Document:

exv10w1

 

Exhibit 10.1

SUBLEASE

     THIS SUBLEASE (“Sublease”) is entered into as of December 11, 2007 by and between Avnet, Inc.,
a New York corporation with its principal offices at 2211 South 47th Street, Phoenix, AZ
85034 (“Sublessor”) and Santarus, Inc., a Delaware corporation with its principal offices at 10590
West Ocean Air Drive, Suite 200, San Diego, CA 92130 (“Sublessee”).

RECITALS

     A. By Lease Agreement dated September 23, 2002 (the “Prime Lease”), Kilroy Realty, L.P.
(“Landlord”) leased to Memec, LLC (“Memec”) certain premises at 3721 Valley Centre Drive, San
Diego, CA 92130 (the “Building”).

     B. Sublessor is successor by merger to Memec.

     C. Sublessor desires to sublease to Sublessee and Sublessee desires to hire from Sublessor the
entire rentable area on the 4th floor consisting of approximately 24,523 rentable square feet of
space and designated as Suite 400 as depicted on the Plan attached to and forming a part of this
Sublease as Exhibit A (the “Sublet Premises”).

     NOW, THEREFORE, in consideration of the mutual agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sublessor and
Sublessee mutually agree as follows:

     1. Sublease, Use and Term. Sublessor hereby subleases to Sublessee and Sublessee
hereby hires from Sublessor the Sublet Premises together with the fixtures and improvements thereon
and, subject to the conditions and limitations set forth in the Prime Lease and this Sublease the
non-exclusive right to use in common with others entitled thereto the break-room and shower-room
located on the first floor of the Building as depicted on Exhibit E hereof and the Common Areas for
the term, at the rentals and upon the terms and conditions set forth in this Sublease. The Sublet
Premises shall be used only for general business offices and uses related thereto and permitted
under the Prime Lease. The term of this Sublease shall commence on April 1, 2008 (the
“Commencement Date”) and shall expire on February 27, 2013, unless sooner terminated in accordance
with the provisions hereof; provided, however, that the Commencement Date shall be subject to
extension as provided in Section 2 below.

     2. Delivery of Premises and Sublessee Improvements.

(a) Sublessor shall deliver the Sublet Premises on the Early Possession Date in “broom swept”
condition and free of any occupants and their personal property (including, but not limited to, all
of Sublessor’s furniture located in the Sublet Premises) and otherwise in substantially similar
condition to the condition of the Sublet Premises as of the date hereof. Sublessee acknowledges
that it has inspected the Sublet Premises and the fixtures, equipment and improvements thereon, and
is fully acquainted with their condition as of the date hereof, and except for Sublessor’s
obligations in this Section 2(a) of this Sublease, Sublessee shall accept possession of the Sublet
Premises in “as is” condition on the on the Early Possession Date, ordinary wear and tear
excepted. Sublessor shall have no other obligation to perform any installations, renovations,
alterations, or improvements in or to the Sublet Premises except as set forth in this Section 2(a)
of this Sublease. In the event Sublessor shall not deliver possession of the Sublet Premises in the
condition required by this Section 2(a), Sublessee shall give written notice specifying the nature
and extent of such nonconformance within five (5) days of the Early Possession Date (as defined
below) and any other nonconformance shall be deemed to be waived. Sublessor shall promptly correct
any such nonconformance, provided however that if such nonconformance results from material damage
in or to the Sublet Premises prior to the Early Possession Date, Sublessor may elect to terminate
this Sublease by giving written notice of termination to Sublessee within five (5) days from
receipt of Sublessee’s written notice of nonconformance. Promptly following delivery of
Sublessor’s notice, Sublessor shall return any payments made by Sublessee hereunder and any letter
of credit given by Sublessee hereunder.

(b) Sublessee, at its expense, shall perform all improvements desired or required for its use and
occupancy of the Sublet Premises in accordance with plans and specifications approved by Sublessor,
which approval shall not be

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unreasonably withheld, delayed or conditioned by Sublessor, and if required under the Prime Lease,
approved by Landlord. Sublessor shall allow Sublessee an allowance in the form of an abatement of
Base Rent in an amount not to exceed in aggregate the Base Rent for the first eight (8) months of
the term of this Sublease, which is equal to $559,124.40 (the “Abatement Allowance”). The
Abatement Allowance shall be applied solely against the cost and expense incurred by Sublessee for
demolition, construction, alteration, improvement and other work, fixtures, equipment and materials
(including cabling, phone and security systems, signage, painting and re-carpeting), and any
associated out of pocket architect, construction management, design consultant and engineering
fees, plan check and permitting fees, and the contractor’s general conditions and profit, incurred
in connection therewith, as generally set forth in the Preliminary Budget dated October 10, 2007
attached hereto as Exhibit G (collectively “Sublessee Work”). In the event that the cost and
expense of Sublessee Work shall exceed the amount of the Abatement Allowance, Sublessee shall be
entirely responsible for such excess. If Sublessee does not use all or any part of the Abatement
Allowance for the purposes stated herein, then the Abatement Allowance shall be reduced
accordingly. Provided that Sublessee is not then in default of any of the material terms,
provisions or conditions of this Sublease beyond any applicable cure period, the Abatement
Allowance shall be credited to Sublessee in monthly installments equal to the amount of the Base
Rent payable for each month (and any partial month) of the Sublease Term following the Commencement
Date until such Abatement Allowance is fully-expended (or such portion thereof as equals the lesser
cost of the Sublessee Work is expended). Within thirty (30) days following completion of the
Sublessee Work, Sublessee shall deliver to Sublessor a written request for abatement (each called a
“Abatement Application”), which shall be accompanied by: (1) reasonable evidence that the Sublessee
Work has been fully paid for by Sublessee, (2) a certificate signed by Sublessee’s architect, if
any, or an officer of Sublessee certifying that the Sublessee Work is completed, (3) lien waivers
(in form reasonably satisfactory to Sublessor) from contractors, subcontractors and all materialmen
who shall have performed any of the Sublessee Work, releasing Sublessee and the Sublet Premises
from liability for the same, and (4) “as-built” plans showing changes to existing conditions
resulting from the Sublessee Work, and all building department sign-offs, inspection certificates
and any permits required to be issued by any governmental entities having jurisdiction (including,
but not limited to, a copy of a new/updated certificate of occupancy for the Sublet Premises (if
required by state and local building laws)). The Sublessee Work is subject to Landlord’s and
Sublessor’s approval; provided that Sublessor acknowledges its approval of the space plan for the
Sublet Premises attached hereto as Exhibit A, and agrees that Landlord’s consent to this Sublease
shall include approval of the Sublessee Work. Sublessor’s approval of any modifications to the
design of the Sublet Premises set forth on Exhibit A after the date of this Sublease shall not be
unreasonably withheld,
 delayed or conditioned. The Abatement Allowance is being given for the
benefit of Sublessee only. No third party shall be permitted to make any claims against Sublessor
or Sublessee with respect to any portion of the Abatement Allowance.

(c) Notwithstanding any provision of this Section 2 to the contrary, Sublessor shall deliver
possession of the Sublet Premises for performance of Sublessee’s Work three (3) business days after
the date Sublessor delivers to Sublessee the written consent of Landlord pursuant to Section 18 of
this Sublease (the “Early Possession Date”); provided, however, that Sublessor agrees to use
diligent and commercially reasonable efforts to obtain Landlord’s written consent prior to December
15, 2007, and agrees that if the Early Possession Date does not occur on or before January 1, 2008
for any reason other than a failure by Sublessee to reasonably cooperate with Sublessor’s efforts
to obtain such consent by such date, then the Commencement Date shall be delayed by one day for
each day that the Early Possession Date is delayed beyond January 1, 2008; further provided,
however, that if, notwithstanding Sublessor’s commercially reasonable and diligent efforts to
obtain such consent, the Early Possession Date does not occur by February 1, 2008, either party may
terminate this Sublease by giving written notice of termination to the other no later than February
10, 2008. Promptly following delivery of such notice, Sublessor shall return any payments made by
Sublessee hereunder and any letter of credit provided by Sublessee hereunder. Sublessee’s access
to the Sublet Premises and performance of Sublessee’s Work prior to the Commencement Date shall be
subject to and in accordance with all of the terms and conditions of this Sublease, including the
obligation to provide certificates of insurance required pursuant to this Sublease, except that
Sublessee shall have no liability for Base Rent prior to the Commencement Date or for Additional
Rent prior to the Commencement Date except to the extent that Additional Rent arises solely from
Sublessee’s possession or use of the Sublet Premises.

