Document:

exv4w4

 

Exhibit 4.4

AMENDED AND RESTATED

DECLARATION

OF TRUST

HSBC FINANCE CAPITAL TRUST IX

Dated as of      , 2005

 

 

CROSS-REFERENCE TABLE*

	 	 	 	 	 
	Section of	 	 
	Trust Indenture Act	 	Section of
	of 1939, as amended	 	Declaration
	310(a)

	 	 	5.3	(a)
	310(b)

	 	 	5.3	(c)
	310(c)

	 	Inapplicable

	311(a)

	 	 	2.2	(b)
	311(b)

	 	 	2.2	(b)
	311(c)

	 	Inapplicable

	312(a)

	 	 	2.2	(a)
	312(b)

	 	 	2.2	(b)
	313

	 	 	2.3	 
	314(a)

	 	 	2.4	 
	314(b)

	 	Inapplicable

	314(c)

	 	 	2.5	 
	314(d)

	 	Inapplicable

	314(f)

	 	Inapplicable

	315(a)

	 	 	3.9	(b)
	315(b)

	 	 	2.8	 
	315(c)

	 	 	3.9	(a)
	315(d)

	 	 	3.9	(a)
	316(a)

	 	Exhibit At 2.6

	316(c)

	 	 	3.6	(e)

 

			
	*	 	This Cross-Reference Table does not constitute part of the Declaration and shall not affect
the interpretation of any of its terms or provisions.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	DECLARATION OF TRUST
	 	 	1	 
	 
	 	 	 	 
	ARTICLE I
INTERPRETATION AND DEFINITIONS

	 
	 	 	 	 
	SECTION 1.1 Definitions 1
	 	 	 	 
	 
	 	 	 	 
	ARTICLE II
TRUST INDENTURE ACT

	 
	 	 	 	 
	SECTION 2.1 Trust Indenture Act; Application 
	 	 	6	 
	SECTION 2.2 Lists of Holders of Securities 
	 	 	6	 
	SECTION 2.3 Reports by the Property Trustee 
	 	 	6	 
	SECTION 2.4 Periodic Reports to Property Trustee 
	 	 	6	 
	SECTION 2.5 Evidence of Compliance with Conditions Precedent 
	 	 	7	 
	SECTION 2.6 Events of Default; Waiver 
	 	 	7	 
	SECTION 2.7 Event of Default; Notice 
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III
ORGANIZATION

	 
	 	 	 	 
	SECTION 3.1 Name 
	 	 	8	 
	SECTION 3.2 Office 
	 	 	8	 
	SECTION 3.3 Purpose 
	 	 	9	 
	SECTION 3.4 Authority 
	 	 	9	 
	SECTION 3.5 Title to Property of the Trust 
	 	 	9	 
	SECTION 3.6 Powers and Duties of the Regular Trustees 
	 	 	9	 
	SECTION 3.7 Prohibition of Actions by the Trust and the Trustees 
	 	 	11	 
	SECTION 3.8 Powers and Duties of the Property Trustee 
	 	 	12	 
	SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee 
	 	 	13	 
	SECTION 3.10 Certain Rights of Property Trustee 
	 	 	14	 
	SECTION 3.11 Delaware Trustee 
	 	 	15	 
	SECTION 3.12 Execution of Documents 
	 	 	16	 
	SECTION 3.13 Not Responsible for Recitals or Issuance of Securities 
	 	 	16	 
	SECTION 3.14 Duration of Trust 
	 	 	16	 
	SECTION 3.15 Mergers 
	 	 	16	 
	 
	 	 	 	 
	ARTICLE IV
SPONSOR

	 
	 	 	 	 
	SECTION 4.1 Sponsor’s Purchase of Common Securities 
	 	 	17	 
	SECTION 4.2 Responsibilities of the Sponsor 
	 	 	17	 

 

 

	 	 	 	 	 
	ARTICLE V
Trustees

	 
	 	 	 	 
	SECTION 5.1 Number of Trustees 
	 	 	18	 
	SECTION 5.2 Delaware Trustee 
	 	 	18	 
	SECTION 5.3 Property Trustee; Eligibility 
	 	 	19	 
	SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally 
	 	 	19	 
	SECTION 5.5 Initial Trustees 
	 	 	19	 
	SECTION 5.6 Appointment, Removal and Resignation of Trustees 
	 	 	20	 
	SECTION 5.7 Vacancies Among Trustees 
	 	 	21	 
	SECTION 5.8 Effect of Vacancies 
	 	 	21	 
	SECTION 5.9 Meetings 
	 	 	22	 
	SECTION 5.10 Delegation of Power 
	 	 	22	 
	 
	 	 	 	 
	ARTICLE VI
Distributions

	 
	 	 	 	 
	SECTION 6.1 Distributions
	 	 	22	 
	 
	 	 	 	 
	ARTICLE VII
Issuance of Securities

	 
	 	 	 	 
	SECTION 7.1 General Provisions Regarding Securities
	 	 	22	 
	 
	 	 	 	 
	ARTICLE VIII
Termination of Trust

	 
	 	 	 	 
	SECTION 8.1 Termination of Trust
	 	 	23	 
	 
	 	 	 	 
	ARTICLE IX
Transfer of Interests

	 
	 	 	 	 
	SECTION 9.1 Transfer of Securities 
	 	 	24	 
	SECTION 9.2 Transfer of Certificates 
	 	 	24	 
	SECTION 9.3 Deemed Security Holders 
	 	 	25	 
	SECTION 9.4 Book Entry Interests 
	 	 	25	 
	SECTION 9.5 Notices to Clearing Agency 
	 	 	25	 
	SECTION 9.6 Appointment of Successor Clearing Agency 
	 	 	25	 
	SECTION 9.7 Definitive Capital Security Certificates 
	 	 	26	 
	SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates 
	 	 	26	 
	 
	 	 	 	 
	ARTICLE X
Limitation of Liability of
Holders of Securities, Trustees or Others

	 
	 	 	 	 
	SECTION 10.1 Liability 
	 	 	27	 
	SECTION 10.2 Exculpation 
	 	 	27	 
	SECTION 10.3 Fiduciary Duty 
	 	 	27	 
	SECTION 10.4 Indemnification 
	 	 	28	 
	SECTION 10.5 Outside Businesses 
	 	 	29	 

 

 

	 	 	 	 	 
	ARTICLE XI
Accounting

	 
	 	 	 	 
	SECTION 11.1 Fiscal Year 
	 	 	29	 
	SECTION 11.2 Certain Accounting Matters 
	 	 	29	 
	SECTION 11.3 Banking 
	 	 	30	 
	SECTION 11.4 Withholding 
	 	 	30	 
	 
	 	 	 	 
	ARTICLE XII
Amendments and Meetings

	 
	 	 	 	 
	SECTION 12.1 Amendments 
	 	 	30	 
	SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent 
	 	 	31	 
	 
	 	 	 	 
	ARTICLE XIII
Representations of Property Trustee

	 
	 	 	 	 
	SECTION 13.1 Representations and Warranties of Property Trustee
	 	 	32	 
	 
	 	 	 	 
	ARTICLE XIV
Miscellaneous

	 
	 	 	 	 
	SECTION 14.1 Notices 
	 	 	33	 
	SECTION 14.2 Governing Law 
	 	 	34	 
	SECTION 14.3 Intention of the Parties 
	 	 	34	 
	SECTION 14.4 Headings 
	 	 	34	 
	SECTION 14.5 Successors and Assigns 
	 	 	34	 
	SECTION 14.6 Partial Enforceability 
	 	 	34	 
	SECTION 14.7 Counterparts 
	 	 	34	 

 

 

AMENDED AND RESTATED

DECLARATION OF TRUST OF

HSBC FINANCE CAPITAL TRUST IX

     , 2005

AMENDED AND RESTATED DECLARATION OF TRUST (“Declaration”) dated and effective as of
     , 2005 by the undersigned trustees (together with all other Persons from time to time duly
appointed and serving as trustees in accordance with the provisions of this Declaration, the
“Trustees”), HSBC Finance Corporation, a Delaware corporation, as trust sponsor (the “Sponsor”),
and by the holders, from time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;

WHEREAS, the Trustees and the Sponsor established a trust (the “Trust”) under the Delaware
Statutory Trust Act pursuant to a Declaration of Trust, dated as of September 15, 2005 (the
“Original Declaration”) and a Certificate of Trust filed with the Secretary of State of Delaware on
September 15, 2005, for the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in
certain Junior Subordinated Debt Securities of the Sponsor;

NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a statutory
trust under the Statutory Trust Act and that this Declaration constitutes the governing instrument
of such statutory trust, the Trustees declare that all assets contributed to the Trust will be held
in trust for the benefit of the holders, from time to time, of the securities representing
undivided beneficial interests in the assets of the Trust issued hereunder, subject to the
provisions of this Declaration.

ARTICLE I

Interpretation And Definitions 

Section 1.1 Definitions.

	 	(a)	 	Capitalized terms used in this Declaration but not defined in the preamble
above have the respective meanings assigned to them in this Section 1.1;
	 
	 	(b)	 	a term defined anywhere in this Declaration has the same meaning throughout;
	 
	 	(c)	 	all references to “the Declaration” or “this Declaration” are to this
Declaration of Trust as modified, supplemented or amended from time to time;
	 
	 	(d)	 	all references in this Declaration to Articles and Sections and Exhibits are to
Articles and Sections of and Exhibits to this Declaration unless otherwise specified;
	 
	 	(e)	 	a term defined in the Trust Indenture Act has the same meaning when used in
this Declaration unless otherwise defined in this Declaration or unless the context
otherwise requires; and
	 
	 	(f)	 	a reference to the singular includes the plural and vice versa.

“Affiliate” has the same meaning as given to that term in Rule 405 of the Securities Act or any
successor rule thereunder.

“Appointment Event” means an event defined in the terms of the Capital Securities as set forth in
Exhibit A which entitles the Holders of a Majority in liquidation amount of the Capital Securities
to appoint a Special Regular Trustee.

“Authorized Officer” of a Person means any Person that is authorized to bind such Person.

1

 

“Book Entry Interest” means a beneficial interest in a Global Certificate, ownership and transfers
of which shall be maintained and made through book entries by a Clearing Agency as described in
Section 9.4.

“Business Day” means any day other than a day on which banking institutions in New York, New York,
Chicago, Illinois, or the State of Delaware are authorized or required by law to close.

“Capital Securities Guarantee” means the guarantee agreement of the Sponsor in respect of the
Capital Securities.

“Capital Security” has the meaning specified in Section 7.1.

“Capital Security Beneficial Owner” means, with respect to a Book Entry Interest, a Person who is
the beneficial owner of such Book Entry Interest, as reflected on the books of the Clearing Agency,
or on the books of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).

“Capital Security Certificate” means a certificate representing a Capital Security substantially in
the form of Annex I to Exhibit A.

“Certificate” means a Common Security Certificate or a Capital Security Certificate.

“Clearing Agency” means an organization registered as a “Clearing Agency” pursuant to Section 17A
of the Exchange Act that is acting as depository for the Capital Securities and in whose name or in
the name of a nominee of that organization, shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Capital Securities.

“Clearing Agency Participant” means a broker, dealer, bank, other financial institution or other
Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of
securities deposited with the Clearing Agency.

“Closing Date” means      , 2005.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” has the meaning specified in Section 3.6.

“Common Security” has the meaning specified in Section 7.1.

“Common Security Certificate” means a definitive certificate in fully registered form representing
a Common Security substantially in the form of Annex II to Exhibit A.

“Coupon Rate” has the meaning set forth in Section 2(a) of Exhibit A hereto.

“Covered Person” means: (a) any officer, director, shareholder, partner, member, representative,
employee or agent of (i) the Trust; or (ii) the Trust’s Affiliates; and (b) any Holder of
Securities.

“Debt Issuer” means HSBC Finance Corporation, a Delaware corporation.

“Debt Trustee” means J. P. Morgan Trust Company, National Association, a national banking
association, as trustee under the Indenture until a successor is appointed thereunder and
thereafter means such successor trustee.

“Delaware Trustee” has the meaning set forth in Section 5.2.

2

 

“Definitive Capital Security Certificates” has the meaning set forth in Section 9.4.

“Direction” by a Person means a written direction signed (a) if the Person is a natural person, by
that Person; or (b) in any other case, in the name of such Person by one or more Authorized
Officers of that Person.

“Dissolution Tax Opinion” has the meaning set forth in Section 4(c) of Exhibit A hereto.

“Distribution” means a distribution payable to Holders of Securities in accordance with Section
6.1.

“DTC” means the Depository Trust Company, the initial Clearing Agency.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time or any
successor legislation.

“Event of Default” in respect of the Securities means an Event of Default (as defined in the
Indenture) has occurred and is continuing in respect of the Notes.

“Global Certificate” has the meaning set forth in Section 9.4.

“Holder” means a Person in whose name a Certificate representing a Security is registered, such
Person being a beneficial owner within the meaning of the Statutory Trust Act.

“Indemnified Person” means any Trustee, any Affiliate of any Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of any Trustee, or any
employee or agent of the Trust or its Affiliates.

“Indenture” means the Indenture dated as of May 15, 1995 among the Debt Issuer, and J. P. Morgan
Trust Company, National Association, as trustee and the indenture supplemental thereto pursuant to
which the Notes are to be issued.

“Investment Company” means an investment company as defined in the Investment Company Act.

“Investment Company Act” means the Investment Company Act of 1940, as amended from time to time or
any successor legislation.

“Legal Action” has the meaning set forth in Section 3.6(g).

“Majority in liquidation amount of the Securities” means, except as provided in the terms of the
Capital Securities, Holder(s) of Securities voting together as a single class or, as the context
may require, Holder(s) of Capital Securities or Common Securities each, voting separately as a
class, who vote Securities of a relevant class, and the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or maturity, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of the Securities voted
by such Holders represents more than 50% of the above stated liquidation amount of all Securities
of such class.

“Ministerial Action” has the meaning set forth in the terms of the Securities as set forth in
Exhibit A.

“No Recognition Opinion” has the meaning set forth in Section 4(c) of Exhibit A hereto.

“Notes” means the series of junior subordinated debt securities to be issued by the Debt Issuer
under the Indenture to the Property Trustee, a specimen certificate for such series of Notes being
Exhibit B.

3

 

“Officers’ Certificate” means, with respect to any Person, a certificate signed by two Authorized
Officers of such Person. Any Officers’ Certificate delivered with respect to compliance with a
condition or covenant provided for in this Declaration shall include:

	 	(a)	 	a statement that each officer signing the Certificate has read the covenant or
condition and the definition relating thereto;
	 
	 	(b)	 	a brief statement of the nature and scope of the examination or investigation
undertaken by each officer in rendering the Certificate;
	 
	 	(c)	 	a statement that each such officer has made such examination or investigation
as, in such officer’s opinion, is necessary to enable such officer to express an
informed opinion as to whether or not such covenant or condition has been complied
with; and
	 
	 	(d)	 	a statement as to whether, in the opinion of each such officer, such condition
or covenant has been complied with.

“Paying Agent” has the meaning specified in Section 3.8(h).

“Person” means a legal entity, including any individual, corporation, estate, partnership, joint
venture, association, joint stock company, limited liability company, trust, unincorporated
association, or government or any agency or political subdivision thereof, or any other entity of
whatever nature.

“Property Trustee” means the Trustee meeting the eligibility requirements set forth in Section 5.3.

“Property Account” has the meaning set forth in Section 3.8(c).

“Quorum” means a majority of the Regular Trustees or if there are only two Regular Trustees, both
of them.

“Redemption Tax Opinion” has the meaning set forth in Section 4(c) of Exhibit A hereto.

“Regular Trustee” means any Trustee other than the Property Trustee and the Delaware Trustee.

“Related Party” means, with respect to the Sponsor, any direct or indirect wholly owned subsidiary
of the Sponsor or any other Person which owns, directly or indirectly, 100% of the outstanding
voting securities of the Sponsor.

“Responsible Officer” means, with respect to the Property Trustee, any officer within the corporate
trust department, including any vice-president, any assistant vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust
officer or any other officer of the Property Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is referred because of
that officer’s knowledge of and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Guarantee Agreement.

“Rule 3a-5” means Rule 3a-5 under the Investment Company Act.

“Securities” means the Common Securities and the Capital Securities.

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

4

 

“66-2/3% in liquidation amount of the Securities” means, except as provided in the terms of the
Capital Securities, Holder(s) of Securities voting together as a single class or, as the context
may require, Holder(s) of Capital Securities or Common Securities, each voting separately as a
class, who vote Securities of a relevant class, and the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or maturity, plus accrued and unpaid
Distributions, to the date upon which the voting percentages are determined) of the Securities
voted by such Holders represents 66-2/3% of the above-stated liquidation amount of all Securities
of such class.

“Special Event” has the meaning set forth in the terms of the Securities.

“Special Regular Trustee” means a Regular Trustee appointed by the Holders of a Majority in
liquidation amount of the Capital Securities in accordance with Section 5.6(a)(ii)(B).

“Sponsor” means HSBC Finance Corporation, a Delaware corporation or any successor entity in a
merger, in its capacity as sponsor of the Trust.

