAL or an INDEVAL custodian, (iv) whether
Settlement Shares are to be delivered to the Holder or Beneficial Owner or ADSs, if the Holder elects, are to be deposited with
the ADS Depositary on behalf of the Holder or Beneficial Owner through the Company’s ADS facility, (v) the details of the
DTC, INDEVAL or other clearing system account, the details of the registered account in the Company’s ADS facility or, if
the Settlement Shares are not a participating security in DTC, INDEVAL or another clearing system, the address to which the Settlement
Shares (if not expected to be delivered through DTC or INDEVAL) should be delivered and (vi) such other details as may be required
by the Settlement Share Depositary.

 

“Settlement
Request Notice” means the written notice (substantially in the form attached hereto as Exhibit D) to be delivered by
the Company to the Trustee directly and to DTC as the Holder of the Global Notes (or, if the Notes are in definitive form, by
the Company to the

 

     11

     

    

Trustee
directly and to the Holders at their registered addresses as shown on the Contingent Convertible Security Register) on the Suspension
Date requesting that Holders and Beneficial Owners complete a Settlement Notice and specifying (i) the Notice Cut-Off Date and
(ii) the Final Cancellation Date.

 

“Settlement
Share Depositary” means a reputable financial institution, depository entity, trust company or similar entity (which
in each such case is wholly independent of the Company) to be appointed by the Company on or prior to any date when a function
ascribed to the Settlement Share Depositary in the Indenture is required to be performed, to perform such functions and which
will be required to undertake, for the benefit of the Holders and Beneficial Owners, to hold the Settlement Shares on behalf of
such Holders and Beneficial Owners in one or more segregated accounts.

 

“Settlement
Shares” means the Ordinary Shares credited as fully paid to be released and delivered by the Company to the Settlement
Share Depositary on the Conversion Date.

 

“Shareholders”
means the holders of Ordinary Shares.

 

“Special
Event” means a Capital Event or a Tax Event.

 

“Subordinated
Non-Preferred Indebtedness” refers to obligaciones subordinadas no preferentes and means all Indebtedness for
Money Borrowed, whether outstanding on the date of execution of the Indenture or thereafter created, assumed or incurred, which
terms specifically provide that it is junior in right of payment and in liquidation to Senior Indebtedness and Subordinated Preferred
Indebtedness, but is senior in right of payment and in liquidation to all classes of the Company’s capital stock, and any
deferrals, renewals or extensions of such Subordinated Non-Preferred Indebtedness.

 

“Subordinated
Preferred Indebtedness” refers to obligaciones subordinadas preferentes and means all Indebtedness for Money
Borrowed, whether outstanding on the date of execution of the Indenture or thereafter created, assumed or incurred, which terms
specifically provide that it is junior in right of payment and in liquidation to Senior Indebtedness, but is senior in right of
payment and in liquidation to Subordinated Non-Preferred Indebtedness and all classes of the Company’s capital stock, and
any deferrals, renewals or extensions of such Subordinated Preferred Indebtedness.

 

“Suspension
Date” means the date specified in the Conversion Trigger Notice as the date on which DTC shall suspend all clearance
and settlement of transactions in the Notes in accordance with its rules and procedures.

 

“Systemically
Important Bank Capital Supplement” means a capital supplement imposed by the CNBV on D-SIBs, as determined from time
to time.

 

“Tax
Event” means the receipt by the Company of an opinion of a nationally recognized law firm experienced in such matters
to the effect that, as a result of a Change in Tax Law, there is more than an insubstantial risk that interest payable by the
Company on the Notes is not or will not be deductible by the Company in whole or in part for Mexican income tax purposes.

 

     12

     

    

“Tier
1 Capital (capital básico)” means the basic capital (capital básico) of the Total Net Capital
(capital neto), as such term is determined based on the Mexican Capitalization Requirements, as such determination may
be made from time to time, which is comprised of Fundamental Capital (capital fundamental) and Additional Tier 1 Capital
(capital básico no fundamental).

 

“Tier
2 Capital (capital complementario)” means the additional capital (capital complementario) of the Total
Net Capital (capital neto), as such term is determined based on the Mexican Capitalization Requirements, as such determination
may be amended from time to time.

 

“Total
Net Capital (capital neto)” means net capital (capital neto), as such term is determined based on the
Mexican Banking Law and the Mexican Capitalization Requirements, also known as Tier 1 Capital (capital básico) plus
Tier 2 Capital (capital complementario), as such determination may be amended from time to time.

 

“Tradable
Amount” has the meaning specified in ‎Section 2.01(m)
hereof.

 

“Treasury
Yield” means, as of the Reset Determination Date, an interest rate (expressed as a decimal and, in the case of United
States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semiannual yield
to maturity for United States Treasury securities maturing on the Reset Date following the next succeeding Reset Determination
Date, and trading in the public securities markets either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities trading in the United States public securities market, (A)
one maturing as close as possible to, but earlier than, the Reset Date following the next succeeding Reset Determination Date,
and (B) the other maturing as close as possible to, but later than the Reset Date following the next succeeding Reset Determination
Date, in each case as published in the most recent H.15, or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Reset Date following the next succeeding Reset Determination Date is published in the most recent H.15,
such weekly average yield to maturity as published in such H.15.

 

“Volume
Weighted Average Price” means, in respect of an Ordinary Share or Other Instrument on any Dealing Day, the order book
volume weighted average price of an Ordinary Share or Other Instrument published by or derived (in the case of an Ordinary Share)
from the relevant Bloomberg page or (in the case of an Other Instrument (other than Ordinary Shares)) from the principal stock
exchange or securities market on which such Other Instruments 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 an Ordinary Share or Other Instrument, 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
determined as an Independent Financial Adviser might otherwise determine in good faith to be appropriate.

 

“Withholding
Tax Event” means (i) the receipt by the Company and the delivery to the Trustee of an opinion of a law firm nationally
recognized in the Relevant Jurisdiction and

 

     13

     

    

experienced
in such matters to the effect that, as a result of (a) any amendment to or change (including an official announcement of any prospective
change) in the laws or treaties (or any rules or regulations thereunder) of any Relevant Jurisdiction affecting taxation, (b)
any judicial decision, administrative pronouncement or regulatory procedure, of any Relevant Jurisdiction (each, an “Administrative
Action”), or (c) any amendment to or change in the official position or the official interpretation of such Administrative
Action that provides for a position with respect to such Administrative Action that differs from the theretofore generally accepted
position, in each case, by any legislative body, court, governmental authority or regulatory body having appropriate jurisdiction,
irrespective of the manner in which such amendment or change is made known, which amendment or change is effective or such pronouncement
or decision is announced on or after the date of issuance of the Notes (collectively, a “Change in Tax Law”),
there is more than an insubstantial risk that the Company is or will be liable for a payment of Additional Interest in excess
of the Additional Interest attributable to a 10% (or 4.9%, if at such time Santander España and its affiliates do not own
5% or more of the Current Principal Amount of the Notes) withholding tax in respect of the Notes, and (ii) the delivery to the
Trustee of a certificate signed by the Company’s chief financial officer stating that the requirement to make such withholding
or deduction cannot be avoided by taking reasonable measures available to the Company (such measures not involving any material
cost to the Company or the incurrence by it of any other tax or penalty or changing its place of residence). For the avoidance
of doubt, reasonable measures shall include a change in the jurisdiction of a Paying Agent.

 

Section 1.02.     
Separability Clause. In case any provision in this First Supplemental Indenture or the Notes 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 1.03.     
Benefits of Instrument. Nothing in this First Supplemental Indenture, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under the Indenture.

 

Section 1.04.     
Relation to Contingent Convertible Securities Indenture. This First Supplemental Indenture constitutes an integral
part of the Contingent Convertible Securities Indenture. Notwithstanding any other provision of this First Supplemental Indenture,
all provisions of this First Supplemental Indenture are expressly and solely for the benefit of the Holders and Beneficial Owners
and shall not be deemed to amend, modify or supplement the Contingent Convertible Securities Indenture for any purpose other than
with respect to the Notes; provided that pursuant to and in accordance with Section 3.08 of the Contingent Convertible Securities
Indenture, the duties of the Trustee under the Indenture shall extend only to Persons deemed to be Holders.

 

Article
2

The Notes

 

Section 2.01.     
Form, Title, Terms and Payments. The form of any security that is designated as a Note shall be evidenced by one
or more global notes in registered form (each, a “Global Note”) deposited with, or held on behalf of, DTC on
the Issue Date. The Global Notes shall be registered in the name of Cede & Co. and executed and delivered in substantially
the

 

     14

     

    

form
attached hereto as Exhibit A. The terms of the Global Notes are hereby incorporated herein by reference and made a part hereof
as if set forth herein in full.

 

(a)            
There is hereby established a new series of securities designated as the U.S.$500,000,000 8.500% Perpetual Subordinated
Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes (the “Notes”).

 

(b)            
The Notes shall be issued in denominations of U.S.$200,000 principal amount and integral multiples of U.S.$1,000 in excess
thereof.

 

(c)            
The Notes shall be initially limited in aggregate principal amount to U.S.$500,000,000. The Company may from time to time,
without the consent of the Holders of the Notes then outstanding, but subject to the approval of Banco de México,
issue additional Notes (the “Additional Notes”) having the same ranking and same interest rate, interest cancellation
terms, redemption terms, Conversion Price and other terms as the Notes described in this First Supplemental Indenture, except
for the price to the public and Issue Date. Any such Additional Notes shall rank equally and ratably with the Notes in all respects,
so that any such Additional Notes shall be consolidated and form a single series with the Notes.

 

(d)            
The Notes shall be perpetual Securities and shall have no Stated Maturity in respect of principal.

 

(e)            
The Notes shall not have a sinking fund.

 

(f)            
Any proposed transfer of an interest in the Notes held in the form of a Global Note shall be effected through the book-entry
system maintained by DTC.

 

(g)            
The interest rate on the Notes is set forth in ‎Section 2.02 hereof.

 

(h)            
All references to Foreign Government Securities and U.S. Government Obligations in the Contingent Convertible Securities
Indenture shall be deleted in their entirety and be inapplicable to the Notes, including, but not limited to, the definition of
“Outstanding” in the Contingent Convertible Securities Indenture and any references to such terms in Sections 4.01,
4.02 and 4.03 of the Contingent Convertible Securities Indenture.

 

(i)            
Payments in respect of the Notes, including payments of principal and interest, shall be subject to the conditions set
forth under Sections ‎2.02, ‎2.03, ‎2.04, ‎2.05, ‎2.08 and ‎2.13
hereof.

 

(j)            
The Notes shall be subject to Automatic Conversion following the occurrence of a Conversion Trigger Event as provided in
‎Section 2.15 hereof and shall be subject to the Enforcement Events as provided in ‎Article 4 hereof.

 

(k)            The Company may redeem or repurchase the Notes in accordance with Sections ‎2.09, ‎2.10, ‎2.11,
‎2.12 and ‎2.14 hereof.

 

(l)            
The Company shall undertake reasonable efforts to list the Notes on the Global Exchange Market of the ISE. In the event
that the Notes are admitted to listing on the ISE, the

 

     15

     

    

Company
shall use its reasonable best efforts to maintain such listing as long as the Notes remain outstanding; provided, that, if the
Company determines that it is unduly burdensome to maintain a listing on the ISE, the Company may delist the Notes from the ISE.
The Company shall notify the Trustee and the Holders of any listing or delisting of the Notes.

 

(m)            
The denomination of each book-entry interest in a Global Note shall be the “Tradable Amount” of such
book-entry interest. Prior to any Automatic Conversion, the aggregate Tradable Amount of the book-entry interests in each Global
Note shall be equal to such Global Note’s then Current Principal Amount. Following an Automatic Conversion, the principal
amount of each Note shall be reduced by an amount equal to the Converted Principal Amount arising from such Automatic Conversion,
but the Tradable Amount of the book-entry interests in each Global Note shall remain unchanged as a result of the Automatic Conversion
until the distribution of the Settlement Shares arising from such Automatic Conversion, at which time the Tradable Amount shall
be reduced by an amount equal to the Converted Principal Amount arising from such Automatic Conversion.

 

(n)            
The obligations under the Notes are unsecured and not guaranteed, or otherwise eligible for reimbursement, by the Instituto
para la Protección al Ahorro Bancario or any other Mexican governmental agency or by the Company’s subsidiaries
or affiliates or any other entity that is a part of the Group.

 

Section 2.02.     
Interest. Subject to a prior redemption or one or more Automatic Conversions:

 

(a)            
From and including the Issue Date to but excluding the First Call Date, interest shall accrue on the then Current Principal
Amount of Notes at an initial rate equal to 8.500% per annum. Subject to a prior redemption or one or more Automatic Conversions,
from and including each Reset Date, including the First Call Date, to but excluding the next succeeding Reset Date (each such
period, a “Reset Period”), interest shall accrue on the then Current Principal Amount of the Notes at a rate
per annum equal to the sum of the then-prevailing Treasury Yield on the relevant Reset Determination Date and 647.20 basis points
(rounded to two decimal places, with 0.005 being rounded down). Subject to Sections ‎2.03, ‎2.04, ‎2.15
and ‎Article 5, interest, if any, on the Notes shall be payable in four equal quarterly installments in arrears on
each Interest Payment Date in the relevant Reset Period, provided that if any scheduled Interest Payment Date is not a Business
Day, the Company shall pay such interest, to the extent the Company elects to make an interest payment, on the next Business Day,
and no further interest or other payment shall be owed or made in respect of such delay. If any scheduled redemption date is not
a Business Day, payment of interest, if any, and principal shall be postponed to the next Business Day, but interest on that payment
shall not accrue during the period from and after the scheduled redemption date. Subject to Sections ‎2.03, ‎2.04
and ‎2.15 below, if any interest payment is to be made with respect of the Notes on a date other than an Interest Payment
Date, including on any scheduled redemption date, it shall be calculated by the Paying Agent by applying the interest rate applicable
during the applicable Reset Period and multiplying the product by “30/360” and rounding the resulting figure to the
nearest cent (half a cent being rounded upward). For this purpose, “30/360” means, in respect of any period, the number
of days in the relevant period, from and including the first day in such period to but

 

     16

     

    

excluding
the last day in such period, such number of days being calculated on the basis of a 360-day year consisting of twelve (12) months
of thirty (30) days each, divided by 360.

 

Section 2.03.     
Interest Payments Discretionary and Non-cumulative.

 

(a)            
Interest on the Notes shall be due and payable only at the sole discretion of the Company, and the Company shall have sole
and absolute discretion at all times and for any reason to cancel any interest payment (in whole or in part) that would otherwise
be payable on any Interest Payment Date. If the Company elects not to make an interest payment in respect of the Notes on the
relevant Interest Payment Date, or if the Company elects to make a payment of a portion, but not all, of such interest payment,
such non-payment shall evidence the Company’s exercise of its discretion to cancel such interest payment (or the portion
of such interest payment not paid), and accordingly such interest payment (or the portion thereof not paid) shall be canceled
and shall not be or become due and payable. For the avoidance of doubt, if the Company provides notice to cancel a portion, but
not all, of an interest payment in respect of the Notes, and the Company subsequently does not make a payment of the remaining
portion of such interest payment on the relevant Interest Payment Date, such non-payment shall evidence the Company’s exercise
of its discretion to cancel such remaining portion of such interest payment, and accordingly such remaining portion of the interest
payment shall also not be due and payable.

 

(b)            
Interest on the Notes shall only be due and payable on an Interest Payment Date to the extent that it is not canceled (in
whole or in part) in accordance with the provisions set forth in ‎Section 2.03(a), ‎Section 2.04, ‎Section
2.15(j) and ‎Article 5 hereof, respectively, and any interest canceled (in whole or in part) pursuant to such sections
shall not be due and shall not accumulate or be payable at any time thereafter, and Holders and Beneficial Owners shall have no
rights thereto or to receive any additional interest or compensation as a result of such cancellation of interest in respect of
the Notes.

 

(c)            
Any cancellation of interest pursuant to this ‎Section 2.03 shall not constitute a default under the terms of
the Notes or this Indenture, and the Holders and Beneficial Owners of the Notes shall have no rights thereto or to receive any
additional interest, penalty or compensation as a result of such cancellation.

 

(d)            
The Notes shall cease to bear interest from, and including, the date of any redemption of the Notes as described under
Sections ‎2.09, ‎2.10 and ‎2.11 unless payment and performance of all amounts and obligations
due by the Company in respect of the Notes are not properly and duly made, in which event interest shall continue to accrue on
the Notes until payment and performance of all amounts and obligations have been properly and duly made. Furthermore, in the event
of an Automatic Conversion upon the occurrence of a Conversion Trigger Event or a Liquidation Event, any accrued but unpaid interest
on the Notes shall be canceled upon the occurrence of such Conversion Trigger Event or Liquidation Event, as the case may be,
and such interest shall not become due and payable at any time nor shall any further interest accrue.

 

Section 2.04.     
Mandatory Cancellation of Interest Payments.

 

     17

     

    

(a)            
Interest due on the Notes from the Company shall be automatically canceled if (a) the Bank is classified as Class II or
below pursuant to Article 122 of the Mexican Banking Law and the regulations thereunder, which specify capitalization requirements,
or if, as a result of the applicable payment of interest, the Bank would be classified as Class II or below or (b) any financial
entity (entidad financiera) that is a part of the financial group of which the Company is the holding company experiences
a capital deficiency (insuficiencia de capital) under the General Regulations (Reglas De Carácter General)
specified in the penultimate paragraph of Article 91 of the Mexican Financial Groups Law, the foregoing being read in accordance
with Article 118, Section III, of the Mexican Financial Groups Law, (each an “Interest Cancellation Event”).
As of the Issue Date, the minimum capital ratios to be classified as Class I (and, as a result, not Class II or below) are (i)
10.5% in respect of Total Net Capital (capital neto), (ii) 8.5% in the case of Tier 1 Capital (capital básico)
and (iii) 7.0 % in the case of Fundamental Capital (capital fundamental), plus in each case, any other applicable capital
supplement (as of the Issue Date, within a four-year period starting December 31, 2016, a Systemically Important Bank Capital
Supplement for Grade III banks of 1.20% and any Countercyclical Capital Supplement applicable to the Bank).

 

(b)            
In the event of a cancellation of the payment of interest on the Notes, the Company shall notify the Holders and the Trustee
in accordance with the procedures described in ‎Section 2.06. Failure to provide such notice shall have no impact on
the effectiveness of, or otherwise invalidate, any such cancellation of interest (and accordingly, such interest shall not be
due and payable), or give the Holders and Beneficial Owners of the Notes any rights. Canceled interest shall not be due and payable.
Any such cancellation shall not constitute a default under the terms of the Notes or the Indenture, and the Holders and Beneficial
Owners of the Notes shall not have any right to such interest or to receive any additional interest or compensation as a result
of such cancellation. Payments of interest due on the Notes shall not be cumulative, so that in the event that payments of interest
are canceled in accordance with this ‎Section 2.04(b), Holders shall not have the right to claim and receive canceled
interest, even if the Bank thereafter satisfies applicable capitalization requirements. If an Interest Cancellation Event is in
effect on any Automatic Conversion of the Notes upon the occurrence of a Conversion Trigger Event, the Company shall convert the
Notes on such date but shall cancel any and all interest accrued.

 

Section 2.05.     
Agreement to Interest Cancellation. By its acquisition of the Notes, each Holder and each Beneficial Owner shall
be deemed to have acknowledged and agreed that:

 

(a)            
interest is payable solely at the discretion of the Company, and no amount of interest shall become due and payable in
respect of the relevant interest period to the extent that it has been canceled (in whole or in part) by the Company at the Company’s
sole discretion and/or has been canceled as a result of the occurrence and continuation of an Interest Cancellation Event;

 

(b)            
a cancellation of interest (in whole or in part) in accordance with the terms of the Indenture and the Notes shall not
constitute a default in payment or otherwise under the terms of the Notes or the Indenture; and

 

(c)            
neither an Automatic Conversion nor a cancellation of interest (in whole or in part) in accordance with the terms of the
Indenture and the Notes shall give rise to a default of the

 

     18

     

    

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.

 

Section 2.06.     
Notice of Interest Cancellation. Notwithstanding anything to the contrary in the Indenture (including Section 1.06
of the Contingent Convertible Securities Indenture), if practicable, the Company shall provide notice of any cancellation of interest
(in whole or in part) to the Holders of the Notes through DTC (or, if the Notes are held in definitive form, to the Holders directly
at their addresses shown in the Contingent Convertible Security Register) and to the Trustee directly on or prior to the relevant
Interest Payment Date. Failure to provide such notice shall have no impact on the effectiveness of, or otherwise invalidate, any
such cancellation of interest (and accordingly, such interest shall not be due and payable), or give the Holders and Beneficial
Owners any rights as a result of such failure.

 

Section 2.07.     
Other Restrictions on Certain Payments.

 

(a)            
Unless the most recent payable accrued interest and any Additional Interest (as defined below) on the Notes have been paid,
the Company shall not (1) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of its capital stock; or (2) make any payment of premium, if any, or interest on or repay, repurchase
or redeem any of its Subordinated Non-Preferred Indebtedness.

 

(b)            
When any accrued interest payment is not paid in full on the then Current Principal Amount of the Notes or any other outstanding
Subordinated Non-Preferred Indebtedness, all interest payments on the then Current Principal Amount of the Notes and any other
Subordinated Non-Preferred Indebtedness during the twelve (12) month period commencing on the date of the missed or incomplete
interest payment shall be paid pro rata so that the amounts of interest paid on the then Current Principal Amount of Notes and
any other Subordinated Non-Preferred Indebtedness during that period shall in all cases bear to each other the same ratio as the
ratio of (i) the scheduled interest payments on the then Current Principal Amount of the Notes during such period, without giving
effect to any cancellation, and (ii) the scheduled interest payments on the then-outstanding principal amount of such Subordinated
Non-Preferred Indebtedness during such period, without giving effect to any cancellation.

 

Section 2.08.     
Payment of Principal, Interest and Other Amounts.

 

(a)            
Payments of principal of and interest, if any, on the Notes shall be made in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and private debts and such payments on Notes represented
by a Global Note shall be made through one or more Paying Agents appointed under the Contingent Convertible Securities Indenture
to DTC or its nominee, as the Holder of the Global Note. Initially, the Paying Agent and the Contingent Convertible Security Registrar
for the Notes shall be The Bank of New York Mellon, 101 Barclay Street, Floor 7-E, New York, New York 10286. The Company may change
the Paying Agent without prior notice to the Holders and Beneficial Owners of the Notes, and in such an event the Company may
act as Paying Agent or Contingent Convertible Security Registrar.

 

     19

     

    

(b)            
Payments of principal, interest and other amounts in respect of the Notes represented by a Global Note shall be made by
wire transfer of immediately available funds on the date such payment is scheduled to be paid. The Company shall, on the Business
Day prior to each date on which any payment in respect of the Notes becomes due, transfer to the Paying Agent such amount as may
be required for the purposes of such payment no later than 11:00 a.m. New York City time.

 

Section 2.09.     
Optional Redemption.

 

(a)            
The Company may, at its option, redeem the Notes on the First Call Date and on any Interest Payment Date thereafter, in
whole (up to the then Current Principal Amount) or in part, at par plus accrued and unpaid (and not canceled) interest due on,
or with respect to, the Notes and any Additional Interest up to but excluding the Redemption Date (an “Optional Redemption”).