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     3. Rent.

     (a) Sublessee shall pay to Sublessor as base rent (“Base Rent”) the following:

$838,686.60 payable $69,890.55 per month from April 1, 2008 to March 31, 2009*

$868.040.63 payable $72,336.72 per month from April 1, 2009 to March 31, 2010

$898,422.05 payable $74,868.50 per month from April 1, 2010 to March 31, 2011

$929,866.82 payable $77,488.90 per month from April 1, 2011 to March 31, 2012

$882, 211.11 payable $80,201.01 per month from April 1, 2012 to February 27, 2013

     *Base Rent shall be subject to abatement from the Commencement Date until the Abatement
Allowance (or such portion thereof to which Sublessee is entitled) is fully expended in accordance
with Section 2(b) of this Sublease.

     Sublessee shall pay Base Rent in advance on the first day of each month of the term, except
that Sublessee shall pay the first monthly installment of Base Rent payable hereunder prior to
taking possession of the Sublet Premises following the Early Possession Date.

     (b) Sublessee shall pay to Sublessor as additional rent (“Additional Rent”) all other sums
payable under this Sublease.

     (c) Sublessee shall pay Base Rent and Additional Rent (collectively “Rent”) in lawful money of
the United States by good check or draft drawn to the direct order of Sublessor at the address of
Sublessor herein or to such other party or such other address as Sublessor shall designate, without
notice or demand and without any deduction, set-off, abatement (except for any abatements expressly
provided herein) or offset whatsoever. If this Sublease shall commence on a day other than the
first day of a calendar month, or if this Sublease shall expire or terminate on a day other than
the last day of a calendar month, then Rent payable for such fractional month shall be prorated on
a daily basis based upon a thirty (30) day calendar month. Additional Rent shall be paid as and
when specified in this Sublease; if not specified in this Sublease Additional Rent shall be paid
within twenty (20) days from receipt of Sublessor’s invoice.

     4. Additional Rent. . For the purposes of this Sublease: the rentable area of the
Sublet Premises shall mean 24,523 square feet, which is the agreed rentable square foot area of the
Sublet Premises; and the rentable area of the Building shall mean 114,782 square feet, which is the
agreed rentable square foot area of the Building; and “Sublessee’s Share” shall be deemed to mean
21.37%, which is the agreed percentage obtained by dividing 24,523 by 114,782. In the event that
the rentable square foot area leased by Sublessor under the Prime Lease shall be increased or
decreased during the term of this Sublease, Sublessee’s Share shall be recalculated in accordance
with ANSI Z65.1-1996, as promulgated by the Building Owners and Managers Association. Sublessee
shall pay as Additional Rent Sublessee’s Share of:

     (a) any increases in charges incurred by Sublessor pursuant to Article 4 of the Prime Lease
over sums incurred by Sublessor pursuant to Article 4 of the Prime Lease for the calendar year
ending December 31, 2008 (the “Base Year” for purposes of this Sublease); and further provided that
the “gross up” provisions of Section 4.2 of the Prime Lease shall be limited to Landlord’s gross up
of Project and Building Operating Expenses under the Prime Lease and shall not require Sublessee to
pay more that the Sublessee’s Share of such Operating Expenses payable by Sublessor if the Building
is not fully sublet or occupied at any time during the Sublease Term; and

     (b) any increases in charges incurred by Sublessor pursuant to provisions of the Prime Lease
other than Article 3 or 4 of the Prime Lease (less any applicable credits), provided however that
Sublessee shall pay 100% of all charges payable for electricity and other utilities supplied to the
Sublet Premises; 100% of all charges for services supplied to the Sublet Premises (except as
otherwise set forth in this Sublease) and 100% of all such charges resulting from Sublessee’s
violation of any provision of this Sublease; and

     (c) If applicable in the jurisdiction where the Sublet Premises are situated, Sublessee shall
pay and be liable for all rental, sales, use and other similar taxes, if any, (excluding income
taxes of Sublessor) levied or imposed by any governmental or municipal authority having authority
on payments by Sublessee pursuant to this Sublease. If any applicable taxing authority requires
payment of such taxes as a component of taxes payable by Sublessor to such taxing authority,
Sublessor shall notify Sublessee of such requirement and Sublessee shall thereafter make such
payments to Sublessor concurrently with the payment of the Rent upon which the tax is based as set
forth above.

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     (d) Sublessor shall provide Sublessee with copies of all documentation received by Sublessor
from Landlord in support of the Base Year charges and calculations of Additional Rent payable by
Sublessee under this Sublease. At Sublessee’s written request, Sublessor shall exercise its rights
pursuant to Section 4.6 of the Prime Lease to (a) request documentation evidencing the accuracy of
Landlord’s calculations of Additional Rent, and (b) dispute such calculations and seek to have them
adjusted, provided that Sublessee shall pay Sublessor for any and all out of pocket expenses
(including the reasonable accountants and attorneys fees) incurred by Sublessor in connection with
such dispute.

     5. Repairs and Maintenance. Sublessor shall not be responsible for injury, loss or
damage resulting from acts or omissions of third parties performing repairs or maintenance or for
injury, loss or damage resulting from the condition of the Sublet Premises or the lands and
buildings of which the Sublet Premises are a part or the fixtures or improvements therein, except
where such loss or damage arises from the negligence or willful misconduct of Sublessor, its
agents, employees, contractors and/or subcontractors.

     6. Utilities and Services.

     (a) Sublessee shall pay for electricity provided to the Sublet Premises and to mechanical
equipment serving the Sublet Premises based on usage shown on such sub-meter(s). Sublessor shall
invoice Sublessee for its use of electricity on a monthly basis showing in reasonable detail the
computation of charges for the prior month for electricity together with copies of applicable bills
received by Sublessor from the utility providing electricity and Sublessee shall pay Sublessor or
its designee for Sublessee’s use of electricity at rates no greater than the rates that Sublessee
would have paid if metered directly to the utility providing electricity to the Building.

     (b) Notwithstanding any provision of this Sublease to the contrary, cleaning and janitorial
service to the Sublet Premises shall be provided by Landlord in accordance with the Cleaning
Specifications attached to the Prime Lease as Exhibit J thereto.

     (c) Sublessor agrees to provide at Sublessor’s expense (except for reimbursement of charges
for issuance of access cards and except to the extent that such charges are payable by Sublessee
pursuant to Section 4 of this Sublease) the security equipment and related services specified in
Exhibit D hereto. Sublessee hereby acknowledges that such equipment is operated and/or monitored
by a recognized third party service provider and that Sublessor’s sole responsibility shall be to
continue to engage a recognized third party service provider to operate and/or monitor such
equipment. Subject to the foregoing, Sublessor shall not be responsible for providing security and
shall not be responsible for the failure of any security equipment and/or monitoring service.
Sublessee hereby assumes all responsibility for the protection of Sublessee, its employees, agents,
invitees and property from acts of third parties. Sublessee shall give Sublessor prompt written
notice of the failure of any security equipment or monitoring service provided hereunder upon
Sublessee obtaining actual knowledge of such failure.

     7. Casualty Loss; Condemnation. This Sublease and Sublessee’s rights hereunder shall
be subject to the exercise by Landlord or any third party entitled thereto of any rights granted
pursuant to the Prime Lease or by law, including the right to terminate the Prime Lease or this
Sublease in the event of any taking by eminent domain or condemnation or any casualty loss or
damage. In the event of any taking by eminent domain or condemnation or any casualty loss or
damage to the Sublet Premises, Sublessee agrees to be subject to any action taken to terminate the
Prime Lease by Sublessor pursuant to the terms of the Prime Lease.

