Eighth Supplemental
Indenture
EIGHTH
SUPPLEMENTAL INDENTURE, dated as
of , 2005 (the
“Supplemental Indenture”), between HSBC Finance
Corporation, a Delaware corporation (the “Company”),
and J.P. Morgan Trust Company, National Association, as trustee
(the “Trustee”) under the Indenture dated as of
May 15, 1995 between the Company and the Trustee (the
“Indenture”).
WHEREAS, the
Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of the Company’s unsecured
junior subordinated debt securities, to be issued from time to time
in one or more series as might be determined by the Company under
the Indenture, in an unlimited aggregate principal amount which may
be authenticated and delivered as provided in the
Indenture;
WHEREAS, pursuant
to the terms of the Indenture, the Company desires to provide for
the establishment of a new series of its debt securities to be
known as its % Junior
Subordinated Deferrable Interest Notes
due , 2035 (the
“Notes”), the form and substance of such Notes and the
terms, provisions and conditions thereof to be set forth as
provided in the Indenture and this Supplemental
Indenture;
WHEREAS, Household
Capital Trust IX, a Delaware statutory business trust (the
“Trust”), intends to offer to the public
$ aggregate
liquidation amount of its %
Trust Preferred Securities (the “Preferred Securities”)
and intends to issue to the Company, as sponsor,
its % Trust Common Securities
(the “Common Securities”, and together with the
Preferred Securities, the “Trust Securities”),
representing undivided beneficial interests in the assets of the
Trust and proposes to invest the proceeds from such offering in
$ aggregate
principal amount of the Notes; and
WHEREAS, the
Company has requested that the Trustee execute and deliver this
Supplemental Indenture, and all requirements necessary to make this
Supplemental Indenture a valid instrument, in accordance with its
terms, and to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee, the valid obligations
of the Company, have been performed, and the execution and delivery
of this Supplemental Indenture has been duly authorized in all
respects:
NOW THEREFORE, in
consideration of the purchase and acceptance of the Notes by the
holders thereof, and for the purpose of setting forth, as provided
in the Indenture, the form and substance of the Notes and the
terms, provisions and conditions thereof, the Company covenants and
agrees with the Trustee as follows:
Section 1.1 Definition of
Terms.
Unless the context
otherwise requires:
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(a)
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a
term defined in the Indenture has the same meaning when used in
this Supplemental Indenture;
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(b)
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a
term defined anywhere in this Supplemental Indenture has the same
meaning throughout;
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(c)
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the
singular includes the plural and vice versa;
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(d)
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a
reference to a Section or Article is to a Section or Article of
this Supplemental Indenture;
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(e)
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headings are for convenience of
reference only and do not affect interpretation;
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(f)
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the
following terms have the meanings given to them in the Declaration:
(i) Clearing Agency (ii) Delaware Trustee; (iii)Dissolution
Tax Opinion; (iv) No Recognition Opinion; (v) Pricing
Agreement; (vi) Property
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Trustee; (vii) Preferred
Security Certificate; (viii) Redemption Tax Opinion; (ix)
Regular Trustees; (x) Special Event; (xi) Tax Event; and
(xii) Underwriting Agreement); and
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(g)
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the
following terms have the meanings given to them in this Section
l.l(g):
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“Additional Interest” has the
meaning set forth in Section 2.5(c).
“Compounded Interest” has the
meaning set forth in Section 4.1.
“Coupon
Rate” has the meaning set forth in
Section 2.5(a).
“Declaration” means the Amended and
Restated Declaration of Trust of Household Capital Trust IX, a
Delaware business trust, dated as
of , 2005.
“Deferred
Interest” has the meaning set forth in
Section 4.1.
“Dissolution Event” means that as a
result of the occurrence and continuation of a Special Event, the
Trust is to be dissolved in accordance with the Declaration and the
Notes held by the Trustee are to be distributed to the holders of
the Trust Securities issued by the Trust pro rata in accordance
with the Declaration.
