(Translation)
Annex 1
CONDITIONS OF BONDS
These Conditions of Bonds shall apply to the issue of HSBC FINANCE
CORPORATION JAPANESE YEN BONDS - TWELFTH SERIES (2006) (the "Bonds")
pursuant to lawful authorization by HSBC Finance Corporation (the "Company").
1.
Amount, Denomination and Form
The aggregate principal amount of the Bonds is ¥15,000,000,000.
The Bonds are issued in a single denomination of ¥100,000,000 each. No Bond
may be split into Bonds of a smaller denomination or consolidated with any other Bond.
The certificates for the Bonds (the "Bond Certificates") are issued exclusively in
bearer form with interest coupons attached thereto (the "Coupons"), and shall not be
exchangeable for Bond Certificates in registered form.
2.
Status of the Bonds and Negative Pledge
(1)
The Bonds and the Coupons constitute direct, unconditional, unsubordinated and
(subject to the provisions of this Condition 2(2)) unsecured obligations of the
Company, and rank and will rank pari passu without any preference among
themselves and at least pari passu with all other unsubordinated and unsecured
obligations of the Company, present and future (save for certain mandatory
exceptions provided by law).
(2)
The Company will not issue, assume or guarantee any indebtedness for borrowed
money (referred to as "indebtedness", which term shall not include any guarantee,
cash deposit or other recourse obligation in connection with the sale, securitization
or discount by the Company of finance or accounts receivables, trade acceptances or
other paper arising in the ordinary course of its business) secured by a mortgage,
security interest, pledge or lien (referred to as "mortgage" or "mortgages") of or
upon any property of the Company, now owned or hereafter acquired, unless the
Bonds then outstanding are effectively secured by such mortgage equally and
ratably with (or at the option of the Company, prior to) all other indebtedness
secured thereby for so long as such other indebtedness shall be so secured.
The foregoing covenant, however, will not apply to:
(i)
mortgages on any property acquired, constructed or improved by, or on any
shares of capital stock or indebtedness acquired by, the Company after the
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issuance of the Bonds (a) to secure the payment of all or any part of the
purchase price of such property, shares of capital stock or indebtedness upon
the acquisition thereof by the Company, or (b) to secure any indebtedness
issued, assumed or guaranteed by the Company prior to, at the time of, or
within 360 days after (x) in the case of property, the later of the acquisition,
completion of construction (including any improvements on existing
property) or commencement of commercial operation of such property or (y)
in the case of shares of capital stock or indebtedness, the acquisition of such
shares of capital stock or indebtedness, which indebtedness is issued,
assumed or guaranteed for the purpose of financing or refinancing all or any
part of the purchase price of such property, shares of capital stock or
indebtedness and, in the case of property, the cost of construction thereof or
improvements thereon, provided that in the case of any such acquisition,
construction or improvement of property, the mortgage shall not apply to
any property, shares of capital stock or indebtedness theretofore owned by
the Company other than, in the case of any such construction or
improvement, any theretofore unimproved or substantially unimproved real
property on which the property so constructed or the improvement is
located;
(ii)
mortgages on any property, shares of capital stock or indebtedness, which
mortgages exist at the time of acquisition by the Company;
(iii)
mortgages on any property of a corporation, which mortgages exist at the
time such corporation merges or consolidates with or into the Company or
which mortgages exist at the time of a sale or transfer of all or substantially
all of the assets of such corporation to the Company;
(iv)
mortgages to secure any indebtedness of the Company to any subsidiary, or
the indebtedness of, or performance of obligations by, one of its subsidiaries
to another subsidiary;
(v)
mortgages in favor of the United States (as defined in Condition 5) or any
State, or any department, agency or instrumentality or political subdivision
of the United States or any State thereof, or in favor of any other country or
political subdivision, to secure partial, progress, advance or other payments
pursuant to any contract or statute or to secure any indebtedness incurred or
guaranteed for the purpose of financing or refinancing all or any part of the
purchase price of the property, shares of capital stock or indebtedness subject
to such mortgages, or the cost of construction or improvement of the
property subject to such mortgages;
(vi)
mortgages on properties financed through tax-exempt municipal obligations;
provided that such mortgages are limited to the property so financed;
(vii)
mortgages existing on the issuance of the Bonds; and
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(viii) any extension, renewal, refunding or replacement (or successive extensions,
renewals, refundings or replacements), in whole or in part, of any mortgage
referred to in the foregoing clauses (i) through (vii), inclusive; provided,
however, that the principal amount of indebtedness secured thereby does not
exceed the principal amount of indebtedness secured at the time by such
extension, renewal, refunding or replacement; provided, further, that such
extension, renewal, refunding or replacement of such mortgage is limited to
all or a part of the property, shares of capital stock or indebtedness subject to
such mortgage so extended, renewed, refunded or replaced.