     8. Holding Over. If Sublessee or any party claiming by, through or under Sublessee
holds over in the Sublet Premises after expiration or termination of this Sublease, Sublessor may
exercise any and all remedies available to it at law or in equity to recover possession of the
Sublet Premises, and to recover damages, including without limitation, all amounts payable by
Sublessor to Landlord by reason of such holdover. For any month or partial month that Sublessee
or any party claiming by, through or under Sublessee remains in the occupancy of the Sublet
Premises after the expiration or termination of this Sublease, such occupancy shall at Sublessor’s
option be construed as tenancy from month to month only at a monthly Rental equal to the greater of
(a) one and one-half (1-1/2) times the Rent and Additional Rent payable for the month prior to
expiration or termination of this Sublease; or (b) the Rent and Additional Rent and other amounts
payable by Sublessor to Landlord by reason of such holding over. The foregoing shall not be
construed as Sublessor’s permission for Sublessee to hold over and the acceptance by Sublessor of
any lesser sum shall be construed as payment on account and not in satisfaction of damages for such
holding over. Notwithstanding the foregoing terms of surrender, Sublessee is not prohibited by
Sublessor from entering into a separate direct agreement with Prime Landlord for the extension of
Sublessee’s occupancy in the

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Sublet Premises beyond the expiration or earlier termination of this Sublease, either as a
direct lease or a month-to-month holdover agreement (a “Direct Occupancy Agreement”), and in the
event that Sublessee and Landlord enter into a Direct Occupancy Agreement for the Sublet Premises,
then provided that (y) a copy of the Direct Agreement is provided to Sublessor, and (z) Prime
Landlord agrees in writing, for the express benefit of, and in form and substance reasonably
acceptable to, Sublessor, that (i) terminates the Prime Lease with respect to the Sublet Premises
as of the date of the expiration or earlier termination of this Sublease, and (ii) releases
Sublessor from any and all liability and obligation under the Prime Lease (1) for the Sublessee’s
failure to vacate the Sublet Premises, (2) for the condition of the Sublet Premises upon their
surrender by Sublessee, and (3) from any and all claims relating to the Sublet Premises arising
after the date of expiration or earlier termination of this Sublease, then Sublessor agrees to
waive any renewal or extension rights under the Prime Lease with respect to the Sublet Premises,
and this Sublease shall be deemed terminated as of the commencement of such Direct Occupancy
Agreement notwithstanding Sublessee’s failure to surrender the Sublet Premises as otherwise
required by this Sublease. The provisions of this Section 8 are intended to be binding on
Sublessor and Sublessee (and their successors and assigns) only, and in consenting to this
Sublease, Prime Landlord is not obligated in any way to provide Sublessee with a Direct Occupancy
Agreement, and it shall be within Prime Landlord’s sole and absolute discretion to grant or reject
any request by Sublessee for such an agreement.

     9.  Default by Sublessee; Remedies of Sublessor. Sublessee shall be in default under
this Sublease: (i) if Sublessee shall fail to pay Rent or Additional Rent or other amounts as and
when same shall be due hereunder and such failure shall continue for five (5) business days after
receipt of written notice of such failure; or (ii) if Sublessee shall fail to comply with any
provision of this Sublease and shall not cure such failure within thirty (30) days after receipt of
written notice thereof, provided however that if the nature of Sublessee’s obligation requires more
than thirty (30) days for compliance and Sublessor shall not be in default under the Prime Lease by
reason thereof, Sublessee shall not be in default if Sublessee commences to cure such default
within such thirty (30) days and thereafter diligently prosecutes same to completion; or (iii) if
any act or omission by Sublessee shall constitute a default under the Prime Lease and Sublessee
shall not cure such default or threatened default within one half of the time period allowed to
cure such default under the Prime Lease. If Sublessee shall be in default under this Sublease,
Sublessor shall have the right, without further notice to Sublessee, to (a) invoke any of the
remedies permitted under the Prime Lease; or (b) invoke any other remedies permitted by law or in
equity by reason of such default, including the right of injunction. Notwithstanding the
foregoing, if Sublessee receives notice of Landlord’s election to exercise its right to terminate
the Prime Lease as a result of an Event of Default by Sublessor under the Prime Lease (including,
without limitation, Sublessee’s receipt of a 3-day notice to pay rent or quit, as required under
California law), and such default is capable of cure by the payment of money, then Sublessee shall
have the right, but not the obligation, to cure such a monetary default by Sublessor under the
Prime Lease if necessary to prevent a termination of this Sublease, and the amount paid to cure
such default shall be reimbursed by Sublessor within ten (10) business days following delivery of
written notice from Sublessee, including confirmation from Landlord that the default was
effectively cured by such payment; provided, however, that Sublessee shall have no right to recover
from Sublessor those amounts paid by Sublessee in curing any monetary default by Sublessor under
the Prime Lease until either (y) Sublessor agrees in writing with Sublessee that such a monetary
default under the Prime Lease existed and the amount paid by Sublessee on behalf of Sublessor was
indeed due and unpaid by Sublessor, or (z) Sublessee obtains the judgment of a court of competent
jurisdiction (or other adjudicative body mutually agreed to by Sublessor and Sublessee) reaching
such conclusion (provided that in the event of a filing by or against Sublessor of any proceeding
under bankruptcy or insolvency laws, which results in the stay of any such action, the amounts
previously paid by Sublessee shall be deemed due and payable by Sublessor). For the purposes of
Sublessee’s cure rights under this Section 9, the failure by Sublessor to maintain the insurance
required by the Prime Lease shall be deemed to be a monetary default. Any amount due from
Sublessor to Sublessee under this Section 9 shall be subject to the limitations of Section 10(c)
below, and if such amount is not reimbursed to Sublessee within twenty (20) days after the date due
and payable as provided above shall be subject to Sublessee’s right to offset such amount against
Sublessee’s Rent obligations accruing under this Sublease after the expiration of such 20-day
period.

     10. Prime Lease.

     (a) This Sublease shall be subject and subordinate to the terms, covenants and conditions of
the Prime Lease. Except as otherwise set forth herein, Sublessee agrees to fully and faithfully
perform all of the obligations of Sublessor as tenant under the Prime Lease, and abide by and
observe all the terms, conditions, restrictions and limitations imposed on Sublessor as tenant by
the Prime Lease, with respect to the Sublet Premises, and not to do anything which would constitute
a default under the Prime Lease or omit to do anything which would result in a violation of the
terms, covenants and conditions of the Prime Lease.

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     (b) The terms, covenants and conditions of the Prime Lease are hereby incorporated herein by
reference with the same force and effect as if fully set forth in this Sublease, except that:

     (i) any reference in the Prime Lease to “Landlord” or “Tenant” shall mean the Sublessor
or Sublessee, respectively; any reference in the Prime Lease to “Premises” shall mean the
Sublet Premises; any reference in the Prime Lease to “Tenant’s Share” shall mean the
Sublessee’s Share; any reference in the Prime Lease to the “term” shall mean the term of
this Sublease; any reference in the Prime Lease to quantities applicable to the Building
shall be adjusted to reflect Sublessee’s Share;

     (ii) Sublessor shall have no responsibility for any representations, warranties, covenants or
agreements of Landlord or for performance of any obligations of Landlord or for any failure of
Landlord to perform any of Landlord’s obligations or for any act or omission of Landlord;