 

(b)            
The Company shall not redeem the Notes pursuant to this ‎Section 2.09 unless (i)(a) the Bank maintains, and
after giving effect to the concurrent redemption of the Notes and the Back-to-Back Note, shall maintain, each of its capital ratios
equal to, or exceeding, the then-applicable capital ratios required by the CNBV in accordance with Section IV, c), 1 of Annex
1-R of the general rules applicable to Mexican banks or any successor regulation, which as of the Issue Date are 10.5% in the
case of Total Net Capital (capital neto), 8.5% in the case of Tier 1 Capital (capital básico), and 7.0% in
the case of Fundamental Capital (capital fundamental), plus the then-applicable Countercyclical Capital Supplement and
Systemically Important Bank Capital Supplement, or (b) the Bank issues securities that replace the Back-to-Back Note such that
it remains in compliance with the Mexican Capitalization Requirements, and (ii) the Company has obtained the authorization from
Banco de México to redeem the Notes prior to the applicable Redemption Date; provided, however, that if at any time
a Conversion Trigger Event shall have occurred, then the Company shall have no obligation to redeem any Notes called for Optional
Redemption.

 

(c)            
In the event of a partial Optional Redemption of the Notes, the Notes shall be redeemed from each Holder thereof pro rata
according to the then Current Principal Amount of the Notes held by the relevant Holder in relation to the then Current Principal
Amount of all Notes; provided, however, that Global Notes to be redeemed that are held through DTC shall be selected in accordance
with the applicable procedures of DTC. In respect of Notes held by DTC or its nominee, the distribution of the proceeds from such
redemption shall be made to DTC or its nominee and disbursed by DTC or its nominee in accordance with the procedures applied by
DTC or its nominee. In determining the proration of the Notes to be redeemed, the Company may make such adjustments as may be
appropriate in order that only the Notes in authorized denominations shall be redeemed, subject to the minimum denominations set
forth in this First Supplemental Indenture.

 

(d)            
The Company’s obligation to obtain Banco de México’s authorization to redeem the Notes prior
to the applicable Redemption Date, and the summary of Mexican regulations described in ‎Section 2.09(b) are included
herein for information purposes only and shall not grant any rights to the Holders to have the Notes redeemed, even if such authorization
is obtained.

 

     20

     

    

Section 2.10.     
Withholding Tax Redemption.

 

(a)            
The Company may, at its option, redeem the Notes at any time in whole (up to the then Current Principal Amount) but not
in part, at par plus accrued and unpaid (and not canceled) interest due on, or with respect to, the Notes, plus any Additional
Interest, up to, but excluding, the Redemption Date, upon the occurrence of a Withholding Tax Event (a “Withholding Tax
Redemption”); provided that the Company shall not redeem the Notes pursuant to this ‎Section 2.10, unless
(i)(a) the Bank maintains, and after giving effect to the concurrent redemption of the Notes and the Back-to-Back Note, shall
maintain, each of its capital ratios equal to, or exceeding, the then-applicable capital ratios required by the CNBV in accordance
with Section IV, c), 1 of Annex 1-R of the general rules applicable to Mexican banks or any successor regulation, which as of
the date of the Issue Date are 10.5% in the case of Total Net Capital (capital neto), 8.5% in  the case of Tier 1
Capital (capital básico), and 7.0% in the case of Fundamental Capital (capital fundamental), plus the then-applicable
Countercyclical Capital Supplement and Systemically Important Bank Capital Supplement, or (b) the Bank issues securities that
replace the Back-to-Back Note such that it remains in compliance with the Mexican Capitalization Requirements, and (ii) the Company
has obtained the authorization from Banco de México to redeem the Notes prior to the applicable redemption date;
provided, however, that if at any time a Conversion Trigger Event shall have occurred, then the Company shall have no obligation
to redeem any Notes called for Withholding Tax Redemption.

 

(b)            
The Company’s obligation to obtain Banco de México’s authorization to redeem the Notes prior
to the applicable Redemption Date, and the summary of Mexican regulations described in ‎Section 2.10(a) are included
herein for information purposes only and shall not grant any rights to the Holders to have the Notes redeemed, even if such authorization
is obtained.

 

Section 2.11.     
Special Event Redemption.

 

(a)            
The Company may, at its option, redeem the Notes at any time in whole (up to the then Current Principal Amount) but not
in part, at par plus accrued and unpaid (and not canceled) interest due on, or with respect to, the Notes, plus Additional Interest,
up to, but excluding, the Redemption Date, upon the occurrence of a Special Event (a “Special Event Redemption”);
provided that the Company shall not redeem the Notes pursuant to this ‎Section 2.11, unless (i)(a) the Bank maintains,
and after giving effect to the concurrent redemption of the Notes and the Back-to-Back Note, shall maintain, each of its capital
ratios equal to, or exceeding, the then-applicable capital ratios required by the CNBV in accordance with Section IV, c), 1 of
Annex 1-R of the general rules applicable to Mexican banks or any successor regulation, which as of the date of the Issue Date
are 10.5% in the case of Total Net Capital (capital neto), 8.5% in  the case of Tier 1 Capital (capital básico),
and 7.0% in the case of Fundamental Capital (capital fundamental), plus the then-applicable Countercyclical Capital Supplement
and Systemically Important Bank Capital Supplement, or (b) the Bank issues securities that replace the Back-to-Back Note such
that it remains in compliance with the Mexican Capitalization Requirements, and (ii) the Company has obtained the authorization
from Banco de México to redeem the Notes prior to the applicable redemption date; provided, however, that if at
any time a Conversion Trigger Event shall have occurred, then the Company shall have no obligation to redeem any Notes called
for Special Event Redemption.

 

     21

     

    

(b)            
The Company’s obligation to obtain Banco de México’s authorization to redeem the Notes prior
to the applicable Redemption Date, and the summary of Mexican regulations described in ‎Section 2.11(a) are included
herein for information purposes only and shall not grant any rights to the Holders to have the Notes redeemed, even if such authorization
is obtained.

 

Section 2.12.     
Redemption Procedures. Any redemption of the Notes shall occur pursuant to the procedures set forth in Article 10
of the Contingent Convertible Securities Indenture. In addition:

 

(a)            
If the Company has delivered a notice of redemption pursuant to Article 10 of the Contingent Convertible Securities Indenture,
but prior to the payment of the redemption amount with respect to such redemption a Conversion Trigger Event has occurred, such
notice of redemption shall be automatically rescinded and shall be of no force and effect, and no payment in respect of the redemption
amount shall be due and payable.

 

(b)            
If the Company has delivered a notice of redemption pursuant to Article 10 of the Contingent Convertible Securities Indenture,
but prior to the date of any such redemption Banco de México has objected to or refused to grant permission to the
Company, as applicable, to redeem the relevant Notes, such notice of redemption shall be automatically rescinded and shall be
of no force and effect and no payment in respect of any redemption amount, if applicable, shall be due and payable.

 

(c)            
If the Company has delivered a notice of redemption pursuant to Article 10 of the Contingent Convertible Securities Indenture,
but prior to the payment of the redemption amount with respect to such redemption the Bank is not in compliance with the Mexican
Capitalization Requirements or any alternative or additional pre-conditions required by Banco de México as a pre-requisite
to its permission for such redemption, such notice of redemption shall be automatically rescinded and shall be of no force and
effect, and no payment in respect of the redemption amount shall be due and payable.

 

Section 2.13.     
Canceled Interest Not Payable upon Redemption. Any interest payments that have been canceled pursuant to Sections
‎2.03 or ‎2.04 hereof shall not be payable if the Notes are redeemed pursuant to Sections ‎2.09,
‎2.10 or ‎2.11 hereof.

 

Section 2.14.     
Optional Repurchase.

 

(a)            
Subject to applicable law, the Company may at any time and from time to time repurchase, or procure others to repurchase
for the Company’s account, Notes in the open market by tender or by private agreement in any manner and at any price or
at differing prices. Notes purchased or otherwise acquired by the Company shall be surrendered to the Trustee for cancellation
(in which case all Notes so surrendered shall forthwith be canceled in accordance with applicable law and thereafter may not be
reissued or resold). Any such purchases shall be subject to the satisfaction of the following conditions: (x)(a) the Bank maintains,
and after giving effect to the repurchase of the Notes by the Company and any concurrent cancellation of the same amount of the
Back-to-Back Note by the Bank, shall maintain, each of its capital ratios equal to, or exceeding, the then-applicable capital
ratios required by the CNBV in accordance

 

     22

     

    

with
Section IV, c), 1 of Annex 1-R of the general rules applicable to Mexican banks or any successor regulation, which as of the Issue
Date are 10.5% in the case of Total Net Capital (capital neto), 8.5% in  the case of Tier 1 Capital (capital básico),
and 7.0% in the case of Fundamental Capital (capital fundamental), plus the then-applicable Countercyclical Capital Supplement
and Systemically Important Bank Capital Supplement, or (b) the Bank issues securities that replace the amount of the Back-to-Back
Note so canceled such that it remains in compliance with the Mexican Capitalization Requirements, and (y) the Company has obtained
the authorization from Banco de México to repurchase the Notes prior to the applicable repurchase date; provided,
however, that if at any time a Conversion Trigger Event shall have occurred, then the Company shall have no obligation to repurchase
any Notes that the Company had agreed to repurchase.

 

(b)            
The Company’s obligation to obtain Banco de México’s authorization to repurchase the Notes prior
to the applicable date of repurchase, and the summary of Mexican regulations described in ‎Section 2.14(a) are included
herein for information purposes only and shall not grant any rights to the Holders to have the Notes repurchased, even if such
authorization is obtained.

 

Section 2.15.     
Automatic Conversion upon Conversion Trigger Event.

 

(a)            
Upon the occurrence of a Conversion Trigger Event, on the Conversion Date, the then Current Principal Amount of the Notes
shall be automatically reduced in one or more Automatic Conversions by the applicable Conversion Amount and the Converted Principal
Amount relating to such Automatic Conversions shall be converted exclusively into (i) if the Holder is Santander España,
the Company’s Series F shares and (ii) if the Holder is not Santander España, the Company’s Series B shares,
in each case credited as fully paid (the “Settlement Shares”) at the Conversion Price and in accordance with
the terms set forth herein. Settlement Shares upon any Automatic Conversion shall be released and delivered by the Company to
the Settlement Share Depositary (on behalf of the Holders and Beneficial Owners) on the Conversion Date, in consideration for
which all of the Company’s obligations with respect to the Converted Principal Amount under the Notes resulting from such
Automatic Conversion shall be irrevocably and automatically terminated, and under no circumstances shall such terminated obligations
be reinstated.

 

(b)            
If the Company has been unable to appoint a Settlement Share Depositary, it shall make such other arrangements for the
delivery of the Settlement Shares to the Holders as it shall consider reasonable in the circumstances, which may include delivering
the Settlement Shares to another independent nominee or to the Holders directly, which delivery of the Settlement Shares shall
irrevocably and automatically release all of the Company’s obligations under the Notes with respect to the Converted Principal
Amount resulting from such Automatic Conversion as if the Settlement Shares had been delivered to the Settlement Share Depositary,
and, in which case, where the context so admits, references in the Notes and this First Supplemental Indenture to the delivery
of Settlement Shares to the Settlement Share Depositary shall be construed accordingly and apply mutatis mutandis. Where
practicable, the Company shall make such other arrangements as are necessary to allow Holders, if they so elect, to take delivery
of their Settlement Shares in the form of ADSs.

 

     23

     

    

(c)            
A “Conversion Trigger Event” shall occur when:

 

(i)           
the Business Day in Mexico following the publication of a determination by the CNBV, in its official publication of capitalization
levels for Mexican banks, that the Bank’s Fundamental Capital Ratio, as calculated pursuant to the applicable Mexican Capitalization
Requirements, is equal to or below 5.125%;

 

(ii)           
if both (a) the CNBV notifies the Bank that it has made a determination, pursuant to Article 29 Bis of the Mexican Banking
Law, that a cause for revocation of the Bank’s license has occurred resulting from (x) the Bank’s assets being insufficient
to satisfy its liabilities, (y) the Bank’s non-compliance with corrective measures imposed by the CNBV pursuant to the Mexican
Banking Law, or (z) the Bank’s non-compliance with the capitalization requirements set forth in the Mexican Capitalization
Requirements and (b) the Bank has not cured such cause for revocation, by (x) complying with such corrective measures, or (y)(1)
submitting a capital restoration plan to, and receiving approval of such plan by, the CNBV, (2) not being classified in Class
III, IV or V, and (3) transferring at least 75% of its shares to an irrevocable trust, or (z) remedying any capital deficiency,
in each case, on or before the third or seventh calendar day in Mexico, as applicable, following the date on which the CNBV notifies
the Bank of such determination;

 

(iii)           
if the Banking Stability Committee, which is a committee formed by the CNBV, the Ministry of Finance and Public Credit,
Banco de México and the Instituto para la Protección al Ahorro Bancario of Mexico, determines pursuant
to Article 29 Bis 6 of the Mexican Banking Law that, under Article 148, Section II, paragraphs (a) and (b) of the Mexican Banking
Law, financial assistance is required by the Bank to avoid revocation of its license because the Bank’s assets are insufficient
to satisfy the Bank’s liabilities, or the Bank’s failure to comply with corrective measures, to comply with capitalization
requirements, or to satisfy certain liabilities when due, as a means to maintain the solvency of the Mexican financial system
or to avoid risks affecting the Mexican payments system and such determination is either made public or notified to the Bank (for
the avoidance of doubt, pursuant to Annex 1-R of the general rules applicable to Mexican banks, a Conversion Trigger Event shall
occur if financial assistance or other loans shall be granted to the Bank pursuant to Article 148, Section II, paragraphs (a)
and (b) of the Mexican Banking Law); or

 

(iv)           
if any financial entity (entidad financiera) that is a part of the financial group of which the Company is the holding
company experiences a capital deficiency (insuficiencia de capital) under the General Regulations (Reglas de Carácter
General) specified in the penultimate paragraph of Article 91 of the Mexican Financial Groups Law, the foregoing being read
in accordance with Article 118, Section III, of the Mexican Financial Groups Law.

 

(d)            
Upon its determination that a Conversion Trigger Event has occurred, the Company shall (a) prior to the delivery of the
Conversion Trigger Notice, deliver to the Trustee an Officer’s Certificate substantially in the form attached hereto as
Exhibit C, stating that a Conversion Trigger Event has occurred. The Trustee shall accept such Officer’s Certificate

 

     24

     

    

without
any further inquiry as sufficient evidence of the occurrence of the Conversion Trigger Event, in which event such Officer’s
Certificate shall be conclusive and binding on the Trustee, the Holders and Beneficial Owners, and (b) deliver a Conversion Trigger
Notice to the Trustee and to DTC and the Holders without delay after the occurrence of such Conversion Trigger Event.

 

(e)            
The date on which the Conversion Trigger Notice shall be deemed to have been given shall be the date on which it is dispatched
by the Company to DTC (or, if the Notes are held in definitive form, to the Holders directly).

 

(f)            
The Company shall request that DTC, promptly following its receipt of the Conversion Trigger Notice, post the Conversion
Trigger Notice on its Reorganization Inquiry for Participants System pursuant to DTC’s procedures then in effect (or such
other system as DTC uses for providing notices to holders of securities). Within two (2) Business Days of its receipt of the Conversion
Trigger Notice, the Trustee shall transmit the Conversion Trigger Notice to the direct participants in DTC holding the Notes at
such time.

 

(g)            
The Settlement Shares to be delivered shall, except where the Company has been unable to appoint a Settlement Share Depositary,
initially be registered in the name of the Settlement Share Depositary, which shall hold such Settlement Shares on behalf of the
Holders and Beneficial Owners. By virtue of its holding of any Notes, each Holder and Beneficial Owner shall be deemed to have
irrevocably directed the Company to deliver the Settlement Shares corresponding to the conversion of its holding of Notes to the
Settlement Share Depositary (or to such other relevant recipient).

 

(h)            
The Settlement Share Depositary (or the relevant recipient in accordance with this First Supplemental Indenture and the
terms of the Notes, as applicable) shall hold the Settlement Shares on behalf of the Holders and Beneficial Owners. For so long
as the Settlement Shares are held by the Settlement Share Depositary, each Holder and Beneficial Owner shall be entitled to direct
the Settlement Share Depositary or such other relevant recipient, as applicable, to exercise on its behalf all rights of a holder
of Ordinary Shares (including voting rights and rights to receive dividends), to the greatest extent permitted under applicable
law; provided, however, that Holders and Beneficial Owners shall not have any rights to sell or otherwise transfer such Settlement
Shares unless and until such time as the Settlement Shares have been delivered to the Holders or Beneficial Owners in accordance
with the procedures set forth under ‎Section 2.17 hereof.

 

(i)            
Provided that the Company delivers the Settlement Shares to the Settlement Share Depositary (or the relevant recipient
in accordance with the terms of the Notes) in accordance with the terms of the Notes and the Indenture, with effect from and on
the Conversion Date, Holders and Beneficial Owners shall have recourse only to the Settlement Share Depositary (or to such other
relevant recipient, as applicable) for the delivery to them of Settlement Shares or, if the Holder elects, ADSs to which such
Holders and Beneficial Owners are entitled. Subject to the occurrence of a Liquidation Event on or following a Conversion Trigger
Event, if the Company fails to deliver the Settlement Shares upon an Automatic Conversion to the Settlement Share Depositary on
the Conversion Date, the only right of Holders shall be a claim for such Settlement Shares to be delivered to the Settlement Share
Depositary.

 

     25

     

    

(j)            
Effective upon, and following, the occurrence of the Automatic Conversion, provided that the Company delivers the Settlement
Shares to the Settlement Share Depositary (or the relevant recipient in accordance with the terms of the Notes) in accordance
with the terms of the Notes, Holders and Beneficial Owners shall not have any rights against or recourse to the Company with respect
to the repayment of any Converted Principal Amount of the Notes or payment of interest or any other amount on or in respect of
the Converted Principal Amount, which liabilities of the Company shall be automatically released, and accordingly, the then Current
Principal Amount of the Notes shall be reduced as described in this ‎Section 2.15. Any interest in respect of an interest
period ending on any Interest Payment Date falling between the Conversion Trigger Event and the Conversion Date with respect to
any Converted Principal Amount shall be canceled pursuant to ‎Section 2.03 above upon the occurrence of such Conversion
Trigger Event and shall not be due and payable nor shall any further interest accrue on such Converted Principal Amount.

 

(k)            
As of the Issue Date and while any Notes remain outstanding, the Company agrees to have issued and to hold in treasury,
free from preemptive or other preferential rights, sufficient Ordinary Shares to enable an Automatic Conversion of the then Current
Principal Amount of the Notes to be discharged and satisfied in full.

 

(l)            
Notwithstanding any other provision herein, by its acquisition of the Notes, each Holder and Beneficial Owner shall be
deemed to have (i) agreed to all of the terms and conditions of the Notes, including, without limitation, those related to (x)
Automatic Conversion following a Conversion Trigger Event and (y) the appointment of the Settlement Share Depositary and the issuance
of the Settlement Shares to the Settlement Share Depositary (or to the relevant recipient in accordance with the terms of the
Indenture or the Notes) and acknowledged that such events in (x) and (y) may occur without any further action on the part of such
Holders or Beneficial Owners or the Trustee, (ii) agreed that effective upon, and following, an Automatic Conversion, no amount
shall be due and payable to the Holders or Beneficial Owner, and the liability of the Company to pay the Converted Principal Amount,
or any interest in respect of such Converted Principal Amount shall be automatically released, and the Holders and the Beneficial
Owners shall not have the right to give a direction to the Trustee with respect to the Conversion Trigger Event and any related
Automatic 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 Indenture
and in connection with the Notes, including, without limitation, claims related to or arising out of or in connection with the
Conversion Trigger Event and/or any Automatic Conversion, and (iv) authorized, directed and requested DTC, INDEVAL and any direct
participant in DTC or INDEVAL or other intermediary through which it holds such Notes to take any and all necessary action, if
required, to implement the Automatic Conversion without any further action or direction on the part of such Holder or Beneficial
Owner or the Trustee.

 

(m)            
The procedures set forth in this ‎Section 2.15 are subject to change to reflect changes in DTC practices, and
the Company may make changes to the procedures set forth in this ‎Section 2.15 to the extent reasonably necessary,
in the opinion of the Company, to reflect such changes in DTC practices. Any such changes shall be subject to the provisions of
‎Section 7.01.

 

     26

     

    

(n)            
Notwithstanding anything to the contrary contained in the Indenture or the Notes, once the Company has delivered a Conversion
Trigger Notice following the occurrence of a Conversion Trigger Event, (i) subject to the right of Holders relating to a breach
of Performance Obligation, in the event of a failure by the Company to deliver any Settlement Shares to the Settlement Share Depositary
on the Conversion Date, the Indenture shall impose no duties upon the Trustee whatsoever with regard to an Automatic Conversion
upon a Conversion Trigger Event and the Holders and Beneficial Owners shall have no rights whatsoever under the Indenture or the
Notes to instruct the Trustee to take any action whatsoever, and (ii) as of the date of the Conversion Trigger Notice, except
for any indemnity and/or security provided by any Holder or by any Beneficial Owner in such direction or related to such direction,
any direction previously given to the Trustee by any Holders or by any Beneficial Owners shall cease automatically and shall be
null and void and of no further effect; except in each case of (i) and (ii) of this ‎Section 2.15(n), with respect
to any rights of Holders or Beneficial Owners with respect to any payments under the Notes that were unconditionally due and payable
prior to the date of the Conversion Trigger Notice or unless the Trustee is instructed in writing by the Company to act otherwise.

 

(o)            
All authority conferred or agreed to be conferred by each Holder and Beneficial Owner pursuant to this ‎Section
2.15, including the consents given by such Holder and Beneficial Owner, shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of such Holder and Beneficial Owner.

 

(p)            
The Trustee shall not be liable with respect to (i) any aspect of the Company’s decision to deliver a Conversion
Trigger Notice or the related Automatic Conversion, (ii) the adequacy of the disclosure of these provisions in the Prospectus
or any other offering material in respect of the Notes or for the direct or indirect consequences thereof or (iii) any other requirement
of the Company contained herein related to a Conversion Trigger Event or the Automatic Conversion. For the avoidance of doubt,
the Company’s obligation to indemnify the Trustee in accordance with Section 6.07 of the Contingent Convertible Securities
Indenture shall survive any Automatic Conversion.

 

(q)            
Following the delivery of the Settlement Shares by the Company to the Settlement Share Depositary (or to the relevant recipient
in accordance with the terms of the Notes) on a Conversion Date, the Converted Principal Amount of the Notes relating to such
Automatic Conversion shall remain in existence until the applicable Cancellation Date for the sole purpose of evidencing a Holders’
right to receive Settlement Shares or, if the Holder elects, ADSs from the Settlement Share Depositary (or such other relevant
recipient, as applicable).

 

(r)            
The Holders shall not at any time have the option to convert the Notes into Settlement Shares.

 

(s)            
The occurrence of the Automatic Conversion shall not constitute an Enforcement Event.

 

Section 2.16.     
Settlement Shares.