“Statutory Trust Act” means Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801 et
seq., as it may be amended from time to time.

“Successor Entity” has the meaning set forth in Section 3.15(b).

“Successor Property Trustee” means a successor Trustee possessing the qualifications to act as
Property Trustee under Section 5.3(a).

“Successor Securities” has the meaning set forth in Section 3.15(b).

“Super Majority” means where consent under the Indenture would require the consent of greater than
a majority of the holders in principal amount of Notes affected thereby.

“Tax Event” has the meaning set forth in Section 4(c) of Exhibit A hereto.

“10% in liquidation amount of the Securities” means, except as provided in the terms of the Capital
Securities, Holder(s) of Securities voting together as a single class or, as the context may
require, Holder(s) of Capital Securities or Common Securities, each voting separately as a class,
who vote Securities of a relevant class, and the liquidation amount (including the stated amount
that would be paid on redemption, liquidation or maturity, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of the Securities voted by such Holders
represents 10% of the above stated liquidation amount of all Securities of such class.

“Treasury Regulations” means income tax regulations including temporary and proposed regulations,
promulgated under the Code by the United States Treasury, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).

“Trustee” or “Trustees” means each Person who has signed this Declaration as a trustee, so long as
such Person shall continue in office in accordance with the terms hereof, and all other Persons who
may from time to time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or
Persons solely in their capacity as trustees hereunder.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

“Underwriting Agreement” means the Underwriting Agreement for the offering and sale of Capital
Securities in the form of Exhibit C.

5

 

ARTICLE II

Trust Indenture Act 

Section 2.1 Trust Indenture Act; Application.

	 	(a)	 	This Declaration is subject to the provisions of the Trust Indenture Act that
are required to be part of this Declaration and shall, to the extent applicable, be
governed by such provisions;
	 
	 	(b)	 	the Property Trustee shall be the only Trustee which is a trustee for the
purposes of the Trust Indenture Act;
	 
	 	(c)	 	if and to the extent that any provision of this Declaration limits, qualifies
or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control; and
	 
	 	(d)	 	the application of the Trust Indenture Act to this Declaration shall not affect
the nature of the Securities as equity securities representing undivided beneficial
interests in the assets of the Trust.

Section 2.2 Lists of Holders of Securities.

	 	(a)	 	Each of the Sponsor, the Debt Issuer and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record date for
payment of Distributions a list, in such form as the Property Trustee may reasonably
require, of the names and addresses of the Holders of the Securities (“List of
Holders”) as of such record date, provided that none of the Sponsor, the Debt Issuer or
the Regular Trustees on behalf of the Trust shall be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent List of
Holders given to the Property Trustee by the Sponsor, the Debt Issuer and the Regular
Trustees on behalf of the Trust, and (ii) at any other time, within 30 days of receipt
by the Trust of a written request for a List of Holders as of a date no more than 14
days before such List of Holders is given to the Property Trustee. The Property Trustee
shall preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in its capacity as
Paying Agent (if acting in such capacity) provided that the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List of Holders;
and (b) the Property Trustee shall comply with its obligations under Sections 311(a),
311(b) and Section 312(b) of the Trust Indenture Act.

Section 2.3 Reports by the Property Trustee.

Within 60 days after May 15 of each year, the Property Trustee shall provide to the Holders of the
Capital Securities such reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act.

Section 2.4 Periodic Reports to Property Trustee.

Each of the Sponsor, the Debt Issuer and the Regular Trustees on behalf of the Trust shall provide
to the Property Trustee such documents, reports and information as required by Section 314 (if any)
and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.

6

 

Section 2.5 Evidence of Compliance with Conditions Precedent.

Each of the Sponsor, the Debt Issuer and the Regular Trustees on behalf of the Trust shall provide
to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided
for in this Declaration which relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers’ Certificate.

Section 2.6 Events of Default; Waiver.

	 	(a)	 	The Holders of a Majority in liquidation amount of Capital Securities may, by
vote, on behalf of the Holders of all of the Capital Securities, waive any past Event
of Default in respect of the Capital Securities and its consequences provided that if
the Event of Default arises out of an Event of Default under the Indenture:

	 	(i)	 	which is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
	 
	 	(ii)	 	which requires the consent or vote of all or a Super Majority of
the holders of the Notes to be waived under the Indenture, the Event of Default
under the Declaration may only be waived by the vote of all of the Holders of the
Capital Securities or such proportion thereof in liquidation amount as represents
the relevant Super Majority of the aggregate principal amount of Notes
outstanding.

	 	 	 	Upon such waiver, any such default shall cease to exist, and any Event of Default with
respect to the Capital Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Capital Securities
or impair any right consequent thereon. Any waiver by the Holders of the Capital
Securities of an Event of Default with respect to the Capital Securities shall also be
deemed to constitute a waiver by the Holders of the Common Securities of any such
Event of Default with respect to the Common Securities.
	 
	 	(b)	 	The Holders of a Majority in liquidation amount of the Common Securities may,
by vote, on behalf of the Holders of all of the Common Securities, waive any past Event
of Default with respect to the Common Securities and its consequences, provided that,
if the Event of Default arises out of an Event of Default under the Indenture:

	 	(i)	 	which is not waivable under the Indenture, except where the Holders
of the Common Securities are deemed to have waived such Event of Default under
the Declaration as provided below, the Event of Default under the Declaration is
not waivable; or
	 
	 	(ii)	 	which requires the consent or vote of all or a Super Majority of
the holders of the Notes to be waived under the Indenture, the Event of Default
under the Declaration may only be waived by the vote of all of the Holders of the
Capital Securities or such proportion thereof in liquidation amount as represents
the relevant Super Majority of the aggregate principal amount of the Notes
outstanding,

	 	 	 	provided that, each Holder of Common Securities will be deemed to have waived any such
Event of Default and all Events of Default with respect to the Common Securities until
all Events of Default with respect to the Capital Securities have been cured, waived
or otherwise eliminated and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Capital Securities and only the Holders of the Capital
Securities will have the right to direct the Property Trustee in accordance with the
terms of the Securities. Subject to the foregoing proviso, upon such waiver, any such
default shall cease to exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured, for every purpose of
this Declaration, but no such waiver

7

 

	 	 	 	shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.

	 	(c)	 	A waiver of an event of default under the Indenture by the Property Trustee at
the direction of the Holders of the Capital Securities, constitutes a waiver of the
corresponding Event of Default under this Declaration.

Section 2.7 Event of Default; Notice

	 	(a)	 	The Property Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders of the
Securities, notices of all defaults with respect to the Securities known to the
Property Trustee, unless such defaults have been cured before the giving of such notice
(the term “defaults” for the purposes of this Section 2.7(a) being hereby defined to be
an Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided therein);
provided, that, except for a default in the payment of principal of (or premium, if
any) or interest on any of the Notes or in the payment of any sinking fund installment
established for the Notes, the Property Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a trust
committee of directors and/or Responsible Officers, of the Property Trustee in good
faith determine that the withholding of such notice is in the interests of the Holders
of the Securities.
	 
	 	(b)	 	The Property Trustee shall not be deemed to have knowledge of any default
except:

	 	(i)	 	a default under Sections 6.01(a)(1) and 6.01(a)(2) of the
Indenture; or
	 
	 	(ii)	 	any default as to which the Property Trustee shall have received
written notice or a Responsible Officer charged with the administration of the
Declaration shall have obtained written notice of.

ARTICLE III

Organization 

Section 3.1 Name.

The Trust created hereby shall be known as “HSBC Finance Capital Trust IX”, as such name may be
modified from time to time by the Regular Trustees following written notice to the Holders of
Securities. The Trust’s activities may be conducted under the name of the Trust or any other name
deemed advisable by the Regular Trustees.

Section 3.2 Office.

The address of the principal office of the Trust is c/o HSBC Finance Corporation, 2700 Sanders
Road, Prospect Heights, Illinois 60070. On ten Business Days written notice to the Holders of
Securities, the Regular Trustees may designate another principal office.

8

 

Section 3.3 Purpose.

The exclusive purposes and functions of the Trust are (a) to issue and sell Securities and use the
proceeds from such sale to acquire the Notes, and (b) except as otherwise limited herein, to enter
into such agreements and engage in only those other activities necessary, or incidental thereto.
The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would
cause the Trust to be classified for United States federal income tax purposes as other than a
grantor trust.

Section 3.4 Authority.

Subject to the limitations provided in this Declaration and to the specific duties of the Property
Trustee, the Regular Trustees shall have exclusive and complete authority to carry out the purposes
of the Trust. An action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the Property Trustee in
accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with
the Trustees acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this Declaration.

Section 3.5 Title to Property of the Trust.

Except as provided in Section 3.8 with respect to the Notes and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in
the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.

Section 3.6 Powers and Duties of the Regular Trustees.

The Regular Trustees shall have the power and authority and duty to cause the Trust to engage in
the following activities:

	 	(a)	 	to issue and sell the Capital Securities and the Common Securities in
accordance with this Declaration; provided, however, that the Trust may issue no more
than one series of Capital Securities and no more than one series of Common Securities,
and, provided further, there shall be no interests in the Trust other than the
Securities and the issuance of Securities shall be limited to a one time, simultaneous
issuance of both Capital Securities and Common Securities on the Closing Date;
	 
	 	(b)	 	in connection with the issue and sale of the Capital Securities, at the
direction of the Sponsor, to:

	 	(i)	 	execute and file with the Securities and Exchange Commission (the
“Commission”) the registration statement on Form S-3 prepared by the Sponsor in
relation to the Capital Securities, including any amendments thereto prepared by
the Sponsor;
	 
	 	(ii)	 	execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor as necessary in order to qualify or
register all or part of the Capital Securities in any State in which the Sponsor
has determined to qualify or register such Capital Securities for sale;
	 
	 	(iii)	 	execute and file an application prepared by the Sponsor to The New
York Stock Exchange or any other national stock exchange or the NASDAQ Stock
Market for listing upon notice of issuance of any Capital Securities;
	 
	 	(iv)	 	execute and file with the Commission a registration statement on
Form 8-A prepared by the Sponsor relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act, including any amendments
thereto prepared by the Sponsor; and

9

 

	 	(v)	 	execute and enter into the Underwriting Agreement providing for
the sale of the Capital Securities;

	 	(c)	 	to acquire the Notes with the proceeds of the sale of the Capital Securities
and the Common Securities; provided, however, that the Regular Trustees shall cause
legal title to the Notes to be held of record in the name of the Property Trustee for
the benefit of the Holders of the Capital Securities and the Common Securities;
	 
	 	(d)	 	to give the Debt Issuer, the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event provided, that the Regular Trustees shall
consult with the Debt Issuer, the Sponsor and the Property Trustee before taking or
refraining from taking any Ministerial Action in relation to a Special Event;
	 
	 	(e)	 	to establish a record date with respect to all actions to be taken hereunder
that require a record date be established, including for the purposes of Section 316(c)
of the Trust Indenture Act and with respect to Distributions, voting rights,
redemptions and exchanges, and to issue relevant notices to the Holders of Capital
Securities and Common Securities as to such actions and applicable record dates;
	 
	 	(f)	 	to take all actions and perform such duties as may be required of the Regular
Trustees pursuant to the terms of the Securities;
	 
	 	(g)	 	to bring or defend, pay, collect, compromise, arbitrate, resort to legal
action, or otherwise adjust claims or demands of or against the Trust (“Legal Action”),
unless pursuant to 3.8(e), the Property Trustee has the exclusive power to bring such
Legal Action;
	 
	 	(h)	 	to employ or otherwise engage employees and agents (who may be designated as
officers with titles) and managers, contractors, advisors, and consultants and pay
reasonable compensation for such services;
	 
	 	(i)	 	to cause the Trust to comply with the Trust’s obligations under the Trust
Indenture Act;
	 
	 	(j)	 	to give the certificate to the Property Trustee required by Section 314(a)(4)
of the Trust Indenture Act which certificate may be executed by any Regular Trustee;
	 
	 	(k)	 	incur expenses which are necessary or incidental to carry out any of the
purposes of the Trust;
	 
	 	(l)	 	to act as, or appoint another Person to act as, registrar and transfer agent
for the Securities;
	 
	 	(m)	 	to give prompt written notice to the Holders of the Securities of any notice
received from the Debt Issuer of its election to defer payments of interest on the
Notes by extending the interest payment period under the Indenture;
	 
	 	(n)	 	to execute all documents or instruments, perform all duties and powers, and do
all things for and on behalf of the Trust in all matters necessary or incidental to the
foregoing;
	 
	 	(o)	 	to take all action which may be necessary or appropriate for the preservation
and the continuation of the Trust’s valid existence, rights, franchises and privileges
as a statutory trust under the laws of the State of Delaware and of each other
jurisdiction in which such existence is necessary to protect the limited liability of
the Holders of the Securities or to enable the Trust to effect the purposes for which
the Trust was created;
	 
	 	(p)	 	to take any action, not inconsistent with this Declaration or with applicable
law, which the Regular Trustees determine in their discretion to be necessary or
desirable in carrying out the activities of the Trust as set out in this Section 3.6
including, but not limited to:

10

 

	 	(i)	 	causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
	 
	 	(ii)	 	causing the Trust to be characterized for United States federal
income tax purposes as other than a grantor trust; and
	 
	 	(iii)	 	cooperating with the Debt Issuer to ensure that the Notes will be
treated as indebtedness of the Debt Issuer for United States federal income tax
purposes, provided that such action does not adversely affect the interests of
Holders; and

	 	(q)	 	to take all action necessary to cause all applicable tax returns and tax
information reports that are required to be filed with respect to the Trust to be duly
prepared and filed by the Regular Trustees, on behalf of the Trust.

The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner which is
consistent with the purposes and functions of the Trust set out in Section 3.3 and the Regular
Trustees shall not take any action which is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3. Subject to this Section 3.6, the Regular Trustees shall have none
of the powers or the authority of the Property Trustee set forth in Section 3.8.

Section 3.7 Prohibition of Actions by the Trust and the Trustees.

	 	(a)	 	The Trust shall not, and the Trustees (including the Property Trustee) shall
cause the Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Trustees (including the
Property Trustee) shall not:

	 	(i)	 	invest any proceeds received by the Trust from holding the Notes
but shall distribute all such proceeds to Holders of Securities pursuant to the
terms of this Declaration and of the Securities;
	 
	 	(ii)	 	acquire any assets other than as expressly provided herein;
	 
	 	(iii)	 	possess Trust property for other than a Trust purpose;
	 
	 	(iv)	 	make any loans or incur any indebtedness other than loans represented by the Notes;
	 
	 	(v)	 	possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
	 
	 	(vi)	 	issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
	 
	 	(vii)	 	(A) direct the time, method and place of exercising any trust or
power conferred upon the Debt Trustee with respect to the Notes, (B) waive any
past default that is waivable under Section 7.13 of the Indenture, (C) exercise
any right to rescind or annul any declaration that the principal of all the Notes
shall be due and payable or (D) consent to any amendment, modification or
termination of the Indenture or the Notes, where such consent shall be required,
unless the Trust shall have received an opinion of counsel to the effect that
such modification will not cause more than an insubstantial risk that for United
States federal income tax purposes the Trust will be characterized as other than
a grantor trust.

11

 

Section 3.8 Powers and Duties of the Property Trustee.

	 	(a)	 	The legal title to the Notes shall be owned by and held of record in the name
of the Property Trustee in trust for the benefit of the Holders of the Securities. The
right, title and interest of the Property Trustee to the Notes shall vest automatically
in each Person who may hereafter be appointed as Property Trustee as set forth in
Section 5.6. Such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.
	 
	 	(b)	 	The Property Trustee shall not transfer its right, title and interest in the
Notes to the Regular Trustees or to the Delaware Trustee (if the Property Trustee does
not also act as Delaware Trustee).
	 