     (iii) the following portions of the Prime Lease shall not be incorporated in this
Sublease: all Sections of the “Summary of Basic Lease Information”, Sections 1.3, 1.4, 2, 4,
16, 21 (except 21.2.5), 23.4, 29.13 (except for the last sentence thereof), 29.18, 29.24,
29.37 and 29.39 of the Prime Lease and Exhibits A, B, C, G, I, J and K; provided, however,
that the applicable terms and conditions of Article 4 of the Prime Lease are incorporated
herein as reference with respect to Sublessee’s pass-through payment obligations and the
limitations on such amounts payable by Sublessee as additional rent under Section 4 of this
Sublease, the documentation of which Sublessee is entitled to receive under Section 4(d)
above, and Sublessee’s rights pursuant to Section 4(d) above to enforce Sublessor’s rights
under Section 4.6 of the Prime Lease;

     (iv) any obligation of Landlord to provide a Non-disturbance Agreement shall be satisfied by
any non-disturbance agreement reasonably acceptable to Sublessor;

     (v) any obligation of Landlord to provide construction, alterations or improvements shall not
apply to this Sublease;

     (vi) if the Prime Lease provides Sublessor with any exclusive rights and/or any rights
to renew, or terminate, or rights of first refusal or rights to increase, or decrease the
size of the Sublet Premises, or elect to lease other premises, any such right shall be
deemed personal to Sublessor and expressly reserved to Sublessor and shall not be
incorporated in this Sublease; provided, however, that Sublessor’s renewal rights with
respect to the Sublet Premises only shall be subject to the rights of Sublessee under
Section 8 above with respect to Sublessee’s right to seek a Direct Occupancy Agreement with
Landlord;

     (vii) if a conflict between provisions of this Sublease and provisions of the Prime
Lease would permit Sublessee to do or cause to be done any act or thing to be done
prohibited by the Prime Lease, then the provisions of the Prime Lease shall prevail;

     (viii) except as otherwise provided in this Sublease, any provision of the Prime Lease
that Landlord’s consent shall not be unreasonably withheld shall not apply to Sublessor’s
consent hereunder, which consent shall be given or not given by Sublessor in its sole
judgment in the event that (a) Landlord shall not have given its consent under the Prime
Lease or (b) the giving of such consent by Sublessor would subject Sublessor to additional
liabilities, costs or expenses as a result thereof;

     (ix) if any act or omission by Sublessee shall constitute a default under the Prime Lease,
the time period for Sublessee to cure such default hereunder shall be deemed to be one-half of the
time period to cure such default under the Prime Lease (except that no such period shall be less
than three (3) days;

     (x) for purposes of incorporating Section 3.2 (Abatement of Rent) of the Prime Lease
into this Sublease, the term “Abatement Event” shall be deemed to apply to any such event
caused by Landlord, with respect to Landlord’s obligations under the Prime Lease or any such
event caused by Sublessor with respect to Sublessor’s obligations under this Sublease;

     (xi) for the purpose of incorporating Section 8.5 (Landlord’s Property) of the Prime
Lease, provided that this Sublease shall expire on or about the date that the Prime Lease
shall expire, Sublessor shall not

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require removal of improvements, alterations, fixtures or equipment from the Sublet Premises
unless Landlord shall require removal of same; and

     (xii) subject to Sublessee’s obligations to abide by and not to do anything that would
constitute a default under the Prime Lease or omit to do anything which would result in a
violation of the terms, covenants and conditions of the Prime Lease, in the event that any
provisions or defined terms set forth in this Sublease conflict with any provision or
defined term of the Prime Lease that is incorporated herein by reference, then the
provisions of this Sublease shall control.

     (c) Sublessor agrees: (i) to take all commercially reasonable actions to maintain the
existence of the Prime Lease; (ii) to defend any claim by Landlord that Sublessor is in default
under the Prime Lease and pursue all commercially reasonable means of opposing any efforts by
Landlord to terminate the Prime Lease by reason of such default. In the event that Sublessee’s
right to occupy the Sublet Premises pursuant to this Sublease is terminated as a result of: (i)
Sublessor entering into an agreement to modifiy or terminate the Prime Lease in violation of the
provisions of this Sublease, (ii) Sublessor defaulting under the Prime Lease, or (iii) Sublessor
defaulting under this Section 10(c), then in any such event Sublessor and Sublessee agree that it
would be impractical and extremely difficult to estimate the damages which Sublessee may suffer as
a result thereof. Therefore, Sublessor and Sublessee agree that a reasonable estimate of the total
net detriment that Sublessee would suffer in the event that Sublessor breaches its obligations
under this Section 10(c) is and shall be, as Sublessee’s sole and exclusive remedy (whether at law
or in equity) for such breach, an amount equal to the following: $700,000 for termination before
April 1, 2009; $500,000 for termination between April 1, 2009 and March 31, 2010; $400,000 for
termination between April 1, 2010 and March 31, 2011; and $300,000 for termination between April 1,
2011 and February 27, 2013; provided however that Sublessor shall not be liable to Sublessee for
liquidated damages if Sublessee is not in occupancy and conducting business in the entire Sublet
Premises at the time of such termination. SAID AMOUNTS SHALL BE THE FULL, AGREED AND LIQUIDATED
DAMAGES FOR THE BREACH OF THE COVENANTS SET FORTH IN THIS SECTION 10(C) BY SUBLESSOR, ALL OTHER
CLAIMS TO DAMAGES OR OTHER REMEDIES F0R SUCH BREACH BEING HEREIN EXPRESSLY WAIVED BY SUBLESSEE.
THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE
OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO
CONSTITUTE LIQUIDATED DAMAGES TO SUBLESSEE PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676
AND 1677. SUBLESSEE HEREBY WAIVES CALIFORNIA CIVIL CODE SECTION 3389. NOTWITHSTANDING THE
FOREGOING, THE WAIVERS SET FORTH IN THIS SECTION SHALL NOT PRECLUDE SUBLESSEE FROM PURSUING OTHER
REMEDIES THAT MAY BE AVAILABLE TO SUBLESSEE AT LAW OR IN EQUITY WITH RESPECT TO ANY BREACHES BY
SUBLESSOR OF ANY OTHER PROVISION OF THIS SUBLEASE.

     11. Enforcement of Landlord’s Obligations. In the event that Landlord fails to
perform any obligation under the Prime Lease for the benefit of the Sublet Premises, Sublessor
shall, on written notice from Sublessee, request that Landlord perform such obligation and
Sublessor shall use all commercially reasonable efforts (which expression shall not include
prosecution of any legal action) to obtain performance of such obligation by Landlord in favor of
the Sublet Premises. Notwithstanding the foregoing, if Landlord shall be in default under the
Prime Lease in performance of an obligation in favor of the Sublet Premises, Sublessor shall, on
notice from Sublessee and at Sublessee’s expense (which expense shall be allocated among Sublessee
and other subtenants of Sublessor providing similar notice to Sublessor), prosecute such action as
Sublessor shall deem reasonably appropriate to obtain performance of such obligation by Landlord.
Sublessee shall be entitled to participate with Sublessor in the enforcement of Sublessor’s rights
against Landlord and Sublessee agrees to cooperate with the prosecution of any such action.

     12. Parking. Sublessee shall be permitted to use 98 of the parking spaces available
to all occupants of the Building on a non-exclusive basis without additional charge. Such use
shall be subject to the terms and provisions set forth in the Prime Lease.

     13. Signage. Sublessee shall be permitted to be listed together with other
subtenant’s entitled thereto on (i) the monument sign located in front of the Building as depicted
on the Sign Plan attached hereto as Exhibit F; (ii) the building standard signage in the Elevator
Lobby and (iii) signage in the 4th Floor Lobby meeting Landlord’s requirements for any internal
signage located in the premises of the Project (provided that such signage is not visible from
outside the Sublet Premises, in which case such signage shall be subject to Sublessor’s prior
approval). All costs associated with such listing shall be payable by Sublessee.