 

     27

     

    

(a)            
The number of Settlement Shares issued by the Company to be released to the Settlement Share Depositary on the Conversion
Date shall be determined by dividing the (i) Converted Principal Amount of the Notes arising on the Conversion Date by (ii) the
Conversion Price prevailing on the Conversion Date. The number of Settlement Shares to be delivered to each Holder shall be rounded
down, if necessary, to the nearest whole number of Settlement Shares. Fractions of Settlement Shares shall not be delivered to
the Settlement Share Depositary following the Automatic Conversion and no cash payment shall be made in lieu thereof. The number
of Settlement Shares to be held by the Settlement Share Depositary for the benefit of each Holder shall equal the number of Settlement
Shares thus calculated multiplied by a fraction equal to (i) the Tradable Amount of the book-entry interests in the Notes held
by such Holder on the Conversion Date divided by (ii) the Current Principal Amount immediately preceding such Automatic Conversion,
rounded down, if necessary, to the nearest whole number of Settlement Shares, provided that (x) Settlement Shares exceeding two
percent (2%) of the aggregate outstanding Ordinary Shares of the Company shall only be delivered to a Holder or group of Holders
if the requirements specified in the Mexican Financial Groups Law are satisfied by such Holder or group of Holders, (y) no Settlement
Shares exceeding five percent (5%) of the aggregate outstanding Ordinary Shares of the Company shall be delivered to a Holder
or group of Holders, provided that a lesser percentage of shares not exceeding such five percent (5%) may be delivered if the
requirements specified in clause (i) above are satisfied, and (z) no Settlement Shares shall be delivered to a Holder that is
considered a foreign government under the Mexican Financial Groups Law.

 

(b)            
The Settlement Shares released following the Automatic Conversion shall be fully paid and non-assessable and shall be Ordinary
Shares of the Company.

 

(c)            
If any Holder or Beneficial Owner (or group of either or both) of the Notes other than Santander España would become
a Holder or group of Holders (i) of more than two percent (2%) of the Company’s Ordinary Shares as a result of an Automatic
Conversion, and the requirements specified in the Mexican Financial Groups Law are not satisfied by the applicable Holder or group
of Holders, or (ii) of more than five percent (5%) of the Company’s Ordinary Shares as a result of an Automatic Conversion,
the Company shall cause the Settlement Share Depositary to sell in whatever manner the Settlement Share Depositary determines,
in its sole discretion, a sufficient amount of Settlement Shares in excess of any of the applicable percentages specified above
(the “Excess Settlement Shares”) such that such Holder or Beneficial Owner, together with any such group, does
not become a Holder of Ordinary Shares exceeding two percent (2%) or five percent (5%), as applicable, of the Ordinary Shares
of the Company, it being understood that such Holder shall be paid the proceeds, net of expenses, of the sale of the applicable
Excess Settlement Shares.

 

(d)            
The procedures set forth in this ‎Section 2.16 are subject to change to reflect changes in the practices of
DTC, and the Company may make changes to the procedures set forth in this ‎Section 2.16 to the extent reasonably necessary,
in the opinion of the Company, to reflect such changes in the practices of DTC as provided under ‎Section 2.17(a) hereof.
Any such changes shall be subject to the provisions of ‎Section 7.01.

 

Section 2.17.     
Settlement Procedure.

 

     28

     

    

(a)            
Delivery of the Settlement Shares or, if the Holder elects, ADSs to the Holders and Beneficial Owners shall be made in
accordance with the procedures set forth in this ‎Section 2.17, which remain subject to change to reflect changes in
the practices of DTC and the Company may make changes to the procedures set forth in this ‎Section 2.17 to the extent
necessary, in the opinion of the Company, to reflect such changes in the practices of DTC.

 

(b)            
On the Suspension Date, the Company shall deliver, to the Trustee and to DTC as the Holder (or, if the Notes are in definitive
form, to the Holders directly at their addresses shown on the Contingent Convertible Security Register), a Settlement Request
Notice, pursuant to which the Company shall request that Holders and Beneficial Owners complete a Settlement Notice and shall
specify the Notice Cut-Off Date and the Final Cancellation Date.

 

(c)            
A Holder or Beneficial Owner (or the custodian, nominee, broker or other representative thereof) shall not receive delivery
of the relevant Settlement Shares or, if the Holder elects, ADSs unless such Holder or Beneficial Owner (or the custodian, nominee,
broker or other representative thereof) delivers the Settlement Notice to the Settlement Share Depositary on or before the Notice
Cut-Off Date; provided that, if such delivery is made after the end of normal business hours at the specified office of the Settlement
Share Depositary, such delivery shall be deemed for all purposes to have been made or given on the next following Business Day.

 

(d)            
If the Notes are held through DTC, the Settlement Notice must be given in accordance with the standard procedures of DTC
(which may include, without limitation, delivery of the notice to the Settlement Share Depositary by electronic means) and in
a form acceptable to DTC and the Settlement Share Depositary. With respect to any Notes held in definitive form, the Settlement
Notice must be delivered to the specified office of the Settlement Share Depositary together with the relevant Notes.

 

(e)            
Subject to satisfaction of the requirements and limitations set forth in this ‎Section 2.17 and provided that
the Settlement Notice and the relevant Notes, if applicable when held in definitive form, are delivered on or before the Notice
Cut-Off Date, the Settlement Share Depositary shall deliver the relevant Settlement Shares (rounded down to the nearest whole
number of Settlement Shares) to, or shall deposit such relevant Settlement Shares with the ADS Depositary on behalf of, the relevant
Holder or Beneficial Owner (or custodian, nominee, broker or other representative thereof) of the relevant Notes completing the
relevant Settlement Notice in accordance with the instructions given in such Settlement Notice or its nominee on the applicable
Settlement Date.

 

(f)            
Each Settlement Notice shall be irrevocable. The Settlement Share Depositary shall determine, in its sole and absolute
discretion, whether any Settlement Notice has been properly completed and delivered, and such determination shall be conclusive
and binding on the relevant Holder or Beneficial Owner. If any Holder or Beneficial Owner fails to properly complete and deliver
a Settlement Notice and the relevant Notes, if applicable, the Settlement Share Depositary shall be entitled to treat such Settlement
Notice as null and void.

 

(g)            
Neither the Company nor any member of the Group shall pay 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 upon an

 

     29

     

    

Automatic
Conversion or that may arise or be paid as a consequence of the delivery of Settlement Shares to the Settlement Share Depositary
or in connection with the issue of ADSs. A Holder or Beneficial Owner must pay 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 upon an Automatic Conversion in connection with the delivery of the Settlement Shares to the Settlement Share
Depositary and/or the issue of ADSs and such Holder or Beneficial Owner must pay all, if any, such 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 by reference to any disposal or deemed disposal of such Holders or Beneficial Owner’s
Note or interest therein.

 

(h)            
The Company may make changes to the procedures set forth in this ‎Section 2.17 to the extent that such changes
are reasonably necessary, in the opinion of the Company, to effect the delivery of the Settlement Shares or, if the Holder elects,
ADSs, as applicable, to the Holders and Beneficial Owners.

 

Section 2.18.     
Failure to Deliver a Settlement Notice. If any Holder or Beneficial Owner (or custodian, nominee, broker or other
representative thereof) fails to deliver a Settlement Notice and the relevant Notes, if applicable, to the Settlement Share Depositary
on or before the Notice Cut-Off Date, the Settlement Share Depositary shall continue to hold the relevant Settlement Shares in
respect of such Holder or Beneficial Owner, until a Settlement Notice (and the relevant Notes, if applicable when held in definitive
form) are so delivered; provided, however, that the relevant Notes shall be canceled on the Final Cancellation Date, and any Holder
or Beneficial Owner (or custodian, nominee, broker or other representative thereof) of Notes delivering a Settlement Notice after
the Notice Cut-Off Date shall be required to provide evidence of its entitlement to the relevant Settlement Shares or, if the
Holder elects, ADSs satisfactory to the Settlement Share Depositary in its sole and absolute discretion in order to receive delivery
of such Settlement Shares or ADSs (if so elected to be deposited with the ADS Depositary on its behalf). The Company shall have
no liability to any Holder or Beneficial Owner of the Notes for any loss resulting from such Holder’s or Beneficial Owner’s
failure to receive any Settlement Shares or ADSs, or from any delay in the receipt thereof, in each case as a result of such Holder
or Beneficial Owner (or custodian, nominee, broker or other representative thereof) failing to duly submit a Settlement Notice
and the relevant Notes, if applicable, on a timely basis or at all.

 

Section 2.19.     
Delivery of ADSs. In respect of any Settlement Shares for which Holders or Beneficial Owners elect to be converted
into ADSs as specified in the Settlement Notice, the Settlement Share Depositary shall deposit with the ADS Depositary, the number
of Settlement Shares to be released upon an Automatic Conversion of the relevant Notes, and shall instruct the ADS Depositary
to issue the corresponding number of ADSs to such Holders or Beneficial Owners (per the ADS-to-Ordinary Share ratio in effect
on the Conversion Date). Once deposited, the ADS Depositary shall be entitled to the economic rights of a Holder or Beneficial
Owner of the Settlement Shares for the purposes of any dividend entitlement and otherwise on behalf of the ADS holders, and the
Holder or Beneficial Owner shall become the record holder of the related ADSs for all purposes under the ADS Depository Facility.
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 Settlement Shares

 

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have
been duly transferred to the custodian and that all applicable depositary fees and payments have been paid to the ADS Depositary.

 

Article
3

Anti-Dilution

 

Section 3.01.     
Adjustment of Conversion Price. Upon the occurrence of any of the events described below, the Conversion Price shall
be adjusted as follows:

 

(a)            
If and whenever there shall be a consolidation, reclassification, redesignation or subdivision in relation to the Ordinary
Shares which alters the number of Ordinary Shares in issue, the Conversion Price shall be adjusted by multiplying the Conversion
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 Ordinary
                                         Shares in issue immediately before such consolidation, reclassification, redesignation
                                         or subdivision, as the case may be; and

 

		B	is the aggregate number of Ordinary
                                         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 that the consolidation, reclassification, redesignation or subdivision, as the case
may be, takes effect.

 

(b)            
If and whenever the Company shall issue any Ordinary Shares to its existing Shareholders credited as fully paid by way
of capitalization of profits or reserves (including any share premium account or capital redemption reserve) other than (1) where
any such Ordinary Shares are or are to be issued instead of the whole or part of a Cash Dividend which the Shareholders would
or could otherwise have elected to receive, (2) where the Shareholders may elect to receive a Cash Dividend in lieu of such Ordinary
Shares or (3) where any such Ordinary 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 the Shareholders, whether at their election or otherwise),
the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such issue by the following
fraction:

 

A

B

 

where:

 

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		A	is the aggregate number of Ordinary
                                         Shares in issue immediately before such issue; and

 

		B	is the aggregate number of Ordinary
                                         Shares in issue immediately after such issue.

 

Such
adjustment shall become effective on the date of issue of such Ordinary Shares.

 

(c)            
If and whenever the Company shall pay any Extraordinary Dividend to its Shareholders, the Conversion Price shall be adjusted
by multiplying the Conversion 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 Ordinary Share on the Effective Date; and

 

		B	is the portion of the aggregate
                                         Extraordinary Dividend attributable to one Ordinary Share, with such portion being determined
                                         by dividing the aggregate Extraordinary Dividend by the number of Ordinary Shares entitled
                                         to receive the relevant Extraordinary Dividend. If the Extraordinary Dividend shall be
                                         expressed in a currency other than the Relevant Currency, it shall be converted into
                                         the Relevant Currency at the Prevailing Rate on the relevant Effective Date.

 

Such
adjustment shall become effective on the Effective Date. If any Extraordinary Dividend is declared but not so paid, the Conversion
Price shall be immediately readjusted, effective as of the date the Company determines not to pay such Extraordinary Dividend,
to the Conversion Price that would be in effect if such Extraordinary Dividend had not been declared.

 

“Effective
Date” means, in respect of this ‎Section 3.01(c),
the first date on which the Ordinary Shares are traded ex-the Extraordinary Dividend on the Relevant Stock Exchange.

 

(d)            
If and whenever the Company shall issue Ordinary 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 arrangements with the Company or any member of the Group)
any other company, person or entity, shall issue or grant to Shareholders as a class by way of rights, any options, warrants or
other rights to subscribe for or purchase Ordinary Shares, or any Other Instruments which by their terms of issue carry (directly
or indirectly) rights of conversion into, or exchange or subscription for, any Ordinary Shares (or shall grant any such rights
in respect of existing Other Instruments so issued), in each case at a price per Ordinary Share which is less than 95% of the
Current Market Price per Ordinary Share on the Effective Date, the Conversion Price shall be adjusted by multiplying the Conversion
Price in force immediately prior to the Effective Date by the following fraction:

 

     32

     

    

A
+ B

A
+ C

 

where:

 

		A	is the number of Ordinary Shares
                                         in issue on the Effective Date;

 

		B	is the number of Ordinary Shares
                                         that the aggregate consideration (if any) receivable for the Ordinary Shares issued by
                                         way of rights, or for the Other Instruments and for the total number of Ordinary Shares
                                         deliverable on the exercise thereof, would purchase at such Current Market Price per
                                         Ordinary Share on the Effective Date; and

 

		C	is the number of Ordinary Shares
                                         to be issued or, as the case may be, the maximum number of Ordinary 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 in respect thereof at the initial conversion, exchange,
                                         subscription or purchase price or rate;

 

provided that if, on the Effective
Date, such number of Ordinary 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
3.01(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 Effective Date and as if such conversion, exchange, subscription, purchase or acquisition had
taken place on the Effective Date.

 

Such adjustment
shall become effective on the Effective Date. To the extent that Ordinary Shares are not so issued or delivered after the expiration
of such rights, options, warrants or other rights, the Conversion Price shall be immediately readjusted to the Conversion Price
that would then be in effect had the adjustment with respect to the issuance of such Ordinary Shares or such rights, options,
warrants or other rights been made on the basis of delivery of only the number of Ordinary Shares actually delivered. If such
Ordinary Shares or such rights, options, warrants or other rights are not so issued, the Conversion Price shall be immediately
readjusted to the Conversion Price that would then be in effect if such Effective Date for such issuance had not occurred.

 

“Effective
Date” means, in respect of this ‎Section 3.01(d),
the first date on which the Ordinary Shares are traded ex-rights, ex-options or ex-warrants on the Relevant Stock Exchange.

 

For the purpose
of any calculation of the consideration receivable or price pursuant to this ‎Section
3.01(d), the following provisions shall apply:

 

(i)       the
aggregate consideration receivable or price for Ordinary Shares issued for cash shall be the amount of such cash;

 

(ii)       (x)
the aggregate consideration receivable or price for Ordinary Shares to be issued or otherwise made available upon the conversion
or exchange of any Other Instruments

 

     33

     

    

shall
be deemed to be the consideration or price received or receivable for any such Other Instruments and (y) the aggregate consideration
receivable or price for Ordinary Shares to be issued or otherwise made available upon the exercise of rights of subscription attached
to any Other Instruments shall be deemed to be that part (which may be the whole) of the consideration or price received or receivable
for such Other Instruments which are attributed by the Company to such rights of subscription or, if no part of such consideration
or price is so attributed, the Fair Market Value of such rights of subscription as at the relevant Effective Date, plus in the
case of each of (x) and (y) above, the additional minimum consideration receivable or price (if any) upon the conversion or exchange
of such Other Instruments, or upon the exercise of such rights of subscription attached thereto and (z) the consideration receivable
or price per Ordinary Share upon the conversion or exchange of, or upon the exercise of such rights of subscription attached to,
such Other Instruments shall be the aggregate consideration or price referred to in (x) or (y) above (as the case may be) divided
by the number of Ordinary 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 Relevant Currency, it shall be converted into the Relevant Currency at the Prevailing Rate on the relevant Effective
Date;

 

(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 Ordinary
Shares or Other Instruments, 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.

 

(e)            
Notwithstanding provisions of Sections ‎3.01(a) through ‎(d) above:

 

(i)           
where the events or circumstances giving rise to any adjustment to the Conversion Price have already resulted or will result
in an adjustment to the Conversion Price or the events or circumstances giving rise to any adjustment arise by virtue of any other
events or circumstances that have already given or will give rise to an adjustment to the Conversion Price or where more than
one event which gives rise to an adjustment to the Conversion Price occurs within such a short period of time that, in the opinion
of the Company, a modification to the provisions of ‎Section 3.01(a) to ‎Section 3.01(d) is
required to give the intended result, such modification shall be made to the operation of such provisions as may be determined
in good faith by an Independent Financial Adviser to be in its opinion appropriate to give the intended result;

 

(ii)           
such modification shall be made to the operation of the provisions of ‎Section 3.01(a) to ‎Section
3.01(d) as may be determined in good faith by an Independent Financial Adviser to be in its opinion appropriate (x) to ensure
that an adjustment to the Conversion Price or the economic effect thereof shall not be taken into account more than once, (y)
to ensure that the economic effect of an Extraordinary

 

     34

     

    

Dividend
is not taken into account more than once and (z) to reflect any redenomination of the issued Ordinary Shares for the time being
into a new currency;

 

(iii)           
other than provided under paragraphs ‎(i) and ‎(ii) above, if any doubt shall arise
as to whether an adjustment fails to be made to the Conversion Price or as to the appropriate adjustment to the Conversion Price,
the Company may at its discretion appoint an Independent Financial Adviser and, following consultation between the Company and
such Independent Financial Adviser, a written opinion of such Independent Financial Adviser in respect thereof shall be conclusive
and binding on the Company, the Holders and the Beneficial Owners, save in the case of manifest error;

 

(iv)           
no adjustment shall be made to the Conversion Price where Ordinary Shares or Other Instruments 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 office or the personal service company of any such person) or their spouses or relatives,
in each case, of the Company or any of its subsidiaries or any associated company or to a trustee or trustees to be held for the
benefit of any such person, in any such case pursuant to any share or option scheme;

 

(v)           
on any adjustment, if the resultant Conversion Price has more decimal places than the initial Conversion Price, it shall
be rounded to the same number of decimal places as the initial Conversion Price (with 0.005 being rounded down). No adjustment
shall be made to the Conversion Price where such adjustment (rounded down if applicable) would be less than 1% of the Conversion
Price then in effect. Any adjustment not required to be made pursuant to the above, and/or any amount by which the Conversion
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;

 

(vi)           
notice of any adjustments to the Conversion Price shall be given by the Company to DTC as the Holder (or, if the Notes
are in definitive form, via the Trustee) promptly after the determination thereof;

 

(vii)           
any adjustment to the Conversion Price shall be subject to such Conversion Price not being less than the U.S. dollar equivalent
of the nominal amount of an Ordinary Share at such time (as of the Issue Date Ps.3.780782962). The Company undertakes that it
shall not take any action, and shall procure that no action is taken, that would otherwise result in an adjustment to the Conversion
Price to below such nominal value then in effect; and

 

(viii)           
references to any issue or offer or grant to 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, as the case may be, other than
Shareholders, as the case may be, to whom, by reason of the laws of any territory or requirements of any recognized regulatory
body or any other stock exchange or securities market in any

 

     35

     

    

territory
or in connection with fractional entitlements, it is determined not to make such issue or offer or grant.

 

Section 3.02.     
Recapitalization, Reclassification and Changes of the Ordinary Shares. In the case of:

 

(i)           
any recapitalization, reclassification or similar change affecting the Ordinary Shares (other than changes resulting from
a subdivision or combination),

 

(ii)           
any consolidation, merger or combination involving the Company, or

 

(iii)           
any sale, lease or other transfer to a third party of the consolidated assets of the Group substantially as an entirety,

 

in
each case, as a result of which the Ordinary Shares would be converted into, or exchanged for, stock, other property or assets
(including cash or any combination thereof) (any such event, a “Merger Event”), then, at and after the effective
time of the Merger Event, each Note shall instead be convertible into the kind and amount of shares of stock or other property
or assets (including cash or any combination thereof) that a holder of a number of Ordinary Shares equal to the number of Settlement
Shares underlying such Note (determined by dividing the Converted Principal Amount of such Note by the Conversion Price (both
determined immediately prior to such Merger Event)) would have owned or been entitled to receive (the “Reference Property”)
upon such Merger Event. However, at and after the effective time of the Merger Event, the number of Ordinary Shares otherwise
deliverable upon conversion of the Notes as set forth herein shall instead be deliverable in the amount and type of Reference
Property that a holder of that number of Ordinary Shares would have received in such Merger Event. If the Merger Event causes
the Ordinary Shares to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined
based in part upon any form of stockholder election), the Reference Property into which the Notes shall be convertible shall be
deemed to be (i) the weighted average of the types and amounts of consideration received by the holders of Ordinary Shares that
affirmatively make such an election or (ii) if no holders of Ordinary Shares affirmatively make such an election, the types and
amounts of consideration actually received by the holders of Ordinary Shares. The Company shall notify the Trustee of the weighted
average as soon as practicable after such determination is made.

 

If
the Reference Property in respect of any such Merger Event includes shares of stock, securities or other property or assets of
an entity other than the Company or the successor or purchasing entity, as the case may be, in such Merger Event, such other entity
shall execute a supplemental indenture, and such supplemental indenture shall contain such additional provisions to protect the
interests of the Holders as the Company reasonably considers necessary by reason of the foregoing. Such supplemental indenture
shall provide for anti-dilution and other adjustments that shall be as nearly equivalent as is practicably possible to the adjustments
provided for in this ‎Article 3. The Company hereby
agrees not to become a party to any such Merger Event unless its terms are consistent with the foregoing.

 

     36

     

    

The
above provisions of this ‎Section 3.02 shall similarly
apply to successive Merger Events.

 

Section 3.03.     
Adjustment of Prices. Whenever any provision of this First Supplemental Indenture requires the Company to calculate
any price or value under the Indenture with respect to the Ordinary Shares and/or the Conversion Price (including, without limitation,
the Volume Weighted Average Price of an Ordinary Share) over a span of multiple days, the Company shall make appropriate adjustments
in good faith to account for any adjustment to the Conversion Price that becomes effective or is to become effective over, or
in respect of, such period.

 

Article
4

Enforcement Events and Remedies

 

Section 4.01.     
Enforcement Events. Each of the following events is an “Enforcement Event” with respect to the
Notes:

 

(a)            
the occurrence of a Liquidation Event prior to the occurrence of a Conversion Trigger Event;

 

(b)            
a Principal Non-Payment Event; and

 

(c)            
a breach of a Performance Obligation.

 

Section 4.02.     
Liquidation Event. If a Liquidation Event occurs:

 

(a)            
 prior to the occurrence of a Conversion Trigger Event, subject to the subordination provisions of ‎Article
5, the Liquidation Distribution shall become immediately due and payable, without the need of any further action on the part of
the Trustee, the Holders or any other Person, including the declaration by the Trustee, the Holders or any other Person that the
Liquidation Distribution shall become immediately due and payable.

 

(b)            
all principal, premium, if any, and interest due or to become due on all Senior Indebtedness and Subordinated Preferred
Indebtedness must be paid in full before the holders of Subordinated Non-Preferred Indebtedness (including Holders of the Notes)
are entitled to receive or retain any payment in respect thereof, and the holders of unsecured Subordinated Non-Preferred Indebtedness
(including Holders of the Notes) will be entitled to receive pari passu among themselves any payment in respect thereof.

 

Section 4.03.     
Principal Non-Payment Event. Subject to the satisfaction of any redemption conditions described in Sections ‎2.09,
‎2.10 and ‎2.11, if the Company does not make payment of principal in respect of the Notes for a period
of fourteen (14) calendar days or more after the date on which such payment is due (a “Principal Non-Payment Event”),
then the Trustee, on behalf of the Holders and Beneficial Owners, may, at its discretion, or shall at the direction of Holders
of 25% or more of the aggregate principal amount of outstanding Notes, subject to any applicable laws, institute proceedings for
the liquidation of the Company. In the event of a Liquidation Event, whether or not instituted by the Trustee, the Trustee may
prove the claims of the Holders, Beneficial Owners and the Trustee. For the avoidance of doubt, the

 

     37

     

    

Trustee
may not declare the principal amount of any outstanding Notes to be due and payable and may not pursue any other legal remedy,
including a judicial proceeding for the collection of the sums due and unpaid on the Notes.