	 	(c)	 	The Property Trustee shall:

	 	(i)	 	establish and maintain a segregated non-interest bearing bank
account (the “Property Account”) in the name of and under the exclusive control
of the Property Trustee on behalf of the Holders of the Securities and, upon the
receipt of payments of funds made in respect of the Notes held by the Property
Trustee, deposit such funds into the Property Account and make payments to the
Holders of the Capital Securities and the Common Securities from the Property
Account in accordance with Section 6.1. Funds in the Property Account shall be
held uninvested until disbursed in accordance with this Declaration. The Property
Account shall be an account which is maintained with a banking institution the
rating on whose long term unsecured indebtedness is at least equal to the rating
assigned to the Capital Securities by a “nationally recognized statistical rating
organization”, as that term is defined for purposes of Rule 436(g)(2) under the
Securities Act;
	 
	 	(ii)	 	engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Capital Securities and the Common
Securities to the extent the Notes are redeemed or mature; and
	 
	 	(iii)	 	upon notice of distribution issued by the Regular Trustees in
accordance with the terms of the Capital Securities and the Common Securities,
engage in such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Notes to Holders of Securities upon the occurrence
of certain special events (as may be defined in the terms of the Securities)
arising from a change in law or a change in legal interpretation or other
specified circumstances pursuant to the terms of the Securities;

	 	(d)	 	the Property Trustee shall take all actions and perform such duties as may be
specifically required of the Property Trustee pursuant to the terms of the Securities;
	 
	 	(e)	 	the Property Trustee shall take any Legal Action which arises out of or in
connection with an Event of Default or the Property Trustee’s duties and obligations
under this Declaration or the Trust Indenture Act;
	 
	 	(f)	 	the Property Trustee shall not resign as a Trustee unless either:

	 	(i)	 	the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms of
the Securities; or
	 
	 	(ii)	 	a Successor Property Trustee has been appointed and accepted that
appointment in accordance with Section 5.6;

12

 

	 	(g)	 	the Property Trustee shall have the legal power to exercise all of the rights,
powers and privileges of a holder of Notes under the Indenture and, if an Event of
Default occurs and is continuing, the Property Trustee shall, for
the benefit of Holders of the Securities, enforce its rights as holder of the Notes
subject to the rights of the Holders pursuant to the terms of such Securities;
	 
	 	(h)	 	the Property Trustee may authorize one or more Persons (each, a “Paying Agent”)
to pay Distributions, redemption payments or liquidation payments on behalf of the
Trust with respect to either or both of the Capital Securities and the Common
Securities and any such Paying Agent shall comply with Section 317(b) of the Trust
Indenture Act. Any Paying Agent may be removed by the Property Trustee at any time and
a successor Paying Agent or additional Paying Agents may be appointed at any time by
the Property Trustee; and
	 
	 	(i)	 	subject to this Section 3.8, the Property Trustee shall have none of the powers
or the authority of the Regular Trustees set forth in Section 3.6.

The Property Trustee must exercise the powers set forth in this Section 3.8 in a manner which is
consistent with the purposes and functions of the Trust set forth in Section 3.3 and the Property
Trustee shall not take any action which is inconsistent with the purposes and functions of the
Trust set out in Section 3.3.

Section 3.9 Certain Duties and Responsibilities of the Property Trustee

	 	(a)	 	The Property Trustee, before the occurrence of any Event of Default and after
the curing of all Events of Default that may have occurred, shall undertake to perform
only such duties as are specifically set forth in this Declaration and in the terms of
the Securities, and no implied covenants shall be read into this Declaration against
the Property Trustee. In case an Event of Default has occurred (that has not been cured
or waived pursuant to Section 2.6), the Property Trustee shall exercise such of the
rights and powers vested in it by this Declaration, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs;
	 
	 	(b)	 	no provision of this Declaration shall be construed to relieve the Property
Trustee from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:

	 	(i)	 	prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:

	 	(A)	 	the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this Declaration
and in the terms of the Securities, and the Property Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants or
obligations shall be read into this Declaration against the Property
Trustee; and
	 
	 	(B)	 	in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Declaration;

13

 

	 	(ii)	 	the Property Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Property Trustee, unless it
shall be proved that the Property Trustee was negligent in ascertaining the
pertinent facts;
	 
	 	(iii)	 	the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation
amount of the Securities at the time outstanding relating to the time, method
and place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Declaration; and
	 
	 	(iv)	 	no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if it shall have reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Declaration or adequate indemnity against such risk or liability is
not reasonably assured to it.

Section 3.10 Certain Rights of Property Trustee.

	 	(a)	 	Subject to the provisions of Section 3.9:

	 	(i)	 	the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties;
	 
	 	(ii)	 	any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by a Direction
or an Officers’ Certificate;
	 
	 	(iii)	 	whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Property Trustee (unless
other evidence is herein specifically prescribed) may, in the absence of bad
faith on its part and, if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-5, subject to the requirements of
Rule 3a-5, request and rely upon an Officers’ Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular Trustees;
	 
	 	(iv)	 	the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (or any rerecording, refiling or
registration thereof);
	 
	 	(v)	 	the Property Trustee may consult with counsel of its selection and
the advice or opinion of such counsel with respect to legal matters shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Property Trustee shall have
the right at any time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
	 
	 	(vi)	 	the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Declaration at the request or
direction of any Holder, unless such Holder shall have provided to the Property
Trustee adequate security and indemnity which would satisfy a reasonable person
in the

14

 

	 	 	 	position of the Property Trustee, against the costs, expenses (including
attorneys’ fees and expenses) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable advances as
may be requested by the Property Trustee provided, that, nothing contained in
this Section 3.10 (a) (vi) shall be taken to relieve the Property Trustee, upon
the occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Declaration;
	 
	 	(vii)	 	the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
	 
	 	(viii)	 	the Property Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or attorneys
and the Property Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
	 
	 	(ix)	 	any action taken by the Property Trustee or its agents hereunder
shall bind the Trust and the Holders of the Securities and the signature of the
Property Trustee or its agents alone shall be sufficient and effective to perform
any such action; and no third party shall be required to inquire as to the
authority of the Property Trustee to so act, or as to its compliance with any of
the terms and provisions of this Declaration, both of which shall be conclusively
evidenced by the Property Trustee’s or its agent’s taking such action;
	 
	 	(x)	 	whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the Securities, (ii) may
refrain from enforcing such remedy or right or taking such other action until
such instructions are received, and (iii) shall be fully protected in acting in
accordance with such instructions; and
	 
	 	(xi)	 	except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Declaration except upon the Direction
of the Sponsor or the Regular Trustees as the case may be.

     (b) No provision of this Declaration shall be deemed to impose any duty or obligation on the
Property Trustee to perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the
Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform
any such act or acts or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Property Trustee shall be construed to be a duty.

Section 3.11 Delaware Trustee

     Notwithstanding any other provision of this Declaration other than Section 5.2, the Delaware
Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of
the duties and responsibilities of the Regular Trustees and the Property Trustee described in this
Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the Statutory Trust Act.

15

 

Section 3.12 Execution of Documents

Unless otherwise determined by the Regular Trustees and except as otherwise required by the
Statutory Trust Act, a majority of, or if there are only two, both of the Regular Trustees are
authorized to execute on behalf of the Trust any documents which the Regular Trustees have the
power and authority to execute pursuant to Section 3.6, provided that any listing application
prepared by the Sponsor referred to in Section 3.6(b)(iii) may be executed by any Regular Trustee.

Section 3.13 Not Responsible for Recitals or Issuance of Securities.

The recitals contained in this Declaration and the Securities shall be taken as the statements of
the Sponsor and the Trustees do not assume any responsibility for their correctness. The Trustees
make no representations as to the value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration
or the Securities.

Section 3.14 Duration of Trust.

The Trust, unless terminated pursuant to the provisions of Article VIII hereof, shall have
existence until December 31, 2040.

Section 3.15 Mergers.

	 	(a)	 	The Trust may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an entirety
to any corporation or other body, except as described in Section 3.15 (b) and (c).
	 
	 	(b)	 	The Trust may, with the consent of a majority of the Regular Trustees and
without the consent of the Holders of the Securities, the Delaware Trustee or the
Property Trustee, consolidate, amalgamate, merge with or into, or be replaced by a
trust organized as such under the laws of any state; provided, that:

	 	(i)	 	such successor entity (the “Successor Entity”) either:

	 	(A)	 	expressly assumes all of the obligations of the
Trust under the Capital Securities; or
	 
	 	(B)	 	substitutes for the Capital Securities other
securities having substantially the same terms as the Preferred
Securities (the “Successor Securities”) so long as the Successor
Securities rank the same as the Capital Securities rank with respect to
priority of Distributions and payments upon liquidation, redemption and
maturity;

	 	(ii)	 	the Debt Issuer expressly acknowledges a trustee of the Successor
Entity which possess the same powers and duties as the Property Trustee as the
Holder of the Notes;
	 
	 	(iii)	 	the Capital Securities or any Successor Securities are listed,
or any Successor Securities will be listed upon notification of issuance, on
any national securities exchange or other organization on which the Capital
Securities are then listed;
	 
	 	(iv)	 	such merger, consolidation, amalgamation or replacement does not
cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization;
	 
	 	(v)	 	such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of the
Capital Securities (including any Successor

16

 

	 	 	 	Securities) in any material respect
(other than with respect to any dilution of the Holders’ interest in the new
entity);
	 
	 	(vi)	 	such successor entity has a purpose identical to that of the
Trust;
	 
	 	(vii)	 	prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect that:

	 	(A)	 	such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Capital Securities (including any
Successor Securities) in any material respect (other than with respect
to any dilution of the Holders’ interest in the new entity); and
	 
	 	(B)	 	following such merger, consolidation, amalgamation
or replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and

	 	(viii)	 	the Sponsor guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the Capital Securities
Guarantee; and

	 	(c)	 	notwithstanding Section 3.15(b), the Trust shall not consolidate, amalgamate,
merge with or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or Successor Entity for
United States federal income tax purposes to be classified as other than a grantor
trust, except with the consent of Holders of 100% in liquidation amount of the
Securities.

ARTICLE IV

Sponsor

Section 4.1 Sponsor’s Purchase of Common Securities.

On the Closing Date the Sponsor will purchase all the Common Securities issued by the Trust, at the
same time as the Capital Securities are sold, in an amount equal to 3% of the capital of the Trust.

Section 4.2 Responsibilities of the Sponsor.

Prior to the issue and sale of the Capital Securities, the Sponsor shall have the right and
responsibility to engage in the following activities:

	 	(a)	 	to prepare for filing by the Trust with the Commission and execute a
registration statement on Form S-3 in relation to the Capital Securities, including any
amendments thereto;
	 
	 	(b)	 	to determine the states in which to take appropriate action to qualify or
register for sale all or part of the Capital Securities and to take any and all such
acts, other than actions which must be taken by the Trust, and advise the Trust of
actions it must take, and prepare for execution, execute and filing any documents to
be executed and filed by the Trust, as the Sponsor deems necessary or advisable in
order to comply with the applicable laws of any such states;

17

 

	 	(c)	 	to prepare for filing by the Trust an application to The New York Stock
Exchange or any other national stock exchange or the Nasdaq National Market for listing
upon notice of issuance of any Capital Securities;
	 
	 	(d)	 	to prepare for filing by the Trust with the Commission and execute a
registration statement on Form 8-A relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act, including any amendments thereto;
and
	 
	 	(e)	 	to negotiate the terms of and execute the Underwriting Agreement providing for
the sale of the Capital Securities.

ARTICLE V

Trustees

Section 5.1 Number of Trustees.

The number of Trustees shall initially be five (5), and:

	 	(a)	 	at any time before the issuance of any Securities, the Sponsor may, by written
instrument, increase the number of Trustees; and
	 
	 	(b)	 	after the issuance of any Securities:

	 	(i)	 	and except as provided in Section 5.1 (b)(ii)and 5.6 (a) (ii) (B)
with respect to the Special Regular Trustee, the number of Trustees may be
increased or decreased by vote of the Holders of a Majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders
of the Common Securities; and
	 
	 	(ii)	 	the number of Trustees shall be increased automatically by one
(1) if an Appointment Event has occurred and is continuing and the Holders of a
Majority in liquidation amount of the Capital Securities appoint a Special
Regular Trustee in accordance with Section 5.6,

provided that in any case, the number of Trustees shall be at least three (3) so long as the
Trustee that acts as the Property Trustee also acts as the Delaware Trustee pursuant to Section
5.2. In the event the Property Trustee is not also acting as the Delaware Trustee, the number of
Trustees shall be at least five (5).

Section 5.2 Delaware Trustee.

If required by the Statutory Trust Act, one Trustee (the “Delaware Trustee”) shall be:

	 	(a)	 	a natural person who is a resident of the State of Delaware; or
	 
	 	(b)	 	if not a natural person, an entity which has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,

provided that if the Property Trustee has its principal place of business in the State of
Delaware and otherwise meets the requirements of applicable law, then the Property Trustee
shall also be the Delaware Trustee and Section 3.11 shall have no application.

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Section 5.3 Property Trustee; Eligibility.

	 	(a)	 	There shall at all times be one Trustee (which may be the Delaware Trustee)
which shall act as Property Trustee which shall:

	 	(i)	 	not be an Affiliate of the Sponsor; and
	 
	 	(ii)	 	be a corporation organized and doing business under the laws of
the United States of America or any state or territory thereof or of the
District of Columbia, or a corporation or Person permitted by the Commission to
act as an institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section 5.3 (a)
(ii), the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus asset forth in its most recent report of
condition so published.

	 	(b)	 	If at any time the Property Trustee shall cease to be eligible to so act under
Section 5.3(a), the Property Trustee shall immediately resign in the manner and with
the effect set out in Section 5.6(c).
	 
	 	(c)	 	If the Property Trustee has or shall acquire any “conflicting interest” within
the meaning of Section 310(b) of the Trust Indenture Act, the Property Trustee and the
Holder of the Common Securities (as if it were the obligor referred to in Section
310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
	 
	 	(d)	 	The Capital Securities Guarantee shall be deemed to be specifically described
in this Declaration for purposes of clause (i) of the first provision contained in
Section 310(b) of the Trust Indenture Act.

Section 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.

Each Regular Trustee and the Delaware Trustee (unless the Property Trustee also acts as Delaware
Trustee) shall be either a natural person who is at least 21 years of age or a legal entity which
shall act through one or more Authorized Officers.

Section 5.5 Initial Trustees.

The initial Regular Trustees shall be:

Beverley A. Sibblies

2700 Sanders Road

Prospect Heights, Illinois 60070,

Dennis J. Mickey

2700 Sanders Road

Prospect Heights, Illinois 60070

and

William H. Kesler

2700 Sanders Road

Prospect Heights, Illinois 60070

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The initial Delaware Trustee shall be:

The Bank of New York (Delaware)

White Clay Center Route 273

Newark, Delaware 19711

The initial Property Trustee shall be:

BNY Midwest Trust Company

2 North LaSalle Street, Suite 1020

Chicago, Illinois 60602

Attn: Corporate Trust Department

Section 5.6 Appointment, Removal and Resignation of Trustees.

	 	(a)	 	Subject to Section 5.6(b) Trustees may be appointed or removed without cause
at any time:

	 	(i)	 	until the issuance of any Securities, by written instrument
executed by the Sponsor; and
	 
	 	(ii)	 	after the issuance of any Securities;

	 	(A)	 	other than in respect to a Special Regular Trustee,
by vote of the Holders of a Majority in liquidation amount of the
Common Securities voting as a class at a meeting of the Holders of the
Common Securities; and
	 
	 	(B)	 	if an Appointment Event has occurred and is
continuing, one (1) additional Regular Trustee (the “Special Regular
Trustee”) may be appointed by vote of the Holders of a Majority in
liquidation amount of the Capital Securities, voting as a class at a
meeting of the Holders of the Capital Securities and such Special Regular
Trustee may only be removed (otherwise than by the operation of Section
5.6(c)), by vote of the Holders of a Majority in liquidation amount of
the Preferred Securities voting as a class at a meeting of the Holders
of the Capital Securities.

	 	(b)	 	(i) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.6(a) until Successor Property Trustee has been appointed and
has accepted such appointment by written instrument executed by such Successor Property
Trustee and delivered to the Regular Trustees and the Sponsor; and

(ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance
with this Section 5.6(a) until a successor Trustee possessing the qualifications to
act as Delaware Trustee under Sections 5.2 and 5.4 (a “Successor Delaware Trustee”)
has been appointed and has accepted such appointment by written instrument executed by
such Successor Delaware Trustee and delivered to the Regular Trustees and the Sponsor.

	 	(c)	 	A Trustee appointed to office shall hold office until his successor shall have
been appointed or until his death, removal or resignation, provided that a Special
Regular Trustee shall only hold office while an Appointment Event is continuing and
shall cease to hold office immediately after the Appointment Event pursuant to which
the Special Regular Trustee was appointed and all other Appointment Events cease to be
continuing. Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to the
Sponsor and the Trust, which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:

	 	(i)	 	no such resignation of the Trustee that acts as the Property Trustee shall be
effective until either:

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	 	(A)	 	a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the resigning
Property Trustee; or
	 
	 	(B)	 	the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of the
Securities; and

	 	(ii)	 	no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been appointed
and has accepted such appointment by instrument executed by such Successor
Delaware Trustee and delivered to the Trust, the Sponsor and the resigning
Delaware Trustee; and
	 
	 	(iii)	 	no such resignation of a Special Regular Trustee shall be
effective until the 60th day following delivery of the instrument of resignation
of the Special Regular Trustee to the Sponsor and the Trust or such later date
specified in such instrument during which period the Holders of the Preferred
Securities shall have the right to appoint a successor Special Trustee as
provided in this Section 5.6.

	 	(d)	 	If no Successor Property Trustee or Successor Delaware Trustee shall have been
appointed and accepted appointment as provided in this Section 5.6 within 60 days after
delivery to the Sponsor and the Trust of an instrument of resignation, the resigning
Property Trustee or Delaware Trustee may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee. Such
court may thereupon after such notice, if any, as it may deem proper and prescribe,
appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be.

Section 5.7 Vacancies Among Trustees.

     If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced
pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of such vacancy by a majority of the
Regular Trustees shall be conclusive evidence of the existence of such vacancy. The vacancy shall
be filled with a Trustee appointed in accordance with Section 5.6.

Section 5.8 Effect of Vacancies.

