TIDM99HH
RNS Number : 5173U
HSBC Bank Middle East Limited
12 July 2018
INFORMATION MEMORANDUM
HSBC Bank Middle East Limited
(a company limited by shares incorporated in the Dubai
International Financial Centre)
as Issuer
U.S.$ 7,000,000,000 DEBT ISSUANCE PROGRAMME
On 16 November 2004, HSBC Bank Middle East Limited (the
"Issuer") established a Debt Issuance Programme which is described
in this document (the "Programme") under which notes (the "Notes")
may be issued by the Issuer. This document (the "Information
Memorandum", which expression shall include this document as
amended and supplemented from time to time and all information
incorporated by reference herein) has been prepared for the
purposes of providing disclosure information with regard to the
Notes to be admitted to the Official List of the Irish Stock
Exchange plc, trading as Euronext Dublin ("Euronext Dublin") and
trading on its Global Exchange Market. Euronext Dublin's Global
Exchange Market is not a regulated market for the purposes of
Directive 2014/65/EU (as amended) ("MiFID II"). This Information
Memorandum constitutes listing particulars for the purposes of
listing on Euronext Dublin's Official List and trading on its
Global Exchange Market.
Investors should note that securities to be admitted to Euronext
Dublin's Official List and trading on its Global Exchange Market
will, because of their nature, normally be bought and traded by a
limited number of investors who are particularly knowledgeable in
investment matters.
In relation to any Notes, this Information Memorandum must be
read as a whole and together also with the relevant pricing
supplement (the "Pricing Supplement"). Any Notes issued under the
Programme on or after the date of this Information Memorandum are
issued subject to the provisions described herein. This does not
affect any Notes already in issue.
AN INVESTMENT IN THE NOTES INVOLVES CERTAIN RISKS. SEE PAGE 1
FOR RISK FACTORS.
This Information Memorandum does not constitute a prospectus
under Directive 2003/71/EC (and amendments thereto) and includes
any relevant implementing measure in the Relevant Member State (the
"Prospectus Directive"). Application has been made for this
Information Memorandum to be approved by Euronext Dublin and the
securities to be admitted to Euronext Dublin's Official List and to
trading on its Global Exchange Market. The securities issued under
this Information Memorandum will not be admitted to trading on any
market which is a regulated market for the purposes of MiFID II
and, accordingly, no prospectus is required in connection with the
issuance of the securities described in this document. Offerings or
placements of the Notes under this Information Memorandum will not
be made other than in circumstances in which no obligation arises
for the Issuer or any Dealer to publish a prospectus pursuant to
Article 3 of the Prospectus Directive.
The Notes have not been and will not be registered under the
United States Securities Act of 1933 as amended (the "Securities
Act") or any state securities laws and, unless so registered, may
not be offered or sold within the United States or to, or for the
benefit of U.S. persons as defined in Regulation S under the
Securities Act. The Notes may include Notes in bearer form that are
subject to U.S. tax law requirements.
The Programme also permits Notes to be issued on the basis that
they will not be admitted to listing, trading and/or quotation by
any listing authority, stock exchange and/or quotation system or
will be admitted to listing, trading and/or quotation by such other
or further listing authorities, stock exchanges and/or quotation
systems as may be agreed with the Issuer.
Notes issued under the Programme may be rated. The rating
assigned to an issue of Notes may not be the same as the Issuer's
credit rating generally. A rating is not a recommendation to buy,
sell or hold securities and may be subject to suspension, change or
withdrawal at any time by the assigning rating agency. The rating,
if any, of a certain series of Notes to be issued under the
Programme and/or details of credit ratings applicable to the Issuer
generally may be specified in the relevant Pricing Supplement.
This Information Memorandum includes details of the long--term
and short--term credit ratings assigned to the Issuer by Moody's
Investors Service Limited ("Moody's") and Fitch Ratings Limited
("Fitch"). Each of Moody's and Fitch are established in the
European Economic Area ("EEA") and are registered as credit rating
agencies under Regulation (EU) No 1060/2009, as amended (the "CRA
Regulation"). Each of Moody's and Fitch are included in the list of
credit rating agencies published by the European Securities and
Markets Authority on its website in accordance with the CRA
Regulation.
The Notes are not deposit liabilities of the Issuer but a
structured investment with limited recourse against the Issuer.
Accordingly, payments by Noteholders to the Issuer will not
constitute a bank deposit and nor will they be covered or insured
by any deposit-protection or insurance scheme in any
jurisdiction.
Interest and/or other amounts payable under the Notes may be
calculated by reference to certain reference rates, which may
constitute a benchmark under Regulation (EU) 2016/1011 (the
"Benchmarks Regulation"). If any such reference rate does not
constitute such a benchmark, the relevant Pricing Supplement will
indicate whether or not the administrator thereof is included in
the register of administrators and benchmarks established and
maintained by the European Securities and Markets Authority
("ESMA") pursuant to Article 36 of the Benchmarks Regulation. Not
every reference rate will fall within the scope of the Benchmarks
Regulation. Furthermore transitional provisions in the Benchmarks
Regulation may have the result that the administrator of a
particular benchmark is not required to appear in the register of
administrators and benchmarks at the date of the relevant Pricing
Supplement. The registration status of any administrator under the
Benchmarks Regulation is a matter of public record and, save where
required by applicable law, the Issuer does not intend to update
any Pricing Supplements to reflect any change in the registration
status of the administrator.
Programme Arranger and Dealer
HSBC
12 July 2018
IMPORTANT NOTICES
The Issuer accepts responsibility for the information contained
in this Information Memorandum. To the best of the knowledge and
belief of the Issuer, which has taken all reasonable care to ensure
that such is the case, the information contained in this
Information Memorandum is in accordance with the facts and does not
omit anything likely to affect the import of such information.
The language of this Information Memorandum is English. Certain
legislative references and technical terms have been cited in their
original language in order that the correct technical meaning may
be ascribed to them under applicable law.
The dealer named under "Subscription and Sale" below (the
"Dealers", which expression shall include any additional dealers
appointed under the Programme from time to time) and The Law
Debenture Trust Corporation p.l.c. (the "Trustee", which expression
shall include any successor to The Law Debenture Trust Corporation
p.l.c. as trustee under the trust deed dated 16 November 2004
between, inter alios, the Issuer and the Trustee (such trust deed
as last modified and restated by a supplemental trust deed dated 12
July 2018 and as further modified and/or supplemented and/or
restated from time to time, the "Trust Deed")) have not separately
verified the information contained herein. Accordingly, no
representation, warranty or undertaking, express or implied, is
made and no responsibility is accepted by the Dealers or the
Trustee as to the accuracy or completeness of the information
contained in this Information Memorandum or any document
incorporated by reference herein or any further information
supplied in connection with any Notes. The Dealers and the Trustee
accept no liability in relation to this Information Memorandum or
its distribution or with regard to any other information supplied
by or on behalf of the Issuer.
No person is or has been authorised to give any information or
to make any representation not contained in or not consistent with
this Information Memorandum and, if given or made, such information
or representation must not be relied upon as having been authorised
by the Issuer, the Trustee or any of the Dealers.
This Information Memorandum is not intended to provide the basis
of any credit or other evaluation and should not be considered as a
recommendation by the Issuer, the Trustee or any of the Dealers
that any recipient of this Information Memorandum should subscribe
for or purchase any of the Notes. Each investor contemplating
subscribing for or purchasing Notes should make its own independent
investigation of the financial condition and affairs, and its own
appraisal of the creditworthiness, of the Issuer. No part of this
Information Memorandum constitutes an offer or invitation by or on
behalf of the Issuer, the Trustee or the Dealers or any of them to
any person to subscribe for or to purchase any of the Notes.
This Information Memorandum has been prepared on the basis that
any offer of Notes in any Member State of the EEA which has
implemented the Prospectus Directive (each, a "Relevant Member
State") will be made pursuant to an exemption under the Prospectus
Directive, as implemented in that Relevant Member State, from the
requirement to publish a prospectus for offers of Notes.
Accordingly any person making or intending to make an offer in that
Relevant Member State of Notes which are the subject of an
offering/placement contemplated in this Information Memorandum as
completed by a Pricing Supplement in relation to the offer of those
Notes may only do so: (i) in circumstances in which no obligation
arises for the Issuer or any Dealer to publish a prospectus
pursuant to Article 3 of the Prospectus Directive or (ii) by way of
a prospectus supplement pursuant to Article 16 of the Prospectus
Directive, in each case, in relation to such offer. Neither the
Issuer nor any Dealer have authorised, nor do they authorise, the
making of any offer of Notes in circumstances in which an
obligation arises for the Issuer or any Dealer to publish or
supplement a prospectus for such offer.
Neither the delivery of this Information Memorandum nor any
Pricing Supplement nor the offering, sale or delivery of any Notes
shall, in any circumstances, create any implication that there has
been no change in the affairs of the Issuer since the date hereof,
or that the information contained in this Information Memorandum is
correct at any time subsequent to the date hereof or that any other
written information delivered in connection herewith or therewith
is correct as of any time subsequent to the date indicated in such
document. The Dealers and the Trustee expressly do not undertake to
review the financial condition or affairs of the Issuer or its
subsidiary undertakings during the life of the Programme. Investors
should review, inter alia, the most recent consolidated financial
statements of the Issuer when evaluating the Notes or an investment
therein.
It should be remembered that the price of securities and the
income from them can go down as well as up. If you are in any doubt
about the contents of this Information Memorandum you should
consult your stockbroker, bank manager, solicitor, accountant, tax
or other financial adviser.
The distribution of this Information Memorandum and the offer or
sale of the Notes may be restricted by law in certain
jurisdictions. Persons into whose possession this Information
Memorandum or any Notes come must inform themselves about, and
observe, any such restrictions. For a description of certain
restrictions on offers, sales and deliveries of Notes and on the
distribution of this Information Memorandum, see "Subscription and
Sale" below.
In this Information Memorandum and in relation to any Notes,
references to the "relevant Dealers" are to whichever of the
Dealers enters into an agreement for the issue of such Notes as
described in "Subscription and Sale" below and references to the
"relevant Pricing Supplement" are to the Pricing Supplement
relating to such Notes.
In this Information Memorandum, there are, in the "Risk Factors"
section below, direct translations into English of characters in
Chinese language. In the event of any discrepancy, the Chinese
language version shall prevail.
All references in this Information Memorandum to "AED" or
"Dirhams" are to the lawful currency of the United Arab Emirates,
to "GBP", "pounds", "Pounds Sterling" and "Sterling" are to the
lawful currency of the United Kingdom, to "$", "dollars", "US$",
"USD" and "U.S. dollars" are to the lawful currency of the United
States of America (the "U.S"), to "EUR", "euro" and "EUR" are to
the lawful currency of the member states of the European Union that
have adopted or adopt the single currency in accordance with the
Treaty establishing the European Community, as amended, to
"Japanese Yen" and "Yen" are to the lawful currency of Japan and to
"Renminbi", "CNY" and "RMB" are to the lawful currency of the
People's Republic of China (excluding the Hong Kong Special
Administrative Region, the Macau Special Administrative Region and
Taiwan) ("PRC") or, in any such case, to any lawful successor
currency from time to time.
STABILISATION
In connection with the issue of any Tranche of Notes, the Dealer
or Dealers (if any) named as the Stabilisation Manager(s) (or
person(s) acting on behalf of any Stabilisation Manager(s)) in the
relevant Pricing Supplement may over-allot notes or effect
transactions with a view to supporting the market price of the
Notes at a level higher than that which might otherwise prevail.