“Extended
Interest Payment Period” has the meaning set forth in
Section 4.1.
“Interest
Payment Date” has the meaning set forth in
Section 2.5(a).
“Maturity
Date” means , 2035, or
such other earlier date as may be determined by the Company
pursuant to Section 3.4 herein.
“Ministerial Action” has the meaning
set forth in Section 3.1.
“90 Day
Period” has the meaning set forth in
Section 3.1.
“Non Book
Entry Preferred Securities” has the meaning set forth in
Section 2.4(b).
“Paying
Agent” means J.P. Morgan Trust Company, National Association,
until a successor paying agent has been appointed and has accepted
such appointment.
“Redemption Price” has the meaning
set forth in Section 3.1.
ARTICLE II
General Terms And Conditions
Of
The Notes
Section 2.1 Designation and
Principal Amount.
There is hereby
authorized a series of debt securities designated the “
% Junior Subordinated Deferrable Interest Notes
due , 2035”, limited in
aggregate principal amount to $ , which amount
shall be as set forth in any written order of the Company for the
authentication and delivery of Notes pursuant to Section 2.02
of the Indenture.
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The Maturity Date
will be , 2035, or such other
earlier date as may be determined by the Company pursuant to
Section 3.4 herein, and the date on which the Notes mature and
on which the principal shall be due and payable together with all
accrued and unpaid interest thereon.
Section 2.3 Form And
Payment.
Except as provided
in Section 2.4, the Notes shall be issued in fully registered
certificated form without interest coupons. Principal and interest
on the Notes issued in certificated form will be payable, the
transfer of such Notes will be registrable and such Notes will be
exchangeable for Notes bearing identical terms and provisions at
the office or agency of the Trustee; provided, however, that
payment of interest may be made at the option of the Company by
check mailed to the registered Holder at such address as shall
appear in the Note Register. Notwithstanding the foregoing, so long
as the registered Holder of any Notes is the Property Trustee, the
payment of the principal of (and premium, if any) and interest on
such Notes held by the Property Trustee will be made by wire
transfer at such place and to such account as may be designated by
the Property Trustee.
Section 2.4 Depository
Note.
In connection with
a Dissolution Event;
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(a)
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the
Notes in certificated form may be presented to the Trustee by the
Property Trustee in exchange for a Depository Note in an aggregate
principal amount equal to all Outstanding Notes, to be registered
in the name of the Depository, or its nominee, and delivered by the
Trustee to the Depository for crediting to the accounts of its
participants pursuant to the instructions of the Regular Trustees.
The Company upon any such presentation shall execute a Depository
Note in such aggregate principal amount and deliver the same to the
Trustee for authentication and delivery in accordance with the
Indenture and this Supplemental Indenture. Payments on the Notes
issued as a Depository Note will be made to the Depository;
and
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(b)
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if
any Preferred Securities are held in non book-entry certificated
form, the Notes in certificated form may be presented to the
Trustee by the Property Trustee and any Preferred Security
Certificate which represents Preferred Securities other than
Preferred Securities held by the Clearing Agency or its nominee
(“Non Book-Entry Preferred Securities”) will be deemed
to represent beneficial interests in Notes presented to the Trustee
by the Property Trustee having an aggregate principal amount equal
to the aggregate liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security Certificates are presented
to the Security Registrar for transfer or reissuance at which time
such Preferred Security Certificates will be cancelled and a Note
registered in the name of the holder of the Preferred Security
Certificate or the transferee of the holder of such Preferred
Security Certificate as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the
Preferred Security Certificate cancelled will be executed by the
Company and delivered to the Trustee for authentication and
delivery in accordance with the Indenture and this Supplemental
Indenture. On issue of such Notes, Notes with an equivalent
aggregate principal amount that were presented by the Property
Trustee to the Trustee will be deemed to have been
cancelled.