7

 

     14. Security Deposit, Letter of Credit. Sublessee shall on or before the date that
Sublessee commences access to the Sublet Premises pursuant to Section 2(c) of this Sublease deposit
with Sublessor a security deposit in the form of a Letter of Credit in substantially the form
attached hereto as Exhibit C and conforming to the requirements of the Prime Lease, except that:
the “Initial L-C Amount” and the “L-C Amount” shall be deemed to be as follows: (i) $150,000 from
the date which is three (3) business days after Sublessor’s delivery of Landlord’s consent pursuant
to Section 18 hereof; which shall be increased to $400,000 on January 15, 2008; and (ii) provided
that Sublessee is not then in default of any of the material terms, provisions or conditions of
this Sublease beyond any applicable cure period, the L-C Amount shall be reduced to $300,000 on
October 1, 2010 ; and (iii) provided that Sublessee is not then in default of any of the material
terms, provisions or conditions of this Sublease beyond any applicable cure period, the L-C Amount
shall be reduced to $200,000 on February 28, 2012; Sections 21.2.2, 21.2.3, 21.2.4 of the Prime
Lease shall not be incorporated in this Sublease and references to such Sections of the Prime Lease
shall not apply to this Sublease; Exhibit H of the Prime Lease shall be amended so that the
addressee is: “Avnet, Inc., 2211 South 47th Street, Phoenix, AZ 85034, Attn. Legal Department. The
Letter of Credit shall secure Sublessee’s full and faithful performance and observance of the
terms, covenants and conditions of this Sublease, including without limitation Sublessee’s
obligation to restore the Sublet Premises to its condition prior to any alteration by Sublessee.
The initial L-C delivered by Sublessee may provide for the automatic increase and decrease of the
L-C Amount as provided above, or, following each date on which the L-C Amount shall increase or
decrease, Sublessee may provide Sublessor an L-C that replaces the L-C previously provided
Subelssor; and on Sublessor’s acceptance of such replacement L-C, Sublessor shall deliver back to
Sublessee the L-C previously provided.

     15. Notices. In the event that Sublessee shall receive any notice or other
communication with respect to the Sublet Premises or the use and occupancy thereof, Sublessee shall
promptly furnish same to Sublessor. Any notice or other communication which either party shall
desire or be required to give to the other shall be deemed sufficiently given if in writing and
sent by registered or certified mail or recognized overnight carrier addressed to the other party,
as follows: to Sublessor at: Avnet, Inc., 2211 South 47th Street, Phoenix, AZ 85034,
Attn: Corporate Real Estate Department; with a copy sent concurrently to: Avnet, Inc., 2211 South
47th Street, Phoenix, AZ 85034, Attn: Legal Department; and to Sublessee at: the Sublet
Premises, Attn. Senior Vice President & CFO with a copy to Sublessee at the Sublet Premises, Attn.
General Counsel.

     16. Real Estate Broker. Sublessee and Sublessor each represents that except for
Colliers International and Burnham Real Estate, it has dealt with no real estate broker, agent,
finder or other person acting as such in connection with this transaction. Each party shall
indemnify and hold the other harmless from and against any and all claims, judgments, suits, costs,
reasonable attorney’s fees and other expenses which the other may incur by reason of claims of any
person, firm or corporation for a brokerage commission, finder’s fee or other compensation based
upon any alleged negotiations or dealings by the indemnifying party contrary to the foregoing
representation. Each party’s obligations under this section shall survive the expiration or sooner
termination of this Sublease.

     17. Representations of the Parties.

     (a) Sublessee represents to Sublessor that except as expressly set forth in this Sublease,
neither Sublessor nor its agents or representatives have made any representations or promises with
respect to the physical condition of the Sublet Premises or the lands and buildings of which the
Sublet Premises are a part or the expenses of operation, availability of utilities and services,
zoning ordinances or other legal requirements or any other matter or thing related thereto.

     (b) Sublessor represents to Sublessee that: (i) Exhibit B constitutes a true, correct and
complete copy of the Prime Lease, and comprises the entire understanding and agreement of Landlord
and Sublessor with respect to the Sublet Premises, (ii) the Prime Lease is in full force and effect
in accordance with its terms, and (iii) neither Landlord nor Sublessor is in default under the
Prime Lease (iv) to Sublessor’s knowledge, no condition exists that with notice and/or the passage
of time would constitute a default under the Prime Lease; and (v) to Sublessor’s knowledge, the
Building and the Sublet Premises are in compliance with all laws and regulations applicable to its
present uses.

     18. Landlord Approval. This Sublease shall not be effective unless and until
Sublessor shall have obtained the written consent of Landlord to: (i) this Sublease, (ii)
Sublessee’s listing on the monument sign located in front of the Building as depicted on the Sign
Plan attached hereto as Exhibit F; and (iii) Sublessee Work depicted on Exhibit A, as described in
the Preliminary Budget attached as Exhibit G. Sublessor shall request Landlord’s consent promptly
upon execution of this Sublease by the parties. In the event that such written consent is not
obtained

8

 

within forty five (45) days from the date hereof, either party may cancel this Sublease by notice
to the other party delivered prior to receipt by Sublessor and Sublessee of such written consent of
Landlord.

     19. Miscellaneous.

     a. Where the context so permits or requires, the terms of this Sublease shall survive the
expiration or termination of this Sublease.

     b. The following exhibits are attached to and form a part of this Sublease:

Exhibit A — Sublet Premises

Exhibit B — Prime Lease

Exhibit C — Form of Letter of Credit

Exhibit D — Security Equipment and Guidelines

Exhibit E — First Floor Plan (Common Areas)

Exhibit F — Sign Plan

Exhibit G — Preliminary Budget for Sublessee Work

     c. This Sublease contains the entire agreement between the parties relative to the subject
matter hereof, and all negotiations, understandings and agreements related to the subject matter
hereof are merged in this Sublease. This Sublease may not be altered, changed or amended except by
a written agreement between Sublessor and Sublessee.

     IN WITNESS WHEREOF, Sublessor and Sublessee have executed this Sublease as of the date and
year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	SUBLESSOR:	 	 	 	SUBLESSEE:	 	 
	Avnet, Inc.	 	 	 	Santarus, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Raymond Sadowski
 

	 	 	 	By:
	 	/s/ Debra P. Crawford
 

	 	 
	Name:

	 	Raymond Sadowski
	 	 	 	Name:
	 	Debra P. Crawford	 	 
	Title:

	 	S.V.P. / CFO
	 	 	 	Title:
	 	Senior VP, CFO, Treasurer and Secretary	 	 

9Exhibit
      4.1

     

     

     

     

     

     

    
      
        
        

      

      
        -
          1
          -

        
          

        

      

      
        
        

      

    

     

    6.50%
      NON-CUMULATIVE GUARANTEED

    SERIES
      5
      PREFERRED SECURITIES,

    PAR
      VALUE
      $25.00 PER SECURITY

    

    

    
      
        	
                NUMBER:
                  1

                CUSIP:  80281R805

                AMOUNT:
                  $600,000,000 (*)

                 

              	
                NO.
                  OF SHARES: 24,000,000

                 

              

      

    

     

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

    

    SANTANDER
      FINANCE PREFERRED, S.A. UNIPERSONAL

    

    INCORPORATED
      UNDER THE LAWS OF THE KINGDOM OF SPAIN

    

    This
      certifies that CEDE & CO., as nominee of The Depository Trust Company is the
      registered holder of the number of shares indicated on the records of the
      Transfer Agent and Registrar of 6.50% Non-Cumulative Guaranteed Series 5
      Preferred Securities, par value $25.00 per security, of Santander Finance
      Preferred, S.A. Unipersonal, with corporate address at Ciudad Grupo Santander,
      Avda. de Cantabria S/N, Edificio Encinar 28660 Boadilla del Monte, Madrid,
      Spain, registered with the Mercantile Registry of Madrid under Volume 19747,
      Folio 171, Section 8, Sheet M-347560  and with tax identification
      number A- 83916395 (hereinafter called the “Company”), subject to the Memorandum
      and Articles of Association of the Company, transferable on the books of the
      Company upon surrender of this Certificate properly endorsed by the holder
      in
      person or by duly authorized attorney.  This Certificate is not valid
      unless countersigned by the Transfer Agent and Registrar.