Notwithstanding the foregoing, the Company may, without equally and ratably
securing the Bonds, issue, assume or guarantee indebtedness secured by a mortgage
not excepted by clauses (i) through (viii) of the preceding paragraph, if the
aggregate amount of such indebtedness, together with all other indebtedness of, or
guaranteed by, the Company existing at such time and secured by mortgages not so
excepted, does not at the time exceed 10% of the Company's Consolidated Net
Worth. As used herein, "Consolidated Net Worth" shall be the difference between
the Company's consolidated assets and consolidated liabilities as shown on the
Company's most recent audited consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States. In
addition, an arrangement with any person providing for the leasing by the Company
of any property, which property has been or is to be sold or transferred by the
Company to such person with the intention that such property be leased back to the
Company, shall not be deemed to create any indebtedness secured by a mortgage if
the obligations in respect of such lease would not be included as liabilities on a
consolidated balance sheet of the Company.
If any mortgage is provided by the Company for the Bonds pursuant to this
Condition 2(2), the Company shall take any and all steps necessary for creation and
perfection of such mortgage for the Bonds in accordance with applicable laws and
regulations. The Company shall, upon completion of the valid creation of such
mortgage, give public notice to the effect that such mortgage has been duly and
validly created and perfected under applicable laws and regulations. All expenses
incurred in connection with the creation, perfection, maintenance and execution of
such mortgage shall be borne by the Company.
3.
Fiscal Agent and Non-appointment of Commissioned Companies for
Bondholders
(1)
Mizuho Corporate Bank, Ltd. acts as fiscal agent (the "Fiscal Agent") of the
Company in respect of the Bonds. The Fiscal Agent shall perform the duties and
functions provided for in these Conditions of Bonds and the Fiscal and Paying
Agency Agreement (the "Agency Agreement") dated February 3, 2006 among the
Company and the Fiscal Agent and the Paying Agent (as defined in Condition 5).
The Fiscal Agent is acting solely on behalf of the Company and does not assume
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any obligation towards or relationship of agency or trust for or with the holders of
the Bonds (the "Bondholders") or the Coupons. A copy of the Agency Agreement
together with these Conditions of Bonds shall be kept at the Head Office of the
Fiscal Agent and shall be made available for perusal or photocopying by any
Bondholder during normal business hours. All expenses incurred for such
photocopying shall be borne by the applicant therefor.
(2)
No commissioned companies for bondholders under Article 297 of the Commercial
Code of Japan (Law No. 48 of 1899, as amended) are appointed in respect of the
Bonds since the Bonds satisfy the conditions set forth in the proviso to said Article
297.
(3)
The Company may from time to time vary the appointment of the Fiscal Agent,
provided that the appointment of the Fiscal Agent shall continue until the
replacement fiscal agent shall be effectively appointed. In such case the Company
shall give prior public notice thereof to the Bondholders.
4.
Recording of Bonds
The recording agency for the Bonds (the "Recording Agency") is Mizuho Corporate
Bank, Ltd. The Bondholders have the option to record their Bonds at any time.
The recording of the Bonds at the request of initial subscribers thereto at the time of
the initial issue of the Bonds shall be made at the expense of the Company; otherwise the
recording of the Bonds shall be made at the expense of the applicant therefor. Any
expenses incurred in connection with the preparation and delivery of the Bond Certificates
and the Coupons upon cancellation of the recording of recorded Bonds shall be for the
account of the applicant therefor.
5.
Place of Payment
The paying agent for the Bonds (the "Paying Agent") and its offices at which the
payment of principal of and interest on the Bonds may be made are as follows:
Mizuho Corporate Bank, Ltd.
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Head Office and Osaka Office
The Company may from time to time vary the appointment of the Paying Agent(s).
In such case the Company shall give prior public notice thereof to the Bondholders.
Notwithstanding the foregoing, no Paying Agent may be appointed by the Company in the
United States or may make any payment of principal of or interest on the Bonds within the
United States.
No payment of principal of or interest on any Bond will be made at the office of any
Paying Agent maintained by the Company outside of Japan, nor will any payment be made
by transfer to an account maintained with a bank located in, or by check mailed to an
address in, the United States.
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As used in these Conditions of Bonds, the term “United States” means the United
States of America (including the States and the District of Columbia) and its possessions
(including Puerto Rico, The U.S. Virgin Islands, Guam, American Samoa, Wake Island and
Northern Mariana Islands).
6.
Interest
Each Bond shall bear interest at the rate of 2.54% per annum of its principal
amount.
The Bonds shall bear interest from and including February 17, 2006, payable
semi-annually in arrears on February 16 and August 16 of each year in respect of the
six-month period to and including each such date. Interest for any period of less than six
months shall be payable for the actual number of days included in such period computed on
the basis of a 365-day year. Amounts resulting from this calculation will be rounded to
the nearest Japanese Yen, with five-tenths or more of one Japanese yen to be rounded
upwards to the nearest one Japanese yen for each Bond. Each date set for payment of
interest in this paragraph is hereinafter referred to as an "Interest Payment Date".