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(a)
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Each Note will bear interest at the
rate of % per annum (the
“Coupon Rate”) from the original date of issuance until
the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of
interest at the Coupon Rate, compounded quarterly and payable
(subject to the provisions of Article IV) quarterly in arrears
on , ,
and of each year (each, an “Interest
Payment Date”), commencing
on , 2006 to the person in whose
name such Note or any predecessor Note is registered, at the close
of business on the Regular Record Date for such interest
installment, which shall be the close of business on the
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Business Day next preceding that
Interest Payment Date. If pursuant to the provisions of
Section 2.11(c) of the Indenture the Notes are no longer
represented by a Depository Note, the Company may select a Regular
Record Date for such interest installment which shall be any date
at least fifteen days before an Interest Payment Date.
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(b)
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The
amount of interest payable for any period will be computed
(i) for any full 90-day quarterly interest payment period, on
the basis of a 360-day year of twelve 30-day months and
(ii) for any period shorter than a full 90-day quarterly
interest payment period for which interest payments are computed,
on the basis of a 30-day month, and for periods of less than a
month, the actual number of days elapsed per 30-day month. In the
event that any date on which interest is payable on the Notes is
not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect
as if made on such date.
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(c)
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If
at any time while the Property Trustee is the Holder of any Notes,
the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature
(other than withholding taxes) imposed by the United States, or any
other taxing authority, then, in any case, the Company will pay as
additional interest (“Additional Interest”) on the
Notes held by the Property Trustee, such additional amounts as
shall be required so that the net amounts received and retained by
the Trust and the Property Trustee after paying such taxes, duties
assessments or other governmental charges will be equal to the
amounts the Trust and the Property Trustee would have received had
no such taxes, duties, assessments or other government charges been
imposed.
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ARTICLE III
Redemption Of The Notes
And
Acceleration Of
Maturity
Section 3.1 Tax Event
Redemption.
If a Tax Event has
occurred and is continuing and:
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(a)
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the
Company has received a Redemption Tax Opinion; or
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(b)
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after receiving a Dissolution Tax
Opinion, the Regular Trustees shall have been informed by tax
counsel rendering the Dissolution Tax Opinion that a No Recognition
Opinion cannot be delivered to the Trust,
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then,
notwithstanding Section 3.2, the Company shall have the right
upon not less than 30 days nor more than 60 days notice
to the registered Holders of the Notes to redeem the Notes in whole
or in part for cash, at the redemption price set forth below,
within 90 days following the occurrence of such Tax Event (the
“90 Day Period”), provided that, if at the time there
is available to the Company the opportunity to eliminate within the
90 Day Period, the Tax Event by taking some ministerial action
(“Ministerial Action”), such as filing a form or making
an election, or pursuing some other similar reasonable measure
which has no adverse effect on the Company, the Trust or the
Holders of the Trust Securities issued by the Trust, the Company
shall pursue such Ministerial Action in lieu of redemption; and
provided, further, that the Company shall have no right to redeem
the Notes while the Trust is pursuing any Ministerial Action
pursuant to its obligations under the Declaration.
The Redemption
Price shall be equal to 100% of the principal amount to be redeemed
plus any accrued and unpaid interest thereon to the date of such
redemption (the “Redemption Price”).
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Section
3.2 Optional Redemption By
Company.
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(a)
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Subject to the provisions of
Article III of the Indenture and to Section 3.2(b)
hereof, the Company shall have the right to redeem the Notes, in
whole or in part, from time to time, on or
after , 2010, at the Redemption
Price. Any redemption pursuant to this paragraph will be made upon
not less than 30 nor more than 60 days’ notice to the
registered Holder of the Notes, at the Redemption Price. If the
Notes are only partially redeemed pursuant to this
Section 3.2, the Notes will be redeemed pro rata or by lot or
by any other method utilized by the Trustee; provided, that if at
the time of redemption, the Notes are registered as a Depository
Note, the Depository shall determine by lot the principal amount of
such Notes held by each Holder to be redeemed.