 

Section 4.04.     
Breach of a Performance Obligation. In the event of a breach of any term, obligation or condition binding upon the
Company under the Notes or the Indenture (other than any payment obligation of the Company under or arising from the Notes or
the Indenture, including payment of any principal or interest, including any damages awarded for breach of any obligation) (such
obligation, a “Performance Obligation”), the Trustee may without further notice institute such proceedings
against the Company as it may deem fit to enforce the Performance Obligation, provided that the Company shall not by virtue of
the institution of any such proceedings be obliged to pay any sum or sums, in cash or otherwise (including any damages) earlier
than the same would otherwise have been payable under the Notes or the Indenture, if any. For the avoidance of doubt, the breach
by the Company of any Performance Obligation shall not confer upon the Trustee (acting on behalf of the Holders) and/or the Holders
or Beneficial Owners of the Notes any claim for damages and, in the event of such a breach, the sole and exclusive remedy that
the Trustee (acting on behalf of the Holders) and/or the Holders or Beneficial Owners of the Notes may seek under the Notes and
the Indenture is specific performance under the laws of the State of New York. By its acquisition of the Notes, each Holder and
Beneficial Owner of the Notes acknowledges and agrees (i) that such Holder and Beneficial Owner shall not seek, and shall not
direct the Trustee (acting on their behalf) to seek, any claim for damages against the Company in respect of any breach by the
Company of a Performance Obligation, and (ii) that the sole and exclusive remedy that such Holder and Beneficial Owner and/or
the Trustee (acting on their behalf) may seek under the Notes and the Indenture for a breach by the Company of a Performance Obligation
is specific performance under the laws of the State of New York.

 

Section 4.05.     
No Other Remedies and Other Terms.

 

(a)            
Other than the limited remedies specified in this ‎Article 4, 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 and Beneficial
Owners, whether for the recovery of amounts owing in respect of such Notes or under the 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 Notes or under the Indenture
in relation thereto; provided, however, that the Company’s obligations to the Trustee under, and the Trustee’s lien
provided for in, Sections 5.05 and 6.07 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 Sections 5.05 and 6.07
of the Contingent Convertible Securities Indenture shall not be limited or impaired by this ‎Article 4 or otherwise
and expressly survive any Enforcement Event and are not subject to the subordination provisions of ‎Article 5 of this
First Supplemental Indenture.

 

(b)            
Notwithstanding the limitations on remedies specified in this ‎Article 4, (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 and Beneficial Owners
under the provisions of the Indenture, and (ii) nothing shall impair the rights of a Holder or Beneficial Owner of the Notes under
the Trust Indenture Act, absent such Holder’s or Beneficial Owner’s consent, to sue for

 

     38

     

    

any
payment due but unpaid in respect of the Notes as provided for in Section 5.07 of the Contingent Convertible Securities Indenture;
provided that, in the case of (i) and (ii) above, any payments in respect of, or arising from, the Notes, including any payments
or amounts resulting or arising from the enforcement of any rights under the Trust Indenture Act in respect of the Notes, shall
be subject to the subordination provisions set forth in ‎Article 5 of this First Supplemental Indenture.

 

(c)            
In furtherance of Section 6.01 of the Contingent Convertible 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 Securities Indenture to the contrary, the duties and responsibilities
of the Trustee under this 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 4.06.     
Waiver of Past Defaults.

 

(a)            
Holders of not less than a majority of the Current Principal Amount of the Notes may on behalf of the Holders of all of
the Notes waive any past Enforcement Event that results from a breach by the Company of a Performance Obligation. Holders of a
majority of the Current Principal Amount of the Notes shall not be entitled to waive any past Enforcement Event that results from
a Liquidation Event or a Principal Non-Payment Event.

 

(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 Notes arising therefrom shall be deemed to have been cured and not to have occurred
for every purpose of the Indenture, but no such waiver shall extend to any subsequent or other Enforcement Event or impair any
right consequent thereon.

 

Article
5

Subordination

 

For purposes
of the Contingent Convertible Securities Indenture, “Senior Creditors” shall mean holders and beneficial owners
of Senior Indebtedness and Subordinated Preferred Indebtedness, collectively.

 

Section 5.01.     
Agreement to Subordinate. The Company covenants and agrees, and each Holder of Notes issued hereunder likewise covenants
and agrees, that the Notes shall be issued subject to the provisions of this ‎Article 5 and each Holder of a Note,
whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. The payment
by the Company of the principal of and interest on all Notes issued hereunder shall, to the extent and in the manner hereinafter
set forth, rank (i) subordinate and junior in right of payment and in liquidation to all the Company’s present and future
Senior Indebtedness and Subordinated Preferred Indebtedness, (ii) pari passu without preference among themselves and

 

     39

     

    

with
all of the Company’s present and future other unsecured Subordinated Non-Preferred Indebtedness and (iii) senior only to
all classes of the Company’s capital stock, provided that determinations concerning ranking and subordination of the Notes
as a regulatory mater, shall be governed by, and construed in accordance with, Mexican law. No provision of this ‎Article
5 shall prevent the occurrence of any Enforcement Event hereunder.

 

Section 5.02.     
Default on Senior Indebtedness.

 

(a)            
No payment of principal or interest on the Notes may be made at any time when (i) any Senior Indebtedness in an amount
greater than U.S.$25.0 million is not paid when due, and any applicable grace period with respect to such default has ended and
such default has not been cured or waived or ceased to exist or (ii) the maturity of any Senior Indebtedness in an amount greater
than U.S.$25.0 million has been accelerated because of a default and such Senior Indebtedness has not been paid in full or such
acceleration rescinded.

 

(b)            
In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited
by the preceding paragraph of this ‎Section 5.02, such payment shall be held in trust for the benefit of, and shall
be paid over or delivered to, the holders of Senior Indebtedness (subject to the priority specified in ‎Section 5.01)
or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness
(or their representative or representatives or a trustee) notify the Trustee in writing, within 90 days of such payment of
the amounts then due and owing on such Senior Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of such Senior Indebtedness.

 

Section 5.03.     
Liquidation Distribution.

 

(a)            
Except as set forth in the following paragraph, in the event of any voluntary or involuntary liquidation (concurso mercantil)
of the Company or the liquidation (resolución) of the Bank (a “Liquidation Event”), Holders of
the Notes (unless Notes have been previously converted into the Company’s Ordinary Shares pursuant to Automatic Conversion
or previously redeemed pursuant to Sections ‎2.09, ‎2.10 or ‎2.11 of this First Supplemental
Indenture) shall be entitled to receive, out of the assets of the Company available for distribution to Holders, the Liquidation
Distribution. Such entitlement shall arise before any distribution of assets is made to holders of Ordinary Shares or any other
instrument of the Company ranking junior to the Notes.

 

(b)            
Upon payment of the Liquidation Distribution, all interest accrued on the Notes to that date shall be canceled and such
interest shall not become due and payable at any time nor shall any further interest accrue.

 

(c)            
If, before the occurrence of a Liquidation Event, a Conversion Trigger Event occurs but the Automatic Conversion has not
yet taken place, Holders shall be entitled to receive out of the relevant assets of the Company a monetary amount equal to that
which Holders would have received on any distribution of the assets of the Company if such Automatic Conversion had taken place
immediately prior to such liquidation.

 

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(d)            
After payment of the relevant entitlement in respect of a Note as described in this Section, such Note shall confer no
further right or claim to any of the remaining assets of the Company.

 

Section 5.04.     
Waiver of Right to Set-off. Subject to applicable law, neither any Holder or Beneficial Owner of the Notes nor the
Trustee acting on behalf of the Holders 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 Notes or the Indenture and
each Holder and Beneficial Owner of the Notes, by virtue of its holding of any Notes or any interest therein, and the Trustee
acting on behalf of the Holders, 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 Note or any interest therein by the Company in respect
of, or arising under, the Notes 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,
administrator or conciliador of the Company or any other applicable Person designated for such purposes, as the case may
be) and, until such time as payment is made, shall hold an amount equal to such amount in trust or deposit (where possible) or
otherwise for the Company (or the liquidator, administrator or conciliador of the Company or any other applicable Person
designated for such purposes, as the case may be) and, accordingly, any such discharge shall be deemed not to have taken place.

 

Article
6

Satisfaction and Discharge

 

Section 6.01.     
Satisfaction and Discharge of Indenture. For purposes of the Notes, Section 4.01 of the Contingent Convertible Securities
Indenture shall be amended and restated in its entirety and shall read as follows:

 

This
Indenture shall upon Company Request cease to be of further effect with respect to the Notes (except as to any surviving rights
of registration of transfer of the Notes herein expressly provided for), and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of the Indenture with respect to the Notes when:

 

(a)            
all Notes theretofore authenticated and delivered (other than Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 3.06 of the Contingent Convertible Securities Indenture) 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 Interest, if any) by the
Company with respect to the Notes; 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 Indenture with respect to the Notes
have been complied with.

 

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Notwithstanding
any satisfaction and discharge of the Indenture, the obligations of the Company to the Trustee under Sections 5.05 and 6.07
of the Contingent Convertible Securities Indenture, the obligations of the Trustee to any Authenticating Agent under Section 6.15
of the Contingent Convertible Securities Indenture and the obligations of the Trustee under Section 4.02 of the Contingent
Convertible Securities Indenture and the last paragraph of Section 9.03 of the Contingent Convertible Securities Indenture
shall survive such satisfaction and discharge.

 

Section 6.02.     
Additional Interest Obligations. Any obligations with respect to the payment of Additional Interest as provided
in ‎Article 8 shall survive any termination, defeasance or discharge of the Notes and the Indenture.

 

Article
7

Supplemental Indentures

 

Section 7.01.     
Amendments or Supplements without Consent of Holders. Subject to ‎Section 7.04, in addition to any permitted
amendment or supplement to the Contingent Convertible Securities Indenture pursuant to Section 8.02 of the Contingent Convertible
Securities Indenture, the Company and the Trustee may amend or supplement the Indenture or the Notes without notice to or the
consent of any Holder (i) to conform this First Supplemental Indenture and the form or terms of the Notes to the section entitled
“Description of the Notes” as set forth in the Prospectus or (ii) to reflect changes to the procedures set forth in
‎Section 2.15 or ‎Section 2.16 above.

 

Section 7.02.     
Amendments or Supplements with Consent of Holders. Subject to ‎Section 7.04, the Company and the Trustee
may amend the Notes and the Indenture with respect to the Notes as provided in Section 8.03 of the Contingent Convertible
Securities Indenture. Notwithstanding the foregoing provision and in addition to the provisions of Section 8.03 of the Contingent
Convertible Securities Indenture, without the consent of 100% of the Holders of all outstanding securities affected thereby and
the approval of 75% of the Board of Directors, no amendment or waiver may make any change that adversely affects the Automatic
Conversion or the conversion rights of any of the Notes.

 

Section 7.03.     
Holders’ Approval of Amendments. Subject to ‎Section 7.04, the consent of the Holders is not necessary
under the Indenture to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient
if such consent approves the substance of such proposed amendment, supplement or waiver. After an amendment, supplement or waiver
becomes effective, the Company shall give to the Holders affected by such amendment, supplement or waiver a notice in accordance
with the Indenture briefly describing such amendment, supplement or waiver. The Company shall mail supplemental indentures to
Holders upon request. Any failure of the Company to mail such notice, or any defect in such notice, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.

 

Section 7.04.     
Banco de México Authorization. No modification shall be effected to this First Supplemental Indenture or
in relation to the Notes, unless the Company has received

 

     42

     

    

authorization
from Banco de México. The Trustee is entitled to request and rely on an Officer’s Certificate and an Opinion of Counsel
as to the satisfaction of this and any other condition precedent to any modification without further inquiry and as to such other
matters as the Trustee may require.

 

Article
8

Additional Interest

 

Section 8.01.     
Additional Interest. All payments made by or on the Company’s behalf in respect of the Notes shall be made
free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, levies, imposts,
assessments or governmental charges of whatever nature and interest, penalties and fines in respect thereof, imposed or levied
by or on behalf of Mexico or any other jurisdiction through which payments are made or any authority or agency therein or thereof
having power to tax (each a “Relevant Jurisdiction” and any such amount, a “Relevant Tax”)
unless the withholding or deduction of such Relevant Tax is required by law. In that event, the Company shall pay such additional
interest (“Additional Interest”) as may be necessary so that the net amounts received by the Holders, after
such withholding or deduction shall equal the amount which would have been received in respect of the Notes in the absence of
such withholding or deduction, except that no Additional Interest shall be payable to a Holder or Beneficial Owner to the extent
that such Relevant Tax:

 

(a)            
is imposed as a result of the existence of any present or former connection between such Holder or Beneficial Owner (or
between a fiduciary, settlor, beneficiary, partner, member or shareholder of such Holder or Beneficial Owner, if such Holder or
Beneficial Owner is an estate, a trust, a partnership, a limited liability company or a corporation) and a Relevant Jurisdiction,
including, without limitation, the Holder or Beneficial Owner (or such fiduciary, settlor, beneficiary, partner, member or shareholder)
being or having been a citizen or resident of a Relevant Jurisdiction or being or having been engaged in a trade or business or
present in a Relevant Jurisdiction or having, or having had, a permanent establishment for tax purposes in a Relevant Jurisdiction,
other than the mere receipt of payment in respect of the Notes or ownership of the Notes or the enforcement of rights thereunder;

 

(b)            
is imposed as a result of the failure of such Holder or a Beneficial Owner to comply with certification, identification
or other reporting requirements concerning the nationality, residence, identity or connection with the applicable Relevant Jurisdiction
of such Holder or Beneficial Owner, if compliance is required by statute or by regulation of a Relevant Jurisdiction as a precondition
to relief or exemption from the Relevant Tax, provided that (x) the Company has or its agent has provided the Holder or its nominee
with at least thirty (30) calendar days’ written notice that such Holder or Beneficial Owner shall be required to comply
with any such information, documentation or reporting requirement, and (y) in no event shall such Holder’s or Beneficial
Owner’s requirement to make such a declaration or claim require such Holder or Beneficial Owner to provide any materially
more onerous information, documents or other evidence than would be required to be provided had such Holder or Beneficial Owner
been required to file IRS Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP and/or W-8IMY, except to the extent required under applicable
law or regulation or a double taxation treaty to which the Relevant Jurisdiction is a party and which is in effect, so that the
Company may determine the appropriate rate for tax withholding;

 

     43

     

    

(c)            
is imposed on a Holder (or Beneficial Owner) of a Note that has been presented (where presentation is required) for payment
on a date more than thirty (30) calendar days after the date on which such payment becomes due and payable or the date on which
payment thereof is duly provided for, whichever occurs later, except to the extent that such Holder would be entitled to Additional
Interest had the Notes been presented for payment on the last day of such 30-day period;

 

(d)            
is imposed as a result of the presentation of any Note for payment to a paying agent (where presentation is required) where
the payment could be made without such withholding or deduction by the presentation of the Note for payment to at least one other
paying agent;

 

(e)            
is an estate, inheritance, gift, sale, transfer or personal property tax or any similar tax, assessment or governmental
charge;

 

(f)            
is imposed other than by withholding or deduction from payments on or in respect of any Note;

 

(g)            
is withheld or deducted pursuant to, or in connection with, Sections 1471 through 1474 of the U.S. Internal Revenue Code
of 1986 and the U.S. Treasury regulations thereunder (“FATCA”), including any agreement with the U.S. Internal
Revenue Service with respect thereto, any intergovernmental agreement between the United States and Mexico or any other jurisdiction
with respect to FATCA, or any law, regulation or other official guidance enacted in any jurisdiction implementing, or in connection
with, FATCA or any intergovernmental agreement with respect to FATCA; or

 

(h)            
is imposed as a result of any combination of ‎(a) through ‎(g) above.

 

‎Section
8.01(b) above does not require, and should not be construed as requiring, that any person, including any non-Mexican pension fund,
retirement fund or financial institution, of any nature, register with, or provide information to, the Ministry of Finance and
Public Credit or Tax Management Service (Servicio de Administración Tributaria) to establish eligibility for an
exemption from, or a reduction of, Mexican withholding tax.

 

In addition,
Additional Interest shall not be paid with respect to any payment on a Note to a Holder who is a fiduciary, a partnership, a limited
liability company or other than the sole beneficial owner of that payment to the extent that payment would be required by the
laws of a Relevant Jurisdiction 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 a limited liability company or a beneficial owner who would not
have been entitled to the Additional Interest had that beneficiary, settlor, member or beneficial owner been the Holder.

 

The Company
or its agent shall (i) make such withholding or deduction and (ii) remit the full amount withheld or deducted to the relevant
taxing authority in the Relevant Jurisdiction in accordance with applicable law.

 

The Company
or its agent shall provide the Trustee with documentation, which may be certified copies of filed returns, evidencing the payment
of any such taxes in respect of which the

 

     44

     

    

Company
has paid any Additional Interest. The Company shall make copies of such documentation available to the Holders or the relevant
Paying Agent upon request.

 

At least
thirty (30) calendar days prior to each date on which any payment under or with respect to the Notes is due and payable (unless
such obligation to pay Additional Interest arises after the thirtieth (30th) calendar day prior to the date on which payment under
or with respect to the Notes is due and payable, in which case it shall be promptly thereafter), if the Company shall be obligated
to pay Additional Interest with respect to such payment, the Company shall deliver to the Trustee an Officer’s Certificate
stating that such Additional Interest shall be payable and the amounts so payable and setting forth such other information as
is necessary to enable the Trustee to pay such Additional Interest to the Holders on the payment date.

 

Except as
specifically provided herein, the Company shall pay any present or future stamp, administrative, court, or any similar documentary
taxes or any other excise or property taxes, charges or similar taxes or levies arising in a Relevant Jurisdiction in connection
with the execution, delivery or registration of the Notes or any other document or instrument referred to herein or therein and
shall indemnify the Holders for any such taxes paid by Holders.

 

In the event
that Additional Interest actually paid with respect to the Notes pursuant to the preceding paragraphs is based on rates of deduction
or withholding of withholding taxes in excess of the appropriate rate applicable to a Holder or Beneficial Owner of the Notes,
and as a result thereof such Holder or Beneficial Owner is entitled to make a claim for a refund or credit of such excess from
the authority imposing such withholding tax, such Holder or Beneficial Owner shall, by purchasing and holding (or holding a beneficial
interest in) the Notes, be deemed to have assigned and transferred all right, title and interest to any such claim for a refund
or credit of such excess to the Company. However, by making such assignment, the Holder makes no representation or warranty that
the Company shall be entitled to receive such a refund or credit and incurs no other obligation with respect thereto, except for
such assignment and transfer and for assisting the Company in obtaining such refund. The Company shall inform the Trustee in writing
of the refund or credit within thirty (30) Business Days of the Company’s determination that the Company is entitled to
receive such refund or credit.

 

Whenever
in this Indenture there is mentioned, in any context, the payment of the principal or interest, if any, and any other payments
on, or in respect of, any Note, such mention shall be deemed to include mention of the payment of Additional Interest provided
for in this Section to the extent that, in such context, the Additional Interest is, was or would be payable in respect thereof
pursuant to the provisions of this Section and as if express mention of the payment of Additional Interest (if applicable) were
made in any provisions hereof where such express mention is not made.

 

Article
9

Consolidation, Merger, Sale or Transfer of Assets

 

Section 9.01.     
Company May Consolidate, etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other
corporation, or convey or transfer, all of its properties, and assets substantially as an entirety to any Person, unless:

 

     45

     

    

(a)            
the successor corporation, if other than the Company, shall be a corporation organized and existing under the laws of Mexico
or the United States of America or any state thereof, and shall expressly assume by a supplemental indenture, delivered to and
in a form satisfactory to the Trustee, the due and punctual payment of the principal of, interest and Additional Interest, if
any, on all of the outstanding Notes and the performance of every covenant in the Indenture on the Company’s part to be
performed or observed;

 

(b)            
the merger or consolidation shall have been approved by the relevant authorities pursuant to applicable law, including
the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público);

 

(c)            
immediately after giving effect to such transaction, no Enforcement Event and no event which, after notice or lapse of
time or both, would become an Enforcement Event, shall have happened and be continuing; and

 

(d)            
the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance or transfer and, if a supplemental indenture is required, such supplemental indenture
comply with the foregoing provisions relating to such transaction and all conditions precedent in the Indenture relating to such
a transaction have been complied with. In case of any such consolidation, merger, conveyance or transfer, such successor corporation
shall succeed to and be substituted for the Company as obligor on the Notes with the same effect as if it had issued the Notes.
Upon the assumption of the Company’s obligations by any such successor corporation in such circumstances, the Company shall
be discharged from all obligations under the Notes and the Indenture.

 

Section 9.02.     
Successor Corporation Substituted. In the case of any conveyance or transfer contemplated in ‎ ‎Section
9.01 and upon the assumption by the successor Person, by supplemental indenture pursuant to ‎ ‎Section 9.01(a),
executed and delivered to the Trustee and in form reasonably satisfactory to the Trustee, of the due and punctual payment of the
principal of and interest and other amounts due (including any Additional Interest) on the Notes and the due and punctual performance
and observance of all of the covenants and conditions of the Indenture to be performed or observed by the Company, such successor
Person shall succeed to and be substituted for the Company, with the same effect as if it had been named herein initially as the
“Company,” and the Company thereupon shall be relieved of any further liability or obligation under the Indenture
or upon the Notes. Such successor Person, upon such conveyance or transfer, may cause to be signed, and thereafter issue in its
own name, any or all of the Notes issuable hereunder, which theretofore shall not have been signed by the Company and delivered
to the Trustee or the Authenticating Agent, and, upon the order of the successor Person instead of the Company and subject to
all of the terms, conditions and limitations in the Indenture prescribed, the Trustee or the Authenticating Agent shall authenticate
and deliver any Notes that previously shall have been signed and delivered by the officers of the Company to the Trustee or the
Authenticating Agent for authentication, and any Notes that such successor Person thereafter shall cause to be signed and delivered
to the Trustee or the Authenticating Agent for that purpose to be issued by such successor Person. All the Notes so issued shall
in all respects have the same legal rank and benefit under the Indenture.

 

     46

     

    

In case of any such
consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be
made in the Notes thereafter to be issued as may be appropriate.

 

Article
10

Miscellaneous

 

Section 10.01. 
Effect of Supplemental Indenture. Upon the execution and delivery of this First Supplemental Indenture by each of
the Company and the Trustee, the Contingent Convertible Securities Indenture shall be supplemented and amended in accordance herewith,
and this First Supplemental Indenture shall form a part of the Contingent Convertible Securities Indenture for all purposes in
respect of any Notes.

 

Section 10.02. 
Other Documents to Be Given to the Trustee. As specified in Section 9.03 of the Contingent Convertible Securities
Indenture and subject to the provisions of Section 6.02 of the Contingent Convertible Securities Indenture, the Trustee shall
be entitled to receive an Officer’s Certificate stating that the recitals contained in Section 1.02 of the Contingent
Convertible Securities Indenture have been complied with and an Opinion of Counsel stating that this First Supplemental Indenture
is permitted by the Contingent Convertible Securities Indenture, conforms to the requirements of the Trust Indenture Act, and
(subject to Section 1.03 of the Contingent Convertible Securities Indenture) constitutes valid and binding obligations of
the Company 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. The Trustee shall
be entitled to rely on such Officer’s Certificate and Opinion of Counsel as conclusive evidence that this First Supplemental
Indenture complies with the applicable provisions of the Contingent Convertible Securities Indenture.

 

Section 10.03. 
Survival. Anything herein to the contrary notwithstanding, for purposes of the Notes, Sections 5.05 and 6.07
of the Contingent Convertible Securities Indenture is hereby amended in its entirety as follows: The Trustee’s right to
payment of its fees, reimbursement and indemnity under, and in its lien provided for in, Section 6.07 of the Contingent Convertible
Securities Indenture shall survive the payment in full of the Notes, the satisfaction and discharge of the Indenture, the Automatic
Conversion upon a Conversion Trigger Event, the resignation or removal of the Trustee and the termination for any reason of the
Indenture.