     The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation,
incompetence or incapacity to perform the duties of a Trustee, or any one of them, shall not
operate to annul the Trust. Whenever a vacancy in the number of Regular Trustees shall occur, until
such vacancy is filled by the appointment of a Regular Trustee in accordance with Section 5.6, the
Regular Trustees in office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular Trustees by this
Declaration.

Section 5.9 Meetings.

     Meetings of the Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and place fixed by
resolution of the Regular Trustees. Notice of any in-person meetings of the Regular Trustees shall
be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meetings of
the Regular Trustees or any committee thereof shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours
before a meeting. Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a Regular Trustee at a
meeting shall constitute a waiver of notice of such meeting except where a Regular Trustee attends
a meeting for the express purpose of

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objecting to the transaction of any activity on the ground
that the meeting has not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Regular Trustees may be taken at a meeting by vote of a majority of
the
Regular Trustees present (whether in person or by telephone) and eligible to vote with respect to
such matter, provided that a quorum is present, or without a meeting by the unanimous written
consent of the Regular Trustees.

Section 5.10 Delegation of Power.

	 	(a)	 	Any Regular Trustee may, by power of attorney consistent with applicable law,
delegate to any other natural person over the age of 21 his or her power for the
purpose of executing any documents contemplated in Section 3.6 including any
registration statement or amendment thereto filed with the Commission or making any
other governmental filing; and
	 
	 	(b)	 	the Regular Trustees shall have power to delegate from time to time to such of
their number or to officers of the Trust the doing of such things and the execution of
such instruments either in the name of the Trust or the names of the Regular Trustees
or otherwise as the Regular Trustees may deem expedient, to the extent such delegation
is not prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.

ARTICLE VI

Distributions

Section 6.1 Distributions.

Holders shall receive Distributions in accordance with the applicable terms of the relevant
Holder’s Securities. Distributions shall be made on the Capital Securities and the Common
Securities in accordance with the preferences set forth in their respective terms. If and to the
extent that the Debt Issuer makes a payment of interest (including Compounded Interest (as defined
in the Indenture)), premium and principal on the Notes held by the Property Trustee (the amount of
any such payment being a “Payment Amount”), the Property Trustee shall and is directed, to the
extent funds are available for that purpose, to make a Distribution of the Payment Amount to
Holders.

ARTICLE VII

Issuance of Securities

Section 7.1 General Provisions Regarding Securities.

	 	(a)	 	The Regular Trustees shall, on behalf of the Trust, issue one class of Capital
Securities representing undivided beneficial interests in the assets of the Trust
having such terms as are set forth in Exhibit A and incorporated herein by reference
(the “Preferred Securities”), and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as are set
forth in Exhibit A and incorporated herein by reference (the “Common Securities”). The
Trust shall have no securities or other interests in the assets of the Trust other than
the Capital Securities and the Common Securities.
	 
	 	(b)	 	The Certificates shall be signed on behalf of the Trust by the Regular Trustees
(or if there are more than two Regular Trustees by any two of the Regular Trustees).
Such signatures may be the manual or facsimile signatures of the present or any future
Regular Trustee. Typographical and other minor errors or defects in any such
reproduction of any such signature shall not affect the validity of any Certificate. In
case any Regular Trustee of the Trust who shall have signed any of the Certificates
shall cease to be such Regular Trustee before the Certificate so signed shall be
delivered by the Trust, such Certificate nevertheless may be delivered as though the
person who signed such Certificate had not ceased to be such Regular Trustee; and any
Certificate

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	 	 	 	may be signed on behalf of the Trust by such persons who shall at the
actual date of execution of such Security, shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such person
was not such a Regular Trustee. Certificates shall be printed, lithographed or engraved
or may be produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of identification
or designation and such legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation of any stock exchange on which Securities may be listed, or to conform to
usage.
	 
	 	(c)	 	The consideration received by the Trust for the issuance of the Securities
shall constitute a contribution to the capital of the Trust and shall not constitute a
loan to the Trust.
	 
	 	(d)	 	Upon issuance of the Securities as provided in this Declaration, the Securities
so issued shall be deemed to be validly issued, fully paid and nonassessable.
	 
	 	(e)	 	Every Person, by virtue of having become a Holder or a Capital Security
Beneficial Owner in accordance with the terms of this Declaration, shall be deemed to
have expressly assented and agreed to the terms of, and shall be bound by this
Declaration.

ARTICLE VIII

Termination of Trust

Section 8.1 Termination of Trust.

	 	(a)	 	The Trust shall dissolve;

	 	(i)	 	upon the bankruptcy of the Holder of the Common Securities, the
Sponsor or the Debt Issuer;
	 
	 	(ii)	 	upon the filing of a certificate of dissolution or its equivalent
with respect to the Holder of the Common Securities, the Sponsor or the Debt
Issuer, or the revocation of the Holder of the Common Securities, the Sponsor’s
or the Debt Issuer’s charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
	 
	 	(iii)	 	upon the entry of a decree of judicial dissolution of the Holder
of the Common Securities, the Sponsor, the Debt Issuer or the Trust;
	 
	 	(iv)	 	when all of the Securities shall have been called for redemption;
	 
	 	(v)	 	upon the occurrence and continuation of a Special Event pursuant
to which the Trust shall have been dissolved in accordance with the terms of the
Securities; or
	 
	 	(vi)	 	before the issuance of any Securities, with the consent of all of
the Regular Trustees and the Sponsor.

	 	(b)	 	As soon as is practicable after the occurrence of an event referred to in
Section 8.1 (a), the Regular Trustees shall, after paying or making reasonable
provision for payment of the liabilities of the Trust, distribute the assets of the
Trust to the Holders of the Trust Securities and file a certificate of cancellation
with the Secretary of State of the State of Delaware and the Trust shall terminate.
	 
	 	(c)	 	The provisions of Section 3.9 and Article X shall survive the termination of
the Trust.

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ARTICLE IX

Transfer of Interests

Section 9.1 Transfer of Securities.

	 	(a)	 	Securities may only be transferred, in whole or in part, in accordance with the
terms and conditions set forth in this Declaration and in the terms of the Securities.
Any transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
	 
	 	(b)	 	Subject to this Article IX, Capital Securities shall be freely transferable.
	 
	 	(c)	 	Subject to this Article IX, the Sponsor and any Related Party may only transfer
Common Securities to the Sponsor or a Related Party of the Sponsor, provided, that, any
such transfer is subject to the condition precedent that the transferor obtain the
written opinion of nationally recognized independent counsel experienced in such
matters that such transfer would not cause more than an insubstantial risk that:

	 	(i)	 	the Trust would be classified for United States federal income tax
purposes as an association taxable as a corporation or a partnership and each
Holder of Securities would not be treated as owning an undivided beneficial
interest in the Notes; and
	 
	 	(ii)	 	the Trust would be an Investment Company, or would be controlled
by an Investment Company.

Section 9.2 Transfer of Certificates.

The Regular Trustees shall provide for the registration of Certificates and of transfers of
Certificates, which will be effected without charge but only upon payment (with such indemnity as
the Regular Trustees may require) in respect of any tax or other government charges which may be
imposed in relation to it. Upon surrender for registration of transfer of any Certificate, the
Regular Trustees shall cause one or more new Certificates to be issued in the name of the
designated transferee or transferees. Every Certificate surrendered for registration of transfer
shall be accompanied by a written instrument of transfer in form satisfactory to the Regular
Trustees duly executed by the Holder or such Holder’s attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer shall be canceled by the Regular Trustees. A
transferee of a Certificate shall be entitled to the rights and subject to the obligations of a
Holder hereunder upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this Declaration and the
documents incorporated by reference herein.

Section 9.3 Deemed Security Holders.

The Trustees may treat the Person in whose name any Certificate shall be registered on the books
and records of the Trust as the sole holder of such Certificate and of the Securities represented
by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever
and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in
such Certificate or in the Securities represented by such Certificate on the part of any Person,
whether or not the Trustees shall have actual or other notice thereof.

24

 

Section 9.4 Book Entry Interests.

Unless otherwise specified in the terms of the Capital Securities, the Capital Securities
Certificates, on original issuance, will be issued in the form of one or more, fully registered,
global Capital Security Certificates (each a “Global Certificate”), to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co., the nominee of DTC,
and no Capital Security Beneficial Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owner’s interests in such Global Certificates, except
as provided in Section 9.7. Unless and until definitive, fully registered Capital Security
Certificates (the “Definitive Capital Security Certificates”) have been issued to the Capital
Security Beneficial Owners pursuant to Section 9.7:

	 	(a)	 	the provisions of this Section 9.4 shall be in full force and effect;
	 
	 	(b)	 	the Trust and the Trustees shall be entitled to deal with the Clearing Agency
for all purposes of this Declaration (including the payment of Distributions on the
Global Certificates and receiving approvals, votes or consents hereunder) as the Holder
of the Capital Securities and the sole holder of the Global Certificates and shall have
no obligation to the Capital Security Beneficial Owners;
	 
	 	(c)	 	to the extent that the provisions of this Section 9.4 conflict with any other
provisions of this Declaration, the provisions of this Section 9.4 shall control; and
	 
	 	(d)	 	the rights of the Capital Security Beneficial Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by law and
agreements between such Capital Security Beneficial Owners and the Clearing Agency
and/or the Clearing Agency Participants. DTC will make book entry transfers among the
Clearing Agency Participants and receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants.

Section 9.5 Notices to Clearing Agency.

Whenever a notice or other communication to the Capital Security Holders is required under this
Declaration, unless and until Definitive Capital Security Certificates shall have been issued to
the Capital Security Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give
all such notices and communications specified herein to be given to the Capital Security Holders to
the Clearing Agency, and shall have no notice obligations to the Capital Security Beneficial
Owners.

Section 9.6 Appointment of Successor Clearing Agency.

If any Clearing Agency elects to discontinue its services as securities depositary with respect to
the Capital Securities, the Regular Trustees may, in their sole discretion, appoint a successor
Clearing Agency with respect to such Capital Securities.

Section 9.7 Definitive Capital Security Certificates.

If:

	 	(a)	 	a Clearing Agency elects to discontinue its services as securities depositary
with respect to the Capital Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance pursuant to Section 9.6; or
	 
	 	(b)	 	the Regular Trustees elect after consultation with the Sponsor to terminate
the book entry system through the Clearing Agency with respect to the Capital
Securities, then:

25

 

	 	(c)	 	Definitive Capital Security Certificates shall be prepared by the Regular
Trustees on behalf of the Trust with respect to such Capital Securities; and
	 
	 	(d)	 	upon surrender of the Global Certificates by the Clearing Agency, accompanied
by registration instructions, the Regular Trustees shall cause Definitive Certificates
to be delivered to Capital Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the Trust shall be
liable for any delay in delivery of such instructions and each of them may conclusively
rely on and shall be protected in relying on, such instructions. The Definitive Capital
Security Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by
their execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular Trustees
may deem appropriate, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock exchange
on which Capital Securities may be listed, or to conform to usage.

Section 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.

If:

	 	(a)	 	any mutilated Certificates should be surrendered to the Regular Trustees, or
if the Regular Trustees shall receive evidence to their satisfaction of the
destruction, loss or theft of any Certificate; and
	 
	 	(b)	 	there shall be delivered to the Regular Trustees such security or indemnity as
may be required by them to keep each of them harmless,

then in the absence of notice that such Certificate shall have been acquired by a protected
purchaser, any two Regular Trustees on behalf of the Trust shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like denomination. In connection with the issuance of any new Certificate
under this Section 9.8, the Regular Trustees may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection therewith. Any
duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.

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ARTICLE X

Limitation of Liability Of

Holders of Securities, Trustees or Others

Section 10.1 Liability.

	 	(a)	 	Except as expressly set forth in this Declaration, the Capital Securities
Guarantee and the terms of the Securities, the Sponsor shall not be:

	 	(i)	 	personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities which
shall be made solely from assets of the Trust; and
	 
	 	(ii)	 	required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.

	 	(b)	 	The Holder of the Common Securities shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the extent not
satisfied out of the Trust’s assets.
	 
	 	(c)	 	Pursuant to Section 3803(a) of the Statutory Trust Act, the Holders of the
Capital Securities shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware.

Section 10.2 Exculpation.

	 	(a)	 	No Indemnified Person shall be liable, responsible or accountable in damages
or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred
by reason of any act or omission performed or omitted by such Indemnified Person in
good faith on behalf of the Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified Person
by this Declaration or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified Person’s gross
negligence (or, in the case of the Property Trustee, negligence) or willful misconduct
with respect to such acts or omissions.
	 
	 	(b)	 	An Indemnified Person shall be fully protected in relying in good faith upon
the records of the Trust and upon such information, opinions, reports or statements
presented to the Trust by any Person as to matters the Indemnified Person reasonably
believes are within such other Person’s professional or expert competence and who has
been selected with reasonable care by or on behalf of the Trust, including information,
opinions, reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of assets
from which Distributions to Holders of Securities might properly be paid.

Section 10.3 Fiduciary Duty.

	 	(a)	 	To the extent that, at law or in equity, an Indemnified Person has duties
(including fiduciary duties) and liabilities relating thereto to the Trust or to any
other Covered Person, an Indemnified Person acting under this Declaration, subject to
any duties or obligations imposed on the Property Trustee under the Trust Indenture
Act and Rule 3a-5, shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and liabilities of an
Indemnified Person otherwise existing at law or in equity (other than duties imposed
on the

27

 

	 	 	 	Property Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of such Indemnified Person.
	 
	 	(b)	 	Unless otherwise expressly provided here in:

	 	(i)	 	whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Persons; or
	 
	 	(ii)	 	whenever this Declaration or any other agreement contemplated
herein or therein provide that an Indemnified Person shall act in a manner that
is, or provides terms that are, fair and reasonable to the Trust or any Holder
of Securities,

the Indemnified Person shall resolve such conflict of interest, take such action or provide such
terms, considering in each case the relative interest of each party (including its own interest) to
such conflict, agreement, transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the Indemnified Person, the
resolution, action or term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated herein or of any duty
or obligation of the Indemnified Person at law or in equity or otherwise.

	 	(c)	 	Whenever in this Declaration an Indemnified Person is permitted or required to
make a decision:

	 	(i)	 	in its “discretion” or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors as
it desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the Trust or any
other Person; or
	 
	 	(ii)	 	in its “good faith” or under another express standard, the
Indemnified Person shall act under such express standard and shall not be subject
to any other or different standard imposed by this Declaration or by applicable
law.

Section 10.4 Indemnification.

	 	(a)	 	To the fullest extent permitted by applicable law, the Sponsor shall indemnify
and hold harmless each Indemnified Person from and against any loss, damage or claim
incurred by such Indemnified Person by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner
such Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declaration, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of gross negligence (or, in the case of
the Property Trustee, negligence) or willful misconduct with respect to such acts or
omissions.
	 
	 	(b)	 	To the fullest extent permitted by applicable law, expenses (including legal
fees and expenses) incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the Sponsor prior
to the final disposition of such claim, demand, action, suit or proceeding upon receipt
by the Sponsor of an undertaking by or on behalf of the Indemnified Person to repay
such amount if it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 10.4(a).

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Section 10.5 Outside Businesses.

Any Covered Person, the Sponsor, the Debt Issuer, the Delaware Trustee and the Property Trustee may
engage in or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders of Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom and the pursuit of any such
venture, even if competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Debt Issuer, the Delaware Trustee, or the Property
Trustee shall be obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust, could be taken by the
Trust, and any Covered Person, the Sponsor, the Debt Issuer, the Delaware Trustee and the Property
Trustee shall have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depository for, trustee or agent for, or act on any committee or body of holders of, securities or
other obligations of the Sponsor or its Affiliates.

ARTICLE XI

Accounting

Section 11.1 Fiscal Year.

The fiscal year (“Fiscal Year”) of the Trust shall be the calendar year, or such other year as is
required by the Code.

Section 11.2 Certain Accounting Matters.

	 	(a)	 	At all times during the existence of the Trust, the Regular Trustees shall
keep, or cause to be kept, full books of account, records and supporting documents,
which shall reflect in reasonable detail, each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting, in accordance with
generally accepted accounting principles, consistently applied. The Trust shall use the
accrual method of accounting for United States federal income tax purposes. The books
of account and the records of the Trust shall be examined by and reported upon as of
the end of each Fiscal Year by a firm of independent certified public accountants
selected by the Regular Trustees.
	 
	 	(b)	 	The Regular Trustees shall cause to be prepared and delivered to each of the
Holders of Securities, within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the Trust as of
the end of such Fiscal Year, and the related statements of income or loss.
	 
	 	(c)	 	The Regular Trustees shall cause to be duly prepared and delivered to each of
the Holders of Securities, any annual United States federal income tax information
statement, required by the Code, containing such information with regard to the
Securities held by each Holder as is required by the Code and the Treasury
Regulations. Notwithstanding any right under the Code to deliver any such statement at
a later date, the Regular Trustees shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
	 
	 	(d)	 	The Regular Trustees shall cause to be duly prepared and filed with the
appropriate taxing authority, an annual United States federal income tax return, on a
Form 1041 or such other form required by United States federal income tax law, and any
other annual income tax returns required to be filed by the Regular Trustees on behalf
of the Trust with any state or local taxing authority.