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(b)
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If
a partial redemption of the Notes would result in the delisting of
the Preferred Securities issued by the Trust from any national
securities exchange or other organization on which the Preferred
Securities are then listed, the Company shall not be permitted to
effect such partial redemption and may only redeem the Notes in
whole.
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Section 3.3 No Sinking
Fund.
The Notes are not
entitled to the benefit of any sinking fund.
Section 3.4 Conditional Right
to Advance Maturity.
If a Tax Event has
occurred and is continuing the Company shall have the right, prior
to dissolution of the Trust, to advance the Maturity Date of the
Notes to the minimum extent required in order to allow the Company
to deduct the interest payments on the Notes for United States
federal income tax purposes; provided, however, the resulting
Maturity Date shall not be less than 15 years from the
original issuance of the Notes or earlier
than , 2020. The Company may
elect to advance the Maturity Date only if it has received an
opinion of nationally recognized independent tax counsel to the
Company experienced in such matters (which opinion may rely on
published revenue rulings of the Internal Revenue Service), to the
effect that (i) after the Maturity Date has been advanced,
interest paid on the Notes will be deductible by the Company for
United States federal income tax purposes and (ii) advancing
the Maturity Date will not result in a taxable event to holders of
the Preferred Securities.
Section 3.5 Notice of
Advancement of Maturity Date.
If the Company
elects to advance the Maturity Date of the Notes pursuant to
Section 3.4, the Company shall give written notice of such
election to the Trustee, the Regular Trustees and the Property
Trustee, and the Trustee shall give notice to the holders of the
Preferred Securities not less than 30 and not more than
60 days prior to the effective date of such
election.
ARTICLE IV
Extension Of Interest
Payment Perio d
Section 4.1 Extension of
Interest Payment Period.
The Company shall
have the right, at any time during the term of the Notes, from time
to time to defer the payment of interest by extending the interest
payment period of such Notes for up to 20 consecutive quarters (the
“Extended Interest Payment Period”), provided that no
Extended Interest Payment Period may extend beyond the Maturity
Date of the Notes. To the extent permitted by applicable law,
interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this
Section 4.1, will bear interest thereon at the Coupon Rate,
compounded quarterly, for each quarter of the Extended Interest
Payment Period (“Compounded Interest”). At the end of
the Extended Interest Payment Period the Company shall pay all
interest accrued and unpaid on the Notes including any Additional
Interest and Compounded Interest (“Deferred Interest”)
which shall be payable to the Holders of the Notes in whose names
the Notes are registered in the Note Register on the first record
date after the end of the Extended Interest Payment Period. Before
the termination of any Extended Interest Payment Period, the
Company may further extend such period, provided that such period
together with all such further extensions thereof shall not exceed
20 consecutive quarters and provided further that no Extended
Interest Payment Period may
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extend beyond
the Maturity Date of the Notes. Upon the termination of any
Extended Interest Payment Period and upon the payment of all
Deferred Interest then due, the Company may select a new Extended
Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest
Payment Period, except at the end thereof.
Section 4.2 Notice of
Extension.
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(a)
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If
the Property Trustee is the only registered Holder of the Notes at
the time the Company selects an Extended Interest Payment Period,
the Company shall give written notice to both the Regular Trustees
and the Property Trustee of its selection of such Extended Interest
Payment Period one Business Day before the earlier of (i) the
next succeeding date on which Distributions on the Trust Securities
issued by the Trust are payable, or (ii) the date the Trust is
required to give notice of the record date or the date such
Distributions are payable to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the
Preferred Securities issued by the Trust, but in any event at least
one Business Day before such record date.
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(b)
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If
the Property Trustee is not the only Holder of the Notes at the
time the Company selects an Extended Interest Payment Period, the
Company shall give the Holders of the Notes written notice of its
selection of such Extended Interest Payment Period 10 Business Days
before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice
of the record or payment date of such interest payment to the New
York Stock Exchange or other applicable self-regulatory
organization or to Holders of the Notes, but in any event at least
two Business Days before such record date.