The Bonds shall cease to bear interest after the date on which they become due for
redemption; provided, however, that should the Company fail to redeem any of the Bonds
when due, then the Company shall pay accrued interest on the unpaid principal amount for
the actual number of days of the period from but excluding the due date to and including
the date of the actual redemption of such Bond, computed on the basis of a 365-day year at
the rate specified in the first paragraph of this Condition 6. Such period, however, shall
not exceed 14 days commencing the date on which a public notice is given by the Company
or the Fiscal Agent in accordance with the last paragraph of Condition 8.
7.
Redemption and Purchase
(1)
Unless previously redeemed, or purchased and cancelled, the Bonds shall be
redeemed on February 16, 2021 at a price equal to their principal amount.
(2)
If:
(i)
as a result of any change in the laws, regulations or rulings of the United
States or of any political subdivision thereof or any authority or agency
therein or thereof having power to tax (the "U.S. Laws") or in the
interpretation or administration of any U.S. Law which becomes effective
after the issuance of the Bonds, the Company would be required to pay
Additional Amounts as provided in Condition 9(1), and such obligation
cannot be avoided by the Company taking reasonable measures available to
it; or
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(ii)
the Company becomes obligated to pay any Additional Amount pursuant to
Condition 9(1) and the Company is prohibited by any U.S. Law from paying
all or any part of such Additional Amount; or
(iii)
the Company shall determine that any payment made outside the United
States by the Company or any Paying Agent in respect of any Bond or
Coupon would, under any present or future laws or regulations of the United
States affecting taxation or otherwise, be subject to any certification,
information or other reporting requirement with regard to the nationality,
residence or identity of a beneficial owner of such Bond or Coupon who is a
United States Alien (as defined in Condition 9(2)) (other than a requirement
that (a) would not be applicable to a payment made (x) directly to the
beneficial owner or (y) to a custodian, nominee or other agent of the
beneficial owner, or (b) could be satisfied by the holder, custodian, nominee
or other agent certifying that the beneficial owner is not a United States
person, provided, however, that in each case referred to in (a) (y) or (b)
payment by any such custodian, nominee or agent to the beneficial owner is
not otherwise subject to any such requirement); and
(iv)
in the case of (i), (ii) or (iii) above, such circumstances are evidenced by the
delivery by the Company to the Fiscal Agent of a certificate signed by two
officers of the Company stating that the said circumstances prevail and
describing the facts leading thereto and an opinion of independent legal
advisers of recognized standing to the effect that such circumstances prevail,
the Company may, at its option (in the case of (i) above), and shall (in the cases of
(ii) and (iii) above, subject as provided below), having given public notice to the
Bondholders of the relevant matters at least 14 days prior to the proposed
redemption date (which notice shall be irrevocable except as provided below),
redeem all (but not some only) of the outstanding Bonds at a price equal to 100% of
the principal amount thereof, together with accrued interest (if any) to and including
the redemption date, but without reduction for applicable withholding or deduction
(except for the case where the Company is prohibited by any U.S. Law from paying
all or any part of the Additional Amount referred to in Condition 9(1)); provided,
however, that in the case of (ii) above, the redemption shall be made as soon as
practicable but not later than 40 days after (a) the occurrence of the event giving
rise to the obligation of the Company to pay any Additional Amounts or (b) the date
on which such U.S. Law becomes effective, whichever is later; provided, further,
that in the case of (i) above, the certificate and the opinion referred to in (iv) above
shall be delivered to the Fiscal Agent at least 30 days prior to the proposed
redemption date and no such notice of redemption may be given earlier than 90
days prior to the earliest date on which the Company would be obligated to pay
such Additional Amounts were a payment in respect of the Bonds then due; in the
case of (ii) above, the certificate and the opinion referred to in (iv) above shall be
delivered to the Fiscal Agent promptly following (a) the occurrence of the event
giving rise to the obligation of the Company to pay any Additional Amounts or (b)
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the date on which such U.S. Law becomes effective, whichever is later, but in no
event later than 30 days prior to the proposed redemption date; and in the case of
(iii) above, the Company shall make such determination as soon as practicable and
give prompt notice thereof (the "Determination Notice") to the Fiscal Agent in
writing and also promptly give public notice of such determination and relevant
matters to the Bondholders, and such redemption will take place within one year
from the date of such public notice and the Company shall give further notice in
writing to the Fiscal Agent setting forth the proposed redemption date at least 30
days prior to the proposed redemption date.
Notwithstanding the provisions of (iii) above, the Company shall not redeem the
Bonds if the Company shall subsequently determine, based upon the written opinion
of independent legal counsel of recognized standing not less than 30 days prior to
the date fixed for redemption, that subsequent payments would not be subject to any
such requirement in which case the Company shall give prompt notice of such
determination and deliver such opinion to the Fiscal Agent and give public notice
thereof to the Bondholders at least 14 days prior to the date fixed for redemption,
and upon such public notice any earlier redemption notice will be revoked and of no
further effect.