However, stabilisation may not necessarily occur. Any stabilisation
action may begin on or after the date on which adequate public
disclosure of terms of the offer of the relevant Tranche of Notes
is made and, if begun, may cease at any time, but it must end no
later than the earlier of 30 days after the issue date of the
relevant Tranche of Notes and 60 days after the date of the
allotment of the relevant Tranche of Notes. Any stabilisation
action or over-allotment must be conducted by the relevant
Stabilisation Manager(s) (or person(s) acting on behalf of any
Stabilisation Manager(s)) in accordance with all applicable laws
and rules.
The Notes may not be a suitable investment for all investors.
The Notes may be purchased by investors as a way to reduce risk or
enhance yield with an understood, measured, appropriate addition of
risk to their overall portfolios. Each potential investor in the
Notes must determine the suitability of that investment in light of
its own circumstances. In particular, each potential investor
should:
(i) have sufficient knowledge and experience to make a
meaningful evaluation of the Notes, the merits and risks of
investing in the Notes and the information contained or
incorporated by reference in this Information Memorandum or any
applicable supplement;
(ii) have access to, and knowledge of, appropriate analytical
tools to evaluate, in the context of its particular financial
situation, an investment in the Notes and the impact the Notes will
have on its overall investment portfolio;
(iii) have sufficient financial resources and liquidity to bear
all of the risks of an investment in the Notes, including Notes
with principal or profit payable in one or more currencies, or
where the currency for principal or profit payments is different
from the potential investor's currency;
(iv) understand thoroughly the terms of the Notes and be
familiar with the behaviour of any relevant indices and financial
markets; and
(v) be able to evaluate (either alone or with the help of a
financial adviser) possible scenarios for economic, interest rate
and other factors that may affect its investment and its ability to
bear the applicable risks.
The investment activities of certain investors are subject to
legal investment laws and regulations, or review and regulation by
certain authorities. Each potential investor should consult its
legal advisers to determine whether and to what extent: (1) the
Notes are legal investments for it; (2) the Notes can be used as
collateral for various types of borrowing; and (3) other
restrictions apply to its purchase or pledge of any Notes.
Financial institutions should consult their legal advisers or the
appropriate regulators to determine the appropriate treatment of
the Notes under any applicable risk-based capital or similar
rules.
MiFID II PRODUCT GOVERNANCE / TARGET MARKET
The relevant Pricing Supplement in respect of any Notes may
include a legend entitled "MiFID II Product Governance" which will
outline the target market assessment in respect of the Notes and
which channels for distribution of the Notes are appropriate. Any
person subsequently offering, selling or recommending the Notes (a
"distributor") should take into consideration the target market
assessment; however, a distributor subject to MiFID II is
responsible for undertaking its own target market assessment in
respect of any Notes (by either adopting or refining the target
market assessment) and determining appropriate distribution
channels.
A determination will be made in relation to each issue about
whether, for the purpose of the Product Governance rules under EU
Delegated Directive 2017/593 (the "MiFID Product Governance
Rules"), any Dealer subscribing for any Notes is a manufacturer in
respect of such Notes, but otherwise neither the Arranger nor the
Dealers nor any of their respective affiliates will be a
manufacturer for the purpose of the MiFID Product Governance
Rules.
PRIIPs REGULATION / IMPORTANT - EEA RETAIL INVESTORS
If the relevant Pricing Supplement in respect of any Notes
include a legend entitled "Prohibition of Sales to EEA Retail
Investors", the Notes are not intended to be offered, sold or
otherwise made available to, and should not be offered, sold or
otherwise made available to, any retail investor in the EEA. For
these purposes, a retail investor means a person who is one (or
more) of: (i) a retail client as defined in point (11) of Article
4(1) of MiFID II; (ii) a customer within the meaning of Directive
2002/92/EC (as amended) ("IMD"), where that customer would not
qualify as a professional client as defined in point (10) of
Article 4(1) of MiFID II; or (iii) not a qualified investor as
defined in the Prospectus Directive. Consequently, no key
information document required by Regulation (EU) No 1286/2014 (the
"PRIIPs Regulation") for offering or selling the Notes or otherwise
making them available to retail investors in the EEA has been
prepared and therefore offering or selling the Notes or otherwise
making them available to any retail investor in the EEA may be
unlawful under the PRIIPs Regulation.
NOTICE TO RESIDENTS OF THE KINGDOM OF SAUDI ARABIA
This Information Memorandum may not be distributed in the
Kingdom of Saudi Arabia except to such persons as are permitted
under the Rules on the Offer of Securities and Continuing
Obligations issued by the Saudi Arabian Capital Market Authority
(the "CMA").
The CMA does not make any representations as to the accuracy or
completeness of this Information Memorandum, and expressly
disclaims any liability whatsoever for any loss arising from, or
incurred in reliance upon, any part of this Information Memorandum.
Prospective purchasers of Notes issued under the Programme should
conduct their own due diligence on the accuracy of the information
relating to the Notes. If a prospective purchaser does not
understand the contents of this Information Memorandum he or she
should consult an authorised financial adviser.
NOTICE TO RESIDENTS OF THE KINGDOM OF BAHRAIN
In relation to investors in the Kingdom of Bahrain, Notes issued
in connection with this Information Memorandum and related offering
documents may only be offered in registered form to existing
account holders and accredited investors as defined by the Central
Bank of Bahrain ("CBB") in the Kingdom of Bahrain where such
investors make a minimum investment of at least US$ 100,000 or any
equivalent amount in another currency or such other amounts as the
CBB may determine.
This Information Memorandum does not constitute an offer of
securities in the Kingdom of Bahrain in terms of Article (81) of
the Central Bank and Financial Institutions Law 2006 (decree Law
No. 64 of 2006). This Information Memorandum and any related
offering documents have not been and will not be registered as a
prospectus with the CBB. Accordingly, no securities may be offered,
sold or made the subject of an invitation for subscription or
purchase nor will this Information Memorandum or any other related
document or material be used in connection with any offer, sale or
invitation to subscribe or purchase securities, whether directly or
indirectly, to persons in the Kingdom of Bahrain, other than to
accredited investors (as such term is defined by the CBB) for an
offer outside the Kingdom of Bahrain.
The CBB has not reviewed, approved or registered this
Information Memorandum or any related offering documents and it has
not in any way considered the merits of the Notes to be offered for
investment, whether in or outside the Kingdom of Bahrain.
Therefore, the CBB assumes no responsibility for the accuracy and
completeness of the statements and information contained in this
Information Memorandum and expressly disclaims any liability
whatsoever for any loss howsoever arising from reliance upon the
whole or any part of the content of this Information
Memorandum.
No offer of Notes will be made to the public in the Kingdom of
Bahrain and this Information Memorandum must be read by the
addressee only and must not be issued, passed to, or made available
to the public generally.
NOTICE TO RESIDENTS OF THE STATE OF QATAR
The Notes have not and will not be offered, delivered or sold,
directly or indirectly, in the State of Qatar (including the Qatar
Financial Centre), except: (a) in compliance with all applicable
laws and regulations of the State of Qatar; and (b) through persons
or corporate entities authorised and licensed to provide investment
advice and/or engage in brokerage activity and/or trade in respect
of foreign securities in the State of Qatar. This Information
Memorandum has not been reviewed or approved by the Qatar Central
Bank, the Qatar Stock Exchange, the Qatar Financial Centre
Regulatory Authority or the Qatar Financial Markets Authority and
is only intended for specific recipients, in compliance with the
foregoing.
HOW TO USE THIS DOCUMENT
This document gives information relating to the Programme, the
Issuer and the various types of Notes issued under the Programme.
Notes issued under the Programme may include, inter alia, Notes
whose return is linked to: currencies ("Currency--Linked Notes");
the credit of one or more entities ("Credit--Linked Notes");
interest rates ("Interest Rate--Linked Notes"); or a security, a
basket of securities or one or more indices or the performance
thereof over a defined period ("Equity--Linked Notes", "Cash Equity
Notes" or "Index--Linked Notes"). Notes may also be linked to more
than one of these variables above.
All investors and prospective investors should read the
information contained in this Information Memorandum, including but
not limited to the sections of this Information Memorandum entitled
"Risk Factors", "Information Incorporated by Reference", "Terms and
Conditions of the Notes", "Pro Forma Pricing Supplement", "Forms of
Notes; Summary of Provisions Relating to the Notes While in Global
Form", "Clearing and Settlement", "Use of Proceeds", "Taxation",
"Subscription and Sale" and "General Information" (the "General
Provisions").
All investors and prospective investors in Currency--Linked
Notes should read the General Provisions, the "Additional Terms and
Conditions relating to Currency--Linked Notes" and the "Product
Description relating to Currency--Linked Notes", together with the
relevant Pricing Supplement for the particular series of
Currency--Linked Notes.
All investors and prospective investors in Interest Rate--Linked
Notes should read the General Provisions, and the "Product
Description relating to Interest Rate--Linked Notes", together with
the relevant Pricing Supplement for the particular series of
Interest Rate--Linked Notes.
All investors and prospective investors in Credit-Linked Notes
should read the General Provisions, the "Additional Terms and
Conditions relating to Credit-Linked Notes (2014 ISDA Credit
Derivatives Definitions Version)" and the applicable section of the
"Product Description relating to Credit-Linked Notes", together
with the relevant Pricing Supplement for the particular series of
Credit-Linked Notes.
All investors and prospective investors in Equity--Linked Notes,
Cash Equity Notes and Index--Linked Notes should read General
Provisions, the "Additional Terms and Conditions relating to
Equity--Linked Notes, Cash Equity Notes and Index--Linked Notes"
and the "Product Description relating to Equity--Linked Notes, Cash
Equity Notes and Index--Linked Notes", together with the relevant
Pricing Supplement for the particular series of Equity--Linked
Notes, Cash Equity Notes or Index--Linked Notes.
CONTENTS
Page
RISK FACTORS
INFORMATION RELATING TO THE ISSUER
INFORMATION INCORPORATED BY REFERENCE.
OVERVIEW OF PROGRAMME PARTIES
TERMS AND CONDITIONS OF THE NOTES
ADDITIONAL TERMS AND CONDITIONS OF THE NOTES
ADDITIONAL TERMS AND CONDITIONS RELATING TO CURRENCY--LINKED
NOTES
ADDITIONAL TERMS AND CONDITIONS RELATING TO EQUITY--LINKED
NOTES, CASH EQUITY NOTES AND INDEX--LINKED NOTES
ADDITIONAL TERMS AND CONDITIONS RELATING TO CREDIT-LINKED NOTES
(2014 ISDA CREDIT DERIVATIVES DEFINITIONS VERSION)
PRO FORMA PRICING SUPPLEMENT
FORMS OF NOTES; SUMMARY OF PROVISIONS RELATING TO THE NOTES
WHILE IN GLOBAL FORM
CLEARING AND SETTLEMENT
PRODUCT DESCRIPTIONS
USE OF PROCEEDS
TAXATION
SUBSCRIPTION AND SALE
GENERAL INFORMATION
INDEX OF DEFINED TERMS
RISK FACTORS
Prospective investors in the Notes should read the entire
Information Memorandum (and where appropriate the relevant Pricing
Supplement). The Issuer believes that the following factors may
affect its ability to fulfil its obligations under the Notes issued
under the Programme. Most of these factors are contingencies which
may or may not occur and the Issuer is not in a position to express
a view on the likelihood of any such contingency occurring.
In addition, factors which the Issuer believes are material for
the purpose of investing in the debt or derivative securities of
the Issuer and assessing the market risks associated with Notes
issued under the Programme are also described below.