29

 

Section 11.3 Banking.

The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the
Trust; provided, however, that all payments of funds in respect of the Notes held by the Property
Trustee shall be made directly to the Property Account and no other funds of the Trust shall be
deposited in the Property Account. The sole signatories for such accounts shall be designated by
the Regular Trustees; provided, however, that the Property Trustee shall designate the sole
signatories for the Property Account.

Section 11.4 Withholding.

The Trust and the Trustees shall comply with all withholding requirements under United States
federal, state and local law. The Trust shall request, and the Holders shall provide to the Trust,
such forms or certificates as are necessary to establish an exemption from withholding with respect
to each Holder, and any representations and forms as shall reasonably be requested by the Trust to
assist it in determining the extent of, and in fulfilling, its withholding obligations. The Trust
shall file required forms with applicable jurisdictions and, unless an exemption from withholding
is properly established by a Holder, shall remit amounts withheld with respect to the Holder to
applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any
amounts to any authority with respect to distributions or allocations to any Holder, the amount
withheld shall be deemed to be a distribution in the amount of the withholding to the Holder. In
the event of any claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount withheld was not withheld from actual Distributions made,
the Trust may reduce subsequent Distributions by the amount of such withholding.

ARTICLE XII

Amendments and Meetings

Section 12.1 Amendments.

	 	(a)	 	Except as otherwise provided in this Declaration or by any applicable terms of
the Securities, this Declaration may be amended by, and only by, a written instrument
approved and executed by the Regular Trustees (or, if there are more than two Regular
Trustees a majority of the Regular Trustees); provided, however, that:

	 	(i)	 	no amendment shall be made, and any such purported amendment shall
be void and ineffective, to the extent the result thereof would be to:

	 	(A)	 	cause the Trust to be characterized for purposes of
United States federal income taxation as other than a grantor trust;
	 
	 	(B)	 	reduce or otherwise adversely affect the rights,
powers, obligations or liabilities of the Property Trustee or the Delaware
Trustee without the written consent of the affected trustee; or
	 
	 	(C)	 	cause the Trust to be deemed to be an Investment
Company which is required to be registered under the Investment Company
Act;

	 	(ii)	 	at such time after the Trust has issued any Securities which
remain outstanding, any amendment which would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such Securities;
	 
	 	(iii)	 	Section 10.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;

30

 

	 	(iv)	 	Article IV shall not be amended without the consent of the Sponsor;
and
	 
	 	(v)	 	the rights of the holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities.

	 	(b)	 	Notwithstanding Section 12.1(a)(ii), this Declaration may be amended without
the consent of the Holders of the Securities to:

	 	(i)	 	cure any ambiguity;
	 
	 	(ii)	 	correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this Declaration;
	 
	 	(iii)	 	to add to the covenants, restrictions or obligations of the
Sponsor; and
	 
	 	(iv)	 	to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the right, preferences or privileges of the Holders.

Section 12.2 Meetings of the Holders of Securities; Action by Written Consent.

	 	(a)	 	Meetings of the Holders of any class of Securities may be called at any time
by the Regular Trustees (or as provided in the terms of the Securities) to consider and
act on any matter on which Holders of such class of Securities are entitled to act
under the terms of this Declaration, the terms of the Securities or the rules of any
stock exchange on which the Capital Securities are listed or admitted for trading. The
Regular Trustees shall call a meeting of such class of Holders, if directed to do so by
the Holders of at least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting and
indicating the general or specific purpose for which the meeting is to be called. Any
Holders of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the right to call a meeting
and only those specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been met.
	 
	 	(b)	 	Except to the extent otherwise provided in the terms of the Securities, the
following provisions shall apply to meetings of Holders of Securities:

	 	(i)	 	notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more than 60
days before the date of such meeting. Whenever a vote, consent or approval of the
Holders of Securities is permitted or required under this Declaration or the
rules of any stock exchange on which the Capital Securities are listed or
admitted for trading, such vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be taken at a meeting of the
Holders of Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of Securities owning
not less than the minimum amount of Securities in liquidation amount that would
be necessary to authorize or take such action at a meeting at which all Holders
of Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the Holders of
Securities entitled to vote who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted to the Security Holder for
the purpose of taking any action without a meeting shall be returned to the Trust
within the time specified by the Regular Trustees;

31

 

	 	(ii)	 	each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. No proxy shall be valid after the expiration of 11 months from the
date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the Holder of Securities executing it. Except as otherwise
provided here in, all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder, as if
the Trust were a Delaware corporation and the Holders of the Securities were
stockholders of a Delaware corporation;
	 
	 	(iii)	 	each meeting of the Holders of the Securities shall be conducted
by the Regular Trustees or by such other Person that the Regular Trustees may
designate; and
	 
	 	(iv)	 	unless the Statutory Trust Act, this Declaration, the terms of the
Securities or the listing rules of any stock exchange on which the Capital
Securities are then listed or trading otherwise provides, the Regular Trustees,
in their sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place or purpose
of any meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by proxy
or any other matter with respect to the exercise of any such right to vote.

ARTICLE XIII

Representations of Property Trustee

Section 13.1 Representations and Warranties of Property Trustee.

The Trustee which acts as initial Property Trustee represents and warrants to the Trust and to the
Sponsor at the date of this Declaration, and each Successor Property Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Property Trustee’s acceptance of
its appointment as Property Trustee that:

	 	(a)	 	The Property Trustee is an Illinois corporation with trust powers, duly
organized, validly existing and in good standing under the laws of the State of
Illinois, with trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration.
	 
	 	(b)	 	The execution, delivery and performance by the Property Trustee of the
Declaration has been duly authorized by all necessary corporate action on the part of
the Property Trustee. The Declaration has been duly executed and delivered by the
Property Trustee, and it constitutes a legal, valid and binding obligation of the
Property Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors’ rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
	 
	 	(c)	 	The execution, delivery and performance of the Declaration by the Property
Trustee does not conflict with or constitute a breach of the Articles of Incorporation
or By-laws of the Property Trustee.
	 
	 	(d)	 	No consent, approval or authorization of, or registration with or notice to,
any state or federal banking authority is required for the execution, delivery or
performance by the Property Trustee, of the Declaration.

32

 

	 	(e)	 	The Property Trustee, pursuant to the Declaration, shall hold legal title and
a valid ownership interest in the Notes under the law of its place of incorporation
and Delaware law.
	 
	 	(f)	 	The Delaware Trustee has been authorized to perform its obligations under the
Certificate of Trust and the Declaration. The Declaration under Delaware law
constitutes a legal, valid and binding obligation of the Delaware Trustee, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting creditors’
rights generally and to
general principles of equity and the discretion of the court (regardless of whether
the enforcement of such remedies is considered in a proceeding in equity or at law).

ARTICLE XIV

Miscellaneous

Section 14.1 Notices.

All notices provided for in this Declaration shall be in writing, duly signed by the party giving
such notice, and shall be delivered, telecopied or mailed by registered or certified mail, as
follows:

	 	(a)	 	if given to the Trust, in care of the Regular Trustees at the Trust’s mailing
address set forth below (or such other address as the Trust may give notice of to the
Holders of the Securities):
	 
	 	 	 	HSBC Finance Capital Trust IX

2700 Sanders Road

Prospect Heights, Illinois 60070

Attention: Treasurer
	 
	 	(b)	 	if given to the Property Trustee or the Delaware Trustee, at the respective
mailing addresses set forth below (or such other address as the Property Trustee may
give notice of to the Holders of the Securities):
	 

	 	 	 	BNY Midwest Trust Company

2 North LaSalle Street, Suite 1020 

Chicago, Illinois 60602

Attention: Corporate Trust Administration	 	The Bank of New York (Delaware)

White Clay Center Route 273

Newark, Delaware 197111

	 
	 	(c)	 	if given to the Holder of the Common Securities, at the mailing address of the
Sponsor set forth below (or such other address as the Holder of the Common Securities
may give notice to the Trust):
	 
	 	 	 	HSBC Finance Corporation

2700 Sanders Road

Prospect Heights, Illinois 60070

Attention: Treasurer
	 
	 	(d)	 	if given to any other Holder, at the address set forth on the books and
records of the Trust.

All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.

33

 

Section 14.2 Governing Law.

This Declaration and the rights of the parties hereunder shall be governed by and interpreted in
accordance with the laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.

Section 14.3 Intention of the Parties.

It is the intention of the parties hereto that the Trust not be characterized for United States
federal income tax purposes as an association taxable as a corporation or a partnership but rather,
the Trust be characterized as a grantor trust or otherwise in a
manner that each Holder of Securities be treated as owning an undivided beneficial interest in the
Notes. The provisions of this Declaration shall be interpreted to further this intention of the
parties.

Section 14.4 Headings.

Headings contained in this Declaration are inserted for convenience of reference only and do not
affect the interpretation of this Declaration or any provision hereof.

Section 14.5 Successors and Assigns

Whenever in this Declaration any of the parties hereto is named or referred to, the successors and
assigns of such party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.

Section 14.6 Partial Enforceability.

If any provision of this Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the application of such
provision to persons or circumstances other than those to which it is held invalid, shall not be
affected thereby.

Section 14.7 Counterparts.

This Declaration may contain more than one counterpart of the signature page and this Declaration
may be executed by the affixing of the signature of each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a single signature
page.

34

 

IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as of the day and year
first above written.

	 	 	 
	 

	 	 
	 

	 	 
	 

	 	Beverley A. Sibblies,

as Trustee
	 
	 	 
	 

	 	 
	 

	 	 
	 

	 	Dennis J. Mickey,

as Trustee
	 
	 	 
	 

	 	 
	 

	 	 
	 

	 	William H. Kesler,

as Trustee

	 	 	 	 	 
	 	BNY Midwest Trust Company,

as Trustee and as Property Trustee

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	The Bank of New York (Delaware),

as Trustee and Delaware Trustee

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	HSBC Finance Corporation,

as Sponsor

 	 
	 	By:  	
 	 
	 	 	Name:  	Patrick D. Schwartz 	 
	 	 	Title:  	Vice President, Deputy General
Counsel-Corporate and Assistant Secretary 	 
	 

35

 

EXHIBIT A

TERMS OF

CAPITAL SECURITIES

TRUST COMMON SECURITIES

Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated as of
        , 2005 (as amended from time to time, the “Declaration”), the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in the Prospectus
referred to below):

1. Designation and Number.

	 	(a)	 	Capital Securities. Capital Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of $1,000,000,000 and a
liquidation amount with respect to the assets of the Trust of $100,000 per Capital
Security, are hereby designated for the purposes of identification only as “Capital
Securities” (the “Capital Securities”). The Capital Security Certificates evidencing
the Capital Securities shall be substantially in the form attached hereto as Annex I,
with such changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock exchange on
which the Capital Securities are listed.
	 
	 	(b)	 	Common Securities. Common Securities of the Trust with an aggregate liquidation
amount with respect to the assets of the Trust of $___and a liquidation amount
with respect to the assets of the Trust of $100,000 per Common Security, are hereby
designated for the purposes of identification only as “Trust Common Securities” (the
“Common Securities”). The Common Security Certificates evidencing the Common Securities
shall be substantially in the form attached hereto as Annex II, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage, custom
or practice.

2. Distributions.

	 	(a)	 	Fixed Rate Distributions. From      , 2005 to but excluding      , 2015,
Distributions payable on each Security will be fixed at a rate per annum of      % (the
“Fixed Coupon Rate”) of the stated liquidation amount of $100,000 per Security, such
rate being the rate of interest payable during such period on the Notes to be held by
the Property Trustee. Distributions in arrears for more than one semiannual period will
bear interest thereon, compounded semiannually at the Fixed Coupon Rate (to the extent
permitted by applicable law). The term “Distributions” as used herein includes such
cash distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of the
Notes held by the Property Trustee. The amount of Distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months. From
        , 2005 to but excluding      , 2015, Distributions on the Securities will be
cumulative, will accrue from      , 2005 and will be payable semiannually
in arrears, on            and            of each year, commencing on
        , 2006 (each a “Fixed Rate Distribution Date”), except as otherwise described
below.
	 
	 	(b)	 	Floating Rate Distributions. Commencing      , 2015, Distributions on the
Securities will be payable quarterly on each      ,
        , and      , and at maturity (each a
“Floating Rate Distribution Date”), . Distributions payable on each Floating Rate
Distribution Date will include Distributions accrued from and including      , 2015 or
from and including the most recent Floating Rate Distribution Date to which s
distribution has been paid or duly provided to but excluding the next Floating Rate
Distribution Date. Distributions payable prior to maturity will be payable to the
Person in whose name a Floating Rate Note is

1

 

	 	 	 	registered at the close of business on
the applicable record date. The Distribution at maturity will include
the amount accrued to but excluding the maturity date and will be payable to the Person
to whom liquidation amount of the Security is payable. If a Floating Rate
Distribution Date is not a Business Day, such Floating Rate Interest Payment Date
shall be postponed to the next succeeding Business Day unless such day falls in the
next calendar month, in which case such Floating Rate Distribution Date shall be the
immediately preceding day that is not a Business Day.

     “Business Day” means any day other than a Saturday or Sunday, that is neither a
legal holiday nor a day on which commercial banks are authorized or required by law,
regulation or executive order to close in The City of New York and that is also a
London Business Day.

     “Floating Rate Period” shall mean the period beginning on and including      ,
2015 to but excluding the first Floating Rate Distribution Date and each successive
period from and including a Floating Rate Distribution Date to but excluding the next
Floating Rate Distribution Date or the maturity date, as the case may be.
Distributions on Capital Securities shall be computed on the basis of the actual
number of days in the applicable Floating Rate Period divided by 360.

     “Reset Date” means the first day of any Floating Rate Period.

     The “Spread” for each Floating Rate Period will be      %.

     The per annum rate for Distributions on the Capital Securities for each Floating
Rate Period will be (i) LIBOR (as defined herein) on the second London Business Day
preceding the Reset Date for such Floating Rate Period (the “Distribution
Determination Date”) plus (ii) the Spread (“Floating Coupon Rate”, and together with
the Fixed Coupon Rate, the “Coupon Rate”). “LIBOR” for each Floating Rate Period
will be determined by the Company in accordance with the following provisions:

(i) On each Distribution Determination Date, the Company will ascertain the
offered rate for three-month deposits in U.S. dollars in the London interbank
market, which appears on the Telerate Page 3750 as of 11:00 a.m. (London time)
on such Distribution Determination Date.

(ii) If such rate does not appear on the Telerate Page 3750, or the Telerate
Page 3750 is unavailable, the Company will request four major banks in the
London interbank market (the “Reference Banks”) to provide the Company with
their offered quotation (expressed as a rate per annum) for three-month
deposits in U.S. dollars to leading banks in the London interbank market, in a
principal amount equal to an amount of not less than $1 million that is
representative for a single transaction in such market at such time, at
approximately 11:00 a.m. (London time) on the Distribution Determination Date.
If at least two such quotations are provided, LIBOR in respect of that
Distribution Determination Date will be the arithmetic mean of such
quotations.

(iii) If less than two of the Reference Banks provide the Company with such
offered quotations, LIBOR in respect of that Distribution Determination Date
will be the arithmetic mean of the rates quoted by three major banks in The
City of New York selected by the Company at approximately 11:00 a.m., New York
City time, on that Distribution Determination Date for three-month loans in
U.S. dollars to leading European banks, in a principal amount equal to an
amount of not less than $1 million that is representative for a single
transaction in such market at such time; provided, however, that if the banks
selected as aforesaid by the Company are not quoting as mentioned in this
sentence, LIBOR will be LIBOR in effect on such Distribution Determination
Date.

2

 

     “London Business Day” means any day on which dealing in deposits in U.S. dollars are
transacted in the London interbank market.

     “Telerate Page 3750” means the display designated as page “3750” on Moneyline
Telerate (or such other page as may replace the 3750 page on that service or such
other service or services as may be nominated by the British Bankers’ Association for
the purpose of displaying London interbank offered rates for U.S. dollar deposits).

	 	(c)	 	The Debt Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period from time to time on the Notes (each, an
“Extension Period”) and, as a consequence of such extension, Distributions will also be
deferred. No Extension Period will extend beyond the maturity date for the Notes.
Despite such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the applicable Coupon Rate
during any such Extension Period. Prior to the termination of any such Extension
Period, the Debt Issuer may further extend such Extension Period; provided that such
Extension Period together with all such previous and further extensions thereof may not
exceed 10 consecutive semiannual periods or 20 consecutive quarters, as applicable (or
more than 5 years in the aggregate) and provided further that no Extension Period may
extend beyond the maturity date for the Notes. Payments of accrued Distributions will
be payable to Holders as they appear on the books and records of the Trust on the first
record date after the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debt Issuer may commence
a new Extension Period, subject to the above requirements.
	 