Notwithstanding the foregoing, if and so long as all certification, information or
other reporting requirements referred to in (iii) above would be fully satisfied by
payment of a United States backup withholding tax or similar charge (but without
any requirement to disclose the nationality, residence or identity of the beneficial
owner thereof), the Company may elect (notwithstanding the provisions of
Condition 9(1)(iii)) in the Determination Notice to pay Additional Amounts in
accordance with Condition 9(1), provided, however, that in the case of such election,
the Company shall give public notice of such election and relevant matters to the
Bondholders in the public notice of such determination with respect to (iii) above.
In the event that the Company elects to pay such Additional Amounts and as long as
it is obligated to pay such Additional Amounts, the Company will have the right, at
its sole option, at any time, to redeem the Bonds, in whole but not in part, at a price
equal to 100% of the principal amount thereof, together with accrued interest (if
any) to and including the redemption date, including any Additional Amounts
required to be paid under the above paragraph, provided, however, that the
Company shall give notice to such effect to the Fiscal Agent in writing at least 30
days prior to the proposed redemption date and shall give public notice of the
relevant matters to the Bondholders at least 14 days prior to the proposed
redemption date.
Any certificate and opinion delivered by the Company to the Fiscal Agent pursuant
to this Condition 7(2) shall be kept at the Head Office of the Fiscal Agent and shall
be made available for perusal or photocopying by any Bondholder during normal
business hours. All expenses incurred for such photocopying shall be borne by the
applicant therefor.
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"United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the laws of
the United States or any political subdivision thereof or therein, or an estate or trust
described in Section 7701 (a)(30) of the United States Internal Revenue Code of
1986, as amended (the "Code") (taking into account changes thereto and associated
effective dates, elections and transition rules).
All expenses necessary for the procedures under this Condition 7(2) shall be borne
by the Company.
(3)
The Company or any of its subsidiaries may at any time purchase the Bonds in the
market or otherwise and retain, resell and/or cancel them (in the case of cancellation,
together with all unmatured Coupons appertaining thereto).
(4)
Except as otherwise provided in these Conditions of Bonds, the Company may not
redeem principal of the Bonds prior to the maturity thereof.
8.
Payment
With respect to a Bond represented by a Bond Certificate, payment of principal
shall be made upon surrender of the Bond Certificate and payment of interest shall be made
upon surrender of the relevant Coupon, at any of the offices of the Paying Agent(s) set forth
in Condition 5, except as provided in Condition 13.
With respect to a recorded Bond, payment of principal shall be made upon
surrender of the relevant principal payment voucher, and payment of interest shall be made
upon surrender of the relevant interest payment voucher, at the office of the Paying Agent
designated by the Bondholder in his application for the recording of the Bond. Such
Paying Agent shall confirm that each relevant payment voucher surrendered bears the seal
impression of the relevant Bondholder as registered with the Recording Agency.
Any Bond Certificate surrendered for redemption shall be presented together with
all unmatured Coupons appertaining thereto, failing which an amount equal to the face
value of the missing unmatured Coupon shall be deducted from the principal; provided,
however, that the holder of any such missing Coupon may, upon surrender of such Coupon
within the extinctive prescription period of five years from the relevant redemption date of
the Bond Certificate to which such Coupon pertains, receive the amount so deducted.
If any due date for the payment of principal of or interest on the Bonds falls on a
day which is not a day on which banks are open for business in Japan, the Bondholders
shall not be entitled to payment of the amount due until the next following day on which
banks are open for business in Japan and shall not be entitled to the payment of any further
interest or other payment in respect of such delay.
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If the full amount of principal of or interest on the Bonds payable on any due date is
received by the Fiscal Agent after such due date, the Company shall, or shall cause the
Fiscal Agent to, give public notice to that effect to the Bondholders as soon as practicable
but not later than 14 days after receipt of such amount by it. All expenses incurred in
connection with the said public notice shall be borne by the Company.
9.