The Issuer believes that the factors described below represent
the principal risks relating to the Notes issued under the
Programme, but the value of the Notes may be affected by other
factors which may not be considered significant risks by the Issuer
based on the information currently available to it or which it may
not currently be able to anticipate. The Issuer does not represent
that the statements below regarding the risks of holding any Notes
are exhaustive.
Words and expressions defined in the "Terms and Conditions of
the Notes" below or elsewhere in this Information Memorandum have
the same meanings in this section. Investing in Notes involves
certain risks. Prospective investors should consider, among other
things, the following:
RISKS RELATING TO THE ISSUER
A description of the risk factors relating to the Issuer and its
business and operations that may affect the ability of the Issuer
to fulfil its obligations to the Noteholders in relation to the
Notes issued under the Programme is set out below:
Macroeconomic and geopolitical risk
Current economic and market conditions could materially
adversely affect the Issuer
The Issuer's earnings are affected by global and local economic
and market conditions. In recent years, global markets have
experienced difficult conditions of varying intensity.
As at the date of this Information Memorandum, the global
macroeconomic climate remains volatile. Investor confidence in
international debt and equity markets (and, in turn, the
performance of those markets) could be adversely impacted by recent
political events. In particular, the United Kingdom's "leave" vote
in the June 2016 referendum on its membership of the European Union
("EU") and the election of Donald J. Trump as President of the
United States has resulted in periods of significant under and (as
applicable) over performance in financial markets including, for
example, the strong performance of U.S. equities in the period
since the Trump administration came into office. Additionally, the
impact of "Brexit" on the general political and macro-economic
conditions in the United Kingdom and across the EU is expected to
continue to be significant until the precise terms of the United
Kingdom's exit from the EU become clearer. The recent decision of
the Trump administration to pull the U.S. out of the Joint
Comprehensive Plan of Action on Iran's nuclear programme could have
an impact on the geopolitical environment in the Middle East, North
Africa and Turkey ("MENAT") region.
Movements in global interest rates have also continued to be
unpredictable. The decision of the U.S. Federal Reserve to raise
interest rates in December 2015 for the first time since 2006, and
again in December 2016, March 2017, June 2017, December 2017, March
2018 and June 2018, with further rate rises expected during 2018,
will likely further exacerbate the reduced liquidity environment
and contribute to the prevailing mood of economic uncertainty. Any
slowdown in the global economic environment, together with any
reduction in Governmental spending and the likely impact on the
level of economic activity in Dubai and the United Arab Emirates
("UAE"), may have an adverse effect on the Issuer's credit risk
profile.
At a regional level, and notwithstanding the partial correction
in global crude oil prices through 2016 and 2017 (according to the
OPEC website, the average price of the OPEC Reference Basket was
approximately U.S.$51.67 per barrel for the year ended 31 December
2016 and approximately U.S.$62.06 per barrel for the year ended 31
December 2017), the oil-producing economies of the Gulf
Co-operation Council ("GCC") states, including the UAE, have
continued to be affected by budget deficits, a decrease in fiscal
revenues and consequent lower public spending seen in 2016 and
2017. Government fiscal deficits have resulted in weakened net
asset positions, larger external financing needs and/or continued
lower government spending. This has resulted in the downgrading, or
placing on "creditwatch", of a number of GCC sovereigns including,
particularly, the State of Qatar, the Sultanate of Oman and the
Kingdom of Bahrain.
In the UAE, the prevailing low oil price environment has
stimulated a federal government led policy of rationalisation of
fiscal spending which, in turn, has led to an ongoing
transformation within the UAE economy. The federal government has
scaled back capital transfers to government-related entities, cut
government investment, raised electricity and water tariffs and
removed fuel subsidies.
Further, with effect from 1 January 2018, the federal government
has introduced a value-added tax ("VAT") regime in the UAE at a
rate of 5 per cent as part of a GCC wide agreement. VAT in the UAE
applies on most goods and services. Financial and banking services
are subject to VAT on explicit fees and commission charges. Certain
financial charges are exempt from VAT. Under the UAE VAT regime,
services provided to clients resident outside the GCC will be
subject to 0% VAT whereas services received from foreign vendors
will trigger 5% VAT (following the destination principle). These
significant fiscal reforms have become an integral part of a
broader federal government strategy aimed at reducing fiscal
expenditure generally and fiscal dependency on hydrocarbon related
revenues. When taken in totality with the ongoing oil price
volatility, the diversion of significant fiscal revenues to the
Saudi Arabian led military intervention in the Republic of Yemen
since 2015 and domestic job losses in both the private and public
sectors across the UAE (and particularly within Abu Dhabi), the
impact on the UAE economy since early 2015 has been, and is
expected to continue to be, significant.
Further, and in response to the ongoing volatility through 2015
and 2016, certain regional oil producing countries that have
traditionally "pegged" their domestic currencies to the U.S. dollar
have faced pressure to remove these foreign exchange "pegs". During
2015, each of Kazakhstan, Egypt and Azerbaijan chose to unwind the
U.S. dollar peg of their domestic currencies. Whilst we are not
aware that any GCC country intends on de-pegging (the Central Bank
of the UAE (the "UAE Central Bank") has, as recently as June 2016,
re-iterated its intention to retain the UAE dirham peg against the
U.S. dollar), there remains a risk that any such future de-pegging
by the GCC states (in the event that the current challenging market
conditions or the volatility in global crude oil prices seen since
mid-2014 persist for a prolonged period) may pose a systemic risk
to the regional banking systems by virtue of the inevitable
devaluation of any such de-pegged currency against the U.S. dollar
and the impact this would have on the open cross-currency positions
held by regional banks.
These challenging market conditions have historically resulted
in reduced liquidity, greater volatility, widening of credit
spreads and lack of price transparency in credit and capital
markets. Adverse market conditions have impacted investment markets
both globally and in the MENAT region, including adverse changes
and increased volatility in interest rates and exchange rates and
decreased returns from equity, property and other investments. The
financial performance of the Issuer may be materially and adversely
affected by a worsening of general economic conditions in the
markets in which the Issuer operates, as well as by United States,
European and international trading market conditions and/or related
factors.
Uncertain and at time volatile economic conditions can create a
challenging operating environment for financial services companies
such as the Issuer. In particular the Issuer may face the following
challenges to its operations and operating model in connection with
challenging market conditions:
-- the demand for borrowing from creditworthy customers may
diminish if economic activity slows or remains subdued;
-- if interest rates begin to increase, consumers and businesses
may struggle with the additional debt burden, which could lead to
increased delinquencies, expected credit losses/loan impairment
charges;
-- the Issuer's ability to borrow from other financial
institutions or to engage in funding transactions may be adversely
affected by market disruption;
-- market developments may depress consumer and business
confidence beyond expected levels. If economic growth is subdued,
for example, asset prices and payment patterns may be adversely
affected, leading to greater than expected increases in the
Issuer's delinquencies, default rates, expected credit losses/loan
impairment charges. However, if growth is too rapid, new asset
valuation bubbles could appear, particularly in the real estate
sector, with potentially negative consequences for financial
institutions, such as the Issuer; and
-- a rise in protectionism, including as may be driven by
populist sentiment and structural challenges facing developed
economies, which could contribute to weaker global trade,
potentially affecting the Issuer's traditional lines of business.
If capital flows are increasingly disrupted, some emerging markets
may also impose protectionist measures that could affect financial
institutions and their clients.
The occurrence of any of these events or circumstances could
have a material adverse effect on the Issuer's business, financial
condition, results of operations and prospects, as well as the
Issuer's customers.
The Issuer is subject to political risks in the countries in
which the Issuer operates, including the risk of government
intervention and high levels of indebtedness
The Issuer operates through an international network of
subsidiaries, branches and affiliates. The Issuer's operations are
subject to potential unfavourable political developments (which may
include coups and/or civil wars), currency fluctuations, social
instability and changes in government policies in the countries in
which the Issuer operates and where the Issuer has exposure. In
addition, rising protectionism and the increased trend of using
trade and investment policies as diplomatic tools may also
adversely affect global trade flows.
While the UAE is seen as a relatively stable political
environment, certain other jurisdictions in the Middle East are not
and there is a risk that regional geopolitical instability could
impact the UAE. Instability in the Middle East may result from a
number of factors, including government or military regime change,
civil unrest or terrorism. In particular, since early 2011, there
has been political unrest in a range of countries in the MENAT
region, including Egypt, Algeria, Jordan, Libya, Bahrain, Saudi
Arabia, Yemen, the Republic of Iraq (Kurdistan), Syria, Palestine,
Turkey, Tunisia and Oman.
This unrest has ranged from public demonstrations to, in extreme
cases, armed conflict (including the multinational conflict with
Islamic State (also known as Daesh, ISIS or ISIL)) and the
overthrow of existing leadership and has given rise to increased
political uncertainty across the region. Further, the UAE, along
with other Arab states, is currently participating in the Saudi
Arabian led intervention in the Republic of Yemen which began in
2015 in response to requests for assistance from the Yemeni
government. The UAE is also a member of another Saudi Arabian led
coalition formed in December 2015 to combat Islamic extremism and,
in particular, Islamic State. These situations have caused
significant disruption to the economies of affected countries and
have had a destabilising effect on international oil and gas
prices. In addition, in June 2017, the UAE, along with Saudi
Arabia, Bahrain and Egypt, ended diplomatic ties with the State of
Qatar while in May 2018 the State of Qatar announced a ban on goods
from the UAE, Saudi Arabia, Bahrain and Egypt. Though the effects
of the uncertainty have been varied, it is not possible to predict
the occurrence of events or circumstances such as war or
hostilities, the cessation of diplomatic ties, or the impact of
such occurrences, and no assurance can be given that the UAE would
be able to sustain its current economic growth levels if adverse
political events or circumstances were to occur. Continued
instability affecting the countries in the MENAT region could
adversely impact the UAE, although to date there has been no
significant impact on the UAE.
Any unfavourable political events or developments could result
in deteriorating business, consumer and/or investor confidence
leading to reduced levels of client activity and consequently a
decline in revenues and/or higher costs; foreign exchange losses;
mark to market losses in trading books resulting from adjustments
to credit ratings, share prices and counterparty solvency; or
higher levels of expected credit losses/impairment and rates of
default. Such consequences could have a material adverse effect on
the Issuer's business, its financial condition and prospects, the
results of the Issuer's operations and/or the Issuer's
customers.
The Issuer's financial results are affected by changes in
foreign currency exchange rates
The Issuer prepares its consolidated financial statements in
U.S. dollars, but a substantial portion of the Issuer's assets,
liabilities, revenues and expenses are denominated in other
currencies. Changes in foreign exchange rates may have an effect on
the Issuer's reported income, expenses, cash flows, assets and
liabilities and shareholders' equity and accordingly could have a
material adverse effect on the Issuer's business, its financial
condition and prospects, the results of the Issuer's operations
and/or the Issuer's customers.
Macro-prudential, regulatory and legal risks to the Issuer's
business model
Failure of the Issuer's group parent company or any of the
Issuer's affiliates to adhere to obligations that arose following
the expiry of the deferred prosecution agreement could have a
material adverse effect on the Issuer's results and operations
In December 2012, HSBC Holdings plc ("HSBC Holdings"), the
Issuer's parent company, entered into agreements with U.S. and
United Kingdom government and regulatory agencies regarding past
inadequate compliance with the Bank Secrecy Act, anti-money
laundering ("AML") and sanctions laws. Among those agreements, HSBC
Holdings entered into a five-year deferred prosecution agreement
with, among others, the U.S. Department of Justice ("DoJ") (the
"AML DPA") and HSBC Holdings consented to a cease and desist order
and a civil money penalty order with the Federal Reserve Bank
("FRB"). HSBC Holdings also entered into an agreement with the
Office of Foreign Assets Control ("OFAC") regarding historical
transactions involving parties subject to OFAC sanctions, as well
as an undertaking with the United Kingdom Financial Conduct
Authority (the "FCA") to comply with certain forward-looking AML
and sanctions-related obligations.