    

    The
      Series
      5 Preferred Securities have been documented in a public deed granted before
      the
      Notary Public of Madrid, Spain, Mr. Miguel Ruiz-Gallardón García de la Rasilla
      under 636 of its official files.

    

    

    Witness
      the signatures of the duly authorized officers of the Company

    

    Date:

    

    

    
      	
               

            	 	
               

            	 
	
              Name:

            	 	
              Name:

            	 
	
              Title:

            	 	
              Title:

            	 

    

    

    

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

     

     

    COUNTERSIGNED
      AND REGISTERED

    THE
      BANK
      OF NEW YORK

    TRANSFER
      AGENT AND REGISTRAR

    

    

    
      	
              By:
                

            	
               

            	 
	 	
              Authorized
                Officer

            	 

    

    

    

    (*)  Equal
      to Euros [*] based on the [*] spot exchange rate of the USS [*] = Euros 1 on
      [
      ]

     

     

    
      
        
        

      

      
        -
          3
          -

        
          

        

      

      
        
        

      

    

     

    [GLOBAL
      CERTIFICATE - REVERSE]

    

    GUARANTEE

    

    THE
      HOLDER
      OF THIS SECURITY IS ENTITLED TO THE BENEFITS, AND IS SUBJECT TO THE LIMITATIONS,
      OF THE PAYMENT AND GUARANTEE AGREEMENT, DATED AS OF JANUARY 31, 2007(THE
      "GUARANTEE"), EXECUTED AND DELIVERED BY BANCO SANTANDER, S.A. (THE “BANK”) FOR
      THE HOLDERS FROM TIME TO TIME OF THIS SECURITY. COPIES OF THE GUARANTEE ARE
      AVAILABLE UPON WRITTEN REQUEST TO THE SECRETARY OF SANTANDER FINANCE PREFERRED,
      S.A. UNIPERSONAL (THE “COMPANY”).

    

    

    DESCRIPTION
      OF THE SERIES 5 PREFERRED SECURITIES

    

     

    DISTRIBUTIONS

     

    Non-cumulative
      cash distributions on the exchange Series 5 preferred securities (the
“Distributions”) will accrue from the date of original issuance and are payable
      quarterly in arrears on January 31, April 30, July 31 and October 31 in each
      year, commencing on January 31, 2007.

     

    Payment
      of
      cash distributions in any year on the exchange Series 5 preferred securities
      and
      on all other series of Preferred Securities, as defined below (both issued
      and
      which may, in the future, be issued or guaranteed by the Bank) is limited by
      the
      amount of the Distributable Profits (as defined below) of the Bank for the
      previous year, and to any limitations that may be imposed by Spanish banking
      regulations on capital adequacy for credit institutions, as determined in
      accordance with guidelines and requirements of the Bank of Spain and other
      Spanish law as in effect from time to time.  Distributions shall not
      be payable to the extent that:

     

    
      	
               

            	
              •

            	
              the
                aggregate of such Distributions, together with (a) any other distributions
                previously paid during the then-current fiscal year (defined as the
                accounting year of the Bank) and (b) any distributions proposed to
                be paid
                during the then-current Distribution Period (as defined below), in
                each
                case on or in respect of Preferred Securities (including the Series
                5
                preferred securities) would exceed the Distributable Profits of the
                immediately preceding fiscal year;
                or

            

    

     

    
      	
               

            	
              •

            	
              even
                if Distributable Profits are sufficient, if under applicable Spanish
                banking regulations relating to capital adequacy requirements affecting
                financial institutions which fail to meet their required capital
                ratios on
                a parent company only basis or on a consolidated basis, the Bank
                would be
                prevented at such time from making payments on its ordinary shares
                or on
                Preferred Securities issued by the
                Bank.

            

    

     

    ‘‘Preferred
      Securities’’ means (as the case may be) any preferred securities
      (participaciones preferentes) issued under Spanish Law
      13/1985, or other securities or instruments equivalent to preferred securities
      issued by the Company, or by any other subsidiary of the Bank which are entitled
      to the benefit of a guarantee ranking pari passu with the Bank’s
      obligations under the Guarantee, or any such securities or instruments issued
      by
      the Bank and ranking pari passu with the Bank’s obligations under the
      Guarantee.

     

    The
      term
“distribution” refers to any distributions paid or to be paid on the Preferred
      Securities.

     

    
      
        
        

      

      
        -
          4
          -

        
          

        

      

      
        
        

      

    

     

    “Distributable
      Profits” means, for any fiscal year, the reported net profit (calculated in
      compliance with the regulations of the Bank of Spain) of the Bank, determined
      after tax and extraordinary items for such year, as derived from the
      non-consolidated audited profit and loss account of the Bank, irrespective
      of
      whether shareholders’ meeting approval is still pending, prepared in accordance
      with generally applicable accounting standards in Spain and Bank of Spain
      requirements and guidelines, each as in effect at the time of such preparation.
      In the event that on any Distribution payment date, the audit of the
      non-consolidated profit and loss account has not been completed, the reference
      to be used to calculate the Distributable Profits will be the balance of the
      unaudited non-consolidated profit and loss account of the Bank as reported
      in
      the financial statements delivered to the Bank of Spain in respect of December
      31st of the preceding fiscal year.

     

    If
      Distributions are not paid in full on the exchange Series 5 preferred
      securities, all distributions paid upon the exchange Series 5 preferred
      securities and all other Preferred Securities will be paid pro rata among the
      exchange Series 5 preferred securities and all such other Preferred Securities,
      so that the amount of the distribution payment per security will have the same
      relationship to each other that the nominal or par value per security of the
      exchange Series 5 preferred securities and all other Preferred Securities bear
      to each other.

     

    If
      Distributions are not paid on the exchange Series 5 preferred securities on
      the
      Distribution Payment Date in respect of the relevant Distribution Period as
      a
      consequence of the above limitations on Distributions or are paid partially,
      then the right of the holders of the exchange Series 5 preferred securities
      to
      receive a Distribution or an unpaid part thereof in respect of the relevant
      Distribution Period will be lost and neither the Company nor the Bank will
      have
      any obligation to pay the Distribution accrued or part thereof for such
      Distribution Period or to pay any interest thereon, whether or not Distributions
      on the exchange Series 5 preferred securities are paid for any future
      Distribution Period.

     

    The
      Distributions payable on the exchange Series 5 preferred securities are fixed
      at
      6.50% per annum of their par value.  The Distribution payable in
      respect of any Distribution Period (defined as the period from and including
      one
      Distribution payment date (or, in the case of the first Distribution Period,
      the
      issuance date) to but excluding the next Distribution payment date) will be
      computed on the basis of twelve 30-day months and a 360-day year.

     

    Distributions
      on the exchange Series 5 preferred securities will be payable to the record
      holders thereof as they appear on the register for the exchange Series 5
      preferred securities on record dates, which will be on the 15th calendar day
      preceding the relevant payment dates.  We have been informed by DTC
      that distributions on Global Preferred Securities (as defined below) will be
      paid over to DTC participants in respect of their record holdings on the record
      date. In the event that any date on which Distributions are payable on the
      exchange Series 5 preferred securities is not a day on which banks in the City
      of Madrid (Spain) and The City of New York are open for business and on which
      foreign exchange dealings may be conducted in the City of Madrid (Spain) and
      The
      City of New York (a “business day”), then payment of the Distribution payable on
      such date will be made on the next day which is a business day (and without
      any
      interest or other payment in respect of any such delay).

     

    Except
      as
      hereinabove provided, holders of the Company’s exchange Series 5 preferred
      securities will have no right to participate in the profits of the
      Company.

     

    Optional
      Redemption

     

    The
      exchange Series 5 preferred securities are redeemable, at the option of the
      Company, subject to the prior consent of the Bank of Spain, in whole but not
      in
      part, on or after January 31, 2017, upon not less 

     

    
      
        
        

      

      
        -
          5
          -

        
          

        

      

      
        
        

      

    

     

    than
      30
      nor more than 60 days’ notice prior to the relevant redemption date by mail to
      each record holder, at the redemption price of $25.00 per exchange Series 5
      preferred security, plus the accrued and unpaid Distribution for the
      then-current Distribution Period to the date fixed for redemption.