 

Section 10.04. 
Confirmation of Indenture. The Contingent Convertible Securities Indenture, as supplemented and amended by this
First Supplemental Indenture, is in all respects ratified and confirmed, and the Contingent Convertible Securities Indenture and
this First Supplemental Indenture shall, in respect of any Notes, be read, taken and construed as one and the same instrument.
This First Supplemental Indenture constitutes an integral part of the Contingent Convertible Securities Indenture with respect
to the Notes. In the event of a conflict between the terms and conditions of the Contingent Convertible Securities Indenture and
the terms and conditions of this First Supplemental Indenture, the terms and conditions of this First Supplemental Indenture shall
prevail with respect to the Notes. In the event of a conflict regarding the rights and obligations of the Holders under the Contingent
Convertible Securities Indenture, the First Supplemental Indenture, the Global Note, the Prospectus, including the

 

     47

     

    

section
of the Prospectus entitled “Description of the Notes”, or any other document relating to the Notes, the terms and
conditions of this First Supplemental Indenture shall prevail with respect to the Notes.

 

Section 10.05. 
Concerning the Trustee. The Trustee does not make any representations as to the validity or sufficiency of this
First Supplemental Indenture. The recitals and statements herein are deemed to be those of the Company and not the Trustee. In
entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Contingent
Convertible Securities Indenture relating to the conduct of or affecting the liability of or affording protection to the Trustee.

 

Section 10.06. 
Governing Law. This First Supplemental Indenture and the Notes shall be governed by and construed in accordance
with the law of the State of New York. Whether (i) a Conversion Trigger Event or an event leading to a cancellation of interest
has occurred is based upon applicable Mexican law or a determination by the applicable Mexican regulator, as set forth in this
First Supplemental Indenture, in accordance with Mexican law (as amended from time to time); (ii) a Withholding Tax Event or a
Tax Event has occurred is based upon a determination in accordance with Mexican law (or other applicable law in the case of a
Withholding Tax Event involving a jurisdiction other than Mexico), as amended from time to time, evidenced by an opinion of a
nationally recognized law firm and, if required, a certification by the Company, as set forth in this First Supplemental Indenture;
and (iii) a Capital Event has occurred shall be determined by the Company, as set forth in this First Supplemental Indenture,
in accordance with Mexican law (as amended from time to time). The ranking and subordination of the Notes, shall be governed by,
and construed in accordance with, Mexican law (as amended from time to time). The parties hereto and each Holder of a Note by
its acceptance thereby, each hereby waive any rights it may have under the law of the State of New York not to give effect to
any such determination to the fullest extent permitted by applicable law. Any proceedings in respect of the Company’s concurso
mercantil or bankruptcy shall be conducted in accordance with the Mexican Bankruptcy Law and Chapter II of Title Seven of
the Mexican Financial Groups Law, and any merger or consolidation of the Company shall be subject to applicable approvals under
the Mexican Financial Groups Law and any other applicable Mexican laws, as replaced or amended from time to time, or any successor
thereof.

 

Section 10.07. 
Representations by the Company. The Company hereby represents that:

 

(a)            
the offering and sale of the Notes, as well as the execution of the Indenture and
any other documents relating to the offering and sale of the Notes, were approved by the shareholders of the Company at the ordinary
and extraordinary shareholders’ meeting of the Company held on December 5, 2016;

 

(b)            
the documentation and information included or incorporated by reference in the Prospectus and used as a basis for the issuance
of the Notes, have been prepared based on the audited consolidated financial statements of the Company corresponding to the period
ended as of December 31, 2015 and the consolidated financial statements, subject to a limited review of the Company corresponding
to the period ending on September 30, 2016 (the “Financial Statements”). A copy of the Financial Statements
is attached as Exhibit F hereto;

 

     48

     

    

(c)            
at the ordinary and extraordinary shareholders’ meeting of the Company held on December 5, 2016, the Company’s
shareholders authorized any member of the Board of Directors, acting individually, to execute the Notes; and

 

(d)            
the issuance of the Ordinary Shares necessary to ensure the conversion rights of the Notes was approved at the ordinary
and extraordinary general shareholders’ meeting held on December 5, 2016.

 

Section 10.08. 
Reports. So long as any Notes remain outstanding:

 

(a)            
within four (4) months after the end of each fiscal year, the Company’s Board of Directors, through an appointed
person, shall notify the shareholders of the number of Notes that have been converted into Ordinary Shares in accordance with
the Indenture as of the date thereof. Such notification shall include the number of underlying Ordinary Shares of the Company
that were released as a result of such conversion; and

 

(b)            
the Company shall publish, on an annual basis, its balance sheet corresponding to the previous fiscal year in the Mexican
Official Gazette of the Federation (Diario Oficial de la Federación), duly certified by a public accountant.

 

Section 10.09. 
Entire Agreement. With respect to Notes issued pursuant to this First Supplemental Indenture, any agreements, arrangements
or understandings between the Company and any Holder and Beneficial Owner of the Notes with respect to the Notes must be entered
into in accordance with the terms of the Indenture.

 

Section 10.10. 
Counterparts. This First Supplemental Indenture may be executed in any number of counterparts, each of which shall
be an original, but such counterparts shall together constitute but one and the same instrument.

 

[Signature
Pages Follow]

 

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IN WITNESS
WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first written above.

 

	 	GRUPO FINANCIERO SANTANDER 

MÉXICO, S.A.B. DE C.V., as Company
	 	 
	 	 
	 	By:	

/s/ Pedro Moreno Cantalejo 

	 	 	Name:
	 	 	Title:
	 	 	 
	 	 	 

	 	THE BANK OF NEW YORK MELLON, as 

Trustee
	 	 
	 	 
	 	By:	

/s/ Teresa Wyszomierski

	 	 	Name:
	 	 	Title:

 

 

 

[Signature
Page to First Supplemental Indenture]

 

     

     

    

En la Ciudad
de México, a los 27 días del mes de diciembre de 2016, ante la Comisión Nacional Bancaria y de Valores, representada
por su Director General Adjunto de Autorizaciones Bursátiles, el Licenciado León Ernesto Ubilla Suazo y su Director
de Asuntos Jurídicos Bursátiles, el Licenciado Gerardo Martín Villarino Campa, con fundamento en el artículo
30 de la Ley para Regular las Agrupaciones Financieras, en relación con el artículo 64 de la Ley de Instituciones
de Crédito, y en ejercicio de la facultad prevista en los artículos 4, fracción XXVI de la Ley de la Comisión
Nacional Bancaria y de Valores, 12, 26, fracción III, 55 y 58 del Reglamento Interior de la Comisión Nacional Bancaria
y de Valores, y 1, fracción V, y último párrafo y 5, fracción III del Acuerdo por el que se adscriben
orgánicamente las unidades administrativas de la Comisión Nacional Bancaria y de Valores, comparece en representación
de Grupo Financiero Santander México, S.A.B. de C.V. (“Grupo Financiero Santander México”), el
señor Juan Eduardo Llanos Reynoso en su carácter de apoderado, con el fin de hacer constar ante la Comisión
Nacional Bancaria y de Valores la emisión de los títulos denominados “Obligaciones subordinadas, no preferentes,
perpetuas y susceptibles de ser convertidas en acciones (Perpetual Subordinated Non-Preferred Contingent Convertible Additional
Tier 1 Capital Notes)”, en los términos de la presente acta de emisión (Supplemental Indenture),
suscrita el día 27 de diciembre de 2016, en la ciudad de Nueva York, Estados Unidos de América, entre Grupo Financiero
Santander México y The Bank of New York Mellon, y que se rige conforme a las Leyes del Estado de Nueva York, Estados Unidos
de América, salvo por lo que se refiere a la determinación de la cancelación del pago de intereses, la conversión
de las obligaciones subordinadas, si ha ocurrido cualquier evento que permita una amortización, la subordinación,
medidas correctivas, así como, en su caso, el concurso mercantil, liquidación o disolución del Grupo Financiero
Santander México o la resolución de Banco Santander (México), S.A., Institución de Banca Múltiple,
Grupo Financiero Santander México, que se regirán e interpretarán en términos de la legislación
de los Estados Unidos Mexicanos, la cual tendrá plena eficacia el día 29 de diciembre de 2016.

 

La presente
constancia no exime de los demás actos, permisos o autorizaciones que conforme a la normatividad aplicable requiera de
la Comisión Nacional Bancaria y de Valores, Grupo Financiero Santander México.

 

Grupo Financiero
Santander México,

S.A.B. de
C.V.

 

/s/ Juan Eduardo Llanos Reynoso

 

Sr. Juan
Eduardo Llanos Reynoso

Apoderado

 

OTORGADA
ANTE LA

COMISIÓN NACIONAL BANCARIA Y DE VALORES

 

	/s/ León Ernesto Ubilla Suazo

 

	/s/ Gerardo Martín Villarino Campa 

 

	Lic.
        León Ernesto Ubilla Suazo

        

        Director
        General Adjunto de Autorizaciones Bursátiles

         
	Lic.
Gerardo Martín Villarino Campa 

        Director
        de Asuntos Jurídicos Bursátiles

         

     

     

    

EXHIBIT
A

 

FORM
OF GLOBAL NOTE

 

THIS SECURITY
IS A GLOBAL REGISTERED SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

THE RIGHTS
OF THE HOLDER OF THIS SECURITY ARE, TO THE EXTENT AND IN THE MANNER SET FORTH IN SECTION 11.01 OF THE INDENTURE, SUBORDINATED
TO THE CLAIMS OF OTHER CREDITORS OF THE COMPANY, AND THIS SECURITY IS ISSUED SUBJECT TO THE PROVISIONS OF THAT SECTION 11.01,
AND THE HOLDER OF THIS SECURITY, BY ACCEPTING THE SAME, AGREES TO AND SHALL BE BOUND BY SUCH PROVISIONS. THE PROVISIONS OF SECTION
11.01 OF THE INDENTURE AND THE TERMS OF THIS PARAGRAPH ARE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
MEXICO.

 

This Security
is one of a duly authorized issue of securities of the Company (as defined below) (herein called the “Securities”
and each, a “Security”) issued under and governed by the Contingent Convertible Securities Indenture, dated
as of [ ], 2016 (the “Contingent Convertible Securities Indenture”), as supplemented by the First Supplemental
Indenture, dated as of [ ], 2016 (the “First Supplemental Indenture” and, together with the Contingent Convertible
Securities Indenture, the “Indenture”). Capitalized terms used herein but not otherwise defined shall have
the meaning ascribed to them in the First Supplemental Indenture.

 

The rights
of the Holder and Beneficial Owners of this Security are, to the extent and in the manner set forth in Sections 5.01, 5.02 and
5.03 of the First Supplemental Indenture, subordinated to the claims of other creditors of the Company, and this Security is issued
subject to the provisions of those Sections 5.01, 5.02, 5.03, and the Holder (and Beneficial Owners) of this Security, by accepting
the same, agrees to, and shall be bound by, such provisions. The provisions of Sections 5.01, 5.02, 5.03 and 5.04 of the First
Supplemental Indenture are subject to, and the terms of this paragraph are governed by, and shall be construed in accordance with,
Mexican law.

 

The rights
of the Holder of this Security are subject to Section 2.15 of the First Supplemental Indenture. Effective upon, and following,
the occurrence of the Automatic Conversion, provided that the Company delivers the Settlement Shares to the Settlement Share Depositary
(or the relevant recipient in accordance with this Security or the First Supplemental Indenture), Holders and Beneficial Owners
shall not have any rights against or recourse to the Company with respect to the repayment of the Converted Principal Amount of
this Security or payment of interest or any other amount on or in respect of the Converted Principal Amount of this Security,
which liabilities of the Company shall be automatically released, and accordingly

 

     

     

    

the
then Current Principal Amount of this Security shall be reduced as described in Section 2.15 of the First Supplemental Indenture.
Any interest in respect of an interest period ending on any Interest Payment Date falling between the Conversion Trigger Event
and the Conversion Date with respect to any Converted Principal Amount shall be canceled pursuant to Section 2.03 of the First
Supplemental Indenture upon the occurrence of such Conversion Trigger Event and shall not be due and payable nor shall any further
interest accrue on such Converted Principal Amount.

 

GRUPO FINANCIERO
SANTANDER MÉXICO, S.A.B. DE C.V.

U.S.$[ ] [ ]% Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes (Callable [ ], 2022
and every interest payment date thereafter)

 

	No. [   ]	U.S.$[   ]
	 	CUSIP NO. [   ]
	 	ISIN NO. [   ]

 

GRUPO FINANCIERO
SANTANDER MÉXICO, S.A.B. DE C.V. (herein called the “Company”, which term includes any successor Person
under the Indenture (as defined on the reverse hereof)), for value received, hereby promises to pay to CEDE & CO., or registered
assignees, the principal sum of U.S.$[ ] ([ ] Dollars), if and to the extent due, and to pay interest thereon, if any, in accordance
with the terms hereof and the Indenture. The Notes shall have no fixed maturity or fixed redemption date. Subject to a prior redemption
or one or more Automatic Conversions, from (and including) the Issue Date to (but excluding) [ ], 2022 (the “First Call
Date”), interest shall accrue on the then Current Principal Amount of the Notes at an initial rate equal to [ ]% per
annum. Subject to a prior redemption or one or more Automatic Conversions, from and including the First Call Date and each fifth
anniversary date thereafter (each such date, a “Reset Date”), to (but excluding) the next succeeding Reset
Date, interest shall accrue on the then Current Principal Amount of the Notes at a rate per annum equal to the sum of the then-prevailing
Treasury Yield on the relevant Reset Determination Date and [ ] basis points, converted to a quarterly rate in accordance with
market convention. Subject to the provisions on the reverse of this Security relating to cancellation of interest and to Section
2.03, Section 2.04, Section 2.15(i) and Article 5 of the First Supplemental Indenture, interest, if any, shall be payable in four
equal quarterly installments in arrears on [ ], [ ], [ ] and [ ] of each year (each, an “Interest Payment Date”).
The first date on which interest may be paid shall be [ ], 2017. Subject to the limitations specified on the reverse of this Security,
if any interest payment is to be made with respect of the Notes on a date other than an Interest Payment Date, including on any
scheduled redemption date, it shall be calculated by applying the interest rate as described above and multiplying the product
by 30/360 and rounding the resulting figure to the nearest cent (half a cent being rounded upward). For this purpose “30/360”
means, in respect of any period, the number of days in the relevant period, from and including the first day in such period to
but excluding the last day in such period, such number of days being calculated on the basis of a 360 day year consisting of twelve
(12) months of thirty (30) days each, divided by 360.

 

“Treasury
Yield” means, as of the Reset Determination Date, an interest rate (expressed as a decimal and, in the case of United
States Treasury bills, converted to a bond equivalent

 

     

     

    

yield)
determined to be the per annum rate equal to the semiannual yield to maturity for United States Treasury securities maturing on
the Reset Date following the next succeeding Reset Determination Date, and trading in the public securities markets either as
determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury
securities trading in the United States public securities market, (A) one maturing as close as possible to, but earlier than,
the Reset Date following the next succeeding Reset Determination Date, and (B) the other maturing as close as possible to, but
later than the Reset Date following the next succeeding Reset Determination Date, in each case as published in the most recent
H.15, or, if a weekly average yield to maturity for United States Treasury securities maturing on the Reset Date following the
next succeeding Reset Determination Date is published in the most recent H.15, such weekly average yield to maturity as published
in such H.15.

 

“H.15”
means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of
the United States Federal Reserve System, and most recent H.15 means the H.15 published closest in time but prior to the close
of business on the third Business Day prior to the applicable Reset Date.

 

If any scheduled
Interest Payment Date is not a Business Day, the Company shall pay such interest, to the extent that the Company elects to make
an interest payment, on the next Business Day, and no further interest or other payment shall be owed or made in respect of such
delay.

 

If any scheduled
redemption date is not a Business Day, payment of interest, if any, and principal shall be postponed to the next Business Day,
but interest on that payment shall not accrue during the period from and after any scheduled redemption date.

 

The interest,
if any, so payable, and paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to
the Person in whose name this Security is registered at the close of business on the Record Date for such interest which shall
be the 15th calendar day preceding each Interest Payment Date, whether or not such day is a Business Day.

 

Interest
on the Notes shall be due and payable only at the sole discretion of the Company, and the Company shall have sole and absolute
discretion at all times and for any reason to cancel any interest payment (in whole or in part) that would otherwise be payable
on any Interest Payment Date. If the Company elects not to make an interest payment in respect of the Notes on the relevant Interest
Payment Date, or if the Company elects to make a payment of a portion, but not all, of such interest payment, such non-payment
shall evidence the Company’s exercise of its discretion to cancel such interest payment (or the portion of such interest
payment not paid), and accordingly such interest payment (or the portion thereof not paid) shall be canceled and shall not be
or become due and payable.

 

Interest
on the Notes shall only be due and payable on an Interest Payment Date to the extent that it is not canceled (in whole or in part)
in accordance with the provisions set forth in Section 2.03(a), Section 2.04, Section 2.15(j) and Article 5 of the First Supplemental
Indenture, respectively, and any interest canceled (in whole or in part) pursuant to such sections shall not be due and shall
not accumulate or be payable at any time thereafter, and Holders and Beneficial

 

     

     

    

Owners
shall have no rights thereto or to receive any additional interest or compensation as a result of such cancellation of interest
in respect of the Notes.

 

To the extent
redeemed, the Notes shall cease to bear interest from, and including, the date of any redemption of the Notes as described under
Sections 2.09, 2.10 and 2.11 of the First Supplemental Indenture unless payment and performance of all amounts and obligations
due by the Company in respect of the redeemed Notes are not properly and duly made, in which event interest shall continue to
accrue on the redeemed Notes until payment and performance of all amounts and obligations have been properly and duly made. Furthermore,
in the event of an Automatic Conversion upon the occurrence of a Conversion Trigger Event or a Liquidation Event, any accrued
but unpaid interest on the Notes shall be canceled upon the occurrence of such Conversion Trigger Event or Liquidation Event,
as the case may be, and such interest shall not become due and payable at any time nor shall any further interest accrue.

 

Interest
due on the Notes from the Company shall be automatically canceled if (a) the Bank is classified as Class II or below pursuant
to Article 122 of the Mexican Banking Law and the regulations thereunder, which specify capitalization requirements, or if, as
a result of the applicable payment of interest, the Bank would be classified as Class II or below or (b) any financial entity
(entidad financiera) that is a part of the financial group of which the Company is the holding company experiences a capital
deficiency (insuficiencia de capital) under the General Regulations (Reglas De Carácter General) specified
in the penultimate paragraph of Article 91 of the Mexican Financial Groups Law, the foregoing being read in accordance with Article
118, Section III, of the Mexican Financial Groups Law, (each an “Interest Cancellation Event”). As of the Issue
Date, the minimum capital ratios to be classified as Class I (and, as a result, not Class II or below) are (i) 10.5% in respect
of Total Net Capital (capital neto), (ii) 8.5 % in the case of Tier 1 Capital (capital básico) and (iii)
7.0% in the case of Fundamental Capital (capital fundamental), plus in each case, any other applicable capital supplement
(as of the Issue Date, within a four-year period starting December 31, 2016, a Systemically Important Bank Capital Supplement
for Grade III banks of 1.20% and any Countercyclical Capital Supplement applicable to the Bank).

 

By its acquisition
of the Notes, each Holder and each Beneficial Owner shall be deemed to have acknowledged and agreed that (a) interest is payable
solely at the discretion of the Company, and no amount of interest shall become due and payable in respect of the relevant interest
period to the extent that it has been canceled (in whole or in part) by the Company at the Company’s sole discretion and/or
has been canceled as a result of the occurrence and continuation of an Interest Cancellation Event; (b) a cancellation of interest
(in whole or in part) in accordance with the terms of the Indenture and the Notes shall not constitute a default in payment or
otherwise under the terms of the Notes or the Indenture; and (c) neither an Automatic Conversion nor a cancellation of interest,
(in whole or in part) in accordance with the terms of the Indenture and the Notes shall give rise to a default of 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.

 

Payments
of principal of and interest, if any, on the Notes shall be made in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts and such payments on Notes represented by a Global
Note shall be made

 

     

     

    

through
one or more Paying Agents appointed under the Contingent Convertible Securities Indenture to DTC or its nominee, as the Holder
of this Security. Initially, the Paying Agent and the Contingent Convertible Security Registrar for the Notes shall be The Bank
of New York Mellon, 101 Barclay Street, Floor 7-E, New York, New York 10286. The Company may change the Paying Agent without prior
notice to the Holders and Beneficial Owners of the Notes, and in such an event the Company may act as Paying Agent or Contingent
Convertible Security Registrar.

 

Payments
of principal, interest and other amounts in respect of the Notes represented by a Global Note shall be made by wire transfer of
immediately available funds on the date such payment is scheduled to be paid. The Company shall, on each date on which any payment
in respect of the Notes becomes due, transfer to the Paying Agent such amount as may be required for the purposes of such payment
no later than 11:00 a.m. New York City time.

 

This Security
shall be governed by and construed in accordance with the laws of the State of New York, irrespective of conflicts of laws principles,
except as stated in Section 10.06 of the First Supplemental Indenture and as stated herein.

 

Reference
is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

 

All terms
used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture, as defined
herein.

 

THIS SECURITY
IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY
OF THE UNITED STATES. THE OBLIGATIONS UNDER THIS SECURITY ARE UNSECURED AND NOT GUARANTEED, OR OTHERWISE ELIGIBLE FOR REIMBURSEMENT,
BY THE INSTITUTO PARA LA PROTECCIÓN AL AHORRO BANCARIO OR ANY OTHER MEXICAN GOVERNMENTAL AGENCY OR BY THE COMPANY’S
SUBSIDIARIES OR AFFILIATES OR ANY OTHER ENTITY THAT IS A PART OF THE GROUP.

 

Unless the
certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.

 

[The rest
of this page is intentionally left blank.]

 

     

     

    

IN WITNESS
WHEREOF, the Company has caused this instrument to be duly executed.

 

Date: [ ]

 

	 	GRUPO FINANCIERO SANTANDER MÉXICO, S.A.B. DE C.V.
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

 

     

     

    

Trustee’s
Certificate of Authentication

 

This is one
of the Notes of the series designated herein referred to in the Indenture.

 

Date: [ ]

 

	 	THE BANK OF NEW YORK MELLON, as Trustee
	 	 
	 	 
	 	By:	 
	 	 	Authorized Signatory

]

 

     

     

    

(Reverse
of Security)

 

This Security
is one of a duly authorized issue of securities of the Company (herein called the “Securities” and each, a
“Security”) issued under and governed by the Contingent Convertible Securities Indenture, dated as of [ ],
2016 (herein called the “Contingent Convertible Securities Indenture”), between the Company and The Bank of
New York Mellon, as Trustee (herein called the “Trustee,” which term includes any successor trustee under the
Contingent Convertible Securities Indenture), as supplemented and amended by the First Supplemental Indenture, dated as of [ ],
2016 (the “First Supplemental Indenture” and, together with the Contingent Convertible Securities Indenture,
the “Indenture”), and reference is hereby made to the Indenture, the terms of which are incorporated herein
by reference, for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. Insofar
as the provisions of the First Supplemental Indenture may conflict with the provisions set forth in this Security, the provisions
of the First Supplemental Indenture shall control for purposes of this Security.