Under these agreements, the HSBC Holdings and its consolidated
subsidiaries ("HSBC Group") made payments totalling U.S.$ 1.9
billion to U.S. authorities and undertook various further
obligations, including, among others, to retain an independent
compliance monitor (who is, for FCA purposes, a 'skilled person'
under section 166 of the Financial Services and Markets Act 2000)
to produce annual assessments of the HSBC Group's AML and sanctions
compliance programme (the "Monitor"). Under the cease and desist
order issued by the FRB in 2012, the Monitor also serves as an
independent consultant to conduct annual assessments. In February
2018, the Monitor delivered his fourth annual follow-up review
report.
Through his country-level reviews, the Monitor identified
potential anti-money laundering and sanctions compliance issues
that the HSBC Group is reviewing further with the DoJ, FRB and/or
FCA. In particular, the DoJ is investigating the HSBC Group's
handling of a corporate customer's accounts. In addition, the U.S.
Department of Treasury Financial Crimes Enforcement Network
(FinCEN) as well as the Civil Division of the U.S. Attorney's
Office for the Southern District of New York are investigating the
collection and transmittal of third-party originator information in
certain payments instructed over the HSBC Group's proprietary
payment systems. The FCA is also conducting an investigation into
HSBC Bank plc's compliance with United Kingdom money laundering
regulations and financial crime systems and controls requirements.
The HSBC Group is cooperating with all of these investigations.
In December 2017, the AML DPA expired and the charges deferred
by the AML DPA were dismissed. The Monitor will continue working in
his capacity as a skilled person and independent consultant for a
period of time at the FCA's and FRB's discretion.
The Issuer is subject to a number of legal and regulatory
actions and investigations, the outcomes of which are inherently
difficult to predict
The Issuer faces significant legal and regulatory risks in its
business. See "Unfavourable legislative or regulatory developments,
or changes in the policy of regulators or governments could
materially adversely affect the Issuer" and "Failure of the
Issuer's group parent company or any of the Issuer's affiliates to
adhere to its obligations that arose following the expiry of the
deferred prosecution agreement could have a material adverse effect
on the Issuer's results and operations".
The volume and amount of damages claimed in litigation,
regulatory proceedings and other adversarial proceedings against
financial institutions are increasing for many reasons, including a
substantial increase in the number of regulatory changes taking
place globally, increased media attention and higher expectations
from regulators and the public. In addition, criminal prosecutions
of financial institutions for, among other things, alleged conduct,
breaches of AML and sanctions regulations, anti-trust violations,
market manipulation, aiding and abetting tax evasion, and providing
unlicensed cross-border banking services, have become more
commonplace and may increase in frequency due to increased media
attention and higher expectations from prosecutors and the
public.
The Issuer continues to be subject to a number of material legal
proceedings, regulatory actions and investigations including, for
example in relation to the HSBC Group's historical foreign exchange
sales and trading activities, which concluded with the entry by
HSBC Holdings into a deferred prosecution agreement with the
Criminal Division of the U.S. Department of Justice (the "FX DPA")
(see Note 33 ("Legal proceedings and regulatory matters") on pages
59 to 61 of the 2017 Annual Report and Accounts for further
details). It is inherently difficult to predict the outcome of many
of the legal, regulatory and other adversarial proceedings
involving the Issuer's businesses, particularly those cases in
which the matters are brought on behalf of various classes of
claimants, seek damages of unspecified or indeterminate amounts or
involve novel legal claims. Additionally, potential consequences of
breaching the FX DPA could include the imposition of additional
terms and conditions on the Issuer, an extension of the agreement
or the criminal prosecution of the Issuer, which could, in turn,
entail further financial penalties and collateral consequences.
Moreover, the Issuer and its subsidiary undertakings may face
additional legal proceedings, investigations or regulatory actions
in the future (including criminal), including in other
jurisdictions and/or with respect to matters similar to, or broader
than, the existing legal proceedings, investigations or regulatory
actions.
An unfavourable result in one or more of these proceedings could
result in the Issuer and its subsidiary undertakings incurring
significant expense, substantial monetary damages, loss of
significant assets, other penalties and injunctive relief,
potential regulatory restrictions on the Issuer's business and/or a
negative effect on the Issuer's reputation, any of which could have
a material adverse effect on the Issuer's business, its financial
condition and prospects and/or the results of the Issuer's
operations.
In addition, any prosecution of HSBC Holdings or one or more of
its subsidiaries could result in substantial fines, penalties
and/or forfeitures and could have a material adverse effect on the
Issuer's business, financial condition, results of operations,
prospects and reputation, including the potential loss of key
licences, requirements to exit certain businesses and withdrawal of
funding from depositors and other stakeholders.
Unfavourable legislative or regulatory developments or changes
in the policy of regulators or governments could materially
adversely affect the Issuer
The Issuer's businesses are subject to on-going regulation and
associated regulatory risks, including the effects of changes in
the laws, regulations, policies, guidance, voluntary codes of
practice and their interpretations in the UAE and the other markets
in which the Issuer operates ("Regulations"). These Regulations
include the Dubai International Financial Centre ("DIFC") Law No. 1
of 2004 as amended and the relevant subsidiary regulations of the
Dubai Financial Services Authority (the "DFSA") and the banking
regulations of the countries in which the Issuer operates. This is
particularly so in the current environment, where the Issuer
expects government and regulatory intervention in the banking
sector to remain high for the foreseeable future. Additionally,
many of these changes increasingly have an effect beyond the
country in which they are enacted, as Regulations increasingly have
extra-territorial effect or the Issuer's operations mean that the
Issuer is obliged to give effect to local Regulations on a wider
basis.
Additionally, the Issuer may be indirectly affected by the
impact of regulations to which its counterparties and affiliates
are subject in their respective jurisdictions, to the extent that
such regulations adversely affect counterparties' ability to meet
their contractual obligations to the Issuer in transactions entered
into with the Issuer.
More stringent regulatory requirements, including further
capital, liquidity and funding requirements, and adjustments in the
use of models for measuring risk, together with expected
restrictions on outsourcing and use of data, may adversely affect
elements of the Issuer's business, particularly if capital
requirements are increased and/or the operating model for the
provision of services is required to change to address such
regulatory developments..
Regulations may come into force in the UAE without being made
publicly available until after their implementation date or which
may require the passing of further regulations or the provision of
guidance before it is fully clear how such Regulations will impact
the Issuer's business.
There may be changes in Regulations, or in their interpretation
or enforcement, or in how new Regulations are implemented. Further,
there may be uncertainty and lack of international regulatory
coordination as enhanced supervisory standards are developed and
implemented. These developments are expected to continue to change
the way in which the Issuer is regulated and supervised and could
affect the manner in which the Issuer conducts its business
activities, manages its capital requirements, assesses its risk
management practices, or how the Issuer's group parent company is
structured, all of which could have a material adverse effect on
the Issuer's business, financial condition, results of operations
and prospects.
The Issuer may not manage risks associated with the replacement
of benchmark indices effectively.
The expected replacement of the London Interbank Offered Rate
("LIBOR") and other benchmark rates with alternative benchmark
rates introduces a number of risks for the Issuer, its clients, and
the financial services industry more widely. This includes, but is
not limited to:
-- legal risks, as changes required to documentation for new and
existing transactions may be required;
-- financial risks, arising from any changes in the valuation of
financial instruments linked to benchmark rates;
-- pricing risks, as changes to benchmark indices could impact
pricing mechanisms on some instruments;
-- operational risks, due to the potential requirement to adapt
informational technology systems, trade reporting infrastructure
and operational processes; and
-- conduct risks, relating to communication with potential
impact on customers, and engagement during the transition
period.
The replacement of benchmarks together with the timetable and
mechanisms for implementation have not yet been confirmed by
central banks. Accordingly, it is not currently possible to
determine whether, or to what extent, any such changes would affect
the Issuer. However, the implementation of alternative benchmark
rates may have a material adverse effect on the Issuer's business,
financial condition, results of operations and prospects.
The Issuer is subject to tax-related risks in the countries in
which it operates
The Issuer is subject to the substance and interpretation of tax
laws in all countries in which the Issuer operates and is subject
to routine review and audit by tax authorities in relation thereto.
The Issuer's interpretation or application of these laws may differ
from those of the relevant tax authorities and the Issuer provides
for potential tax liabilities that may arise on the basis of the
amounts expected to be paid to the tax authorities. The amounts
ultimately paid may differ materially from the amounts provided
for, depending on the ultimate resolution of such matters. Changes
to tax law, tax rates and penalties for failing to comply could
have a material adverse effect on the Issuer's business, financial
condition, results of operations and prospects.
Risks related to the Issuer's business operations, governance
and internal control systems including compliance
The delivery of the Issuer's strategic actions is subject to
execution risk
Robust management of critical time-sensitive and
resource-intensive projects is required to effectively deliver the
Issuer's strategic priorities. The Issuer continues to implement a
number of externally driven regulatory programmes and the magnitude
and complexity of the projects required to meet these demands
present heightened execution risk. The cumulative impact of the
collective change initiatives underway within the HSBC Group is
significant and has direct implications on resourcing. In addition,
the completion of these strategic actions is subject to economic
and market conditions, which may be negatively affected as
described under "Macroeconomic and geopolitical risk-Current
economic and market conditions could materially adversely affect
the Issuer". The failure to successfully deliver key strategic
actions or other regulatory programmes could have a significant
impact on the Issuer's business, financial condition, results of
operations and prospects.
These factors could adversely affect the successful delivery of
the Issuer's strategic priorities, as well as have both adverse
financial and reputational implications, all of which could have a
material adverse effect on the Issuer's business, financial
condition, results of operations and prospects.
The Issuer may fail to increase the collaboration and/or the
business synergies required to achieve its growth strategy
Key to achieving the HSBC Group's growth strategy is increasing
the number of HSBC Group products held by the Issuer's customers
through collaboration and driving synergies across its global
businesses to grow revenue and earnings. Key opportunities for
collaborations and to drive business synergies arise amongst the
Issuer's Commercial Banking, Global Banking and Markets and Retail
Banking and Wealth Management business lines (together with the
HSBC Group's private bank, HSBC Private Bank (Suisse) SA), which
are areas where many of the HSBC Group's competitors also focus. In
both instances, this may limit the Issuer's ability to collaborate
across business lines to sell additional products to its customers
or may influence it to sell its products at lower prices, reducing
its net interest income and revenue from its fee-based products. A
failure to deliver the collaboration and/or business synergies
required to achieve its growth strategy could have a material
adverse effect on the Issuer's business, financial condition,
results of operations and prospects.
The Issuer operates in markets that are highly competitive
The Issuer competes with other financial institutions in a
highly competitive industry that continues to undergo significant
changes as a result of financial regulatory reform, as well as,
increased public scrutiny stemming from the financial crisis and
continued challenging economic conditions.
The Issuer targets internationally mobile clients who need
sophisticated global solutions and generally competes on the basis
of the quality of the Issuer's customer service, the wide variety
of products and services that the Issuer can offer its customers
and the ability of those products and services to satisfy the
Issuer's customers' needs, the extensive distribution channels
available for the Issuer's customers, the Issuer's innovation and
its reputation. Continued and increased competition in any one or
all of these areas may negatively affect the Issuer's market share
and/or cause the Issuer to increase its capital investment in its
businesses in order to remain competitive. Additionally, the
Issuer's products and services may not be accepted by its targeted
clients.