	 	(d)	 	Distributions on the Securities will be payable to the Holders thereof as they
appear on the books and records of the Trust on the relevant record dates. While the
Capital Securities remain in book-entry only form, the relevant record dates shall be
one Business Day prior to the relevant payment dates which payment dates correspond to
the interest payment dates on the Notes. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment in respect of the Capital
Securities will be made as described under the heading “Description of the Capital
Securities — Book-Entry Only Issuance — The Depository Trust Company” in the
Prospectus dated November    , 2005, (the “Prospectus”), included in the Registration
Statement on Form S-3 of the Sponsor, the Debt Issuer and the Trust. The relevant
record dates for the Common Securities, and if the Capital Securities shall not
continue to remain in book-entry only form, the relevant record dates for the Capital
Securities, shall conform to the rules of any securities exchange on which the
securities are listed and, if none, shall be selected by the Regular Trustees, which
dates shall be at least one Business Day but less than 60 Business Days before the
relevant payment dates which payment dates correspond to the interest payment dates on
the Notes. Distributions payable on any Securities that are not punctually paid on any
Distribution payment date as a result of the Debt Issuer or the Sponsor having failed
to make a payment under the Notes, will cease to be payable to the Person in whose name
such Securities are registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such Securities are
registered on the special record date or other specified date determined in accordance
with the Indenture. If any date on which Distributions are payable on the Securities is
not a Business Day, then payment of the Distribution payable on such date will be made
on the next succeeding day that 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.
	 
	 	(e)	 	In the event that there is any money or other property held by or for the Trust
that is not accounted for hereunder, such property shall be distributed Pro Rata (as
defined herein) among the Holders of the Securities.

3

 

     3. Liquidation Distribution Upon Dissolution.

     In the event of any voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Securities on the date of the dissolution, winding-up or termination as
the case may be, will be entitled to receive out of the assets of the Trust available for
distribution to Holders of Securities after satisfaction of liabilities to creditors, an amount
equal to the aggregate of the stated liquidation amount of $100,000 per Security plus accrued and
unpaid Distributions thereon to the date of payment (such amount being the “Liquidation
Distribution”), unless, in connection with such dissolution, winding-up or
termination, Notes in an aggregate principal amount equal to the aggregate stated liquidation
amount of such Securities, with an interest rate equal to the Coupon Rate of, and bearing accrued
and unpaid interest in an amount equal to the accrued and unpaid Distributions on, such Securities,
shall be distributed on a Pro Rata basis to the Holders of the Securities in exchange for such
Securities.

     If, upon any such dissolution, the Liquidation Distribution can be paid only in part because
the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution,
then the amounts payable directly by the Trust on the Securities shall be paid on a Pro Rata basis.

     4. Redemption and Distribution.

	 	(a)	 	Upon the repayment of the Notes in whole or in part, whether at maturity or
upon redemption, the proceeds from such repayment or payment shall be simultaneously
applied to redeem Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Notes so repaid or redeemed at a redemption price of
$100,000 per Security plus an amount equal to accrued and unpaid Distributions thereon
to the date of the redemption, payable in cash (the “Redemption Price”). Holders will
be given not less than 30 nor more than 60 days notice of such redemption.
	 
	 	(b)	 	If fewer than all the outstanding Securities are to be so redeemed, the Common
Securities and the Capital Securities will be redeemed Pro Rata and the Capital
Securities to be redeemed will be as described in Section 4(f)(ii) below.
	 
	 	(c)	 	If, at any time, a Tax Event or an Investment Company Event (each as defined
below, and each a “Special Event”) shall occur and be continuing, the Regular Trustees
shall dissolve the Trust and, after satisfaction of creditors, cause Notes held by the
Property Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of, and
accrued and unpaid interest equal to accrued and unpaid Distributions on and having the
same record date for payment as the Securities to be distributed to the Holders of the
Securities in liquidation of such Holders’ interests in the Trust on a Pro Rata basis,
within 90 days following the occurrence of such Special Event (the “90 Day Period”),
provided, however, that in the case of the occurrence of a Tax Event, as a condition of
such dissolution and distribution, the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters (a “No
Recognition Opinion”), which opinion may rely on published revenue rulings of the
Internal Revenue Service, to the effect that the Holders of the Securities will not
recognize any gain or loss for United States federal income tax purposes as a result of
the dissolution of the Trust and the distribution of Notes and provided, further, that,
if at the time there is available to the Trust the opportunity to eliminate, within the
90 Day Period, the Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable measure that has
no adverse effect on the Trust, the Debt Issuer, the Sponsor or the Holders of the
Securities (“Ministerial Action”), the Trust will pursue such Ministerial Action in
lieu of dissolution. In addition, if a Tax Event shall occur and be continuing, the
Debt Issuer has the right to advance the maturity date of the Notes to the minimum
extent required in order to permit payments of interest on the Notes to be deductible
by the Debt Issuer for United States federal income tax purposes, but the resulting
maturity may not be less than 15 years from the original issuance of the Notes. The
Debt Issuer may take such action only if nationally recognized independent tax counsel
to the Debt Issuer experienced in such matters has delivered an opinion, which opinion
may rely on published revenue rulings of the Internal Revenue Service, to the effect
that (i) after advancing the maturity of 

4

 

	 	 	 	the Notes, interest payments on the Notes will
be deductible for United States federal income tax purposes and (ii) advancing the
maturity date of the Notes will not result in a taxable event to holders of the Capital
Securities.
	 
	 	 	 	If, in the case of the occurrence of a Tax Event (i) the Debt Issuer has received an
opinion (a “Redemption Tax Opinion”) of a nationally recognized independent tax
counsel experienced in such matters that, as a result of a Tax Event, there is more
than an insubstantial risk that the Debt Issuer would be precluded from deducting the
interest on the Notes for United States federal income tax purposes even if the Notes
were distributed to the Holders of Securities in liquidation of such Holders’
interests in the Trust as described in this Section 4(c), or (ii) the Regular Trustees
shall have been informed by such tax counsel that a No Recognition Opinion cannot be
delivered to the Trust, the Debt Issuer shall have the right at any time, upon not
less than 30 nor more than 60 days notice, to redeem the Notes in whole or in part for
cash within 90 days following the occurrence of such Tax Event, and following such
redemption, Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Notes so redeemed shall be redeemed by the Trust at the
Redemption Price on a Pro Rata basis; provided, however, that, if at the time there is
available to the Trust the opportunity to eliminate, within such 90 day period, the
Tax Event by taking some Ministerial Action, the Trust or the Debt Issuer will pursue
such Ministerial Action in lieu of redemption.
	 
	 	 	 	“Tax Event” means that the Regular Trustees shall have received an opinion of a
nationally recognized independent tax counsel experienced in such matters (a
“Dissolution Tax Opinion”) to the effect that on or after the date of the Prospectus,
as a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority therefore or therein, or (b) any amendment
to, or change in, an interpretation or application of any such laws or regulations by
any legislative body, court, governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is taken, in
each case on or after the date of the Prospectus, there is more than an insubstantial
risk that (i) the Trust is or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received on the
Notes, (ii) the Trust is, or will be within 90 days of the date thereof, subject to
more than a de minimis amount of taxes, duties or other governmental charges, or (iii)
interest payable by the Debt Issuer to the Trust on the Notes is not, or within 90
days of the date thereof will not be, deductible, in whole or in part, by the Debt
Issuer for United States federal income tax purposes.
	 
	 	 	 	“Investment Company Event” means that the Regular Trustees shall have received an
opinion of a nationally recognized independent counsel experienced in practice under
the Investment Company Act that, as a result of the occurrence of a change in law or
regulation or a written change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a “Change
in 1940 Act Law”), the Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which Change in 1940 Act
Law becomes effective on or after the date of the Prospectus Supplement.
	 
	 	 	 	On and from the date fixed by the Regular Trustees for any distribution of Notes and
dissolution of the Trust: (i) the Securities will no longer be deemed to be
outstanding, (ii) The Depository Trust Company (the “Depository”) or its nominee (or
any successor Clearing Agency or its nominee), as the record Holder of the Capital
Securities, will receive a registered global certificate or certificates representing
the Notes and the Note Guarantee to be delivered upon such distribution and any
certificates representing Securities, except for certificates representing Capital
Securities held by the Depository or its nominee (or any successor Clearing Agency or
its nominee), will be deemed to represent beneficial interests in the Notes having an
aggregate principal amount equal to the aggregate stated liquidation amount of, with
an interest rate identical to the 

5

 

	 	 	 	Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such certificates
are presented to the Debt Issuer or its agent for transfer or reissue.

	 	(d)	 	The Trust may not redeem fewer than all the outstanding Securities unless all
accrued and unpaid Distributions have been paid on all Securities for all quarterly
Distribution periods terminating on or before the date of redemption.
	 
	 	(e)	 	If the Notes are distributed to holders of the Securities, pursuant to the
terms of the Indenture, the Debt Issuer will use its best efforts to have the Notes
listed on The New York Stock Exchange or on such other exchange as the Capital
Securities were listed immediately prior to the distribution of the Notes.
	 
	 	(f)	 	“Redemption or Distribution Procedures.”

	 	(i)	 	Notice of any redemption of, or notice of distribution of Notes in
exchange for the Securities (a “Redemption/ Distribution Notice”) will be given
by the Trust by mail to each Holder of Securities to be redeemed or exchanged
not fewer than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date fixed for
redemption of the Notes. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this
Section 4(e)(i), a Redemption/ Distribution Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/ Distribution Notice shall be addressed to
the Holders of Securities at the address of each such Holder appearing in the
books and records of the Trust. No defect in the Redemption/ Distribution Notice
or in the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any other
Holder.
	 
	 	(ii)	 	In the event that fewer than all the outstanding Securities are to
be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from each
Holder of Securities, it being understood that in respect of Capital Securities
registered in the name of and held of record by DTC (or a successor clearing
agency) or any other Nominee, the distribution of the proceeds of such redemption
will be made to each Clearing Agency Participant (or person on whose behalf such
nominee holds such securities) in accordance with the procedures applied by such
agency or nominee.
	 
	 	(iii)	 	If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice which notice may only be issued if the Notes are
redeemed as set out in this Section 4 (which notice will be irrevocable) then
(A) while the Capital Securities are in book entry only form, with respect to the
Capital Securities, by 12:00 noon, New York City time, on the redemption date,
provided that the Debt Issuer has paid the Property Trustee a sufficient amount
of cash in connection with the related redemption or maturity of the Notes, the
Property Trustee will deposit irrevocably with the Depository (or successor
Clearing Agency) funds sufficient to pay the applicable Redemption Price with
respect to the Capital Securities and will give the Depository irrevocable
instructions and authority to pay the Redemption Price to the Holders of the
Capital Securities, and (B) if the Capital Securities are issued in definitive
form, with respect to the Capital Securities, and with respect to the Common
Securities, provided that the Debt Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Notes, the Property Trustee will pay the relevant Redemption Price to the
Holders of such Securities by check mailed to the address of the relevant Holder
appearing on the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
date of such deposit, or on the redemption date, as applicable, Distributions
will cease to accrue on the Securities so called for redemption and all 

6

 

	 	 	 	rights of
Holders of such Securities so called for redemption will cease, except the right
of the Holders of such Securities to receive the Redemption Price, but without
interest on such Redemption Price. Neither the Regular Trustees nor the Trust
shall be required to register or cause to be registered the transfer of any
Securities which have been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date fixed for redemption. If
payment of the Redemption Price in respect of Securities is improperly withheld
or refused and not paid either by the Property Trustee or by the Sponsor as
guarantor pursuant to the Capital Securities Guarantee, Distributions on such
Securities will continue to accrue, from the original redemption date to the
actual date of payment, in which case
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.

	 	(iv)	 	Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Capital Securities, the
Depository or its nominee (or any successor Clearing Agency or its nominee) if
the Global Certificates have been issued or if Definitive Capital Security
Certificates have been issued, to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
	 
	 	(v)	 	Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), provided the acquirer is not
the Holder of the Common Securities or the obligor under the Indenture, the
Sponsor or any of its subsidiaries may at any time and from time to time
purchase outstanding Capital Securities by tender, in the open market or by
private agreement.

     5. Voting Rights — Capital Securities.

     (a) Except as provided under Section 5(b) and as otherwise required by law and the
Declaration, the Holders of the Capital Securities will have no voting rights.

     (b) If (i) the Trust fails to make Distributions in full on the Capital Securities for six
consecutive quarterly Distribution periods (other than during an Extension Period), or (ii) an
Event of Default occurs and is continuing (each of (i) and (ii) being an “Appointment Event”), then
the Holders of the Capital Securities, acting as a single class, will be entitled by the vote of a
Majority in liquidation amount of the Capital Securities to appoint a Special Regular Trustee in
accordance with Section 5.6(a)(ii)(B) of the Declaration. Any Holder of Capital Securities (other
than the Sponsor, or any entity directly or indirectly controlling or controlled by or under direct
or indirect common control with the Sponsor) will be entitled to nominate any person to be
appointed as Special Regular Trustee. For purposes of determining whether the Trust has failed to
make Distributions in full for six consecutive quarterly Distribution periods, Distributions shall
be deemed to remain in arrears, notwithstanding any payments in respect thereof, until full
cumulative Distributions have been or contemporaneously are paid with respect to all quarterly
Distribution periods terminating on or prior to the date of payment of such cumulative
Distributions.

     Not later than 30 days after such right to appoint a Special Regular Trustee arises, the
Regular Trustees will convene a meeting for the purpose of appointing a Special Regular Trustee. If
the Regular Trustees fail to convene such meeting within such 30-day period, the Holders of 10% in
liquidation amount of the Capital Securities will be entitled to convene such meeting in accordance
with Section 12.2 of the Declaration. The record date for such meeting will be the close of
business on the Business Day which is one Business Day before the day on which notice of the
meeting is sent to Holders. The provisions of the Declaration relating to the convening and conduct
of the meetings of the Holders will apply with respect to any such meeting.

7

 

     A Special Regular Trustee may be removed without cause at any time by vote of the Holders of a
Majority in liquidation amount of the Capital Securities at a meeting of the Holders of the Capital
Securities in accordance with Section 5.6(a)(ii)(B) of the Declaration.

     The Holders of 10% in liquidation amount of the Capital Securities will be entitled to convene
such a meeting in accordance with Section 12.2 of the Declaration. The record date for such meeting
will be the close of business on the Business Day which is one Business Day before the day on which
the notice of meeting is sent to Holders. Notwithstanding the appointment of a Special Regular
Trustee, the Debt Issuer shall retain all rights under the Indenture, including the right to extend
the interest payment period on the Notes.

     Subject to the requirements of the second to last sentence of this paragraph, the Holders of a
Majority in liquidation amount of the Capital Securities, voting separately as a class may direct
the time, method, and place of conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the Property Trustee under the
Declaration, including (i) directing the time, method, place of conducting any proceeding for any
remedy available to the Note Trustee, or executing any trust or power conferred on the Note Trustee
with respect to the Notes, (ii) waive any past default and
its consequences that is waivable under Section 7.13 of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Notes shall be due and payable, or
(iv) consent to any amendment, modification or termination of the Indenture or the Notes, where
such consent shall be required, provided, however, that where a Super Majority of the holders of
the Notes is required, the Property Trustee may only give such consent at the direction of the
Holders of at least the proportion in liquidation amount of the Capital Securities which the
relevant Super Majority represents of the aggregate principal amount of the Notes. The Property
Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of
the Capital Securities. Other than with respect to directing the time, method and place of
conducting any remedy available to the Property Trustee or the Note Trustee as set forth above, the
Property Trustee shall not take any action in accordance with the directions of the Holders of the
Capital Securities under this paragraph unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax the Trust will not
be classified as other than a grantor trust. If the Property Trustee fails to enforce its rights
under the Declaration, any Holder of Capital Securities may, to the extent permissible by
applicable law, after a period of 30 days has elapsed from such holder’s written request to the
Property Trustee to enforce such rights, institute a legal proceeding directly against any Person
to enforce the Property Trustee’s rights under the Declaration, without first instituting a legal
proceeding against the Property Trustee or any other Person.

     Any approval or direction of Holders of Capital Securities may be given at a separate meeting
of Holders of Capital Securities convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice of
any meeting at which Holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to each Holder of
record of Capital Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the delivery of proxies
or consents.

     No vote or consent of the Holders of the Capital Securities will be required for the Trust to
redeem and cancel Capital Securities or to distribute the Notes in accordance with the Declaration
and the terms of the Securities.

     Notwithstanding that Holders of Capital Securities are entitled to vote or consent under any
of the circumstances described above, any of the Capital Securities that are owned by the Sponsor,
or by any entity directly or indirectly controlling or controlled by or under direct or indirect
common control with the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.

8

 

6. Voting Rights — Common Securities.

	 	(a)	 	Except as provided under Section 6(b), 6(c) and 7 as otherwise required by law
and the Declaration, the Holders of the Common Securities will have no voting rights.
	 
	 	(b)	 	The Holders of the Common Securities are entitled, in accordance with Article
V of the Declaration, to vote to appoint, remove or replace any Trustee or to increase
or decrease the number of Trustees, subject to the exclusive right of the Holders of
the Capital Securities to appoint, remove or replace a Special Regular Trustee.
	 