Taxation
(1)
All payments of principal of, interest on and all other amounts payable in respect of
any Bond shall be made free and clear of and without withholding or deduction for
or on account of any and all present or future taxes, assessments or other
governmental charges of whatever nature imposed or levied by or on behalf of the
United States or any political subdivision thereof or any authority or agency therein
or thereof having power to tax, unless the withholding or deduction of such taxes,
assessments or other governmental charges is required by law. In that event, the
Company will pay in the manner set forth in Condition 8 such additional amounts
(the "Additional Amounts") as may be necessary in order that the net amounts
receivable by the holder of any Bond or Coupon, who is a United States Alien, after
such withholding or deduction shall equal the respective amounts which would have
been receivable by such holder in the absence of such withholding or deduction;
except that the obligation to pay such Additional Amounts shall not apply to:
(i)
any tax, assessment or governmental charge that would not have been so
imposed but for the existence of any present or former connection between
such holder (or between a fiduciary, settlor, beneficiary, partner, member or
shareholder of, or holder of power over, such holder, if such holder is an
estate, trust, partnership, limited liability company or corporation; or
between an estate, trust, partnership or limited liability company in which
such holder is a fiduciary, settlor, beneficiary, partner or member) and the
United States, including, without limitation, such holder (or such fiduciary,
settlor, beneficiary, partner, member, shareholder, estate, trust, partnership,
limited liability company or holder of a power), being considered as:
(a)
being or having been present or engaged in a trade or business in the
United States or having had a permanent establishment therein; or
(b)
having a current or former relationship with the United States,
including a relationship as a citizen or resident or being treated as a
resident thereof; or
(c)
being or having been a personal holding company, a controlled
foreign corporation, a passive foreign investment company, a foreign
personal holding company with respect to the United States, a
corporation that has accumulated earnings to avoid United States
federal income tax or a private foundation or other tax-exempt
organization; or
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(d)
an actual or constructive "10% shareholder" of the Company as
defined in Section 871(h)(3) of the Code; or
(ii)
any holder who is a fiduciary, partnership, limited liability company or other
than the sole beneficial owner of the Bond or Coupon, but only to the extent
that a beneficiary or settlor with respect to such fiduciary or a member of
such partnership or limited liability company or a beneficial owner of the
Bond or Coupon would not have been entitled to the payment of an
Additional Amount had such beneficiary, settlor, member or beneficial
owner been the holder of such Bond or Coupon; or
(iii)
any tax, assessment or governmental charge (including, without limitation,
backup withholding tax) that would not have been imposed or withheld but
for the failure to comply with certification, identification, documentation or
information reporting requirements concerning the nationality, residence,
identity or connection with the United States of a holder or a beneficial
owner of such Bond or Coupon, if, without regard to any tax treaty, such
compliance is required by statute or regulation of the United States as a
precondition to relief or exemption from such tax, assessment or
governmental charge; or
(iv)
any tax, assessment or governmental charge that would not have been so
imposed or withheld but for the presentation by the holder of such Bond or
Coupon for payment on a date more than 30 days after the Relevant Date; or
(v)
any estate, inheritance, gift, sales, transfer, excise, wealth or personal
property tax or any similar tax, assessment or governmental charge; or
(vi)
any tax, assessment or governmental charge that is payable otherwise than
by deduction or withholding by the Company or a Paying Agent from the
payment of the principal of or interest on such Bond or Coupon; or
(vii)
any tax, assessment or governmental charge that would not have been
imposed or withheld but for the treatment of the interest paid by the
Company as contingent interest described in Section 871(h)(4) of the Code
or interest described in Section 881(c)(3)(A) of the Code; or
(viii) any tax, assessment or governmental charge that would not have been
imposed or withheld but for an election by the holder the effect of which is
to make the payment of the principal of or interest (or any other amount) on
a Bond or Coupon by the Company or a Paying Agent subject to United
States federal income tax; or
(ix)
any combination of items (i), (ii), (iii), (iv), (v), (vi), (vii) or (viii).
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(2)
For the purpose of these Conditions of Bonds, "United States Alien" means any
person who, for United States federal income tax purposes, is a foreign corporation,
a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or
trust; or a foreign partnership one or more of the members of which is, for United
States federal income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust; and the
"Relevant Date" means, in respect of any payment, the date on which such payment
first becomes due and payable, but if the full amount of the moneys payable has not
been received by the Fiscal Agent on or prior to such due date, it means the first
date on which, the full amount of such moneys having been so received and being
available for payment to Bondholders, public notice to that effect shall have been
duly given by the Company or the Fiscal Agent in accordance with the last
paragraph of Condition 8.
(3)
Any reference in these Conditions of Bonds to principal or interest shall be deemed
also to refer to any Additional Amounts which may be payable in respect of
principal or interest, respectively, under Condition 7(2) or this Condition 9.
10.