In many markets, there is increased competitive pressure to
provide products and services at current or lower prices.
Consequently, the Issuer's ability to reposition or re-price its
products and services from time to time may be limited and could be
influenced significantly by the actions of the Issuer's competitors
who may or may not charge similar fees for their products and
services. Any changes in the types of products and services that
the Issuer offers its customers and/or the pricing for those
products and services could result in a loss of customers and
market share.
Further, new entrants to the market or new technologies could
require the Issuer to spend more to modify or adapt its products to
attract and retain customers. The Issuer may not respond
effectively to these competitive threats from existing and new
competitors, and the Issuer may be forced to increase its
investment in its business to modify or adapt its existing products
and services or develop new products and services to respond to the
Issuer's customers' needs.
As a result, continued or increased competition could have a
material adverse effect on the Issuer's business, its financial
condition and prospects and/or the results of the Issuer's
operations.
The Issuer's operations are highly dependent on the Issuer's
information technology systems, which are subject to failures
resulting from internet crimes, cyber-attacks or otherwise
The reliability and security of the Issuer's information and
technology infrastructure and the Issuer's customer databases are
crucial to maintaining the service availability of banking
applications and processes and to protecting the Issuer's brand.
The proper functioning of the Issuer's payment systems, financial
control, risk management, credit analysis and reporting,
accounting, customer service and other information technology
systems, as well as the communication networks between the Issuer's
branches and main data processing centres, are critical to the
Issuer's operations.
The Issuer is increasingly exposed to fraudulent and criminal
activities as a result of increased usage of internet and mobile
services by customers. The Issuer also faces the risk of breakdowns
in processes or procedures and systems failure or unavailability,
and its business is subject to disruption from events that are
wholly or partially beyond its control, such as internet crime and
acts of terrorism.
Critical system failure, any prolonged loss of service
availability or any material breach of data security, particularly
involving confidential customer data, could cause serious damage to
the Issuer's ability to service its clients, could breach
regulations under which the Issuer operates and cause long-term
damage to the Issuer's business and brand that could have a
material adverse effect on the Issuer's business, financial
condition, results of operations and prospects.
Moreover, the threat from internet crimes and cyber-attacks
remains a concern for the Issuer's organisation and failure to
protect the Issuer's operations from future internet crime or
cyber-attacks may result in financial loss and/or loss of customer
data or other sensitive information that could undermine the
Issuer's reputation and its ability to attract and keep customers.
They may also lead to potentially large costs to rectify any issues
and reimburse losses incurred by customers.
Ransomware and distributed denial of service ("DDOS") attacks
are an increasingly dominant threat across the industry. In 2017,
the HSBC Group was subjected to a small number of DDOS attacks on
its external-facing websites across the HSBC Group and no
ransomware attacks.
Although cyber-attacks in 2017 had a negligible effect on the
Issuer's customers, services or firm, due to the increasing
sophistication of cyber-attacks there is the potential for future
attacks to have a material adverse effect on the Issuer's business,
financial condition, results of operations and prospects.
The Issuer's risk management measures may not be successful
The management of risk is an integral part of all the Issuer's
activities. Risk constitutes the Issuer's exposure to uncertainty
and the consequent variability of return. Specifically, risk
equates to the adverse effect on profitability or financial
condition arising from different sources of uncertainty, including
retail and wholesale credit risk, market risk, non-traded market
risk, operational risk, insurance risk, concentration risk,
liquidity and funding risk, litigation risk, conduct risk,
reputational risk, strategic risk, pension obligation risk and
regulatory risk. While the Issuer employs a broad and diversified
set of risk monitoring and mitigation techniques, such methods and
the judgements that accompany their application cannot anticipate
every unfavourable event or the specifics and timing of every
outcome. Failure to manage risks appropriately could have an
adverse effect on the Issuer's income, cash flows and the value of
assets and liabilities, which could have a material adverse effect
on the Issuer's business, financial condition, results of
operations, prospects and reputation.
Operational risks are inherent in the Issuer's business
The Issuer is exposed to many types of operational risk that are
inherent in banking operations, including fraudulent and other
criminal activities (both internal and external), breakdowns in
processes or procedures and systems failure or non-availability.
These risks are also present when the Issuer relies on outside
suppliers or vendors to provide services to the Issuer and the
Issuer's customers. These operational risks could have a material
adverse effect on the Issuer's business, its financial condition
and prospects and/or the results of the Issuer's operations.
The Issuer's operations are subject to the threat of fraudulent
activity
Fraudsters may target any of the Issuer's products, services and
delivery channels, including lending, internet banking, payments,
bank accounts and cards. This may result in financial loss to the
Issuer, an adverse customer experience, reputational damage and
potential regulatory action depending on the circumstances of the
event. Any manifestation of such risks could have a material
adverse effect on the Issuer's business, its financial condition
and prospects and/or the results of the Issuer's operations.
The Issuer's operations are subject to disruption from the
external environment
The Issuer operates in many geographic locations that are
subject to events outside the Issuer's control. These events may be
acts of God such as natural disasters and epidemics, geopolitical
risks including acts of terrorism, political instability and social
unrest and infrastructure issues such as transport or power
failure. These events may give rise to disruption to the Issuer's
services and/or result in physical damage and/or loss of life,
which could have a material adverse effect on the Issuer's
business, its financial condition and prospects and/or the results
of the Issuer's operations.
The Issuer may fail to adequately manage its third party
suppliers and service providers
The Issuer places reliance on third-party firms for the supply
of goods and services or outsourcing of certain activities. There
has been increased scrutiny by global regulators of the use by
financial institutions of third-party service providers, including
how outsourcing decisions are made and how the key relationships
are managed. For instance, we anticipate the UAE regulator
introducing regulations on the use of data and outsourcing more
generally, which may impact the way certain services are provided
by the Issuer in the MENAT region. As these regulations are not in
force yet, it is difficult to quantify what impact they will have
on the Issuer and its business. Risks arising from the use of
third-party service providers may be less transparent and therefore
more challenging to manage or influence. The risk of inadequate
management of risks associated with the use of significant
third-party service providers could lead to a failure to meet the
Issuer's operational and business requirements which, in turn, may
involve regulatory breaches, financial crime, loss of confidential
information, civil or monetary penalties or damage both to
shareholder value and to the Issuer's reputation/brand image. Any
such failure could have a material adverse effect on the Issuer's
business, its financial condition and prospects and/or the results
of the Issuer's operations.
The Issuer's data management policies and processes may not be
sufficiently robust.
Critical business processes undertaken by the Issuer rely on
large volumes of data from a number of different systems and
sources. If data governance (including retention and deletion),
data quality and data architecture policies and procedures are not
sufficiently robust, manual intervention, adjustments and
reconciliations may be required to reduce the risk of error in
reporting to senior management or regulators. Inadequate policies
and processes may also affect the Issuer's ability to use data to
service customers more effectively and/or improve our product
offering. Moreover, financial institutions that fail to comply with
the principles for effective risk data aggregation and risk
reporting as set out by the Basel Committee on Banking Supervision
by the required deadline may face supervisory measures. In
addition, failure to comply with any new global or regional data
privacy requirements, where applicable, may result in regulatory
sanctions. Any of these inadequacies or failures could have a
material adverse effect on the Issuer's business, financial
condition, results of operations and prospects.
The Issuer's operations have inherent reputational risk
Reputational risk is the risk of failure to meet stakeholder
expectations as a result of any event, behaviour, action or
inaction, either by the Issuer, its employees or those with whom it
is associated. This might cause stakeholders to form a negative
view of the Issuer and the HSBC Group and may result in financial
or non-financial effects or loss of confidence in the Issuer.
Reputational risk relates to stakeholders' perceptions, whether
fact-based or otherwise. Stakeholders' expectations change
constantly and so reputational risk is dynamic and varies between
geographical regions, groups and individuals. Any material lapse in
standards of integrity, compliance, customer service or operating
efficiency may represent a potential reputational risk.
Modern technologies, in particular online social media channels
and other broadcast tools which facilitate communication with large
audiences in short time frames and with minimal costs, may
significantly enhance and accelerate the impact of damaging
information and allegations. Reputational risk could also arise
from negative public opinion about the actual, or perceived, manner
in which the Issuer conducts its business activities, or financial
performance, as well as actual or perceived practices in the
banking and financial services industry generally. Negative public
opinion may adversely affect the Issuer's ability to keep and
attract customers, in particular, corporate and retail depositors,
and retain and motivate staff, and could have a material adverse
effect on the Issuer's business, its financial condition and
prospects and/or the results of the Issuer's operations.
The Issuer is subject to the risk of employee misconduct and
non-compliance with regulations and policies
The Issuer's businesses are exposed to risk from potential
non-compliance with regulations and policies, including the "HSBC
Values" (the HSBC Values describe how the Issuer's employees should
interact with each other and with customers, regulators and the
wider community, see "Risk Management" on pages 66 to 67 of the
Issuer group parent company's Annual Report and Accounts for the
year ended 31 December 2017
(https://www.hsbc.com/investor-relations/group-results-and-reporting/annual-report)
for further details) and related behaviours, and employee
misconduct, such as fraud or negligence, all of which could result
in regulatory sanctions or reputational or financial harm. In
recent years, a number of multinational financial institutions have
suffered material losses due to the actions of 'rogue traders' or
other employees. It is not always possible to deter employee
misconduct and the precautions the Issuer takes to prevent and
detect this activity may not always be effective. Any manifestation
of this risk could have a material adverse effect on the Issuer's
business, financial condition, results of operations and
prospects.
Failure of the Issuer to recruit, retain and develop appropriate
senior management and skilled personnel could have a material
adverse effect on the Issuer
The cumulative workload arising from a regulatory reform
programme that is often extra-territorial and still evolving is
hugely consumptive of human resources, placing increasingly complex
and conflicting demands on a workforce where the required expert
capabilities are in short supply and globally mobile.
Moreover, certain regulatory changes may affect the Issuer's
ability to attract and/or retain employees. For example, changes in
remuneration policy and practice resulting from the new regulations
under EU Capital Requirements Directive and Regulation ("CRD IV")
apply globally to all employees of the HSBC Group. The key change
is the application of a cap on variable pay that can be paid to any
"material risk-taker" (being employees who have been identified as
having a material impact on the institution's risk profile). This
presents significant challenges given that, as a worldwide
business, a significant number of the HSBC Group's material
risk-takers are based outside the EU. In addition, the policy
statement issued by the United Kingdom Prudential Regulation
Authority (the "PRA") extends its Remuneration Code to require all
PRA authorised firms to apply clawback to vested/paid variable
remuneration on an HSBC Group-wide basis for any material risk
takers receiving variable pay from 1 January 2015. Furthermore, the
PRA and the FCA have introduced in the United Kingdom the Senior
Managers and Certification regimes and the related Rules of Conduct
(the detail of which is currently subject to consultation), which
are intended to set clearer expectations of the accountabilities
and behaviour of both senior and more junior employees. However,
there are a number of uncertainties around the precise impact of
these regimes at present (including on more senior employees, on
non-United Kingdom based employees and on non-executive
directors).
The Issuer's continued success depends in part on the retention
of key members of its management team and wider employee base. The
ability to continue to attract, train, motivate and retain highly
qualified professionals is a key element of the Issuer's strategy.
The successful implementation of the Issuer's growth strategy
depends on the availability of skilled management in each of its
business units, which may depend on factors beyond the Issuer's
control, including economic, market and regulatory conditions.