	 	(c)	 	Subject to Section 2.6 of this Declaration and only after the Event of Default
with respect to the Capital Securities have been cured, waived, or otherwise
eliminated, and subject to the requirements of the second to last sentence of this
paragraph, the Holders of a Majority in liquidation amount of the Common Securities,
voting separately as a class may direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any trust or
power conferred upon the Property Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy available
to the Note Trustee, or executing any trust or power conferred on the Note Trustee with
respect to the Notes, (ii) waive any past default and its consequences that is waivable
under Section 7.13 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Notes shall be due and payable, or (iv)
consent to any amendment, modification or termination of the Indenture or the Notes,
where such consent shall be required, provided, however, that where a consent under the
Indenture would require the consent of greater than a majority of the Holders in
principal amount of Notes affected thereby (a “Super Majority”),the Property Trustee
may only give such consent at the direction of the Holders of at least the proportion
in liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Notes outstanding. The Property
Trustee shall not revoke any action previously authorized or approved by a vote of the
Holders of the Capital Securities. Other than with respect to directing the time,
method and place of conducting any remedy available to the Property Trustee or the Note
Trustee as set forth above, the Property Trustee shall not take any action in
accordance with the directions of the Holders of the Common Securities under this
paragraph unless the Property Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust. If the Property Trustee fails to enforce its
rights under the Declaration, any Holder of Common Securities may, after a period of 30
days has elapsed from such holder’s written request to the Property Trustee to enforce
such rights, institute a legal proceeding directly against any Person to enforce the
Property Trustee’s rights under the Declaration, without first instituting a legal
proceeding against the Property Trustee or any other Person.

     Any approval or direction of Holders of Common Securities may be given at a separate meeting
of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice of
any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken, to be mailed to each Holder of record of
Common Securities. Each such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter
upon which written consent is sought and (iii) instructions for the delivery of proxies or
consents.

     No vote or consent of the Holders of the Common Securities will be required for the Trust to
redeem and cancel Common Securities or to distribute the Notes in accordance with the Declaration
and the terms of the Securities.

     7. Amendments to Declaration and Indenture.

	 	(a)	 	If any proposed amendment to the Declaration provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Securities, whether by 

9

 

	 	 	 	way of amendment to
the Declaration or otherwise, or (ii) the dissolution, winding-up or termination of the
Trust, other than as described in Section 8.1 of the Declaration, then the Holders of
outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any other
amendment or proposal) and such amendment or proposal shall not be effective except
with the approval of the Holders of at least 66-2/3% in liquidation amount of the
Securities, voting together as a single class provided, however, that the rights
Holders of Capital Securities under Article V of the Declaration to appoint, remove or
replace a Special Regular Trustee shall not amended without the consent of each Holder
of Capital Securities, provided, however, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Capital Securities or the Common
Securities, only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of 66 2/3% in liquidation amount of such class of securities.

	 	(b)	 	In the event the consent of the Property Trustee as the holder of the Notes is
required under the Indenture with respect to any amendment, modification or termination
of the Indenture or the Notes, the Property Trustee shall request the direction of the
Holders of the Securities with respect to such amendment, modification or termination
and shall vote with respect to such amendment, modification or termination as directed
by a Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require the
consent of the holders of greater than a majority in aggregate principal amount of the
Notes (a “Super Majority”), the Property Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities which the relevant Super Majority represents of the aggregate principal
amount of the Notes outstanding provided, further, that the Property Trustee shall not
take any action in accordance with the directions of the Holders of the Securities
under this Section 7(b) unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax the
Trust will not be classified as other than a grantor trust.

     8. Pro Rata.

     A reference in these terms of the Securities to any payment, distribution or treatment as
being “Pro Rata” shall mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a payment, an Event of
Default under the Indenture has occurred and is continuing, in which case any funds available to
make such payment shall be paid first to each Holder of the Capital Securities pro rata according
to the aggregate liquidation amount of Capital Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Capital Securities outstanding, and only after satisfaction
of all amounts owed to the Holders of the Capital Securities, to each Holder of Common Securities
pro rata according to the aggregate liquidation amount of Common Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Common Securities outstanding.

     9. Ranking.

     The Capital Securities rank pari pasu and payment thereon shall be made Pro Rata with the
Common Securities except that where an Event of Default occurs and is continuing under the
Indenture in respect of the Notes held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation, redemption and
otherwise are subordinated to the rights to payment of the Holders of the Capital Securities.

     10. Acceptance of Capital Securities Guarantee and Indenture.

     Each Holder of Capital Securities and Common Securities, by the acceptance thereof, agrees to
the provisions of the Capital Securities Guarantee, including the subordination provisions therein,
and to the provisions of the Indenture.

10

 

     11. No Preemptive Rights.

     The Holders of the Securities shall have no preemptive rights to subscribe for any additional
Securities.

     12. Miscellaneous.

     These terms constitute a part of the Declaration.

     The Regular Trustees will provide a copy of the Declaration, the Capital Securities Guarantee
and the Indenture to a Holder without charge on written request to the Trust at its principal place
of business.

11

 

Annex I

     [IF THE CAPITAL SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT — This Capital Security is a
Global Certificate within the meaning of the Declaration hereinafter referred to and is registered
in the name of The Depository Trust Company (the “Depository”) or a nominee of the Depository. This
Capital Security is exchangeable for Capital Securities registered in the name of a person other
than the Depository or its nominee only in the limited circumstances described in the Declaration
and no transfer of this Capital Security (other than a transfer of this Capital Security as a whole
by the Depository to a nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository) may be registered except in limited circumstances.

     Unless this Capital Security is presented by an authorized representative of The Depository
Trust Company (55 Water Street, New York) to the Trust or its agent for registration of transfer,
exchange or payment, and any Capital Security issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]

      

			
	Certificate Number
	 	Number of Capital Securities

CUSIP NO.

Certificate Evidencing Capital Securities

of

HSBC FINANCE PREFERRED TRUST IX

Capital Securities.

(Liquidation Amount $100,000 per Capital Security)

     HSBC Finance Capital Trust IX, a statutory trust formed under the laws of the State of
Delaware (the “Trust”), hereby certifies that ___(the “Holder”) is the registered owner
of Capital Securities of the Trust representing undivided beneficial interests in the assets of the
Trust designated the Capital Securities (liquidation amount $100,000 per Capital Security) (the
“Capital Securities”). The Capital Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Capital Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of            November  , 2005, as the same may be amended from time to time (the
“Declaration”) including the designation of the terms of the Capital Securities as set forth in
Exhibit A to the Declaration. Capitalized terms used herein but not defined shall have the meaning
given them in the Declaration. The Holder is entitled to the benefits of the Capital Securities
Guarantee to the extent provided therein. The Trust will provide a copy of the Declaration, the
Capital Securities Guarantee and the Indenture to a Holder without charge upon written request to
the Trust at its principal place of business.

     Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.

A-1

 

     By acceptance, the Holder agrees to treat the Notes as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Notes.

IN WITNESS WHEREOF, the Trust has executed this

certificate this ______ day of , 2005.

	 	 	 
	 

	 	[     ]
	 

	 	as Trustee
	 
	 	 
	 

	 	 
	 

	 	 
	 

	 	[     ]
	 

	 	as Trustee
	 
	 	 
	 

	 	 
	 

	 	 

A-2

 

ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned assigns and transfer this Capital Security Certificate to:

 

 

 

 

(Insert assignee’s social security of tax identification number)

      

 

 

 

 

 

(Insert address and zip code of assignee) and irrevocably appoint)

      

 

 

 

 

 

agent to transfer this Preferred Security Certificate on the books of the Trust. The agent
may substitute another to act for him or her.

      

	 	 	 
	Date:

	 	 
	 

	 	 

	 	 	 
	Signature:

	 	 
	 

	 	 

(Sign exactly as your name appears on the other side of this Capital Security Certificate)

A-3

 

Annex II

 

			
	Certificate Number
	 	Number of Common Securities

Certificate Evidencing Common Securities

of

HSBC FINANCE CAPITAL TRUST IX

Common Securities

(Liquidation Amount $100,000 per Common Security)

HSBC Finance Capital Trust IX, a statutory trust formed under the laws of the State of Delaware
(the “Trust”), hereby certifies that
                     (the “Holder”) is the registered owner of
common securities of the Trust representing undivided beneficial interests in the assets of the
Trust designated the Trust Common Securities (liquidation amount $100,000 per Common Security) (the
“Common Securities”). The Common Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions, preferences and other
terms and provisions of the Common Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of                     , 2005, as the same may be amended from time to time (the
“Declaration”) including the designation of the terms of the Common Securities as set forth in
Exhibit A to the Declaration. Capitalized terms used herein but not defined shall have the meaning
given them in the Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder without charge upon written request to the Trust at its principal place of business.

Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the
benefits thereunder.

By acceptance, the Holder agrees to treat the Notes as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Notes.

     IN WITNESS WHEREOF, the Trust has executed this certificate this day of                     , 2005.

	 	 	 
	 

	 	[     ]
	 

	 	as Trustee
	 
	 	 
	 

	 	 
	 

	 	 
	 

	 	[     ]
	 

	 	as Trustee
	 
	 	 
	 

	 	 
	 

	 	 

A-4

 

ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned assigns and transfer this Common Security Certificate to:

 

 

 

(Insert assignee’s social security of tax identification number)

      

 

 

 

 

(Insert address and zip code of assignee) and irrevocably appoint)

      

 

 

 

agent to transfer this Common Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.

      

	 	 	 
	Date:

	 	 
	 

	 	 

	 	 	 
	Signature:

	 	 
	 

	 	 

(Sign exactly as your name appears on the other side of this Common Security Certificate)

A-5

 

EXHIBIT B

SPECIMEN OF NOTE

 

EXHIBIT C

UNDERWRITING AGREEMENTexv4w7

 

Exhibit 4.7

CAPITAL SECURITIES GUARANTEE AGREEMENT

HSBC Finance Corporation

Dated as of      , 2005

 

 

CROSS-REFERENCE TABLE*

	 	 	 
	Section of Trust Indenture	 	Section of
	Act of 1939, as amended	 	Guarantee Agreement
	310(a)

	 	4.1(a) 
	310(b)

	 	4.1(c) 
	310(c)

	 	Inapplicable
	311(a)

	 	2.2(b) 
	311(b)

	 	2.2(b) 
	311(c)

	 	Inapplicable
	312(a)

	 	2.2(a) 
	312(b)

	 	2.2(b) 
	313

	 	2.3 
	314(a)

	 	2.4 
	314(b)

	 	Inapplicable
	314(c)

	 	2.5 
	314(d)

	 	Inapplicable
	314(f)

	 	Inapplicable
	315(a)

	 	3.1(b) 
	315(b)

	 	2.7 
	315(c)

	 	3.1(a) 
	315(d)

	 	3.1(a) 
	316(a)

	 	5.4(a), 2.6 

 

			
	*	 	This Cross-Reference Table does not constitute part of the Guarantee Agreement and shall not
affect the interpretation of any of its terms or provisions.

-2-

 

CAPITAL SECURITIES GUARANTEE AGREEMENT

     This GUARANTEE AGREEMENT (“Guarantee Agreement”), dated as of      , 2005, is executed
and delivered by HSBC Finance Corporation, a Delaware corporation (the “Guarantor”), and BNY
Midwest Trust Company, as trustee (the “Capital Securities Guarantee Trustee”), for the benefit of
the Holders (as defined herein) from time to time of the Capital Securities (as defined herein) of
HSBC Finance Capital Trust IX, a Delaware statutory business trust (the “Issuer”).

     WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the “Declaration”), dated
as of      , 2005 among the trustees of the Issuer named therein, the Guarantor as Sponsor
and the holders from time to time of undivided beneficial interests in the assets of the Issuer,
the Issuer is issuing on the date hereof $1,000,000,000 aggregate stated liquidation amount of
Capital Securities designated the Capital Securities (the “Capital Securities”);

     WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor
desires to irrevocably and unconditionally agree, to the extent set forth in this Guarantee
Agreement, to pay to the Holders of the Capital Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the purchase by each Holder of Capital Securities, which
purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee Agreement for the benefit of the Holders.

-3-

 

ARTICLE I

Definitions and Interpretation

Section 1.1 Definitions and Interpretation.

     In this Guarantee Agreement, unless the context otherwise requires:

	 	(a)	 	Capitalized terms used in this Guarantee Agreement but not defined in the
preamble above have the respective meanings assigned to them in this Section 1.1;
	 
	 	(b)	 	a term defined anywhere in this Guarantee Agreement has the same meaning
throughout;
	 
	 	(c)	 	all references to “the Guarantee Agreement” or “this Guarantee Agreement” are
to this Guarantee Agreement as modified, supplemented or amended from time to time;
	 
	 	(d)	 	all references in this Guarantee Agreement to Articles and Sections are to
Articles and Sections of this Guarantee Agreement unless otherwise specified;
	 
	 	(e)	 	a term defined in the Trust Indenture Act has the same meaning when used in
this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or
unless the context otherwise requires; and
	 
	 	(f)	 	a reference to the singular includes the plural and vice versa.

     “Affiliate” has the same meaning as given to that term in Rule 405 of the Securities Act of
1933 as amended or any successor rule thereunder.

     “Capital Securities Guarantee Trustee” means BNY Midwest Trust Company until a Successor
Capital Securities Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such Successor Capital
Securities Guarantee Trustee.

     “Common Securities” means the securities representing common undivided beneficial interests in
the assets of the Issuer.

     “Covered Person” means any Holder of Capital Securities.

     “Distributions” means a distribution payable to holders of the Capital Securities or the
Common Securities in accordance with Section 6.1 of the Declaration.

     “Event of Default” means a default by the Guarantor on any of its payment or other obligations
under this Guarantee Agreement.

     “Guarantee Payments” means the following payments or distributions, without duplication, with
respect to the Capital Securities, to the extent not paid or made by the Issuer: (i) any accrued
and unpaid Distributions which are required to be paid on such Capital Securities to the extent
the Issuer shall have funds available therefore, (ii) the redemption price, including all accrued
and unpaid Distributions to the date of redemption (the “Redemption Price”) to the extent the
Issuer has funds available therefor, with respect to any Capital Securities called for redemption
by the Issuer, and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with the distribution of Notes to the Holders in exchange for
Capital Securities as provided in the Declaration), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid Distributions on the Capital Securities to the date
of payment, and (b) the amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the “Liquidation Distribution”).

-4-

 

     “Holder” shall mean any holder, as registered on the books and records of the Issuer, of any
Capital Securities; provided, however, that in determining whether the holders of the requisite
percentage of Capital Securities have given any request, notice, consent or waiver hereunder,
“Holder” shall not include the Guarantor or any entity directly or indirectly controlling or
controlled by or under direct or indirect common control with the Guarantor.

     “Indemnified Person” means the Capital Securities Guarantee Trustee, any Affiliate of the
Capital Securities Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Capital Securities Guarantee Trustee.

     “Indenture” means the Indenture dated as of May 15, 1995 among J. P. Morgan Trust Company,
National Association (as successor in interest to Bank One, National Association, formerly known as
The First National Bank of Chicago) as trustee and HSBC Finance Corporation (as “Debt Issuer”) and
any indenture supplemental thereto pursuant to which certain subordinated debt securities of the
Debt Issuer are to be issued to the Property Trustee of the Issuer.

     “Majority in liquidation amount of the Capital Securities” means, except as provided by the
Trust Indenture Act, Holder(s) of Capital Securities voting separately as a class, who vote Capital
Securities and the aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which
the voting percentages are determined) of the Preferred Securities voted by such Holders
represents more than 50% of the above stated liquidation amount of all Capital Securities.

     “Notes” means a series of debt securities issued by the Debt Issuer pursuant to the Indenture
to be known as Junior Subordinated Deferrable Interest Notes due      , 2035.

     “Officers’ Certificate” means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers’ Certificate delivered with respect to compliance
with a condition or covenant provided for in this Guarantee Agreement shall include:

	 	(a)	 	a statement that each officer signing the Certificate has read the covenant or
condition and the definitions relating thereto;
	 
	 	(b)	 	a brief statement of the nature and scope of the examination or investigation
undertaken by each officer in rendering the Certificate;
	 
	 	(c)	 	a statement that each such officer has made such examination or investigation
as, in such officer’s opinion, is necessary to enable such officer to express an
informed opinion as to whether or not such covenant or condition has been complied
with; and
	 
	 	(d)	 	a statement as to whether, in the opinion of each such officer, such condition
or covenant has been complied with.

     “Person” means a legal person, including any individual, corporation, estate, partnership,
joint venture, association, joint stock company, limited liability company, trust, unincorporated
association, or government or any agency or political subdivision thereof, or any other entity of
whatever nature.

     “Responsible Officer” means, with respect to the Capital Securities Guarantee Trustee, any
officer within the corporate trust department, including any vice-president, any assistant
vice-president, the secretary, any assistant secretary, the treasurer, any assistant treasurer,
any trust officer or assistant trust officer or any other officer of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer’s knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the administration of this
Guarantee Agreement.

-5-

 

     “Successor Capital Securities Guarantee Trustee” means a successor Capital Securities
Guarantee Trustee possessing the qualifications to act as Capital Securities Guarantee Trustee
under Section 4.1.

     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

ARTICLE II

Trust Indenture Act

Section 2.1 Trust Indenture Act; Application.

     (a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are
required to be a part of this Guarantee Agreement and shall, to the extent applicable, be governed
by such provisions.