 

This Security
is one of the series designated on the face hereof, limited to a principal amount of U.S.$[aggregate principal amount of series
of Notes], which amount the Company may increase from time to time, without the consent of the Holders of the Notes then outstanding,
but subject to the approval of Banco de México, if in the future it determines that it may wish to sell additional Securities
of this series. References herein to “this series” mean the series designated on the face hereof.

 

All payments
made by or on the Company’s behalf in respect of the Notes shall be made free and clear of and without withholding or deduction
for or on account of any present or future taxes, duties, levies, imposts, assessments or governmental charges of whatever nature
and interest, penalties and fines in respect thereof, imposed or levied by or on behalf of Mexico or any other jurisdiction through
which payments are made or any authority or agency therein or thereof having power to tax (each a “Relevant Jurisdiction”
and any such amount, a “Relevant Tax”) unless the withholding or deduction of such Relevant Tax is required
by law. In that event, the Company shall pay such additional interest (“Additional Interest”) as may be necessary
so that the net amounts received by the Holders, after such withholding or deduction shall equal the amount which would have been
received in respect of the Notes in the absence of such withholding or deduction; except that no such Additional Interest shall
be payable with respect to any Note under the circumstances set forth in Section 8.01 of the First Supplemental Indenture.

 

Payments
under the Notes shall be subject in all cases to any applicable fiscal or other laws and regulations in the place of payment or
other laws and regulations to which the Company or its Paying Agents agree to be subject and the Company shall not, save as provided
under Section 8.01 of the First Supplemental Indenture, be liable for any taxes or duties of whatever nature imposed or levied
by such laws, regulations or agreements. No commission or expenses shall be charged to the Holders in respect of such payments.

 

The Company
may, at its option, redeem the Notes on the First Call Date and on any Interest Payment Date thereafter, in whole (up to the then
Current Principal Amount) or in part, at par plus accrued and unpaid (and not canceled) interest due on, or with respect to, the
Notes

 

     

     

    

and
any Additional Interest up to but excluding the Redemption Date; provided that the Company shall not redeem the Notes pursuant
to this paragraph unless (i)(a) the Bank maintains, and after giving effect to the concurrent redemption of the Notes and the
Back-to-Back Note, shall maintain, each of its capital ratios equal to, or exceeding, the then-applicable capital ratios required
by the CNBV in accordance with Section IV, c), 1 of Annex 1-R of the general rules applicable to Mexican banks or any successor
regulation, which as of the Issue Date are 10.5% in the case of Total Net Capital (capital neto), 8.5% in the case of Tier
1 Capital (capital básico), and 7.0% in the case of Fundamental Capital (capital fundamental), plus the then-applicable
Countercyclical Capital Supplement and Systemically Important Bank Capital Supplement, or (b) the Bank issues securities that
replace the Back-to-Back Note such that it remains in compliance with the Mexican Capitalization Requirements, and (ii) the Company
has obtained the authorization from Banco de México to redeem the Notes prior to the applicable Redemption Date; provided,
however, that if at any time a Conversion Trigger Event shall have occurred, then the Company shall have no obligation to redeem
any Notes called for Optional Redemption.

 

In the event
of a partial Optional Redemption of the Notes, the Notes shall be redeemed from each Holder thereof pro rata according to the
then Current Principal Amount of the Notes held by the relevant Holder in relation to the then Current Principal Amount of all
Notes; provided, however, that Global Notes to be redeemed that are held through DTC shall be selected in accordance with the
applicable procedures of DTC. In respect of Notes held by DTC or its nominee, the distribution of the proceeds from such redemption
shall be made to DTC or its nominee and disbursed by DTC or its nominee in accordance with the procedures applied by DTC or its
nominee. In determining the proration of the Notes to be redeemed, the Company may make such adjustments as may be appropriate
in order that only the Notes in authorized denominations shall be redeemed, subject to the minimum denominations set forth in
the Indenture.

 

The Company
may, at its option, redeem the Notes at any time in whole (up to the then Current Principal Amount) but not in part, at par plus
accrued and unpaid (and not canceled) interest due on, or with respect to, the Notes, plus any Additional Interest, up to, but
excluding, the Redemption Date, upon the occurrence of a Withholding Tax Event; provided that the Company shall not redeem the
Notes pursuant to this paragraph, unless (i)(a) the Bank maintains, and after giving effect to the concurrent redemption of the
Notes and the Back-to-Back Note, shall maintain, each of its capital ratios equal to, or exceeding, the then-applicable capital
ratios required by the CNBV in accordance with Section IV, c), 1 of Annex 1-R of the general rules applicable to Mexican banks
or any successor regulation, which as of the date of the Issue Date are 10.5% in the case of Total Net Capital (capital neto),
8.5% in  the case of Tier 1 Capital (capital básico), and 7.0% in the case of Fundamental Capital (capital
fundamental), plus the then-applicable Countercyclical Capital Supplement and Systemically Important Bank Capital Supplement,
or (b) the Bank issues securities that replace the Back-to-Back Note such that it remains in compliance with the Mexican Capitalization
Requirements, and (ii) the Company has obtained the authorization from Banco de México to redeem the Notes prior to the
applicable redemption date; provided, however, that if at any time a Conversion Trigger Event shall have occurred, then the Company
shall have no obligation to redeem any Notes called for Withholding Tax Redemption.

 

     

     

    

The Company
may, at its option, redeem the Notes at any time in whole (up to the then Current Principal Amount) but not in part, at par plus
accrued and unpaid (and not canceled) interest due on, or with respect to, the Notes, plus any Additional Interest, up to, but
excluding, the Redemption Date, upon the occurrence of a Special Event; provided that the Company shall not redeem the Notes pursuant
to this paragraph, unless (i)(a) the Bank maintains, and after giving effect to the concurrent redemption of the Notes and the
Back-to-Back Note, shall maintain, each of its capital ratios equal to, or exceeding, the then-applicable capital ratios required
by the CNBV in accordance with Section IV, c), 1 of Annex 1-R of the general rules applicable to Mexican banks or any successor
regulation, which as of the date of the Issue Date are 10.5% in the case of Total Net Capital (capital neto), 8.5% in  the
case of Tier 1 Capital (capital básico), and 7.0% in the case of Fundamental Capital (capital fundamental),
plus the then-applicable Countercyclical Capital Supplement and Systemically Important Bank Capital Supplement, or (b) the Bank
issues securities that replace the Back-to-Back Note such that it remains in compliance with the Mexican Capitalization Requirements,
and (ii) the Company has obtained the authorization from Banco de México to redeem the Notes prior to the applicable redemption
date; provided, however, that if at any time a Conversion Trigger Event shall have occurred, then the Company shall have no obligation
to redeem any Notes called for Special Event Redemption.

 

Any interest
payments that have been canceled pursuant to the terms of this Security and the Indenture shall not be payable if the Notes are
redeemed pursuant to any of the preceding paragraphs.

 

Before the
Company may redeem the Notes pursuant to any of the preceding paragraphs relating to the Company’s rights of redemption,
the Company shall evidence its election to redeem the Notes (in whole or in part, as the case may be) by a Board Resolution delivered
at the time notice of redemption is given to the Holders. If the Company elects to have the Trustee give any notice of redemption
in respect of the Notes, then the Company shall deliver to the Trustee, not less than forty (40) days or more than sixty (60)
days prior to the Redemption Date (unless the Trustee agrees to a shorter period in writing), a notice requesting that the Trustee
select the Notes to be redeemed and/or give notice of redemption and setting forth the information required by Section 10.05 of
the Contingent Convertible Securities Indenture. If the Company elects to have the Trustee give notice of redemption, the Trustee
shall give the notice in the name of the Company and at the Company’s expense.

 

In the event
the Company elects to redeem the Notes pursuant to this Security and the Indenture and has received approval from Banco de México,
the Company shall or shall cause the Trustee to mail notice of any such redemption, in the manner provided for in Section 1.06
of the Contingent Convertible Securities Indenture, not less than thirty (30) calendar days but not more than sixty (60) calendar
days prior to the Redemption Date, to each Holder. If the Company itself gives the notice, it shall also deliver a copy to the
Trustee.

 

Any notice
of redemption shall state (i) the redemption date, (ii) the redemption price, (iii) that on the redemption date, the redemption
price and any accrued but unpaid (and not canceled) interest payable up to (but excluding) the redemption date will become due
and payable in respect of each Note being to be redeemed and, unless payment and performance of all amounts and obligations due
by the Company are not properly made, interest, if any, on each

 

     

     

    

Note,
or the portion of each Note, to be redeemed will cease to accrue on or after the redemption date, (iii) the place or places where
a Holder must surrender the Holder’s Notes for payment of the redemption price, and (iv) the CUSIP or ISIN number if any,
listed in the notice or printed on the Security, and that no representation is made as to the accuracy or correctness of such
CUSIP or ISIN number.

 

If the Company
has delivered a notice of redemption pursuant to Article 10 of the Contingent Convertible Securities Indenture, but prior to the
payment of the redemption amount with respect to such redemption a Conversion Trigger Event has occurred, such notice of redemption
shall be automatically rescinded and shall be of no force and effect, and no payment in respect of the redemption amount shall
be due and payable.

 

If the Company
has delivered a notice of redemption pursuant to Article 10 of the Contingent Convertible Securities Indenture, but prior to the
date of any such redemption Banco de México has objected to or refused to grant permission to the Company, as applicable,
to redeem the relevant Notes, such notice of redemption shall be automatically rescinded and shall be of no force and effect and
no payment in respect of any redemption amount, if applicable, shall be due and payable.

 

If the Company
has delivered a notice of redemption pursuant to Article 10 of the Contingent Convertible Securities Indenture, but prior to the
payment of the redemption amount with respect to such redemption the Bank is not in compliance with the Mexican Capitalization
Requirements or any alternative or additional pre-conditions required by Banco de México as a pre-requisite to its permission
for such redemption, such notice of redemption shall be automatically rescinded and shall be of no force and effect, and no payment
in respect of the redemption amount shall be due and payable.

 

Subject to
applicable law, the Company may at any time and from time to time repurchase, or procure others to repurchase for the Company’s
account, Notes in the open market by tender or by private agreement in any manner and at any price or at differing prices. Notes
purchased or otherwise acquired by the Company shall be surrendered to the Trustee for cancellation (in which case all Notes so
surrendered shall forthwith be canceled in accordance with applicable law and thereafter may not be reissued or resold). Any such
purchases shall be subject to the satisfaction of the following conditions: (x)(a) the Bank maintains, and after giving effect
to the repurchase of the Notes by the Company and any concurrent cancellation of the same amount of the Back-to-Back Note by the
Bank, shall maintain, each of its capital ratios equal to, or exceeding, the then-applicable capital ratios required by the CNBV
in accordance with Section IV, c), 1 of Annex 1-R of the general rules applicable to Mexican banks or any successor regulation,
which as of the Issue Date are 10.5% in the case of Total Net Capital (capital neto), 8.5% in  the case of Tier 1
Capital (capital básico), and 7.0% in the case of Fundamental Capital (capital fundamental), plus the then-applicable
Countercyclical Capital Supplement and Systemically Important Bank Capital Supplement, or (b) the Bank issues securities that
replace the amount of the Back-to-Back Note so canceled such that it remains in compliance with the Mexican Capitalization Requirements,
and (y) the Company has obtained the authorization from Banco de México to repurchase the Notes prior to the applicable
repurchase date; provided, however, that if at any time a Conversion Trigger Event shall have

 

     

     

    

occurred,
then the Company shall have no obligation to repurchase any Notes that the Company had agreed to repurchase.

 

Upon the
occurrence of a Conversion Trigger Event, on the Conversion Date, the then Current Principal Amount of the Notes shall be automatically
reduced in one or more Automatic Conversions by the applicable Conversion Amount and the Converted Principal Amount of the Notes
relating to such Automatic Conversions shall be converted exclusively into (i) if the Holder is Santander España, the Company’s
Series F shares and (ii) if the Holder is not Santander España, the Company’s Series B shares, in each case credited
as fully paid (the “Settlement Shares”) at the Conversion Price and in accordance with the terms set forth
herein. Settlement Shares upon any Automatic Conversion shall be released and delivered by the Company to the Settlement Share
Depositary (on behalf of the Holders and Beneficial Owners) on the Conversion Date, in consideration for which all of the Company’s
obligations with respect to the Converted Principal Amount under the Notes resulting from such Automatic Conversion shall be irrevocably
and automatically terminated, and under no circumstances shall such terminated obligations be reinstated.

 

A “Conversion
Trigger Event” shall occur when:

 

(i)           
the Business Day in Mexico following the publication of a determination by the CNBV, in its official publication of capitalization
levels for Mexican banks, that the Bank’s Fundamental Capital Ratio, as calculated pursuant to the applicable Mexican Capitalization
Requirements, is equal to or below 5.125%;

 

(ii)           
 if both (a) the CNBV notifies the Bank that it has made a determination, pursuant to Article 29 Bis of the Mexican Banking
Law, that a cause for revocation of the Bank’s license has occurred resulting from (x) the Bank’s assets being insufficient
to satisfy its liabilities, (y) the Bank’s non-compliance with corrective measures imposed by the CNBV pursuant to the Mexican
Banking Law, or (z) the Bank’s non-compliance with the capitalization requirements set forth in the Mexican Capitalization
Requirements and (b) the Bank has not cured such cause for revocation, by (x) complying with such corrective measures, or (y)(1)
submitting a capital restoration plan to, and receiving approval of such plan by, the CNBV, (2) not being classified in Class
III, IV or V, and (3) transferring at least 75% of its shares to an irrevocable trust, or (z) remedying any capital deficiency,
in each case, on or before the third or seventh calendar day in Mexico, as applicable, following the date on which the CNBV notifies
the Bank of such determination;

 

(iii)           
if the Banking Stability Committee, which is a committee formed by the CNBV, the Ministry of Finance and Public Credit,
Banco de México and the Instituto para la Protección al Ahorro Bancario of Mexico, determines pursuant to
Article 29 Bis 6 of the Mexican Banking Law that, under Article 148, Section II, paragraphs (a) and (b) of the Mexican Banking
Law, financial assistance is required by the Bank to avoid revocation of its license because the Bank’s assets are insufficient
to satisfy the Bank’s liabilities, or the Bank’s failure to comply with corrective measures, to comply with capitalization
requirements, or to satisfy certain liabilities when due, as a means to maintain the solvency of the Mexican financial system
or to avoid risks affecting the

 

     

     

    

Mexican
payments system and such determination is either made public or notified to the Bank (for the avoidance of doubt, pursuant to
Annex 1-R of the general rules applicable to Mexican banks, a Conversion Trigger Event shall occur if financial assistance or
other loans shall be granted to the Bank pursuant to Article 148, Section II, paragraphs (a) and (b) of the Mexican Banking Law);
or

 

(iv)           
if any financial entity (entidad financiera) that is a part of the financial group of which the Company is the holding
company experiences a capital deficiency (insuficiencia de capital) under the General Regulations (Reglas de Carácter
General) specified in the penultimate paragraph of Article 91 of the Mexican Financial Groups Law, the foregoing being read
in accordance with Article 118, Section III, of the Mexican Financial Groups Law.

 

The procedures
set forth in this Security and Section 2.15 of the First Supplemental Indenture are subject to change to reflect changes in DTC
practices, and the Company may make changes to the procedures set forth in Section 2.15 of the First Supplemental Indenture to
the extent reasonably necessary, in the opinion of the Company, to reflect such changes in DTC practices. Any such changes shall
be subject to the provisions of Section 7.01 of the First Supplemental Indenture.

 

Notwithstanding
anything to the contrary contained in the Indenture or this Security, once the Company has delivered a Conversion Trigger Notice
following the occurrence of a Conversion Trigger Event, (i) subject to the right of Holders relating to a breach of Performance
Obligation, in the event of a failure by the Company to deliver any Settlement Shares to the Settlement Share Depositary on the
Conversion Date, the Indenture shall impose no duties upon the Trustee whatsoever with regard to an Automatic Conversion upon
a Conversion Trigger Event and the Holders and Beneficial Owners shall have no rights whatsoever under the Indenture or the Notes
to instruct the Trustee to take any action whatsoever, and (ii) as of the date of the Conversion Trigger Notice, except for any
indemnity and/or security provided by any Holder or by any Beneficial Owner in such direction or related to such direction, any
direction previously given to the Trustee by any Holders or by any Beneficial Owners shall cease automatically and shall be null
and void and of no further effect; except in each case of (i) and (ii) of this paragraph, with respect to any rights of Holders
or Beneficial Owners with respect to any payments under the Notes that were unconditionally due and payable prior to the date
of the Conversion Trigger Notice or unless the Trustee is instructed in writing by the Company to act otherwise.

 

All authority
conferred or agreed to be conferred by each Holder and Beneficial Owner pursuant to this Security, including the consents given
by such Holder and Beneficial Owner, shall be binding upon the successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and legal representatives of such Holder and Beneficial Owner.

 

The Trustee
shall not be liable with respect to (i) any aspect of the Company’s decision to deliver a Conversion Trigger Notice or the
related Automatic Conversion, (ii) the adequacy of the disclosure of these provisions in the Prospectus or any other offering
material in respect of the Notes or for the direct or indirect consequences thereof or (iii) any other requirement of the Company
contained herein related to a Conversion Trigger Event or the Automatic Conversion.

 

     

     

    

For
the avoidance of doubt, the Company’s obligation to indemnify the Trustee in accordance with Section 6.07 of the Contingent
Convertible Securities Indenture shall survive any Automatic Conversion.

 

Following
the delivery of the Settlement Shares by the Company to the Settlement Share Depositary (or to the relevant recipient in accordance
with the terms of the Notes) on a Conversion Date, the Converted Principal Amount relating to such Automatic Conversion of the
Notes shall remain in existence until the applicable Cancellation Date for the sole purpose of evidencing a Holders’ right
to receive Settlement Shares or, if the Holder elects, ADSs from the Settlement Share Depositary (or such other relevant recipient,
as applicable).

 

The Holders
shall not at any time have the option to convert the Notes into Settlement Shares.

 

The occurrence
of the Automatic Conversion shall not constitute an Enforcement Event.

 

Notwithstanding
any other provision herein, by its acquisition of the Notes, each Holder and Beneficial Owner shall be deemed to have (i) agreed
to all of the terms and conditions of the Notes, including, without limitation, those related to (x) Automatic Conversion following
a Conversion Trigger Event and (y) the appointment of the Settlement Share Depositary and the issuance of the Settlement Shares
to the Settlement Share Depositary (or to the relevant recipient in accordance with the terms of the Indenture or the Notes) and
acknowledged that such events in (x) and (y) may occur without any further action on the part of such Holders or Beneficial Owners
or the Trustee, (ii) agreed that effective upon, and following, an Automatic Conversion, no amount shall be due and payable to
the Holders or Beneficial Owners, and the liability of the Company to pay the Converted Principal Amount, or any interest in respect
of the Converted Principal Amount, shall be automatically released, and the Holders and the Beneficial Owners shall not have the
right to give a direction to the Trustee with respect to the Conversion Trigger Event and any related Automatic 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 Indenture and in connection with the
Notes, including, without limitation, claims related to or arising out of or in connection with the Conversion Trigger Event and/or
any Automatic Conversion, and (iv) authorized, directed and requested DTC, INDEVAL and any direct participant in DTC or INDEVAL
or other intermediary through which it holds such Notes to take any and all necessary action, if required, to implement the Automatic
Conversion without any further action or direction on the part of such Holder or Beneficial Owner or the Trustee.

 

If any Holder
or Beneficial Owner (or group of either or both) of the Notes other than Santander España would become a Holder or group
of Holders (i) of more than two percent (2%) of the Company’s Ordinary Shares as a result of an Automatic Conversion, and
the requirements specified in the Mexican Financial Groups Law are not satisfied by the applicable Holder or group of Holders,
or (ii) of more than five percent (5%) of the Company’s Ordinary Shares as a result of an Automatic Conversion, the Company
shall cause the Settlement Share Depositary to sell in whatever manner the Settlement Share Depositary determines, in its sole
discretion, a sufficient amount of Settlement Shares in excess of any of the applicable percentages specified above (the “Excess
Settlement Shares”) such that such Holder or Beneficial Owner, together

 

     

     

    

with
any such group, does not become a Holder of Ordinary Shares exceeding two percent (2%) or five percent (5%), as applicable, of
the Ordinary Shares of the Company, it being understood that such Holder shall be paid the proceeds, net of expenses, of the sale
of the applicable Excess Settlement Shares.

 

The Conversion
Price shall be subject to adjustment as provided in Article 3 of the First Supplemental Indenture.

 

A “Liquidation
Event” shall result if there has occurred any voluntary or involuntary liquidation (concurso mercantil) of the
Company or the liquidation (resolución) of the Bank. If a Liquidation Event occurs prior to the occurrence of a
Conversion Trigger Event, subject to the subordination provisions of Article 5 of the First Supplemental Indenture, the Liquidation
Distribution shall become immediately due and payable, without the need of any further action on the part of the Trustee, the
Holders or any other Person, including the declaration by the Trustee, the Holders or any other Person that the Liquidation Distribution
shall become immediately due and payable. Upon payment of the Liquidation Distribution, all interest accrued on the Notes to that
date shall be canceled and such interest shall not become due and payable at any time nor shall any further interest accrue.

 

“Liquidation
Distribution” means the Liquidation Preference per Note without any accrued interest, which shall be canceled upon the
occurrence of a Liquidation Event. The “Liquidation Preference” means the then Current Principal Amount of
each Note at the time the Liquidation Distribution is paid.

 

Subject to
the satisfaction of any redemption conditions described in this Security and in Sections 2.09, 2.10 and 2.11 of the First Supplemental
Indenture, if the Company does not make payment of principal in respect of the Notes for a period of fourteen (14) calendar days
or more after the date on which such payment is due (a “Principal Non-Payment Event”), then the Trustee, on
behalf of the Holders and Beneficial Owners, may, at its discretion, or shall at the direction of Holders of 25% or more of the
aggregate principal amount of outstanding Notes, subject to any applicable laws, institute proceedings for the liquidation of
the Company. In the event of a Liquidation Event, whether or not instituted by the Trustee, the Trustee may prove the claims of
the Holders, Beneficial Owners and the Trustee. For the avoidance of doubt, the Trustee may not declare the principal amount of
any outstanding Notes to be due and payable and may not pursue any other legal remedy, including a judicial proceeding for the
collection of the sums due and unpaid on the Notes.

 

In the event
of a breach of any term, obligation or condition binding upon the Company under the Notes or the Indenture (other than any payment
obligation of the Company under or arising from the Notes or the Indenture, including payment of any principal or interest, including
any damages awarded for breach of any obligation) (such obligation, a “Performance Obligation”), the Trustee
may without further notice institute such proceedings against the Company as it may deem fit to enforce the Performance Obligation,
provided that the Company shall not by virtue of the institution of any such proceedings be obliged to pay any sum or sums, in
cash or otherwise (including any damages) earlier than the same would otherwise have been payable under the Notes or the Indenture,
if any. For the avoidance of doubt, the breach by the Company of any Performance Obligation shall not confer upon the Trustee
(acting on behalf of

 

     

     

    

the
Holders) and/or the Holders or Beneficial Owners of the Notes any claim for damages and, in the event of such a breach, the sole
and exclusive remedy that the Trustee (acting on behalf of the Holders) and/or the Holders or Beneficial Owners of the Notes may
seek under the Notes and the Indenture is specific performance under the laws of the State of New York. By its acquisition of
the Notes, each Holder and Beneficial Owner of the Notes acknowledges and agrees (i) that such Holder and Beneficial Owner shall
not seek, and shall not direct the Trustee (acting on their behalf) to seek, any claim for damages against the Company in respect
of any breach by the Company of a Performance Obligation, and (ii) that the sole and exclusive remedy that such Holder and Beneficial
Owner and/or the Trustee (acting on their behalf) may seek under the Notes and the Indenture for a breach by the Company of a
Performance Obligation is specific performance under the laws of the State of New York

 

Other than
the limited remedies specified in Article 4 of the First Supplemental Indenture, and subject to the second succeeding paragraph
below, no remedy against the Company shall be available to the Trustee (acting on behalf of the Holders) or to the Holders and
Beneficial Owners, whether for the recovery of amounts owing in respect of such Notes or under the 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 Notes or under the
Indenture in relation thereto; provided, however, that the Company’s obligations to the Trustee under, and the Trustee’s
lien provided for in, Sections 5.05 and 6.07 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 Sections 5.05 and 6.07
of the Contingent Convertible Securities Indenture shall not be limited or impaired by Article 4 of the First Supplemental Indenture
or otherwise and expressly survive any Enforcement Event and are not subject to the subordination provisions of Article 5 of the
First Supplemental Indenture.