If one of the Issuer's business units fails to staff its
operations appropriately or loses one or more of its key senior
executives, and fails to successfully replace them in a
satisfactory and timely manner, or fails to implement successfully
the organisational changes required to support the Issuer's
business, this could place the Issuer at a significant competitive
disadvantage and prevent the Issuer from successfully implementing
its strategy, which could have a material adverse effect on the
Issuer's business, its financial condition and prospects and/or the
results of the Issuer's operations
The Issuer's financial statements are based in part on
judgments, estimates and assumptions that are subject to
uncertainty
The preparation of financial statements requires management to
make judgments, estimates and assumptions that affect the reported
amounts of assets, liabilities, income and expenses. Estimates,
judgments and assumptions are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. Revisions to accounting estimates are recognised in
the period in which the estimate is revised and in any future
periods affected. Due to the inherent uncertainties in making
estimates, judgments and assumptions, particularly those involving
the use of complex models, actual results reported in future
periods may differ from those reported in prior periods. The
accounting policies deemed critical to the Issuer's results and
financial position, based upon materiality and significant
judgements and estimates, include expected credit losses/impairment
of loans and advances, valuation of intangible assets recognised in
business combinations, valuation of financial instruments and
provisions for liabilities, which constitute critical accounting
estimates and judgements with respect to the Issuer's consolidated
financial statements.
An example of where the inherent uncertainty in making
estimates, judgements and assumptions may cause actual results
reported in future periods to differ from those reported in prior
periods is in relation to the valuation of financial instruments
measured at fair value, which can be subjective, in particular
where models are used that include unobservable inputs. Given the
uncertainty and subjectivity associated with valuing such
instruments, future outcomes may differ materially from those
assumed using information available at the reporting date.
Changes in estimates, judgments or assumptions used in the
preparation of the Issuer's future financial statements from
estimates, judgments or assumptions used in prior periods could
have a material adverse effect on the Issuer's business, its
financial condition and prospects and/or the results of the
Issuer's operations.
The Issuer could incur losses or be required to hold additional
capital as a result of model limitations or failure
The Issuer uses models for a range of purposes in managing its
business, including regulatory capital calculations, stress
testing, credit approvals, calculation of expected credit
losses/loan impairment charges on an IFRS 9 basis, financial crime
and fraud risk management and financial reporting. The Issuer could
face adverse consequences as a result of decisions that may lead to
actions by management, based on models that are poorly developed,
implemented or used, or as a result of the modelled outcome being
misunderstood or the use of such information for purposes for which
it was not designed.
Regulatory scrutiny and supervisory concerns over banks' use of
models is considerable, particularly the internal models and
assumptions used by banks in the calculation of regulatory capital.
If regulatory approval for key capital models is not achieved in a
timely manner, the Issuer could be required to hold additional
capital.
Risks arising from use of models, including reputational, could
have a material adverse effect on the Issuer's business, financial
condition, results of operations and prospects.
Third parties may use the Issuer as a conduit for illegal
activities without the Issuer's knowledge
The Issuer is required to comply with applicable AML laws and
regulations and has adopted various policies and procedures,
including internal control and 'know-your-customer' procedures,
aimed at preventing use of the Issuer's products and services for
the purposes of committing or concealing a financial crime. A major
focus of US and United Kingdom government policy relating to
financial institutions in recent years has been combating money
laundering and enforcing compliance with US and EU economic
sanctions. This focus is reflected in part by agreements between
members of the HSBC Group with US and United Kingdom authorities
relating to various investigations regarding past inadequate
compliance with AML and sanctions laws.
These agreements do not preclude additional enforcement actions
by bank regulatory, governmental or law enforcement agencies or
private litigation. A number of the remedial actions have been
taken as a result of the matters related to HSBC Holdings' expired
U.S. deferred prosecution agreement with the U.S. Department of
Justice, which are intended to ensure that the HSBC Group's
businesses are better protected in respect of these risks. However,
there can be no assurance that these will be completely effective.
Moreover, in relevant situations and where permitted by regulation,
the Issuer may rely upon certain counterparties to maintain and
properly apply their own appropriate AML procedures. While
permitted by regulation, such reliance may not be effective in
preventing third parties from using the Issuer (and the Issuer's
relevant counterparties) as a conduit for money laundering,
including illegal cash operations, without the Issuer's (and its
relevant counterparties') knowledge. Becoming a party to money
laundering, association with, or even accusations of being
associated with, money laundering will damage the Issuer's
reputation and could make it subject to fines, sanctions and/or
legal enforcement. Any one of these outcomes could have a material
adverse effect on the Issuer's business, financial condition,
results of operations and prospects.
The Issuer has significant exposure to counterparty risk
The Issuer is exposed to counterparties that are involved in
virtually all major industries, and the Issuer routinely executes
transactions with counterparties in financial services, including
brokers and dealers, commercial banks, investment banks, mutual and
hedge funds, and other institutional clients. Many of these
transactions expose the Issuer to credit risk in the event of
default by its counterparty or client. The Issuer's ability to
engage in routine transactions to fund its operations and manage
its risks could be materially adversely affected by the actions and
commercial soundness of other financial services institutions.
Financial institutions are necessarily interdependent because of
trading, clearing, counterparty or other relationships. As a
consequence, a default by, or decline in market confidence in,
individual institutions, or anxiety about the financial services
industry generally, can lead to further individual and/or systemic
difficulties, defaults and losses.
Where bilateral counterparty risk has been mitigated by taking
collateral, the Issuer's credit risk may remain high if the
collateral the Issuer holds cannot be realised or has to be
liquidated at prices which are insufficient to recover the full
amount of its loan or derivative exposure. There is a risk that
collateral cannot be realised, including situations where this
arises due to a change of law that may affect the Issuer's ability
to foreclose on collateral or otherwise enforce contractual
rights.
The Issuer also has limited credit exposure arising from
mitigants such as credit default swaps ("CDSs"), and other credit
derivatives, each of which is carried at fair value. The risk of
default by counterparties to CDSs and other credit derivatives used
as mitigants impacts on the fair value of these instruments
depending on the valuation and the perceived credit risk of the
underlying instrument against which protection has been purchased.
Any adjustments or fair value changes could have a material adverse
effect on the Issuer's business, its financial condition and
prospects and/or the results of the Issuer's operations.
Market fluctuations may reduce the Issuer's income or the value
of its portfolios
The Issuer's businesses are inherently subject to risks in
financial markets and in the wider economy, including changes in,
and increased volatility of, interest rates, inflation rates,
credit spreads, foreign exchange rates, commodity, equity, bond and
property prices and the risk that the Issuer's customers act in a
manner inconsistent with its business, pricing and hedging
assumptions.
Market movements will continue to significantly affect the
Issuer in a number of key areas. For example, banking and trading
activities are subject to interest rate risk, foreign exchange
risk, inflation risk and credit spread risk. Changes in interest
rate levels, interbank spreads over official rates, yield curves
and spreads affect the interest rate spread realised between
lending and borrowing costs. A declining or low interest rate
environment could increase prepayment activity which reduces the
weighted average lives of the Issuer's interest-earning assets and
could have a material adverse effect on the Issuer. The potential
for future volatility and margin changes remains. Competitive
pressures on fixed rates or product terms in existing loans and
deposits sometimes restrict the Issuer's ability to change interest
rates applying to customers in response to changes in official and
wholesale market rates.
It is difficult to predict with any accuracy changes in market
conditions, and such changes could have a material adverse effect
on the Issuer's business, its financial condition and prospects
and/or the results of the Issuer's operations.
The Issuer may experience periods of reduced liquidity or be
unable to raise funds, each of which is essential to the Issuer's
businesses
The Issuer's ability to borrow on a secured or unsecured basis
and the cost of doing so can be affected by increases in interest
rates or credit spreads, the availability of credit, regulatory
requirements relating to liquidity or the market perceptions of
risk relating to the Issuer or the banking sector, including the
Issuer's perceived or actual creditworthiness.
Current accounts and savings deposits payable on demand or at
short notice form a significant part of the Issuer's funding, and
the Issuer places considerable importance on maintaining their
stability. For deposits, stability depends upon preserving investor
confidence in the Issuer's capital strength and liquidity, and on
comparable and transparent pricing. Although deposits have been,
over time, a stable source of funding, this may not continue.
The Issuer also accesses wholesale markets in order to align
asset and liability maturities and currencies and to maintain a
presence in local markets. An inability to obtain financing in the
unsecured long-term or short-term debt capital markets, or to
access the secured lending markets, on acceptable terms or at all,
could have a substantial adverse effect on the Issuer's liquidity.
Unfavourable macroeconomic developments, market disruptions or
regulatory developments may increase the Issuer's funding costs or
challenge its ability to raise funds to support or expand its
businesses, materially adversely affecting the Issuer's business,
its financial condition and prospects and/or results of the
Issuer's operations.
If the Issuer is unable to raise funds through deposits and/or
in the capital markets, the Issuer's liquidity position could be
adversely affected and the Issuer might be unable to meet deposit
withdrawals on demand or at their contractual maturity, to repay
borrowings as they mature, to meet the Issuer's obligations under
committed financing facilities and insurance contracts, or to fund
new loans, investments and businesses. The Issuer may need to
liquidate unencumbered assets to meet its liabilities. In a time of
reduced liquidity, the Issuer may be unable to sell some of its
assets, or it may need to sell assets at reduced prices, which in
either case could have a material adverse effect on the Issuer's
business, its financial condition and prospects and/or the results
of the Issuer's operations.
Any reduction in the credit rating assigned to the Issuer, any
subsidiaries of the Issuer or any of their respective debt
securities could increase the cost or decrease the availability of
the Issuer's funding and adversely affect the Issuer's liquidity
position and interest margins
As at the date of this Information Memorandum, the Issuer has
been assigned the following long term and short term credit ratings
(respectively) by Moody's: A3 (stable) and P-2; and the following
long term and short term credit ratings (respectively) by Fitch:
AA- (stable) and F1+. Credit ratings affect the cost and other
terms upon which the Issuer is able to obtain market funding.
Rating agencies regularly evaluate the Issuer and certain of its
subsidiaries, as well as their respective debt securities. Their
ratings are based on a number of factors, including their
assessment of the relative financial strength of the Issuer or of
the relevant entity, as well as conditions affecting the financial
services industry generally. There can be no assurance that the
rating agencies will maintain the Issuer's or the relevant entity's
current ratings or outlook. For example, in 2017, the Issuer's
short term credit rating provided by Moody's was downgraded from A2
(negative) to A3 (stable) following a similar downgrade to the
short term credit rating of HSBC Holdings by Moody's.
Any such reductions in these ratings and outlook could increase
the cost of the Issuer's funding, limit access to capital markets
and require additional collateral to be placed and, consequently,
materially adversely affect the Issuer's interest margins and/or
the Issuer's liquidity position, which in turn could have a
material adverse effect on the Issuer's business, financial
condition, results of operations and prospects.
The Issuer may experience adverse changes in the credit quality
of the Issuer's borrowers
Risks arising from changes in credit quality and the
recoverability of loans and amounts due from borrowers and
counterparties (for example, reinsurers and counterparties in
derivative transactions) are inherent in a wide range of the
Issuer's businesses. Adverse changes in the credit quality of the
Issuer's borrowers and counterparties arising from a general
deterioration in economic conditions or systemic risks in the
financial systems could reduce the recoverability and value of the
Issuer's assets and require an increase in the Issuer's expected
credit losses/loan impairment charges.