Events of Default
The following events or circumstances (each an "Event of Default") shall be
acceleration events in relation to the Bonds, namely:
(i)
Non-payment: the Company fails to pay any amount of principal in respect
of the Bonds on the due date for payment thereof or fails to pay any amount
of interest in respect of the Bonds within 30 days of the due date for
payment thereof; or
(ii)
Breach of other obligations: the Company defaults in the performance or
observance of any of its other obligations under or in respect of the Bonds or
the Agency Agreement and (except in any case where such default is
incapable of remedy when no such continuation or notice, as is hereinafter
mentioned, will be required) such default remains unremedied for 30 days
after written notice requiring such default to be remedied has been delivered
to the Head Office of the Fiscal Agent on behalf of the Company by any
Bondholder (such notice to be accompanied by a Bond Certificate, or in the
case of the recorded Bond, a certificate issued by the Recording Agency,
showing the holding of any Bond by the relevant Bondholder); or
(iii)
Inability to meet financial obligations: the Company announces its inability
to meet its financial obligations; or
(iv)
Indebtedness for borrowed money: the Company defaults for 30 days after
notice in the payment of principal or interest with respect to any
indebtedness under any fiscal, issue and paying agency agreement, indenture
or similar agreement under which the Company has outstanding any
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indebtedness (other than the Bonds) and which results in the aggregate
principal amount of indebtedness of the Company in excess of
U.S.$150,000,000 becoming due and payable prior to maturity, which
acceleration has not been rescinded or annulled; or
(v)
Appointment of receiver: the entry by a court having jurisdiction in the
premises of (a) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable United States federal or
state bankruptcy, insolvency, reorganization or other similar law or (b) a
decree or order appointing a conservator, receiver, liquidator, assignee,
trustee, sequestrator or any other similar official of the Company, or of
substantially all of the property of the Company, or ordering the winding up
or liquidation of the affairs of the Company and the continuance of any such
decree or order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(vi)
Voluntary bankruptcy proceedings: the commencement by the Company of
a voluntary case or proceeding under any applicable United States federal or
state bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding, or the
filing by the Company of a petition or answer or consent seeking
reorganization or relief under any applicable United States federal or state
law, or the consent by the Company to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Company or of
substantially all of the property of the Company, or the making by the
Company of an assignment for the benefit of creditors, or the taking of
corporate action by the Company in furtherance of any such action, or
admission by the Company in writing of its inability to pay its debts
generally as they become due.
If an Event of Default shall have occurred and be continuing with respect to any
Bond, then and in each and every such case, any Bond shall, at the option of and upon
written notice to the Fiscal Agent at its Head Office by the then holder thereof (such notice
to be accompanied by a Bond Certificate, or in the case of the recorded Bond, a certificate
issued by the Recording Agency, showing the holding of such Bond by the relevant holder
thereof), mature and become due and payable, unless such Bond shall have already become
due and payable, upon the date that such written notice is received by the Fiscal Agent at its
Head Office on behalf of the Company at a price equal to 100% of the principal amount
hereof, together with accrued interest to such date, unless prior to such date all Events of
Default in respect of all the Bonds shall have been cured.
If (a) any of the events specified in items (ii) through (vi) above has occurred or (b)
any circumstance exists which would with the lapse of time or the giving of notice or both
constitute any of such events, the Company shall immediately or in case of (b) above
immediately when such circumstance comes to knowledge of the Company, notify the
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Fiscal Agent of such event and shall immediately give public notice of such event to the
Bondholders. If the event specified in item (i) above or any circumstance exists which
would with the lapse of time constitute such event shall have occurred and be continuing,
the Company shall also immediately notify the Fiscal Agent of such event and give public
notice of such event to the Bondholders.
11.
Bondholders' Meetings
The Bondholders' meetings relating to the Bonds shall be governed by the relevant
and applicable provisions of the Commercial Code of Japan. Such Bondholders' meetings
shall be held in Tokyo. For the purpose of this Condition 11, the Bonds, if any, then held
by the Company shall, pursuant to Article 339 of the Commercial Code of Japan, be
disregarded and deemed not to be outstanding.
All reasonable expenses necessary for the procedures under this Condition 11 shall
be borne by the Company.
12.
Merger, Consolidation, Sale or Conveyance
(1)
The Company will not merge or consolidate with or into any other corporation or
sell, convey, transfer or otherwise dispose of all or substantially all of its properties
to any other corporation, unless (i) either the Company shall be the continuing
corporation, or the successor corporation (if other than the Company) (the
"successor corporation") shall be a corporation organized and existing under the
laws of the United States or of a state thereof and such successor corporation shall
expressly assume the due and punctual payment of the principal of, and interest on
(and Additional Amounts, if any, with respect to) all the Bonds, according to their
tenor, and the due and punctual performance of all of the covenants and obligations
of the Company under the Bonds and the Agency Agreement by supplemental
agreement executed by and among the Fiscal Agent and the successor corporation
and/or the Company, and (ii) the Company or such successor corporation, as the
case may be, shall not, immediately after such merger or consolidation, or such sale,
conveyance, transfer or other disposition, be in default in the performance of any
such covenants or obligations, and (iii) the Company and such successor
corporation shall comply with all requirements of any applicable law required for
the transactions contemplated by this Condition 12.
(2)
Upon any such merger, consolidation, sale, conveyance, transfer or other
disposition, such successor corporation shall succeed to and be substituted for, and
may exercise every right and power of and be subject to all the obligations of, the
Company under the Agency Agreement and the Bonds, with the same effect as if
such successor corporation had been named as the Company therein and herein, and
the Company shall be released from all its liability as obligor under the Bonds and
the Agency Agreement.