 

Notwithstanding
the limitations on remedies specified in Article 4 of the First Supplemental Indenture, (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 and Beneficial Owners
under the provisions of the Indenture, and (ii) nothing shall impair the rights of a Holder or Beneficial Owner of the Notes under
the Trust Indenture Act, absent such Holder’s or Beneficial Owner’s consent, to sue for any payment due but unpaid
in respect of the Notes as provided for in Section 5.07 of the Contingent Convertible Securities Indenture; provided that,
in the case of (i) and (ii) above, any payments in respect of, or arising from, the Notes, including any payments or amounts resulting
or arising from the enforcement of any rights under the Trust Indenture Act in respect of the Notes, shall be subject to the subordination
provisions set forth in Article 5 of the First Supplemental Indenture.

 

In furtherance
of Section 6.01 of the Contingent Convertible 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 Securities Indenture to the contrary, the duties and responsibilities of the
Trustee under the 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.

 

     

     

    

The Company
covenants and agrees, and each Holder of Notes issued hereunder likewise covenants and agrees, that the Notes shall be issued
subject to the provisions of this Security and Article 5 of the First Supplemental Indenture and each Holder of a Note, whether
upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. The payment by
the Company of the principal of and interest on all Notes issued hereunder shall, to the extent and in the manner set forth in
Article 5 of the First Supplemental Indenture, rank (i) subordinate and junior in right of payment and in liquidation to all the
Company’s present and future Senior Indebtedness and Subordinated Preferred Indebtedness, (ii) pari passu without
preference among themselves and with all of the Company’s present and future other unsecured Subordinated Non-Preferred
Indebtedness and (iii) senior only to all classes of the Company’s capital stock, provided that determinations concerning
ranking and subordination of the Notes as a regulatory mater, shall be governed by, and construed in accordance with, Mexican
law. No provision of Article 5 of the First Supplemental Indenture shall prevent the occurrence of any Enforcement Event hereunder.

 

No payment
of principal or interest on the Notes may be made at any time when (i) any Senior Indebtedness in an amount greater than U.S.$[
] is not paid when due, and any applicable grace period with respect to such default has ended and such default has not been cured
or waived or ceased to exist or (ii) the maturity of any Senior Indebtedness in an amount greater than U.S.$[ ] has been accelerated
because of a default and such Senior Indebtedness has not been paid in full or such acceleration rescinded.

 

In the event
that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding
paragraph, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness (subject to the priority specified in the preceding paragraph) or their respective representatives, or to the trustee
or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests
may appear, but only to the extent that the holders of the Senior Indebtedness (or their representative or representatives or
a trustee) notify the Trustee in writing, within 90 days of such payment of the amounts then due and owing on such Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall be paid to the holders of such Senior Indebtedness.

 

Except as
set forth in the following paragraph, in the event of any Liquidation Event, Holders of the Notes (except to the extent that the
Notes have been previously converted into the Company’s Ordinary Shares pursuant to Automatic Conversion or previously redeemed
pursuant to this Security and Sections 2.09, 2.10 or 2.11 of the First Supplemental Indenture) shall be entitled to receive, out
of the assets of the Company available for distribution to Holders of the Notes, the Liquidation Distribution. Such entitlement
shall arise before any distribution of assets is made to holders of Ordinary Shares or any other instrument of the Company ranking
junior to the Notes.

 

If, before
the occurrence of a Liquidation Event, a Conversion Trigger Event occurs but the Automatic Conversion has not yet taken place,
Holders will be entitled to receive out of the relevant assets of the Company a monetary amount equal to that which Holders would
have received on any distribution of the assets of the Company if such Automatic Conversion had taken place immediately prior
to such liquidation.

 

     

     

    

After payment
of the relevant entitlement in respect of a Note as described in the preceding paragraphs, such Note shall confer no further right
or claim to any of the remaining assets of the Company.

 

Subject to
applicable law, neither any Holder or Beneficial Owner of the Notes nor the Trustee acting on behalf of the Holders 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 Notes or the Indenture and each Holder and Beneficial Owner of the Notes, by virtue
of its holding of any Notes or any interest therein, and the Trustee acting on behalf of the Holders, 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 Note or any interest therein by the Company in respect of, or arising under, the Notes 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, administrator or conciliador
of the Company or any other applicable Person designated for such purposes, as the case may be) and, until such time as payment
is made, shall hold an amount equal to such amount in trust or deposit (where possible) or otherwise for the Company (or the liquidator,
administrator or conciliador of the Company or any other applicable Person designated for such purposes, as the case may
be) and, accordingly, any such discharge shall be deemed not to have taken place.

 

The Indenture
permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations
of the Company and the rights of the Holders of the series of Notes to be affected under the Indenture at any time by the Company
and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Notes then outstanding
of the series to be affected.

 

With respect
to Notes issued pursuant to the First Supplemental Indenture, any agreements, arrangements or understandings between the Company
and any Holder with respect to the Notes must be entered into in accordance with the terms of the Contingent Convertible Securities
Indenture and the First Supplemental Indenture.

 

Holders of
not less than a majority of the Current Principal Amount of the Notes may on behalf of the Holders of all of the Notes waive any
past Enforcement Event that results from a breach by the Company of a Performance Obligation. Holders of a majority of the Current
Principal Amount of the Notes shall not be entitled to waive any past Enforcement Event that results from a Liquidation Event
or a Principal Non-Payment Event.

 

As set forth
in, and subject to, the provisions of the Indenture, no Holder shall have the right to institute any proceeding, judicial or otherwise,
with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless such
Holder fulfils the requirements of Section 5.06 of the Contingent Convertible Securities Indenture.

 

Securities
of this series are issuable only in registered form without coupons in initial denominations of U.S.$200,000 and integral multiples
of U.S.$1,000 in excess thereof. The denominations cannot be changed without the consent of the Trustee. The denomination of each

 

     

     

    

book-entry
interest in a Security of this series shall be the “Tradable Amount” of such book-entry interest. Prior to
any Automatic Conversion, the aggregate Tradable Amount of the book-entry interests in each this Security shall be equal to this
Security’s then Current Principal Amount. Following an Automatic Conversion, the principal amount of this Security shall
be reduced by an amount equal to the Converted Principal Amount arising from such Automatic Conversion, but the Tradable Amount
of the book-entry interests in this Security shall remain unchanged as a result of the Automatic Conversion until the distribution
of the Settlement Shares arising from such Automatic Conversion, at which time the Tradable Amount shall be reduced by an amount
equal to the Converted Principal Amount arising from such Automatic Conversion.

 

Prior to
due presentment of this 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 this Security is registered as the owner hereof for all purposes, whether or not this Security
be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

This Security
shall be governed by and construed in accordance with the law of the State of New York. Whether (i) a Conversion Trigger Event
or an event leading to a cancellation of interest has occurred is based upon applicable Mexican law or a determination by the
applicable Mexican regulator, as set forth in the First Supplemental Indenture, in accordance with Mexican law (as amended from
time to time); (ii) a Withholding Tax Event or a Tax Event has occurred is based upon a determination in accordance with Mexican
law (or other applicable law in the case of a Withholding Tax Event involving a jurisdiction other than Mexico), as amended from
time to time, evidenced by an opinion of a nationally recognized law firm and, if required, a certification by the Company, as
set forth in the First Supplemental Indenture; and (iii) a Capital Event has occurred shall be determined by the Company, as set
forth in the First Supplemental Indenture, in accordance with Mexican law (as amended from time to time). The ranking and subordination
of the Notes, shall be governed by, and construed in accordance with, Mexican law (as amended from time to time). The parties
hereto, and each Holder of a Note by its acceptance thereby, each hereby waive any rights it may have under the law of the State
of New York not to give effect to any such determination to the fullest extent permitted by applicable law. Any proceedings in
respect of the Company’s concurso mercantil or bankruptcy shall be conducted in accordance with the Mexican Bankruptcy
Law and Chapter II of Title Seven of the Mexican Financial Groups Law, and any merger or consolidation of the Company shall be
subject to applicable approvals under the Mexican Financial Groups Law and any other applicable Mexican laws, as replaced or amended
from time to time, or any successor thereof.

 

(b)                   
The Company has consented to the jurisdiction of the Supreme Court of the State of New York, County of New York and the
United States District Court for the Southern District of New York, each in the Borough of Manhattan, and agreed that all disputes
under the Indenture may be submitted to the jurisdiction of such courts. The Company has irrevocably consented to and waived to
the fullest extent permitted by law any objection that it may have to the laying of venue of any suit, action or proceeding against
it or its properties, assets and revenues with respect to the Indenture or any such suit, action or proceeding in any such court
and any right to which it may be entitled by virtue of its present or future domicile or for any other reason.

 

     

     

    

To the extent
that the Company or any of its revenues, assets or properties shall be entitled to any immunity from suit, from the jurisdiction
of any such court, from attachment prior to judgment, from attachment in aid of execution of judgment, from execution of a judgment
or from any other legal or judicial process remedy, it irrevocably agrees not to claim and irrevocably waives such immunity to
the fullest extent permitted by the laws of such jurisdiction.

 

The Company
has designated and appointed Banco Santander, S.A., New York Branch, with an address at 45 East 53rd Street, New York,
NY 10022, 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 this Security or the Indenture, but for that purpose
only, and agrees that service of process upon said Banco Santander, S.A., New York Branch 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 Notes remain outstanding until the appointment
of a successor by the Company and such successor’s acceptance of such appointment. The Company has submitted (for the purposes
of any such suit or proceeding) to the jurisdiction of any such court in which any such suit or proceeding is so instituted, and
waived, 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.

 

Article 121
of the Mexican Banking Law provides that, in the exercise of its supervisory duties, the CNBV, through general regulations issued
thereby, will classify banking institutions based on their compliance with the provisions of the Mexican Capitalization Requirements,
which may take into account capital ratios that reflect the degree of stability and solvency of a Mexican bank.

 

Article 122
of the Mexican Banking Law provides that if a Mexican bank does not comply with the capital ratios required to be classified as
Class I pursuant to the Mexican Capitalization Requirements, such bank must implement the corrective measures ordered by the CNBV,
which may include:

 

		(i)	informing the bank’s board
                                         of directors of its classification, based on the capital ratios thereof, and submitting
                                         a detailed report containing an evaluation of the bank’s overall financial status
                                         and its level of compliance with applicable regulations; the bank shall provide written
                                         notice to the chief executive officer and the chairman of the board of directors of the
                                         bank’s holding company (sociedad controladora del grupo financiero), which,
                                         with regard to the Bank, is the Company, with respect to such events and the status thereof;

 

		(ii)	within a period not to exceed
                                         seven (7) calendar days, filing with the CNBV, for its approval, a capital recovery plan
                                         to increase the bank’s capital ratios; the bank’s capital recovery plan shall
                                         be approved by such bank’s board of directors before it is submitted to the CNBV;

 

		(iii)	suspending any payment of dividends
                                         to its shareholders, as well as any mechanism or act for the making of any distributions
                                         or the granting of any economic benefits to shareholders;

 

     

     

    

		(iv)	suspending any share repurchase
                                         programs;

 

		(v)	deferring or canceling payment
                                         of interest and deferring or canceling the payment of principal on outstanding subordinated
                                         debt, as the case may be, or, if applicable, exchanging outstanding convertible subordinated
                                         debt into shares of the bank in the amount necessary to cover the capital deficiency
                                         if ordered by the CNBV; these corrective measures shall be applicable to subordinated
                                         debt considered part of the bank’s Tier 1 Capital (capital básico)
                                         or Tier 2 Capital (capital complementario); in the event that the bank issues
                                         subordinated debt, the bank is obligated to include in the documentation evidencing such
                                         debt, in the applicable indenture and in the applicable offering document, that such
                                         deferral or cancellation of payment of principal or deferral and cancellation of payments
                                         of interest, as the case may be, shall apply upon the occurrence of certain events as
                                         provided in the general rules applicable to Mexican banks and that the implementation
                                         of such measures shall not be considered a default under the relevant debt documentation;

 

		(vi)	suspending payment of any extraordinary
                                         benefits and bonuses that are not a component of the ordinary salary of the chief executive
                                         officer or any officer within the next two levels of seniority, and suspending the granting
                                         of new benefits to the chief executive officer and the officers mentioned above until
                                         the bank complies with the minimum capital ratios set forth under the Mexican Capitalization
                                         Requirements;

 

		(vii)	abstaining from increasing
                                         outstanding amounts of any loans granted to any person who is a related party of the
                                         bank pursuant to Article 73 and related provisions of the Mexican Banking Law; and

 

		(viii)	any other corrective measures
                                         that, in each case, are provided by the general rules applicable to Mexican banks.

 

Article 122
of the Mexican Banking Law further provides that:

 

		(i)	If a Mexican bank complies with
                                         the minimum capital ratios required pursuant to the Mexican Capitalization Requirements
                                         but any of its capital ratios is below the capital ratios required to be satisfied for
                                         a bank not to be subject to any corrective measures, such bank must implement certain
                                         corrective measures ordered by the CNBV, including, among others, (A) informing the bank’s
                                         board of directors of its classification, based on the capital ratios thereof and submitting
                                         a detailed report containing an evaluation of the bank’s overall financial status
                                         and its level of compliance with applicable regulations including the principal regulatory
                                         ratios, that reflect the bank’s degree of stability and solvency (together with
                                         any determinations or indications made by any of the CNBV or Banco de México)
                                         and providing written notice to the chief executive officer and the chairman of the board
                                         of directors of the bank’s holding company (sociedad controladora del grupo
                                         financiero), which, with regard to the Bank, is the Company; (B) abstaining from
                                         entering into any transaction that may decrease the bank’s capital ratios

 

     

     

    

below
the Mexican Capitalization Requirements; and (C) any other corrective measures ordered by the CNBV.

 

		(ii)	Regardless of the capitalization
                                         level, the CNBV may order the implementation of additional special corrective measures
                                         applicable to Mexican banks, including, among others: (1) requiring compliance with additional
                                         corrective measures that the bank will be required to carry out to avoid a decrease of
                                         its capital ratios; (2) special audits to be performed by special auditors in connection
                                         with specific matters; (3) abstaining from increasing the salaries and benefits of all
                                         officers and employees of the bank, except for any change in salary previously agreed
                                         on and subject to the officers’ and employees’ labor rights; (4) removing
                                         officers, directors, statutory auditors or external auditors or appointing any persons
                                         to such positions; or (5) any other measures ordered by the CNBV, based on its inspection
                                         and supervision authorities or sound banking practices.

 

		(iii)	If a Mexican bank does not
                                         comply with any Capital Supplement requirements pursuant to the Mexican Banking Law and
                                         the Mexican Capitalization Requirements, the CNBV may order the bank to suspend any payment
                                         of dividends or other distributions to its shareholders.

 

		(iv)	Corrective measures will not
                                         be applicable to Mexican banks with a capital ratio equal to or greater than the capital
                                         ratios required to be classified as Class I pursuant to the Mexican Capitalization Requirements.

 

		(v)	The Mexican Banking Law and the
                                         general rules applicable to Mexican banks classify Mexican banks in categories from I
                                         through V based on their capital ratios for Total Net Capital (capital neto),
                                         Tier 1 Capital (capital básico) and Fundamental Capital (capital fundamental);
                                         corrective measures are imposed based on such classification, starting at the time a
                                         bank is included in the category Class II.

 

		(vi)	Article 122 of the Mexican Banking
                                         Law specifies that if a bank does not satisfy the capital ratios required to be classified
                                         as Class I pursuant to the Mexican Capitalization Requirements, the bank must implement
                                         the corrective measures ordered by the CNBV. Currently, the minimum capital ratios required
                                         to be classified as Class I are (i) 10.5% in the case of the Total Net Capital (capital
                                         neto), (ii) 8.5% in the case of Tier 1 Capital (capital básico) and
                                         (iii) 7.0% in the case of Fundamental Capital (capital fundamental), plus, in
                                         each case, any applicable Capital Supplement.

 

		(vii)	Further, according to the general
                                         rules applicable to Mexican banks in effect on the date hereof, Mexican banks are classified
                                         as Class II, III, IV or V, if any of its capital ratios is below certain minimum capital
                                         ratios, which as of the Issue Date are: (a) 10.5% in the case of Total Net Capital (capital
                                         neto), (b) 8.5% in the case of Tier 1 Capital (capital básico), or
                                         (c) 7.0% in the case of Fundamental Capital (capital fundamental), plus, in each
                                         case, any applicable Capital Supplement thereof required under the Mexican Capitalization
                                         Requirements.

 

     

     

    

		(viii)	The general rules applicable
                                         to Mexican banks further provide that corrective measures applicable to Mexican banks
                                         classified in Class II, III, IV or V include, among others, requiring a bank to suspend
                                         or cancel payment of interest and defer or cancel payment of any principal on outstanding
                                         subordinated debt or exchange outstanding convertible subordinated debt into shares of
                                         the bank in the amount necessary to cover the capital deficiency; in the event that a
                                         bank issues subordinated debt, a bank must include in the relevant debt documentation,
                                         in the applicable indenture and in the applicable offering document, that such suspension
                                         or cancellation of payment of interest and deferral or cancellation of payment of principal
                                         shall apply to subordinated debt in the event that a bank is classified in Class II,
                                         III, IV, or V and that the implementation of such measures shall not be considered a
                                         default under the relevant debt documentation.

 

		(ix)	Mexican banks that are determined
                                         by the CNBV to be D-SIBs, in light of the impact that their default may cause to the
                                         Mexican financial system, the Mexican payment system or the Mexican economy, are required
                                         by the CNBV to implement an additional Systemically Important Bank Capital Supplement.
                                         The CNBV also has the authority to require a Countercyclical Capital Supplement on any
                                         and all Mexican banks, designed to cover adverse economic cycles, in the event that the
                                         aggregate financing received by the Mexican private sector grows at a higher level as
                                         compared to the level of growth of the Mexican economy.

 

 

     

     

    

EXHIBIT
B

 

Form
of Conversion Trigger Notice[[1]]

 

NOTICE
TO DTC AND TO HOLDERS AND BENEFICIAL OWNERS

 

[Company
Letterhead]

 

		To:	The Depository Trust Company

                                         55 Water Street, 25th Floor

                                         New York, NY 10041-0099

                                         Attn: Mandatory Reorganization Department

                                         Fax: +1 (212) 855-5488

                                         Email: mandatoryreorgannouncements@dtcc.com

 

	 

Re: Grupo Financiero Santander
México, S.A.B. de C.V. U.S.$[ ] [ ]% Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital
Notes (CUSIP: [ ], ISIN: [ ]) – Notice to DTC, Holders and Beneficial Owners of the Occurrence of a Conversion Trigger Event

 

This notice
is in relation to Grupo Financiero Santander México, S.A.B. de C.V.’s (the “Company”) U.S.$[ ]
[ ]% Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes (CUSIP: [ ], ISIN: [ ]) issued
on [ ], 2016 (the “Notes”) pursuant to the Contingent Convertible Securities Indenture, dated as of [ ], 2016,
between the Company and The Bank of New York Mellon, as Trustee (the “Trustee”), as supplemented by the First
Supplemental Indenture, dated as of [ ], 2016, between the Company and the Trustee (together, the “Indenture”).
Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Indenture.

 

Pursuant
to Section 2.15(d) of the First Supplemental Indenture, the Company hereby notifies The Depository Trust Company (“DTC”),
the Holders and Beneficial Owners of the Notes that a Conversion Trigger Event has occurred with respect to the Notes. Such Conversion
Trigger Event has occurred because [the CNBV has published in its official publication of capitalization levels for Mexican banks
a determination that the Fundamental Capital Ratio of the Bank, as calculated pursuant to the applicable Mexican Capitalization
Requirements is equal to or below 5.125%][both (a) the CNBV has notified the Bank that it has made a determination pursuant to
Article 29 Bis of the Mexican Banking Law, that a cause for revocation of the Bank’s license has occurred resulting from
(x) the Bank’s assets being insufficient to satisfy its liabilities, (y) the Bank’s non-compliance with corrective
measures imposed by the CNBV pursuant to the Mexican Banking Law, or (z) the Bank’s non-compliance with the capitalization
requirements set forth in the Mexican Capitalization Requirements and (b) the Bank has not cured such cause for revocation, by
(x) complying with such corrective measures, or (y)(1)

 

_____________________ 

 

1
Note: Addresses to be reconfirmed prior to when notice is sent; subject to modification
if Notes are in definitive form and to changes in DTC (or successor clearing system) policies and procedures.

 

     

     

    

submitting
a capital restoration plan to, and receiving approval of such plan by, the CNBV, (2) not being classified in Class III, IV or
V, and (3) transferring at least 75% of its shares to an irrevocable trust, or (z) remedying any capital deficiency, in each case,
on or before the third or seventh calendar day in Mexico, as applicable, following the date on which the CNBV notified the Bank
of such determination][the Banking Stability Committee has determined pursuant to Article 29 Bis 6 of the Mexican Banking Law
that, under Article 148, Section II, paragraphs (a) and (b) of the Mexican Banking Law, financial assistance is required by the
Bank to avoid revocation of its license because the Bank’s assets are insufficient to satisfy the Bank’s liabilities,
or the Bank’s failure to comply with corrective measures, to comply with capitalization requirements, or to satisfy certain
liabilities when due, as a means to maintain the solvency of the Mexican financial system or to avoid risks affecting the Mexican
payments system and such determination is either made public or notified to the Bank][a financial entity (entidad financiera)
that is a part of the financial group of which the Company is the holding company has experienced a capital deficiency (insuficiencia
de capital) under the General Regulations (Reglas de Carácter General) specified in the penultimate paragraph
of Article 91 of the Mexican Financial Groups Law, the foregoing being read in accordance with Article 118, Section III, of the
Mexican Financial Groups Law].

 

Upon the
occurrence of the Conversion Trigger Event, the terms of the Notes provide for (i) the reduction of the Current Principal Amount
of the Notes in one or more Automatic Conversions by the applicable Conversion Amount and (ii) the conversion of the Converted
Principal Amount relating to such Automatic Conversion into Settlement Shares on the Conversion Date, which is [date], at the
Conversion Price. The Conversion Amount shall be [ ], which was calculated by [method], as provided in the Indenture. The Conversion
Price shall be the [volume weighted average of the Ordinary Shares closing price on the Mexican Stock Exchange for the thirty
(30) consecutive Business Days immediately preceding the Conversion Date, with each closing price for the thirty (30) consecutive
Business Days being converted from pesos into U.S. dollars at the then-prevailing exchange rate][floor price of Ps.[ ] converted
into U.S. dollars at the then-prevailing exchange rate], subject to any applicable adjustments. Upon an Automatic Conversion,
all of the Company’s obligations under the Converted Principal Amount of the Notes shall be irrevocably and automatically
terminated in consideration of the Company’s delivery of Settlement Shares at the Conversion Price on the Conversion Date
to the Settlement Share Depositary (or other relevant recipient) on behalf of the Holders and Beneficial Owners. However, the
terms of the Notes provide that the Converted Principal Amount of the Notes shall remain in existence until the applicable Cancellation
Date for the sole purpose of evidencing a right to receive Settlement Shares or, if the Holder elects, ADSs from the Settlement
Share Depositary (or such other relevant recipient, as applicable).