The Issuer estimates and recognises expected credit
allowances/impairment allowances for credit losses inherent in the
Issuer's credit exposure. This process, which is critical to the
Issuer's results and financial condition, requires difficult,
subjective and complex judgements, including forecasts of how these
economic conditions might impair the ability of the Issuer's
borrowers to repay their loans and the ability of other
counterparties to meet their obligations. As is the case with any
such assessments, the Issuer may fail to estimate accurately the
effect of factors that the Issuer identifies or fails to identify
relevant factors. Further, the information the Issuer uses to
assess the creditworthiness of its counterparties may be inaccurate
or incorrect. Any failure by the Issuer to accurately estimate the
ability of the Issuer's counterparties to meet their obligations
could result in significant losses for the Issuer which have not
been provided for. Such losses may have a material adverse effect
on the Issuer's business, its financial condition and prospects
and/or the results of the Issuer's operations.
Changes in accounting standards may have a material impact on
how the Issuer reports its financial results and financial
condition.
The Issuer prepares its financial statements in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB"), including
interpretations issued by the IFRS Interpretations Committee, and
as endorsed by the EU. From time to time, the IASB or the IFRS
Interpretations Committee may issue new accounting standards or
interpretations which could materially impact how the Issuer
reports and discloses its financial results and financial condition
as well as affect the calculation of its capital ratios, including
the common equity tier 1 capital ratio. The Issuer could also be
required to apply new or revised standards retrospectively,
resulting in the Issuer restating prior period financial statements
in material amounts.
For example, IFRS 9, which the Issuer adopted from 1 January
2018, increased impairment charges to reflect expected credit
losses and may cause expected credit losses/impairment charges to
be more volatile. The adoption of IFRS 9 reduced net assets of the
Issuer as at 1 January 2018 by US$ 106 million, due to impairment
reducing net assets by US$ 117 million, net of deferred tax of US$
11 million.
RISKS RELATING TO THE NOTES
A wide range of Notes may be issued under the Programme. The
Issuer may issue Notes with principal and/or interest determined by
reference to one or more variables such as an index or formula,
changes in the prices of securities or commodities, movements in
currency exchange rates, movements in interest rates, movements in
levels of indices, the credit of one or more entities or other
factors (each, a "Relevant Factor" and each underlying security,
commodity, currency or other asset being "Reference Asset(s)"). A
number of these Notes may have features which contain particular
risks for prospective investors. Set out below is a description of
some of the risks that should be taken into consideration by
prospective investors in such Notes:
Dual Currency Notes
The Issuer may issue Notes with principal or interest payable in
one or more currencies which may be different from the currency in
which the Notes are denominated. Potential investors should be
aware that:
(i) the market price of such Notes may be very volatile;
(ii) they may receive no interest;
(iii) payment of principal or interest may occur at a different
time or in a different currency than expected; and
(iv) they may lose all or a substantial portion of their principal.
Subordinated Notes
Subordinated Notes are unsecured and subordinated obligations of
the Issuer. In the event that a particular Tranche of Notes is
specified as subordinated in the relevant Pricing Supplement and
the Issuer is declared insolvent and a winding up is initiated, the
Issuer will be required to pay the holders of senior debt and meet
its obligations to all its other creditors (including unsecured
creditors but excluding any obligations in respect of subordinated
debt) in full before it can make any payments on the relevant
Notes. If this occurs, the Issuer may not have enough assets
remaining after these payments to pay amounts due under the
relevant Subordinated Notes.
Any obligation of the Issuer to pay interest on Subordinated
Notes may be suspended in certain circumstances.
Where any Subordinated Notes form part of the regulatory capital
of the Issuer, no repayment of such Notes will be made without the
prior consent of the Dubai Financial Services Authority and, if
required in respect of its supervision of the HSBC Group, the
United Kingdom Prudential Regulation Authority (or any successor
authority/ies in its/their function as the supervisor of authorised
institutions).
Fixed/Floating Rate Notes
Fixed/Floating Rate Notes may bear interest at a rate that the
Issuer may elect to convert from a fixed rate to a floating rate,
or from a floating rate to a fixed rate. The Issuer's ability to
convert the interest rate will affect the secondary market and the
market value of the Notes since the Issuer may be expected to
convert the rate when it is likely to produce a lower overall cost
of borrowing. If the Issuer converts from a fixed rate to a
floating rate, the spread on the Fixed/Floating Rate Notes may be
less favourable than then prevailing spreads on comparable Floating
Rate Notes tied to the same reference rate. In addition, the new
floating rate at any time may be lower than the rates on other
Notes. If the Issuer converts from a floating rate to a fixed rate,
the fixed rate may be lower than then prevailing rates on its
Notes.
Notes issued at a substantial discount or premium
The market values of securities issued at a substantial discount
to or premium above their principal amount tend to fluctuate more
in relation to general changes in interest rates than do prices for
conventional interest--bearing securities. Generally, the longer
the remaining term of the securities, the greater the price
volatility.
In certain circumstances a portion of payments made on or with
respect to Notes may be subject to U.S. reporting obligations
which, if not satisfied, may require U.S. tax to be withheld
Pursuant to certain provisions of the U.S. Internal Revenue Code
of 1986, commonly known as "FATCA", a "foreign financial
institution" may be required to withhold on certain payments it
makes ("foreign passthru payments") to persons that fail to meet
certain certification, reporting, or related requirements. The
Issuer is a foreign financial institution for these purposes. A
number of jurisdictions (including the UAE) have entered into, or
have agreed in substance to, intergovernmental agreements (each an
"IGA") with the United States to implement FATCA, which modify the
way in which FATCA applies in their jurisdictions. Under the
provisions of IGAs as currently in effect, a foreign financial
institution in an IGA jurisdiction would generally not be required
to withhold under FATCA or an IGA from payments that it makes.
Certain aspects of the application of the FATCA provisions and IGAs
to instruments such as the Notes, including whether withholding
would ever be required pursuant to FATCA or an IGA with respect to
payments on instruments such as the Notes, are uncertain and may be
subject to change. Even if withholding would be required pursuant
to FATCA or an IGA with respect to payments on instruments such as
the Notes, such withholding would not apply prior to 1 January 2019
and Notes treated as debt for U.S. federal income tax purposes
issued on or prior to the date that is six months after the date on
which final regulations defining "foreign passthru payments" are
filed with the U.S. Federal Register generally would be
"grandfathered" for purposes of FATCA withholding unless materially
modified after such date (including by reason of a substitution of
the issuer). However, if additional Notes (as described under
"Terms and Conditions of the Notes - Further Issues") that are not
distinguishable from previously issued Notes are issued after the
expiration of the grandfathering period and are subject to
withholding under FATCA, then withholding agents may treat all
Notes, including the Notes offered prior to the expiration of the
grandfathering period, as subject to withholding under FATCA.
Noteholders should consult their own tax advisers regarding how
these rules may apply to their investment in the Notes. In the
event any withholding would be required pursuant to FATCA or an IGA
with respect to payments on the Notes, no person will be required
to pay additional amounts as a result of the withholding.
U.S. withholding tax may apply to Notes linked to securities
issued by U.S. issuers
Section 871(m) of the U.S. Internal Revenue Code and Treasury
regulations promulgated thereunder ("Section 871(m)") generally
impose a 30 per cent. withholding tax on dividend equivalents paid
or deemed paid to certain persons with respect to certain financial
instruments linked to U.S. equities or indices that include U.S.
equities (such equities and indices, "U.S. Underlying Equities").
Section 871(m) generally applies to instruments that substantially
replicate the economic performance of one or more U.S. Underlying
Equities, as determined upon issuance, based on tests set forth in
the applicable Treasury regulations (such an instrument, a
"Specified Security").
If the security is a Specified Security, the term sheet for the
security will specify the method of Section 871(m) withholding that
will be applied to the security. If the "Dividend Withholding"
approach is specified, the Issuer will report the appropriate
amount of each payment under the security treated as a U.S. source
dividend equivalent payment (including possibly a portion of the
payments at maturity of the security), and the applicable
withholding agent is expected to withhold 30 per cent. from such
payment unless the payee establishes an exemption from or reduction
in the withholding tax. If the "Issuer Withholding" approach is
specified, the Issuer will withhold 30 per cent. of amounts that
are or will be payable under the security (including possibly a
portion of the payments at maturity of the security) that are
potentially treated as U.S.-source dividend equivalent payments.
The Issuer will withhold 30 per cent. of such amounts without
regard to either any applicable treaty rate or the classification
of an investor as a U.S. or non-U.S. investor for U.S. federal
income tax purposes.
If payments to an investor are subject to withholding tax and
the investor believes it is eligible for an exemption from, or
reduced rate of, withholding tax, the investor may be able to claim
a refund of the amounts over-withheld. The Issuer makes no
representation regarding investors' eligibility to claim such a
refund. Furthermore, the Issuer will not be required to pay any
additional amounts as a result of this withholding tax, regardless
of which withholding method is applicable to the securities, and
regardless of whether the investor may have been eligible for an
exemption or reduction in the withholding tax on payments from the
applicable withholding agent.
Investors should consult their tax advisers regarding the
potential application of Section 871(m) to the securities
including, if applicable, the availability of, and process for,
claiming a refund of such withholding tax.
Partly--paid Notes
The Issuer may issue Notes where the issue price is payable in
more than one instalment. Failure to pay any subsequent instalment
could result in an investor losing all of their investment.
Risks relating to Notes generally
There is no active trading market for the Notes
Any Series of Notes issued under the Programme will be new
securities which may not be widely distributed and for which there
is currently no active trading market (even where, in the case of
any particular Tranche, such Tranche is to be consolidated with and
form a single series with a Tranche of Notes which is already
issued). If the Notes are traded after their initial issuance, they
may trade at a discount to their initial offering price, depending
upon prevailing interest rates, the market for similar securities,
general economic conditions and the financial condition of the
Issuer. Although application has been made for the Notes issued
under the Programme to be admitted to the Official List of Euronext
Dublin and to trading on its Global Exchange Market, there is no
assurance as to the development or liquidity of any trading market
for any particular Tranche of Notes.
The Notes may be redeemed prior to maturity
Unless, in the case of any particular Tranche of Notes, the
relevant Pricing Supplement specifies otherwise, in the event that
the Issuer would be obliged to increase the amounts payable in
respect of any Tranche of Notes due to any withholding or deduction
for or on account of, any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed,
levied, collected, withheld or assessed by or on behalf of the DIFC
or the UAE or any political subdivision thereof or any authority
therein or thereof having power to tax, the Issuer may redeem all
outstanding Notes of such Tranche in accordance with the
Conditions.
In addition, if in the case of any particular Tranche of Notes
the relevant Pricing Supplement specifies that the Notes are
redeemable at the Issuer's option in other circumstances the Issuer
may choose to redeem the Notes at times when prevailing interest
rates may be relatively low or when its cost of borrowing is lower
than the interest rate on the Notes. In such circumstances an
investor may not be able to reinvest the redemption proceeds in a
comparable security at an effective interest rate as high as that
of the relevant Notes.
The Issuer shall have the right to terminate its obligations
under the Notes in case of illegality and force majeure as set out
in the Conditions and the Notes may also be terminated in other
circumstances as specified in the relevant Pricing Supplement.
An optional redemption feature of the Notes is likely to limit
their market value. During any period when the Issuer may elect to
redeem Notes, the market value of those Notes generally will not
rise substantially above the price at which they can be redeemed.
This also may be true prior to any redemption period.
Form of Notes
Because the Global Notes (as defined below) may be held by or on
behalf of Euroclear and Clearstream, Luxembourg or lodged with a
sub--custodian for the Central Moneymarkets Unit Service operated
by the Hong Kong Monetary Authority ("CMU", and together with
Euroclear and Clearstream, Luxembourg, the "Clearing Systems"),
investors will have to rely on the procedures of Euroclear and
Clearstream, Luxembourg or, as the case may be, CMU for transfer,
payment and communication with the Issuer.