     (b) If and to the extent that any provision of this Guarantee Agreement limits, qualifies or
conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act,
such imposed duties shall control.

Section 2.2 Lists of Holders of Securities.

     (a) To the extent the Capital Securities Trustee shall not also be acting as Property Trustee
at the time action is called for under (i) or (ii) below, the Guarantor shall provide the Capital
Securities Trustee (i) within 14 days after January 1 and June 30 of each year, a list, in such
form as the Capital Securities Guarantee Trustee may reasonably require, of the names and addresses
of the Holders of the Capital Securities (“List of Holders”) as of such date, provided that the
Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Capital Securities Guarantee
Trustee by the Guarantor, and (ii) at any other time, within 30 days of receipt by the Guarantor of
a written request for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Capital Securities Guarantee Trustee. The Preferred Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of Holders.

     (b) The Capital Securities Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.

Section 2.3 Reports By The Capital Securities Guarantee Trustee.

     Within 60 days after May 15 of each year, the Capital Securities Guarantee Trustee shall
provide to the Holders of the Capital Securities such reports as are required by Section 313 of the
Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Capital Securities Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

Section 2.4 Periodic Reports To Capital Securities Guarantee Trustee.

     The Guarantor shall provide to the Capital Securities Guarantee Trustee such documents,
reports and information as required by Section 314 (if any) and the compliance certificate required
by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.

Section 2.5 Evidence of Compliance With Conditions Precedent.

     The Guarantor shall provide to the Capital Securities Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Guarantee Agreement which
relate to any of the matters set forth in Section

-6-

 

314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officer’s Certificate.

Section 2.6 Event of Default; Waiver.

     The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on behalf
of the Holders of all of the Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee
Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon.

Section 2.7 Event of Default; Notice.

     (a) The Capital Securities Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Capital
Securities, notices of all Events of Default known to the Capital Securities Guarantee Trustee,
unless such defaults have been cured before the giving of such notice, provided that, the Capital
Securities Guarantee Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors and/or Responsible
Officers, of the Capital Securities Guarantee Trustee in good faith determine that the withholding
of such notice is in the interests of the Holders of the Capital Securities.

     (b) The Capital Securities Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default except any Event of Default as to which the Capital Securities Guarantee Trustee
shall have received written notice or a Responsible Officer charged with the administration of the
Declaration shall have obtained written notice of.

Section 2.8 Conflicting Interests.

     The Declaration shall be deemed to be specifically described in this Guarantee Agreement for
the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture
Act.

ARTICLE III

Powers, Duties and Rights Of

Capital Securities Guarantee Trustee

Section 3.1 Powers and Duties of The Capital Securities Guarantee Trustee.

     (a) This Guarantee Agreement shall be held by the Capital Securities Guarantee Trustee for the
benefit of the Holders of the Capital Securities and the Capital Securities Guarantee Trustee shall
not transfer this Guarantee Agreement to any Person except a Holder of Capital Securities
exercising his or her rights pursuant to Section 5.4(b) or to a Successor Capital Securities
Guarantee Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of its
appointment to act as Capital Securities Guarantee Trustee. The right, title and interest of the
Capital Securities Guarantee Trustee shall automatically vest in any Successor Capital Securities
Guarantee Trustee and such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.

     (b) If an Event of Default has occurred and is continuing, the Capital Securities Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders of the Capital
Securities.

     (c) The Capital Securities Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall undertake to perform
only such duties as are specifically set forth in this Guarantee Agreement, and no implied
covenants shall be read into this Guarantee Agreement against the Capital Securities Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6), the

-7-

 

Capital Securities Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the conduct of his or her own affairs;

     (d) No provision of this Guarantee Agreement shall be construed to relieve the Capital
Securities Guarantee Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:

	 	(i)	 	prior to the occurrence of any Event of Default and after the curing or waiving
of all such Events of Default that may have occurred:

	 	(A)	 	the duties and obligations of the Capital Securities Guarantee
Trustee shall be determined solely by the express provisions of this Guarantee
Agreement, and the Capital Securities Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Guarantee Agreement, and no implied covenants or obligations
shall be read into this Guarantee Agreement against the Preferred Guarantee
Trustee; and
	 
	 	(B)	 	in the absence of bad faith on the part of the Preferred Guarantee
Trustee, the Capital Securities Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Capital Securities
Guarantee Trustee and conforming to the requirements of this Guarantee Agreement;
but in the case of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Capital Securities Guarantee
Trustee, the Capital Securities Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
the Declaration;

	 	(ii)	 	the Capital Securities Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Capital Securities
Guarantee Trustee, unless it shall be proved that the Capital Securities Guarantee
Trustee was negligent in ascertaining the pertinent facts;
	 
	 	(iii)	 	the Capital Securities Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of the
Capital Securities at the time outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the Preferred Guarantee Trustee,
or exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Guarantee Agreement; and
	 
	 	(iv)	 	no provision of this Guarantee Agreement shall require the Capital Securities
Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of its
rights or powers, if it shall have reasonable ground for believing that the repayment
of such funds or liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.

Section 3.2 Certain Rights of Capital Securities Guarantee Trustee.

     (a) Subject to the provisions of Section 3.1:

	 	(i)	 	the Capital Securities Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the proper
party or parties;

-8-

 

	 	(ii)	 	any direction or act of the Guarantor contemplated by this Guarantee Agreement
shall be sufficiently evidenced by an Officers’ Certificate;
	 
	 	(iii)	 	whenever in the administration of this Guarantee Agreement, the Capital
Securities Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the Capital
Securities Guarantee Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and rely upon an Officers’
Certificate which, upon receipt of such request, shall be promptly delivered by the
Guarantor;
	 
	 	(iv)	 	the Capital Securities Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording, refiling or
registration thereof);
	 
	 	(v)	 	the Capital Securities Guarantee Trustee may consult with counsel of its
selection and the advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates, and may
include any of its employees. The Capital Securities Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration of this Guarantee
Agreement from any court of competent jurisdiction;
	 
	 	(vi)	 	the Capital Securities Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have provided to the
Capital Securities Guarantee Trustee security and indemnity reasonably satisfactory to
the Capital Securities Guarantee Trustee, against the costs, expenses (including
attorneys’ fees and expenses) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as may be requested
by the Capital Securities Guarantee Trustee provided, that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Capital Securities Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee Agreement;
	 
	 	(vii)	 	the Capital Securities Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document, but
the Capital Securities Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
	 
	 	(viii)	 	the Capital Securities Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through agents or
attorneys and the Capital Securities Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with due care
by it hereunder;
	 
	 	(ix)	 	any action taken by the Capital Securities Guarantee Trustee or its agents
hereunder shall bind the Holders of the Capital Securities and the signature of the
Capital Securities Guarantee Trustee or its agents alone shall be sufficient and
effective to perform any such action; and no third party shall be required to inquire
as to the authority of the Capital Securities Guarantee Trustee to so act, or as to its
compliance with any of the terms and provisions of this Guarantee Agreement, both of
which shall be conclusively evidenced by the Preferred Guarantee Trustee’s or its
agent’s taking such action; and
	 
	 	(x)	 	whenever in the administration of this Guarantee Agreement the Capital
Securities Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other

-9-

 

action hereunder the Capital Securities Guarantee Trustee (i) may request
instructions from the Holders of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such instructions
are received, and (iii) shall be fully protected in acting in accordance with such
instructions; and

     (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation
on the Capital Securities Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be
illegal, or in which the Capital Securities Guarantee Trustee shall be unqualified or incompetent
in accordance with applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the Capital Securities
Guarantee Trustee shall be construed to be a duty.

Section 3.3 Not Responsible For Recitals or Issuance of Guarantee.

     The recitals contained in this Guarantee shall be taken as the statements of the Guarantor and
the Capital Securities Guarantee Trustee does not assume any responsibility for their correctness.
The Capital Securities Guarantee Trustee makes no representations as to the validity or sufficiency
of this Guarantee Agreement.

ARTICLE IV

Capital Securities Guarantee Trustee

Section 4.1 Capital Securities Guarantee Trustee; Eligibility.

     (a) There shall at all times be a Capital Securities Guarantee Trustee which shall:

	 	(i)	 	not be an Affiliate of the Guarantor;
	 
	 	(ii)	 	be a corporation organized and doing business under the laws of the United
States of America or any state or territory thereof or of the District of Columbia, or
a corporation or Person permitted by the Securities and Exchange Commission to act as
an institutional trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000), and subject to supervision or examination by
federal, state, territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above, then for the
purposes of this Section 4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.

     (b) If at any time the Capital Securities Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Capital Securities Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).

     (c) If the Capital Securities Guarantee Trustee has or shall acquire any “conflicting
interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Capital Securities
Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act.

Section 4.2 Appointment, Removal and Resignation of Capital Securities Guarantee Trustee.

     (a) Subject to Section 4.2(b), the Capital Securities Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.

-10-

 

     (b) The Capital Securities Guarantee Trustee shall not be removed in accordance with this
Section 4.2 until a Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor Capital Securities
Guarantee Trustee and delivered to the Guarantor.

     (c) The Capital Securities Guarantee Trustee appointed to office shall hold office until a
Successor Capital Securities Guarantee Trustee shall have been appointed or until its removal or
resignation. The Capital Securities Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the Capital Securities
Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Capital Securities Guarantee Trustee and
delivered to the Guarantor and the resigning Capital Securities Guarantee Trustee.

     (d) If no Successor Capital Securities Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor
of an instrument of resignation or to the Preferred Guarantee of a notice of removal, the retiring
Capital Securities Guarantee Trustee, at the expense of the Guarantor, may petition any court of
competent jurisdiction for appointment of a Successor Capital Securities Guarantee Trustee. Such
court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a
Successor Capital Securities Guarantee Trustee.

ARTICLE V

Guarantee

Section 5.1 Guarantee.

     The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), as and when
due, regardless of any defense, right of set-off or counterclaim which the Issuer may have or
assert. The Guarantor’s obligation to make a Guarantee Payment may be satisfied by direct payment
of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.

Section 5.2 Waiver of Notice and Demand.

     The Guarantor hereby waives notice of acceptance of this Guarantee Agreement and of any
liability to which it applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

Section 5.3 Obligations Not Affected.

     The obligations, covenants, agreements and duties of the Guarantor under this Guarantee
Agreement shall in no way be affected or impaired by reason of the happening from time to time of
any of the following:

	 	(a)	 	the release or waiver, by operation of law or otherwise, of the performance or
observance by the Issuer of any express or implied agreement, covenant, term or
condition relating to the Capital Securities to be performed or observed by the Issuer;
	 
	 	(b)	 	the extension of time for the payment by the Issuer of all or any portion of
the Distributions, Redemption Price, Liquidation Distribution or any other sums payable
under the terms of the Capital Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the Capital
Securities (other than an extension of time for payment of Distributions, Redemption
Price, Liquidation

-11-

 

	 	 	 	Distribution or other sum payable that results from the extension of any interest
payment period on the Notes or any extension of the maturity date of the Notes
permitted by the Indenture);
	 
	 	(c)	 	any failure, omission, delay or lack of diligence on the part of the Holders to
enforce, assert or exercise any right, privilege, power or remedy conferred on the
Holders pursuant to the terms of the Capital Securities, or any action on the part of
the Issuer granting indulgence or extension of any kind;
	 
	 	(d)	 	the voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or other similar
proceedings affecting, the Issuer or any of the assets of the Issuer;
	 
	 	(e)	 	any invalidity of, or defect or deficiency in the Capital Securities;
	 
	 	(f)	 	the settlement or compromise of any obligation guaranteed hereby or hereby
incurred; or
	 
	 	(g)	 	any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor, it being the intent of this Section 5.3
that the obligations of the Guarantor hereunder shall be absolute and unconditional
under any and all circumstances.

There shall be no obligation on the Holders or any other Person to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

Section 5.4 Rights of Holders.

     (a) The Holders of a Majority in liquidation amount of the Capital Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy available to the
Capital Securities Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust
or power conferred upon Capital Securities Guarantee Trustee under this Guarantee Agreement.

     (b) If the Capital Securities Guarantee Trustee fails to enforce this Guarantee Agreement, any
Holder of Capital Securities may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding
against the Issuer, the Capital Securities Guarantee Trustee or any other Person.

Section 5.5 Guarantee of Payment.

     This Guarantee Agreement creates a guarantee of payment and not of collection.

Section 5.6 Subrogation.

     The Guarantor shall be subrogated to all (if any) rights of the Holders of Capital Securities
against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this
Guarantee Agreement; provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts
are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

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Section 5.7 Independent Obligations.

     The Guarantor acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.

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ARTICLE VI

Limitation of Transactions; Subordination

Section 6.1 Limitation of Transactions.

     So long as any Capital Securities remain outstanding, if there shall have occurred and is
continuing any event that would constitute an Event of Default or an Event of Default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividends on, or purchase, acquire
or make a distribution or liquidation payment with respect to any of its capital stock (other than
(i) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in
connection with any employment contract, benefit plan or other similar arrangement with or for the
benefit of employees, officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Guarantor’s capital stock for any other class or series of
the Guarantor’s capital stock, or (iii) the purchase of fractional interests in shares of the
Guarantor’s capital stock pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged), and (b) the Guarantor shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Guarantor which rank pari passu with or junior to the Notes.
The foregoing, however, will not apply to any stock dividends paid by the Guarantor where the
dividend stock is the same stock as that on which the dividend is being paid.

Section 6.2 Ranking.

     This Guarantee Agreement will constitute an unsecured obligation of the Guarantor and will
rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor,
including the Notes, except those made pari passu or subordinate by their terms, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by the Guarantor and
with any guarantee now or hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor and (iii) senior to the Guarantor’s common
stock.

ARTICLE VII

Termination

Section 7.1 Termination.

     This Guarantee Agreement shall terminate upon full payment of the Redemption Price of all of
the Capital Securities and Common Securities upon the distribution of the Notes to the Holder’s of
all of the Capital Securities or upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement
will continue to be effective or will be reinstated, as the case may be, if at any time any Holder
of Capital Securities must restore payment of any sums paid under the Capital Securities or under
this Capital Securities Guarantee.

ARTICLE VIII

Indemnification

Section 8.1 Exculpation.

     (a) No indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in accordance with this
Guarantee Agreement and in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Guarantee Agreement or by law,
except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by
reason of such Indemnified Person’s negligence or willful misconduct with respect to such acts or
omissions.

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     (b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Guarantor and upon such information, opinions, reports or statements presented to the
Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such
other Person’s professional or expert competence and who has been selected with reasonable care by
or on behalf of the Guarantor, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of Capital Securities might
properly be paid.

Section 8.2 Indemnification.

     (a) To the fullest extent permitted by applicable law, the Guarantor shall indemnify and hold
harmless each Indemnified Person from and against any loss, expense, damage or claim incurred by
such Indemnified Person by reason of any act or omission performed or omitted by such Indemnified
Person in good faith in accordance with this Guarantee Agreement and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on such Indemnified Person
by this Guarantee Agreement, except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, expense, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions.

     (b) To the fullest extent permitted by applicable law, expenses (including legal fees and
expenses) incurred by an Indemnified Person in defending any claim, demand, action, suit or
proceeding shall, from time to time, be advanced by the Guarantor prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Guarantor of an undertaking by
or on behalf of the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section 8.2(a).

ARTICLE IX

Miscellaneous

Section 9.1 Successors and Assigns.

     All guarantees and agreements contained in this Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders of the Capital Securities then outstanding.

Section 9.2 Amendments.

     Except with respect to any changes which do not adversely affect the rights of Holders (in
which case no consent of Holders will be required), this Guarantee Agreement may only be amended
with the prior approval of the Holders of at least 66-2/3% in liquidation amount of all the
outstanding Capital Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Capital Securities and Common Securities apply to the giving of such
approval.

Section 9.3 Notices.

     All notices provided for in this Guarantee Agreement shall be in writing, duly signed by the
party giving such notice, and shall be delivered, telecopied or mailed by registered or certified
mail, as follows:

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	 	(a)	 	if given to the Capital Securities Guarantee Trustee at the Capital Securities
Guarantee Trustee’s mailing address set forth below(or such other address as the
Capital Securities Guarantee Trustee may give notice of to the Holders of the Capital
Securities):

BNY Midwest Trust Company

2 North LaSalle Street, Suite 1020

Chicago, Illinois 60602

Attn: Corporate Trust Administration

	 	(b)	 	if given to the Guarantor, at the Guarantor’s mailing address set forth below
(or such other address as the Guarantor may give notice of to the Holders of the
Capital Securities):

HSBC Finance Corporation

2700 Sanders Road

Prospect Heights, IL 60070

Attn: Treasurer

	 	(c)	 	if given to any holder of Capital Securities, at the address set forth on the
books and records of the Issuer.

     All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.

Section 9.4 Benefit.

     This Guarantee Agreement is solely for the benefit of the Holders of the Capital Securities
and subject to Section 3.1(a) is not separately transferable from the Capital Securities.

Section 9.5 Governing Law.

     THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS.

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     THIS GUARANTEE AGREEMENT is executed as of the day and year first above written.

	 	 	 	 	 
	 	HSBC FINANCE CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BNY MIDWEST TRUST COMPANY,

not in its individual capacity but

solely as Capital Securities Guarantee Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

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