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(c)
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The
quarter in which any notice is given pursuant to paragraphs
(a) or (b) of this Section 4.2 shall be counted as
one of the 20 quarters permitted in the maximum Extended Interest
Payment Period permitted under Section 4.1.
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ARTICLE V
Expenses And
Guarantee
Section 5.1 Payment of
Expenses.
In connection with
the offering, sale and issuance of the Notes to the Property
Trustee in connection with the sale of the Trust Securities by the
Trust, the Company shall:
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(a)
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pay
for all costs and expenses relating to the offering, sale and
issuance of the Notes, including commissions to the underwriters
payable pursuant to the Underwriting Agreement and the Pricing
Agreement and compensation of the Trustee under the Indenture in
accordance with the provisions of Section 8.07 of the
Indenture;
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(b)
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pay
for all costs and expenses of the Trust (including, but not limited
to, costs and expenses relating to the organization of the Trust,
the offering, sale and issuance of the Trust Securities (including
commissions to the underwriters in connection therewith), the fees
and expenses of the Property Trustee and the Delaware Trustee, the
costs and expenses relating to the operation
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of
the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), travel
expenses and costs and expenses incurred in connection with the
acquisition, financing, and disposition of Trust assets);
and
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(c)
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pay
any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs
and expenses with respect to such taxes of the Trust.
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Section 6.1 Agreement to
Subordinate.
The Company
covenants and agrees, and each Holder of Notes issued hereunder by
such Holder’s acceptance thereof likewise covenants and
agrees, that all Notes shall be issued subject to the provisions of
this Article VI; and each Holder of a Note, whether upon
original issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions.
The payment by the
Company of the principal of, (premium, if any) and interest on all
Notes issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and junior in right of
payment to the prior payment in full of all Senior Indebtedness of
the Company, whether outstanding at the date of this Indenture or
thereafter incurred.
No provision of
this Article VI shall prevent the occurrence of any default or
Event of Default hereunder.
Section 6.2 Default on Senior
Indebtedness.
In the event and
during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on
any Senior Indebtedness of the Company, or in the event that the
maturity of any Senior Indebtedness of the Company, has been
accelerated because of a default, then, in either case, no payment
shall be made by the Company with respect to the principal
(including redemption payments) of, or premium, if any, or interest
on the Notes including payment with respect to any obligation due
under the Preferred Securities Guarantee.
In the event that,
notwithstanding the foregoing, any payment shall be received by the
Trustee or any Holder when such payment is prohibited by the
preceding paragraph of this Section 6.2, such payment shall be
held in trust for the benefit of, and shall be paid over or
delivered to, the holders of such Senior Indebtedness or their
respective representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may
have been issued, as their respective interests may appear, but
only to the extent that the holders of such Senior Indebtedness (or
their representative or representatives or a trustee) notify the
Trustee within 90 days of such payment of the amounts then due
and owing on such Senior Indebtedness and only the amounts
specified in such notice to the Trustee shall be paid to the
holders of such Senior Indebtedness.
Section 6.3 Liquidation;
Dissolution; Bankruptcy.
Upon any payment
by the Company, or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or
reorganization of the Company, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, all
amounts due upon all Senior Indebtedness of the Company, shall
first be paid in full, or payment thereof provided for in money in
accordance with its terms, before any payment is made by the
Company, as the case may be, on account of the principal (and
premium, if any) or interest on the Notes; and upon any such
dissolution or winding-up or liquidation or reorganization any
payment by the Company, or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to
which the Holders of the Notes or the Trustee would be entitled to
receive from the Company, except for the provisions of this
Article VI, shall be paid by the Company, or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders of the Notes
or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness of the Company, (pro
rata to the holders of the respective amounts of Senior
Indebtedness, as calculated by the Company) or their representative
or representatives, or to the trustee or trustees under any
indenture pu
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