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(3)
Prior to the time (if practicable and lawful) when such merger, consolidation, sale,
conveyance, transfer or other disposition shall be referred to the shareholders of the
Company for adoption or approval, and after such merger, consolidation, sale,
conveyance, transfer or other disposition shall have taken effect, the Company (or,
as the case may be, the successor corporation) shall promptly notify the Fiscal
Agent and shall, only in the event that the Company is not the continuing
corporation, give public notice of the relevant matters to the Bondholders. Prior to
the time such merger, consolidation, sale, conveyance, transfer or other disposition
shall have taken effect, the Company (or, as the case may be, the successor
corporation) shall deliver to the Fiscal Agent a certificate signed by two officers of
the Company (or, as the case may be, the successor corporation) stating that such
transaction will take effect in compliance with all the conditions referred to in
above (i), (ii) and (iii) of this Condition 12(1) and an opinion or letter of legal
counsel (including in-house counsel) of the Company (or, as the case may be, the
successor corporation) to the effect that the Company (or, as the case may be, the
successor corporation) complies or upon consummation of such transaction will
comply with all such conditions. All expenses necessary for the procedure under
this Condition 12 shall be borne by the Company.
The said certificate and opinion or letter shall be kept at the Head Office of the
Fiscal Agent and shall be made available for perusal or photocopying by any
Bondholder during normal business hours. All expenses incurred for such
photocopying shall be borne by the applicant therefor.
13.
Replacement of Bonds
The Fiscal Agent on behalf of the Company shall prepare and deliver substitute
Bond Certificates or Coupons to the holders of lost, stolen, destroyed or mutilated Bond
Certificates or Coupons, upon application by any such holder, which must be accompanied
by a certified transcript of a decision of nullification of such Bond Certificates or Coupons
rendered by a Japanese court; provided, however, that as to those Bonds or Coupons which
have then matured, the principal or interest shall be paid by the Paying Agent(s) without
surrender of the Bond Certificates or the Coupons upon presentation of a certified transcript
of a decision of nullification of such Bond Certificates or Coupons. Any Japanese court
having jurisdiction over the place of principal and interest payment shall have jurisdiction
concerning the procedures for the nullification decision regarding the Bond Certificates or
the Coupons. If a holder of a Bond Certificate or a Coupon which has been lost, stolen,
destroyed or mutilated makes a request, for the purpose of obtaining a decision of
nullification, for a certificate to the effect that such Bond Certificate or Coupon has been
issued by the Company, the Fiscal Agent shall prepare and deliver such certificate. If it is
possible for the Fiscal Agent to identify mutilated Bond Certificates or Coupons, it shall,
upon surrender to it of such Bond Certificates or Coupons, prepare and deliver substitute
Bond Certificates or Coupons therefor without requiring a nullification decision and
destroy the surrendered Bond Certificates or Coupons. The actual expenses incurred in
respect of the preparation and delivery of substitute Bond Certificates or Coupons or said
certificate shall be borne by the applicant therefor.
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14.
Registration Book
The registration book for the Bonds shall be prepared and administered by the
Fiscal Agent on behalf of the Company, and kept at its Head Office.
15.
Prescription
The period of extinctive prescription shall be ten years for the principal of the
Bonds and five years for the interest on the Bonds pursuant to Article 316 of the
Commercial Code of Japan.
16.
Notices
All public notices relating to the Bonds shall be published once in the Japanese
Official Gazette (if possible) and once in a daily Japanese newspaper published in both
Tokyo and Osaka reporting on general affairs. Direct notification to individual
Bondholders need not be made. Such public notices to be given by the Company shall,
upon the request and at the expense of the Company, be given by the Fiscal Agent on
behalf of the Company. The Agency Agreement provides that the Company shall request
the Fiscal Agent in writing to give such public notices on behalf of the Company whenever
necessary.
17.
Currency Indemnity
In the event of a judgment or order being rendered by any court for the payment of
the principal of or interest on the Bonds, and such judgment or order being expressed in a
currency other than Japanese yen, any amount received or recovered in such currency by
any Bondholder or holder of Coupons in respect of such judgment or order shall only
constitute a discharge to the Company to the extent of the amount received or recovered in
Japanese yen and the Company undertakes to pay to such Bondholder and holder of
Coupons the amount necessary to make up any deficiency arising or resulting from any
variation in rates of exchange between (a) the date as of which any amount expressed in
Japanese yen is (or is to be treated as) converted for the purposes of any such judgment or
order, and (b) the date or dates of discharge of such judgment or order (or part thereof).
To the extent permitted by any applicable law, the above undertaking shall constitute a
separate and independent obligation of the Company from its other obligations, shall give
rise to a separate and independent cause of action against the Company, shall apply
irrespective of any indulgence granted by any Bondholder or holder of Coupons from time
to time and shall continue in full force and effect notwithstanding any judgment or order.