     

    If
      the
      Company gives notice of redemption of the exchange Series 5 preferred
      securities, then by 12:00 Noon, New York City time on the relevant redemption
      date, the Company will:

     

    
      	
               

            	
              •

            	
              irrevocably
                deposit with the paying agent funds sufficient to pay the foregoing
                redemption price, including the amount of accrued and unpaid Distribution
                for the then-current Distribution Period to the date fixed for redemption;
                and

            

    

     

    
      	
               

            	
              •

            	
              give
                the paying agent irrevocable instructions and authority to pay the
                redemption price to the holders of the exchange Series 5 preferred
                securities.

            

    

     

    If
      the
      notice of redemption has been given, and the funds deposited as required, then
      on the date of such deposit:

     

    •      distributions
      on the exchange Series 5 preferred securities called for redemption shall
      cease;

     

    •      such
      exchange Series 5 preferred securities will no longer be considered outstanding;
      and

     

    
      	
               

            	
              •

            	
              the
                holders will no longer have any rights as holders except the right
                to
                receive the redemption price.

            

    

     

    If
      either
      the notice of redemption has been given and the funds are not deposited as
      required on the date of such deposit or if the Company or the Bank improperly
      withholds or refuses to pay the redemption price of the exchange Series 5
      preferred securities, Distributions will continue to accrue at the rate
      specified from the redemption date to the date of actual payment of the
      redemption price.

     

    In
      order
      to comply with certain Spanish capital adequacy regulations, neither the Company
      nor the Bank nor any of their respective subsidiaries shall at any time purchase
      exchange Series 5 preferred securities, without the prior consent of the Bank
      of
      Spain, and in any event not earlier than January 31, 2017. Notwithstanding
      the
      foregoing, if Spanish law were to change and such purchases are permitted before
      January 31, 2017, then, subject to applicable law, the Company, the Bank and
      any
      of their respective subsidiaries may at any time and from time to time purchase
      outstanding exchange Series 5 preferred securities by tender, in the open market
      or by private agreement.

     

    Any
      exchange Series 5 preferred securities so purchased by the Company shall be
      immediately cancelled.

     

    Rights
      upon Liquidation

     

    If
      the
      Company is voluntarily or involuntarily liquidated, dissolved or wound-up,
      the
      holders of outstanding exchange Series 5 preferred securities will be entitled
      to receive out of the assets that are available to be distributed to holders,
      and before any assets are distributed to holders of ordinary shares or any
      other
      class of shares of the Company ranking junior to the exchange Series 5 preferred
      securities as to participation in assets, but together with holders of any
      other
      Preferred Securities of the Company ranking equally with the exchange Series
      5
      preferred securities as to participation in assets, the following liquidation
      distribution:

     

    •      $25.00
      per exchange Series 5 preferred security, plus

     

    
      
        
        

      

      
        -
          6
          -

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              •

            	
              an
                amount equal to the accrued and unpaid Distributions for the then-current
                Distribution Period up to the date of
                payment.

            

    

     

    If
      at the
      time that any liquidation distribution is to be paid, proceedings are also
      pending or have been commenced for the voluntary or involuntary liquidation,
      dissolution or winding-up of the Bank or for a reduction in the Bank’s
      shareholders’ equity pursuant to Article 169 of the Spanish Corporations Act
      (Ley de Sociedades Anónimas), then the liquidation distribution to be
      paid to the holders:

     

    •      of
      all Preferred Securities of the Company;

     

    •      of
      all Preferred Securities of other subsidiaries of the Bank; and

     

    •      of
      Preferred Securities issued by the Bank,

     

    will
      be
      limited to and not exceed the amount that would have been paid as the
      liquidation distribution from the assets of the Bank (after payment in full
      in
      accordance with Spanish law of all creditors of the Bank, including holders
      of
      subordinated debt but excluding holders of any guarantee or any other
      contractual right expressed to rank equally with or junior to the Guarantee),
      had all such Preferred Securities been issued by the Bank, and

     

    •      ranked
      junior to all liabilities of the Bank;

     

    
      	
               

            	
              •

            	
              ranked
                pari passu with the most senior Preferred Securities which could
                have been issued by the Bank (if any);
                and

            

    

     

    •      ranked
      senior to the Bank’s ordinary shares.

     

    The
      above
      limitation will apply even if the Company has at the time sufficient assets
      to
      pay the liquidation distribution to the holders of all Preferred Securities
      issued by it, including the exchange Series 5 preferred securities.

     

    If
      the
      foregoing liquidation distribution relating to the exchange Series 5 preferred
      securities and other Preferred Securities cannot be made in full due to the
      limitation described above, then all payments will be made pro rata in the
      proportion that the amount available for payment bears to the full amount that
      would have been payable, had there been no such limitation.

     

    Upon
      receipt of payment of the liquidation distribution, holders of exchange Series
      5
      preferred securities will have no right or claim on any of the remaining assets
      of either the Company or the Bank.

     

    Except
      as
      provided in the second paragraph above with respect to any liquidation or
      winding up of the Bank or a reduction in its shareholders’ equity, the Bank will
      not permit, and will not take any action to cause, the liquidation, dissolution
      or winding-up of the Company.

     

    Voting
      Rights

     

    The
      holders of exchange Series 5 preferred securities will not have any voting
      rights unless either the Company or the Bank, under the Guarantee, fails to
      pay
      Distributions in full on the exchange Series 5 preferred securities for four
      consecutive Distribution Periods.  In such event, the holders of
      outstanding exchange Series 5 preferred securities, together with the holders
      of
      any other series of Preferred Securities of the Company then also having the
      right to vote for the election of directors, acting as a single class without
      regard to series, will be entitled to:

     

    
      
        
        

      

      
        -
          7
          -

        
          

        

      

      
        
        

      

    

     

    •      appoint
      two additional members of the board of directors of the Company;

     

    •      remove
      any such board member from office; and

     

    •      appoint
      another person(s) in place of such member(s).

     

    This
      can
      be accomplished by either:

     

    •      written
      notice given to the Company by the holders of a majority in liquidation
      preference; or

     

    
      	
               

            	
              •

            	
              an
                ordinary resolution passed by the holders of a majority in liquidation
                preference of the securities present in person or by proxy at a special
                general meeting of the holders convened for that
                purpose.

            

    

     

    If
      the
      written notice of the holders is not given as provided in the preceding
      paragraph, the board of directors of the Company, or a duly authorized committee
      of the board of directors, is required to convene a special general meeting
      for
      the above purpose, no later than 30 days after this entitlement
      arises.

     

    If
      the
      board of directors of the Company, or its duly authorized committee, fails
      to
      convene this meeting within the required 30-day period, the holders of 10%
      in
      liquidation preference of the outstanding exchange Series 5 preferred securities
      and other Preferred Securities of the Company are entitled to convene the
      meeting. The Company will determine the place where the separate general meeting
      will be held.

     

    Immediately
      following a resolution for the appointment or the removal of additional members
      to the board of directors, the special general meeting of holders shall give
      notice of such to:

     

    
      	
               

            	
              (1)

            	
              the
                board of directors of the Company so that it may, where necessary,
                call a
                general meeting of the shareholders of the Company;
                and

            

    

     

    
      	
               

            	
              (2)

            	
              the
                shareholders of the Company, so that they may hold a general meeting
                of
                shareholders.

            

    

     

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

     

    Once
      distributions have been paid in full in respect of the exchange Series 5
      preferred securities for four consecutive Distribution Periods and any other
      Preferred Securities of the Company in respect of such distribution periods
      as
      set out in their own terms and conditions, any member of the board of directors
      of the Company that has been appointed in the manner described in the preceding
      paragraphs is required to vacate office.

     

    Under
      the
      Articles of the Company, its board of directors must have a minimum of three
      members and a maximum of eleven members. At the date of the public deed of
      issuance of the exchange Series 5 preferred securities, the board of directors
      of the Company has four directors.