 

Accordingly,
the Company hereby instructs DTC to indicate to all participants that payments of principal and interest are no longer payable
under the Converted Principal Amount of the Notes as of the Conversion Date and that the Converted Principal Amount of the Notes
will have no further entitlement to interest or principal as of such date by making a note to that effect in its systems. Additionally,
as of the Suspension date, which shall be [date], DTC shall, as provided under applicable regulations, suspend all clearance and
settlement of transactions in the Notes. As a result, from the Suspension Date, Holders will not be able to settle the transfer
of any Notes, including any then Current Principal Amount through DTC, following the Suspension Date, and any sale or other transfer
of the Notes that a Holder or Beneficial Owner of the Notes

 

     

     

    

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 Company
further requests DTC to post this notice on its Reorganization Inquiry for Participants System (or such other system as DTC uses
for providing notices to holders of securities).

 

Should DTC,
any Holder or any Beneficial Owner of the Notes have any inquiries, please contact either the Company at [Telephone, Fax, Email]
or [Name] or the Settlement Share Depositary, at [Telephone, Fax, Email].[[2]]

 

	 	GRUPO FINANCIERO SANTANDER MÉXICO, S.A.B. DE C.V.
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

Dated:
[ ]

 

		cc	The Bank of New York Mellon

                                         101 Barclay Street, Floor 7-E

                                         New York, NY 10286

                                         United States of America

                                         Attn: International Corporate Trust

                                         Fax: [     ]

                                         

 

 

 

_____________________

 

2
Insert contact details of any Settlement Share Depositary, or, if the Company has been
unable to appoint a Settlement Share Depositary, any other details required to set out the delivery procedures in respect of the
Settlement Shares or ADSs as to holders and beneficial owners as the Company shall consider reasonable in the circumstances.

 

     

     

    

EXHIBIT
C

 

Form
of Conversion Trigger Event Officer’s Certificate

 

GRUPO FINANCIERO
SANTANDER MÉXICO, S.A.B. DE C.V.

 

Conversion
Trigger Event Officer’s Certificate

 

This Officer’s
Certificate is being delivered in relation to Grupo Financiero Santander México, S.A.B. de C.V.’s (the “Company”)
U.S.$[ ] [ ]% Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes (CUSIP: [ ], ISIN: [
]) issued on [ ], 2016 (the “Notes”) pursuant to the Contingent Convertible Securities Indenture, dated as
of [ ], 2016, between the Company and The Bank of New York Mellon, as Trustee (the “Trustee”), as amended and
supplemented by the First Supplemental Indenture, dated as of [ ], 2016, between the Company and the Trustee (together, the “Indenture”).Capitalized
terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Indenture.

 

Pursuant
to Section 1.02 of the Contingent Convertible Securities Indenture and Section 2.15(d) of the First Supplemental Indenture, the
undersigned, being authorized signatory of the Company and authorized by the Company to give this certificate, hereby certifies
as follows:

 

(a)       I
have read all of the covenants and conditions in the Indenture, setting forth certain provisions in respect of the occurrence
of a Conversion Trigger Event, including Section 2.15 of the First Supplemental Indenture, and the definitions relating thereto;

 

(b)       [Include
a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in this certificate
are based][I have reviewed such other documents as I have deemed necessary as a basis for the opinion hereinafter expressed];

 

(c)       I
have made such other examinations and investigations as I have deemed necessary to enable me to express an informed opinion as
to (i) whether or not such covenants and conditions have been complied with, and (ii) the matters set forth in (e) below; and

 

(d)       In
my opinion, such conditions (including all conditions precedent) and covenants have been complied with; and

 

(e)       a
Conversion Trigger Event has occurred with respect to the Notes. Such Conversion Trigger Event has occurred because [the CNBV
has published in its official publication of capitalization levels for Mexican banks a determination that the Fundamental Capital
Ratio of the Bank, as calculated pursuant to the applicable Mexican Capitalization Requirements is equal to or below 5.125%][both
(a) the CNBV has notified the Bank that it has made a determination pursuant to Article 29 Bis of the Mexican Banking Law, that
a cause for revocation of the Bank’s license has occurred resulting from (x) the Bank’s assets being insufficient
to satisfy its liabilities, (y) the Bank’s non-compliance with corrective measures imposed by the CNBV pursuant to the Mexican
Banking Law, or (z) the Bank’s non-compliance with the capitalization requirements set forth in the Mexican Capitalization
Requirements and (b)

 

     

     

    

the
Bank has not cured such cause for revocation, by (x) complying with such corrective measures, or (y)(1) submitting a capital restoration
plan to, and receiving approval of such plan by, the CNBV, (2) not being classified in Class III, IV or V, and (3) transferring
at least 75% of its shares to an irrevocable trust, or (z) remedying any capital deficiency, in each case, on or before the third
or seventh calendar day in Mexico, as applicable, following the date on which the CNBV notified the Bank of such determination][the
Banking Stability Committee has determined pursuant to Article 29 Bis 6 of the Mexican Banking Law that, under Article 148, Section
II, paragraphs (a) and (b) of the Mexican Banking Law, financial assistance is required by the Bank to avoid revocation of its
license because the Bank’s assets are insufficient to satisfy the Bank’s liabilities, or the Bank’s failure
to comply with corrective measures, to comply with capitalization requirements, or to satisfy certain liabilities when due, as
a means to maintain the solvency of the Mexican financial system or to avoid risks affecting the Mexican payments system and such
determination is either made public or notified to the Bank][a financial entity (entidad financiera) that is a part of
the financial group of which the Company is the holding company has experienced a capital deficiency (insuficiencia de capital)
under the General Regulations (Reglas de Carácter General) specified in the penultimate paragraph of Article 91
of the Mexican Financial Groups Law, the foregoing being read in accordance with Article 118, Section III, of the Mexican Financial
Groups Law].

 

[Concurrently
with][Immediately following] the delivery of this Conversion Trigger Event Officer’s Certificate, the Company is delivering
to The Depository Trust Company (“DTC”) the Conversion Trigger Notice attached hereto as Exhibit A as a notice
to DTC and to Holders and Beneficial Owners in the form set forth in Exhibit B to the First Supplemental Indenture.

 

The Trustee
is entitled to conclusively rely on and accept this Conversion Trigger Event Officer’s Certificate without any duty whatsoever
of further inquiry as sufficient and conclusive evidence of the occurrence of a Conversion Trigger Event, and this Conversion
Trigger Event Officer’s Certificate shall be conclusive and binding on the Trustee, the Holders and Beneficial Owners.

 

Dated: [       ]

 

	 	 
	 	Name:

        

        Title:

         

         

     

     

    

EXHIBIT
D

 

Form
of Settlement Request Notice[3]

 

NOTICE
TO DTC AND TO HOLDERS AND BENEFICIAL OWNERS

 

[Company
Letterhead]

 

		To:	The Depository Trust Company

                                         55 Water Street, 25th Floor

                                         New York, NY 10041-0099

                                         Attn: Mandatory Reorganization Department

                                         Fax: +1 (212) 855-5488

                                         Email: mandatoryreorgannouncements@dtcc.com

 

Re: Grupo Financiero Santander
México, S.A.B. de C.V. U.S.$[ ] [ ]% Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital
Notes (CUSIP: [ ], ISIN: [ ]) – Notice to DTC, Holders and Beneficial Owners 

 

This notice
is in relation to Grupo Financiero Santander México, S.A.B. de C.V.’s (the “Company”) U.S.$[ ]
[ ]% Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes (CUSIP: [ ], ISIN: [ ]) issued
on [ ], 2016 (the “Notes”) pursuant to the Contingent Convertible Securities Indenture, dated as of [ ], 2016,
between the Company and The Bank of New York Mellon, as Trustee (the “Trustee”), as supplemented by the First
Supplemental Indenture, dated as of [ ], 2016, between the Company and the Trustee (together, the “Indenture”).
Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Indenture.

 

The Company
hereby requests that Holders and Beneficial Owners of the Notes (or custodian, broker, nominee or other representative thereof)
provide a Settlement Notice to [Name of Settlement Share Depositary (or other nominee)], as [Settlement Share Depositary], in
the form provided in Exhibit E to the First Supplemental Indenture on or before [date] (the “Notice Cut-Off Date”).
If such delivery is made after the end of normal business hours at the specified office of the Settlement Share Depositary, such
delivery shall be deemed for all purposes to have been made or given on the next following Business Day. Any Settlement Notice
delivered pursuant to the terms of the Indenture will be irrevocable.

 

If a Holder
or Beneficial Owner of the Notes properly completes and delivers a Settlement Notice on or before the Notice Cut-Off Date, the
Settlement Share Depositary shall, in accordance with the terms of the First Supplemental Indenture, deliver to such Holder or
Beneficial Owner the relevant Settlement Shares (rounded down to the nearest whole number of Settlement Shares) or, if the Holder
elects, ADSs on the date which is two (2) Business Days

 

 

___________________

 

3
Note: Addresses to be reconfirmed prior to when notice is sent; subject to modification
if Notes are in definitive form and to changes in DTC (or successor clearing system) policies and procedures.

 

 

     

     

    

after
the latter of (a) the Conversion Date and (b) the date on which the Settlement Notice has been received by the Settlement Share
Depositary.

 

If a Holder
or Beneficial Owner of the Notes (or custodian, broker, nominee or other representative thereof) fails to properly complete and
deliver a Settlement Notice to the Settlement Share Depositary on or before the Notice Cut-Off Date, the Settlement Share Depositary
shall continue to hold the relevant Settlement Shares until a Settlement Notice is so delivered. However, the relevant Notes shall
be canceled on the Final Cancellation Date, which shall be [date], and any Holder or Beneficial Owner of the Notes (or custodian,
broker, nominee or other representative thereof) delivering a Settlement Notice after the Notice Cut-Off Date will have to provide
evidence of its entitlement to the relevant Settlement Shares or ADSs satisfactory to the Settlement Share Depositary in its sole
and absolute discretion in order to receive delivery of such Settlement Shares or, if the Holder elects, ADSs (if so elected to
be deposited with the ADS Depositary on its behalf). The Company shall have no liability to any Holder or Beneficial Owner of
the Notes for any loss resulting from such Holder’s or Beneficial Owner’s failure to receive any Settlement Shares
or ADSs, or from any delay in the receipt thereof, in each case as a result of such Holder or Beneficial Owner (or custodian,
nominee, broker or other representative thereof) failing to duly submit a Settlement Notice and the relevant Notes, if applicable,
on a timely basis or at all. If any Holder fails to properly complete and deliver a Settlement Notice, the Settlement Share Depositary
will be entitled to treat such Settlement Notice as null and void.

 

Should DTC,
any Holder or any Beneficial Owner of the Notes have any inquiries, please contact either the Company at [Telephone, Fax, Email]
or [Name], the [Settlement Share Depositary], at [Telephone, Fax, Email].[[4]]

 

	 	GRUPO FINANCIERO SANTANDER MÉXICO, S.A.B. DE C.V.
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

Dated: [              ]

 

		cc	The Bank of New York Mellon

                                         101 Barclay Street, Floor 7-E

                                         New York, NY 10286

                                         United States of America

                                         Attn: International Corporate Trust

                                         Fax: [     ]

 

 

 _____________________

4
Insert contact details of any Settlement Share Depositary, or, if the Company has been
unable to appoint a Settlement Share Depositary, any other details required to set out the delivery procedures in respect of the
Settlement Shares or ADSs as to holders and beneficial owners as the Company shall consider reasonable in the circumstances.

 

     

     

    

EXHIBIT
E

 

Form
of Settlement Notice[5]

NOTICE TO THE [SETTLEMENT SHARES DEPOSITARY]

 

		To:	[Settlement Share Depositary]

 

	Cc:         The Depository Trust Company

    55 Water Street, 25th Floor

    New York, NY 10041-0099

    Attn: Mandatory Reorganization Department

    Fax: +1 (212) 855-5488

    Email: mandatoryreorgannouncements@dtcc.com

 

Re: Grupo Financiero Santander
México, S.A.B. de C.V. U.S.$[ ] [ ]% Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital
Notes (CUSIP: [ ], ISIN: [ ]) – Notice to [Settlement Shares Depositary].

 

This notice
is in relation to Grupo Financiero Santander México, S.A.B. de C.V.’s (the “Company”) U.S.$[ ]
[ ]% Perpetual Subordinated Non-Preferred Contingent Convertible Additional Tier 1 Capital Notes (CUSIP: [ ], ISIN: [ ]) issued
on [ ], 2016 (the “Notes”) pursuant to the Contingent Convertible Securities Indenture, dated as of [ ], 2016,
between the Company and The Bank of New York Mellon, as Trustee (the “Trustee”), as supplemented by the First
Supplemental Indenture, dated as of [ ], 2016, between the Company and the Trustee (together, the “Indenture”).
Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Indenture.

 

 

 

_____________________

 

5
Note: Addresses to be reconfirmed prior to when notice is sent; subject to modification
if Notes are in definitive form and to changes in DTC (or successor clearing system) policies and procedures.

 

     

     

    

INFORMATION
OF THE HOLDER OR BENEFICIAL OWNER FOR DELIVERY OF SETTLEMENT SHARES OR ADSs

 

Surname/Company Name:

 

First name:

 

In the case of Settlement
Shares, name to be entered in the share register of Grupo Financiero Santander México, S.A.B. de C.V. or in records maintained
by INDEVAL or an INDEVAL custodian or, in the case of ADSs, name to be entered in the register of the Company’s registered
American Depositary Share facility:

 

Tradable Amount of the Notes
held on the date hereof:

 

Securities to be delivered:

 

o       Settlement
Shares

 

[Account details of clearing
system account] 

 

[Address to which any Settlement
Shares should be delivered] 

 

o       American
Depositary Shares

 

Registered account in the
Company’s American Depositary Share facility:

 

DTC participant number and
number of account holder at such participant:

 

[Other details as may be required
by the Settlement Share Depositary]

 

YOU MUST DELIVER THE SETTLEMENT
NOTICE TO [SETTLEMENT SHARE DEPOSITARY] (THE SETTLEMENT SHARE DEPOSITARY) [VIA DTC] ON OR BEFORE [DATE].

 

If such delivery
is made after the end of normal business hours at the specified office of the Settlement Share Depositary, such delivery shall
be deemed for all purposes to have been made or given on the next following Business Day. If you fail to properly complete and
deliver the Settlement Notice on or before the Notice Cut-Off Date, the Settlement Share Depositary shall continue to hold your
Settlement Shares until a Settlement Notice is delivered. However, your Notes shall be canceled on the Final Cancellation Date,
which shall be [date],[6] and, if you deliver a Settlement
Notice after the Notice Cut-Off Date, you will have to provide evidence of your entitlement to the relevant Settlement Shares
or ADSs satisfactory to the Settlement Share Depositary in its sole
and absolute discretion in order to receive delivery of such Settlement Shares or ADSs.

 

 

___________________

 

6
Note: The Final Cancellation Date may be up to twelve (12) Business Days following
the Notice Cut-Off Date.Exhibit 4.1

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

NEUROMETRIX,
INC.

 

	Warrant Shares: ______	Initial Exercise Date: December __, 2016

 

 

THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received, ___________ or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on
or after June __, 2017 (the “Initial Exercise Date”) and on or prior to the close of business on the five year
anniversary of the Initial Exercise Date (the “Termination Date”), but not thereafter, to subscribe for and
purchase from NeuroMetrix, Inc., a Delaware corporation (the “Company”), up to _______ shares (as subject to
adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock
under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.         Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement
(the “Purchase Agreement”), dated December __, 2016, among the Company and the purchasers signatory thereto.

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.

 

“Common
Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any
time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

    	 	 1	 

     

    

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Trading Day”
means a day on which the principal Trading Market is open for trading.

 

“Trading
Market” means the trading market on which the Common Stock is primarily listed on and quoted for trading, which, as of
the date of this Warrant shall be the Nasdaq Capital Market.

 

“Transfer
Agent” means American Stock Transfer & Trust Company, LLC, the Company’s transfer agent for the Common Stock
and Warrants.

 

Section 2.         Exercise.

 

a)       Exercise
of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company or the Transfer Agent (or such other office or agency
that the Company may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books
of the Company), as applicable, of (i) a duly executed facsimile copy or PDF copy submitted by electronic mail of the Notice of
Exercise and (ii) within three (3) Trading Days of the date said Notice of Exercise is received by the Transfer Agent, the Company
shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s
check drawn on a United States bank or, if available, pursuant to the cashless exercise procedure specified in Section 2(c) below.
No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Transfer Agent for cancellation
within three (3) Trading Days of the date the final Notice of Exercise is received by the Transfer Agent. Partial exercises of
this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect
of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Transfer Agent shall maintain records showing the number of Warrant Shares purchased and the
date of such purchases. The Company or the Transfer Agent shall deliver any objection to any Notice of Exercise Form within one
(1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof. In
no event will the Company be required to net cash settle the Warrant.

 

    	 	 2	 

     

    

 

b)       Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be $____, subject to adjustment hereunder
(the “Exercise Price”); provided, however, following the date that Shareholder Approval is obtained and deemed
effective, the Exercise Price shall be $0.70, subject to adjustment hereunder.

 

c)       Cashless
Exercise. If, at any time after the 6 month anniversary of the date of the Closing Date, there is no effective registration
statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant
may only be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the VWAP
on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of Exercise;

 

(B) = the Exercise
Price of this Warrant, as adjusted hereunder; and

 

(X) = the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.

 

In no event shall
the Company be required to net cash settle the Warrant exercise. If Warrant Shares are issued
in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the
Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants being
exercised may be tacked on to the holding period of the Warrant Shares.  The Company agrees not to take any position
contrary to this Section 2(c).

 

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d)           Mechanics
of Exercise.

 

i.         Delivery
of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal
at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder
or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and
otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the end of the day on the date
that is the later of (A) three (3) Trading Days after the receipt by the Company or the Transfer Agent of the Notice of Exercise
and (B) if cash exercise, payment of the aggregate Exercise Price of the shares thereby purchased (such date, the “Warrant
Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated
to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date of delivery
of the Notice of Exercise in accordance with this Section 2, with payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(v) prior to the
issuance of such shares, having been paid; provided, however, that if the date of such submission, payment and submission is a
date upon which the Common Stock transfer books of the Company are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next succeeding day on which the Common Stock transfer books
of the Company are open. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of
Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable
Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages
begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder
rescinds such exercise.

 

ii.        Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all
other respects be identical with this Warrant.

 

iii.       Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

    	 	 4	 

     

    

 

iv.      Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder,
if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or before
the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction
or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times
(2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have
been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common
Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding
sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.
Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

v.        No Fractional
Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.
As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at
its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price or round up to the next whole share.

 

vi.       Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by
the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the
Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of
the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed
by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer
tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

 

    	 	 5	 

     

    

 

vii.      Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.

 

e)            Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth
in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company
is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of
the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination and shall have no liability for exercise of the Warrant that are not in compliance
with the Beneficial Ownership Limitation. In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this
Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares
of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company
shall within two Trading Days confirm in writing to the Holder the number of shares of Common Stock then outstanding.  In
any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the
number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable
upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease
the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event
exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.
Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

    	 	 6	 

     

    

 

Section 3.              Certain
Adjustments.

 

a)            Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)            [RESERVED]

 

    	 	 7	 

     

    

 

c)            Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to
any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the Beneficial Ownership Limitation).

 

d)            Pro
Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation,
the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in
such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution
to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this
Warrant has not been partially or completed exercised at the time of such Distribution, such portion of the Distribution shall
be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.

 

    	 	 8	 

     

    

 

e)            Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon
such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard
to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to
apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance
with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder
and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder,
deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such
Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this
Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance
to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted
for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.

 

    	 	 9	 

     

    

 

f)             Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

g)            Notice
to Holder.

 

i.         Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.        Notice
to Allow Exercise by Holder. If the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (A) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (B) the approval of any stockholders of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (C) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile
or email to the Holder at its last facsimile number or email as it shall appear upon the Warrant Register of the Company, at least
20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice
or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such
notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

    	 	 10	 

     

    

 

Section 4.              Transfer
of Warrant.

 

a)            Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(c) hereof and the provisions
of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration
rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder
or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company
unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within
three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant,
if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having
a new Warrant issued.

 

b)            New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial
Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

    	 	 11	 

     

    

 

c)            Transfer
Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or
current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer,
that the Holder or transferee of this Warrant, as the case may be, comply with the transfer restrictions of the Purchase Agreement.

 

d)            Representation
by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any
exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.              Miscellaneous.

 

a)            No Rights
as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as
a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section
3.

 

b)            Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of
the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.

 

c)            Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding
Business Day.

 

    	 	 12	 

     

    

 

d)            Authorized
Shares.

 

The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be
listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such
issue).

 

Except and to the
extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the
generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any
action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise
Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any
public regulatory body or bodies having jurisdiction thereof.

 

e)            Jurisdiction.
The validity, interpretation, and performance of this Warrant shall be governed in all respects by the laws of the State of New
York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another
jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to
this Warrant shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern
District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.

 

    	 	 13	 

     

    

 

f)             Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does
not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)            Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all
rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.

 

h)            Notices.
Any notice or statement authorized by this Warrant to be given or made by the holder of any Warrant to or on the Company shall
be sufficiently given (i) when so delivered if by hand or overnight delivery, (ii) when sent, if delivered by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) or by electronic
mail, or (iii) if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage
prepaid, addressed, as follows:

 

NeuroMetrix,
Inc.

1000 Winter Street

Waltham, Massachusetts 02451

Attn: Shai Gozani

By Email (which constitutes notice):
shai_gozani@neurometrix.com

 

i)             Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder
for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.

 

j)             Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be adequate.

 

    	 	 14	 

     

    

 

k)            Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.

 

l)             Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)           Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Warrant.

 

n)            Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.

 

********************

 

(Signature Page Follows)

 

    	 	 15	 

     

    

 

IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	 	neurometrix, inc.
	 	 	 
	 	By:	 
	 	 	
        Name:

	 	 	
        Title:

	 	 	 

    	 	 16	 

     

    

 

NOTICE OF EXERCISE

 

To:         neurometrix,
inc.

 

(1)     The undersigned hereby
elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full),
and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)     Payment shall take
the form of (check applicable box):

 

 ̈
in lawful money of the United States; or

 

 ̈
if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).

 

(3)     Please issue said
Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

The Warrant Shares shall be delivered to the
following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4)     Accredited Investor.
The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933,
as amended.

 

[SIGNATURE
OF HOLDER]

 

	Name of Investing Entity:	 

	Signature of Authorized Signatory of Investing Entity:	 

	Name of Authorized Signatory:	 

	Title of Authorized Signatory:	 

	Date:	 

 

    	 	 	 

     

    

 

EXHIBIT B

 

ASSIGNMENT
FORM

(To assign the foregoing
Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the
foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	Name:	 	 
	 	 	(Please Print)
	 	 	 
	Address:	 	 
	 	 	(Please Print)
	Dated: _______________ __, ______	 	 
	 	 	 
	Holder’s Signature:	 	 	 
	 	 	 	 
	Holder’s Address:

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