18.
Governing Law and Jurisdiction
Except as to the authorization relating to the issuance by the Company of the Bonds,
the Bonds, the form and substance of the Bond Certificates and the Coupons and all the
rights and obligations of all the parties concerned, including the Bondholders, arising
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thereunder shall in all respects be governed by and construed in accordance with the laws
of Japan.
Except as otherwise provided in these Conditions of Bonds, the place of
performance of obligations pertaining to the Bonds is Tokyo, Japan.
Any legal action or other court procedure against the Company arising from or
relating to the Bonds, Bond Certificates, Coupons or these Conditions of Bonds may be
instituted in the Tokyo District Court, to the jurisdiction of which the Company hereby
expressly, unconditionally and irrevocably submits.
The Company hereby appoints a director of CH Projects Management Ltd., in
Tokyo, Japan as the authorized agent of the Company upon whom process and any judicial
or other court documents may be served in any legal or other court procedural action
arising from or relating to the Bonds, Bond Certificates, Coupons or these Conditions of
Bonds that may be instituted in Japan; the Company hereby designates the address from
time to time of CH Projects Management Ltd., currently at Chiyoda House 301, 17-8
Nagatacho 2-chome, Chiyoda-ku, Tokyo 100-0014, Japan, as the address to receive such
process and any judicial or other court documents; and the Company hereby agrees to take,
from time to time and so long as any of the Bonds shall remain outstanding, any and all
action (including the execution and filing of any and all documents and instruments) that
may be necessary to effect and to continue such appointment and designation in full force
and effect. If at any time such agent shall not, for any reason, serve as such authorized
agent, the Company shall immediately appoint, and it hereby undertakes to take any and all
action that may be necessary to effect the appointment of, a successor authorized agent in
Tokyo, Japan. The Company shall notify the Fiscal Agent of the appointment of such
successor agent and give a public notice thereof to the Bondholders.
Nothing in this Condition 18 shall affect the right of the Bondholders to institute
legal action against the Company in any court of competent jurisdiction under applicable
laws or to serve process in any manner otherwise permitted by law.
19.
Conversion into Book-Entry Transfer Bonds
If any of the Bonds are converted into book-entry transfer bonds as defined in the
Law Concerning Book-Entry Transfer of Corporate Bonds, Etc. of Japan (Law No. 75 of
2001, as amended, the "Book-Entry Transfer Law") after all necessary procedures have
duly been taken by the Company and the relevant Bondholders pursuant to the Book-Entry
Transfer Law, the manner of calculation and payment of principal of and interest on such
Bonds in the form of book-entry transfer bonds, how to identify the Bondholders in the
form of book-entry transfer bonds, how to exercise its rights under such Bonds in the form
of book-entry transfer bonds, how to transfer such Bonds in the form of book-entry transfer
bonds and all other related matters in respect of the Bonds to which such book-entry
transfer system for corporate bonds, etc. applies, shall all be subject to the Book-Entry
Transfer Law, the business regulations of the book-entry transfer institution under the
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Book-Entry Transfer Law and other rules and regulations relating to book-entry transfer
bonds.
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(Translation)
Annex 2
¥100,000,000
No. ___________
HSBC FINANCE CORPORATION
JAPANESE YEN BONDS - TWELFTH SERIES (2006)
Unsecured
Amount ¥100,000,000
Interest Rate: 2.54 % per annum
Due February 16, 2021
This Bond is one of HSBC Finance Corporation Japanese Yen Bonds - Twelfth
Series (2006) in the aggregate principal amount of ¥15,000,000,000 issued on February 16,
2006 by HSBC Finance Corporation pursuant to the lawful authorization and in accordance
with the Conditions of Bonds appearing on the reverse hereof.
February 16, 2006
HSBC Finance Corporation
By:
Assistant Treasurer
(Facsimile Signature)
[The following legend will be printed in English at the bottom of the face side of the Bond
Certificates.]
Any United States person who holds this obligation will be subject to limitations
under the United States income tax laws, including the limitations provided in Sections
165(j) and 1287(a) of the Internal Revenue Code.
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(Translation)
Annex 3
HSBC FINANCE CORPORATION
JAPANESE YEN BONDS - TWELFTH SERIES (2006)
Unsecured
S
e
m
i
Interest Coupon of ¥100,000,000 Bond
For ¥1,270,000
A
n
n
u
a
l
I
n
t
e
r
e
s
t
Payable on February 16 / August 16, 20_ _
No.
February 16, 2006
HSBC Finance Corporation
By:
Assistant Treasurer
(Facsimile Signature)
[The following legend will be printed in English at the bottom of the face side of the
Coupons.]
Any United States person who holds this obligation will be subject to limitations
under the United States income tax laws, including the limitations provided in Sections
165(j) and 1287(a) of the Internal Revenue Code.
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