     

    Any
      amendments or abrogation of the rights, preferences and privileges of the
      exchange Series 5 preferred securities will not be effective, unless otherwise
      required by applicable law and except:

     

    
      	
               

            	
              •

            	
              with
                the consent in writing of the holders of at least two-thirds of the
                outstanding exchange Series 5 preferred securities;
                or

            

    

     

    
      
        
        

      

      
        -
          8
          -

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              •

            	
              with
                the sanction of a special resolution passed at a separate general
                meeting
                by the holders of at least two-thirds of the outstanding exchange
                Series 5
                preferred securities.

            

    

     

    If
      the
      Company, or the Bank under any guarantee, has paid in full the most recent
      distribution payable on each series of the Company’s Preferred Securities, the
      Company, the holders of its ordinary shares, or its board of directors may,
      without the consent or sanction of the holders of its Preferred
      Securities:

     

    
      	
               

            	
              •

            	
              take
                any action required to issue additional Preferred Securities or authorize,
                create and issue one or more other series of Preferred Securities
                of the
                Company ranking equally with the exchange Series 5 preferred securities,
                as to the participation in the profits and assets of the Company,
                without
                limit as to the amount; or

            

    

     

    
      	
               

            	
              •

            	
              take
                any action required to authorize, create and issue one or more other
                classes or series of shares of the Company ranking junior to the
                Preferred
                Securities, as to the participation in the profits or assets of the
                Company.

            

    

     

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

     

    The
      vote
      of the holders of exchange Series 5 preferred securities is not required to
      redeem and cancel the exchange Series 5 preferred securities. Spanish law does
      not impose any restrictions on the ability of holders of Preferred Securities
      who are not residents or citizens of Spain to hold or vote such Preferred
      Securities.

     

    If
      the
      shareholders of the Company propose a resolution providing for the liquidation,
      dissolution or winding-up of the Company, the holders of all the outstanding
      Preferred Securities of the Company:

     

    
      	
               

            	
              •

            	
              will
                be entitled to receive notice of and to attend the general meeting
                of
                shareholders called to adopt this resolution;
                and

            

    

     

    
      	
               

            	
              •

            	
              will
                be entitled to hold a separate and previous general meeting of holders
                and
                vote together as a single class without regard to series on such
                resolution, but not on any other
                resolution.

            

    

     

    The
      above
      resolution will not be effective unless approved by the holders of a majority
      in
      liquidation preference of all outstanding Preferred Securities of the
      Company.

     

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

     

    Notice,
      attendance, or approval is not required if the liquidation, dissolution and
      winding-up of the Company is initiated due to:

     

    •      the
      liquidation, dissolution or, winding up of the Bank; or

     

    
      	
               

            	
              •

            	
              a
                reduction in shareholders equity of the Bank under Article 169 of
                the
                Corporations Law of Spain.

            

    

     

    
      
        
        

      

      
        -
          9
          -

        
          

        

      

      
        
        

      

    

     

    The
      Company shall cause a notice of any meeting at which the holders of exchange
      Series 5 preferred securities are entitled to vote, to be mailed to each record
      holder of exchange Series 5 preferred securities. This notice will include
      a
      statement regarding:

     

    •      the
      date, time and place of the meeting;

     

    
      	
               

            	
              •

            	
              a
                description of any resolution to be proposed for adoption at the
                meeting
                at which the holders are entitled to vote;
                and

            

    

     

    •      instructions
      for the delivery of proxies.

     

    Special
      General Meetings

     

    A
      Special
      General Meeting (the “Special General Meeting”), which will be constituted by
      all holders of preferred securities of the Company, will be called by the board
      of directors of the Company.

     

    The
      quorum
      shall be the holders of such preferred securities holding one-quarter of the
      liquidation preference of all preferred securities of the Company issued and
      outstanding.  If the attendance of one-quarter of the holders of such
      preferred securities issued and outstanding cannot be obtained, such Special
      General Meeting may be re-convened one day after the first meeting and such
      meeting shall be validly convened irrespective of the number of preferred
      securities present or represented.

     

    In
      a
      Special General Meeting all resolutions shall be made by the majority set out
      in
“Voting Rights” above, and will be binding on all of the holders of such
      preferred securities, including those not in attendance and
      dissenters.

     

    All
      holders of preferred securities who are able to show that they held their
      securities five days prior to the date of the Special General Meeting shall
      be
      entitled to attend with the right to speak and vote.  Holders of such
      preferred securities shall prove that they held preferred securities in the
      manner and subject to the requirements set out in the announcement published
      when convening such Special General Meeting. Holders of such preferred
      securities may delegate their representation to another person, by an individual
      signed letter for each meeting.

     

    The
      convening of a Special General Meeting will be carried out in accordance with
      the rules governing the calling and holding of meetings of holders of each
      series of preferred securities.

     

    A
      Special
      General Meeting of holders of the Company’s preferred securities will be
      convened (i) so long as any Series 5 preferred security is listed on the London
      Stock Exchange and the London Stock Exchange so requires by publication in
      an
      English language newspaper in London (which is expected to be the Financial
      Times) or, if such publication is not practicable but is required by the rules
      of the London Stock Exchange, in a leading daily newspaper in English and having
      general circulation in Europe, (ii) in accordance with the requirements of
      any
      security exchange on which the exchange Series 5 preferred securities are listed
      and (iii) by mail to DTC (in each case not less that 30 nor more than 60 days
      prior to the date of the act or event to which such notice, request or
      communication relates).

     

    Registrar,
      Transfer Agent and Paying Agent

     

    The
      Bank
      of New York, located at 101 Barclay Street, New York, New York 10286 at the
      time
      of the issuance of the public deed, will act as registrar, transfer agent and
      paying agent for the exchange Series 5 preferred securities, which together
      with
      its successors and assigns, we will refer to as “ the Paying
      Agent.”

     

    
      
        
        

      

      
        -
          10
          -

        
          

        

      

      
        
        

      

    

     

    Ranking
      of the Series 5 Preferred Securities

     

    The
      exchange Series 5 preferred securities will rank (a) junior to all liabilities
      of the Company including subordinated liabilities, (b) pari passu with
      each other and with any other series of Preferred Securities of the Company
      and
      (c) senior to the Company’s ordinary shares.

     

    The
      holders of exchange Series 5 preferred securities by their subscription or
      acquisition waive any different priority that Spanish law or regulations could
      grant at any time, and particularly those arising from articles 92 and 158
      of
      Law 22/2003 (Ley Concursal), if any.

     

    Transfer

     

    The
      transfer of a Series 5 Preferred Security, and the benefit of the Guarantee,
      may
      be registered by surrendering the certificate evidencing the Series 5 Preferred
      Security to be transferred together with the form of transfer endorsed on it
      duly completed and executed, at the office of the registrar.

     

    The
      Company will register transfers of Series 5 Preferred Securities without charge
      but with payment (or the giving of such indemnity for the benefit of the Company
      as the registrar may require) for any tax or other governmental charges, which
      may be imposed in relation to the transfer.

     

    The
      Company will not register the transfer of any Series 5 Preferred Securities
      after such securities have been called for redemption.

     

    Replacement
      of Lost Certificates

     

    If
      any
      certificate for exchange Series 5 preferred securities is mutilated or alleged
      to have been lost, stolen or destroyed, a new certificate representing the
      same
      security may be issued to the record holder upon request but subject to either
      delivery of the old certificate or (if alleged to have been lost, stolen or
      destroyed) compliance with such preconditions of indemnity and payment of the
      Company’s and Paying Agent’s out-of-pocket expenses related to such request as
      the board of directors of the Company may then determine.

     

    Miscellaneous

     

    Exchange
      Series 5 preferred securities are not subject to any mandatory redemption or
      sinking fund provisions.  Holders of exchange Series 5 preferred
      securities have no preemptive rights.

     

     

     

    
      -
        11
        -

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