Notes issued under the Programme may be represented by one or
more temporary global notes (each, a "Temporary Global Note"),
permanent global notes (each, a "Permanent Global Note" and,
together with a Temporary Global Note, the "Global Bearer Notes"),
registered notes in global form ("Global Registered Notes" and
together with the Global Bearer Notes, the "Global Notes"). Such
Global Notes may be deposited with a common depositary for
Euroclear and Clearstream, Luxembourg or, as the case may be,
lodged with a sub--custodian for CMU. As set out in the
circumstances described in this Information Memorandum, interests
in the Global Notes may be exchangeable for definitive Notes. The
Clearing Systems will maintain records of the interests in the
Global Notes. While the Notes are represented by one or more Global
Notes, investors will be able to trade their interests only through
the Clearing Systems.
While Notes are represented by one or more Global Notes, the
Issuer will discharge its payment obligations under such Notes by
making payments to the common depositary for Euroclear and
Clearstream, Luxembourg or, as the case may be, the sub--custodian
for CMU, for distribution to their account holders. A holder of an
interest in a Global Note must rely on the procedures of the
relevant clearing system(s) to receive payments under the relevant
Notes. The Issuer has no responsibility or liability for the
records relating to, or payments made in respect of, interests in
the Global Notes.
Holders of interests in the Global Notes will not have a direct
right to vote in respect of the relevant Notes. Instead, such
holders will be permitted to act only to the extent that they are
enabled by the relevant Clearing System(s) to appoint appropriate
proxies. Similarly, holders of beneficial interests in the Global
Notes will not have a direct right under the Global Notes to take
action against the Issuer in the event of a default under the
relevant Notes but will have to rely upon the exercise by the
Trustee of the rights arising under the Trust Deed.
Definitive Notes may not in all circumstances be printed from
engraved steel plates. If they are not to be so printed, a
statement to that effect will be made in the relevant Pricing
Supplement.
Credit Rating
Tranches of Notes issued under the Programme may be rated or
unrated. A security rating is not a recommendation to buy, sell or
hold securities and may be subject to suspension, reduction or
withdrawal at any time by the assigning rating agency. Any adverse
change in an applicable credit rating could adversely affect the
trading price for the Notes issued under the Programme.
Where an issue of Notes is rated, the rating will be specified
in the relevant Pricing Supplement. A rating is not a
recommendation to buy, sell or hold securities and may be subject
to suspension, reduction or withdrawal at any time by the assigning
rating agency. Whether or not each credit rating applied for in
relation to the relevant Series of Notes will be issued by a credit
rating agency established in the European Union and registered
under Regulation (EC) No 1060/2009 (the "CRA Regulation") will be
disclosed in the Pricing Supplement. In general, European regulated
investors are restricted from using a rating for regulatory
purposes if such rating is not issued by a credit rating agency
established in the European Union and registered under the CRA
Regulation (or is endorsed and published or distributed by
subscription by such a credit rating agency in accordance with the
Regulation) unless the rating is provided by a credit rating agency
operating in the European Union before 7 June 2010 which has
submitted an application for registration in accordance with the
CRA Regulation and such registration is not refused.
In general, European regulated investors are restricted from
using a rating for regulatory purposes if such rating is not issued
or endorsed by a credit rating agency established in the European
Union and registered under the CRA Regulation unless the rating is
provided or endorsed by a credit rating agency operating in the
European Union before 7 June 2010 which has submitted an
application for registration in accordance with the CRA Regulation
and such registration is still pending.
No Third--Party Guarantees
Investors should be aware that no guarantee is or will be given
in relation to the Notes by the shareholders of the Issuer
(including, without limitation, any member of the HSBC group of
companies) or any other person.
Legal investment considerations may restrict certain
investments
The investment activities of certain investors are subject to
investment laws and regulations, and additional review or
regulation, by certain authorities. Each potential investor should
consult its legal advisers to determine whether and to what extent:
(i) Notes are legal investments for it, (ii) Notes can be used as
collateral for various types of borrowing and (iii) other
restrictions apply to its purchase or pledge of any Notes.
Financial institutions should consult their legal advisers or the
appropriate regulators to determine the appropriate treatment of
Notes under any applicable risk--based capital or similar
rules.
Exchange rate risks and exchange controls
The Issuer will pay principal and profit in respect of the Notes
in the Specified Currency (as referred to in the relevant Pricing
Supplement). This presents certain risks relating to currency
conversions if an investor's financial activities are denominated
principally in a currency or currency unit (the "Investor's
Currency") other than the Specified Currency. These include the
risk that exchange rates may significantly change (including
changes due to devaluation of the Specified Currency or revaluation
of the Investor's Currency) and the risk that authorities with
jurisdiction over the Investor's Currency may impose or modify
exchange controls. An appreciation in the value of the Investor's
Currency relative to the Specified Currency would decrease (i) the
Investor's Currency equivalent yield on the Notes, (ii) the
Investor's Currency equivalent value of the principal payable on
the Notes and (iii) the Investor's Currency equivalent market value
of the Notes.
In addition, if "Price Source Disruption" is specified in the
relevant Pricing Supplement as being applicable to any Notes, then
if for any reason a relevant rate of exchange is not available the
Calculation Agent may (i) use alternative sources to determine an
exchange rate (such source as may be determined by the Calculation
Agent), (ii) postpone the determination of the rate of exchange
(subject to a postponement cut-off of 30 calendar days (or such
other number of calendar days as may be specified in the Pricing
Supplement)) after which the Calculation Agent, acting in a
commercially reasonable manner, shall determine its good faith
estimate of the rate and use exchange rates prevailing at later
times or (iii) determine the rate of exchange as the arithmetic
mean of exchange rates provided by leading dealers in the relevant
foreign exchange market.
The exchange rate so determined may differ from the rate which
would have prevailed but for the occurrence of the disruption and
this may lead to a decrease in the amount payable to the investors.
In addition, if the Calculation Agent postpones the determination
of the rate of exchange the due dates for any payments in respect
of the Notes (including, without limitation, the maturity date) may
also be postponed.
If a specified fixing date for the determination of a relevant
exchange rate is an Unscheduled Holiday, the fixing date will be
postponed to the next relevant currency business day which is not
an Unscheduled Holiday (subject to a postponement cut-off of 30
calendar days (or such other number of calendar days as may be
specified in the Pricing Supplement)), after which the Calculation
Agent, acting in a commercially reasonable manner, shall determine
its good faith estimate of the relevant rate.
Government and monetary authorities may impose (as some have
done in the past) exchange controls that could adversely affect an
applicable exchange rate. As a result, investors may receive less
interest or principal than expected, or no interest or
principal.
Sanctions
In relation to the Issuer, any transfer of, or payment in
respect of, a Note or Coupon involving the government of any
country which is at the relevant time the subject of the Office of
Foreign Assets Control of the U.S. Department of Treasury, the
UNSC, the US and the EU sanctions regimes, any person or body
resident in, incorporated in or constituted under the laws of any
such country or exercising public functions in any such country or
any person or body controlled by any of the foregoing or by any
person acting on behalf of the foregoing may be subject to
restrictions pursuant to such sanctions regimes.
Investors may experience some difficulty in enforcing
arbitration awards and foreign judgments against the Issuer in the
DIFC
The payments under the Notes are dependent upon the Issuer
making payments to the investors in the manner contemplated under
the Notes. If the Issuer fails to do so, it may be necessary to
bring an action against the Issuer to enforce its obligations
and/or to claim damages, as appropriate, which may be costly and
time consuming. The Issuer's place of incorporation and head office
is the DIFC and a substantial portion of the assets of the Issuer
are located in the UAE and a number of other jurisdictions outside
the United Kingdom.
Each of the Agency Agreement, the Trust Deed, the Dealer
Agreement and the Notes (as defined herein) are governed by English
law (the "English Law Documents") and (subject to the exercise of
an option to litigate given to certain parties (other than the
Issuer)) the parties to the English Law Documents have agreed to
refer any dispute in relation to such documents to arbitration
under the Arbitration Rules of the LCIA (the "LCIA Rules"). The
seat of such arbitration shall be London, England. Pursuant to an
option to litigate given to certain parties, the Issuer has agreed
to submit to the jurisdiction of the courts of England in respect
of any dispute arising out of or in connection with the English Law
Documents.
Pursuant to Article 13 of the DIFC Law No. 10 of 2005 (as
amended and restated) (Law relating to the application of DIFC
Laws) (Amended and Restated) (the "Application Law"), the parties'
express submission to both arbitration and to the jurisdiction of
the English courts should be effective, subject to the courts of
the DIFC's (the "DIFC Courts"), interpretation of Article 5A(1) and
5A(2) of Dubai Law No. 12 of 2004 (as amended) (Law of the Judicial
Authority at the DIFC) (the "Judicial Authority Law"). In
particular, Article 5A(1)(e) of the Judicial Authority Law provides
the DIFC Courts with jurisdiction to ratify foreign arbitral
awards. However, notwithstanding Article 13 of the Application Law,
it is not free from doubt that the DIFC Courts would not seek to
re-examine the merits of a case.
In addition, Article 24 of the DIFC Court Law No. 10 of 2004 (as
amended) (the "DIFC Court Law") provides that, pursuant to Article
7 of the Judicial Authority Law, the DIFC Court of First Instance
has jurisdiction to ratify any judgment, order or award of any
recognised: (i) foreign court; (ii) Dubai or UAE court; (iii) DIFC
or foreign (including the UAE) arbitral award or any award
recognised by the DIFC Court Law; or (iv) orders for the purposes
of any subsequent application for enforcement in the Dubai courts
in the manner prescribed in DIFC law. Article 42(1) of the DIFC
Court Law provides that judgments, orders or awards issued or
ratified by the DIFC Courts may be enforced within the DIFC in the
manner prescribed in the DIFC Rules of Court and Article 42(2) of
the DIFC Court Law provides that judgments, orders or awards issued
or ratified by the DIFC Courts may be enforced outside the DIFC in
accordance with the Judicial Authority Law. Although there is no
clear guidance on what is a "recognised foreign court", an English
court judgment has been ratified recently within the DIFC against
the contract counterparty. In addition, Article 24(2) of the DIFC
Court Law provides that where the UAE has entered into an
applicable treaty for the mutual enforcement of judgments, orders
or awards, the DIFC Court of First Instance will comply with the
terms of such a treaty. Although the UAE has not yet entered into
such a bilateral enforcement treaty with England, on 23 January
2013, the Chief Justice of the DIFC Courts and the Judge in Charge
of the U.K. Commercial Court of the Queen's Bench Division, England
and Wales (the "Commercial Court") entered into a Memorandum of
Guidance (the "Memorandum of Guidance") setting out their
understanding of the procedures for the enforcement of the DIFC
Courts' money judgments in the Commercial Court and vice versa. The
Memorandum of Guidance is expressed to have no binding legal effect
and does not constitute a bilateral enforcement treaty or
legislation (and therefore is not binding on the judges of either
party and does not supersede any existing laws, judicial decisions
or court rules) but it may provide useful insight into the position
that is likely to be adopted by the DIFC Courts when enforcing
monetary judgments issued by the Commercial Court. It remains to be
seen how the DIFC Courts will in practice apply the Memorandum of
Guidance.
However, the UAE is a signatory to the 1958 New York Convention
on the Recognition and Enforcement of Foreign Arbitral Awards (the
"New York Convention") and the DIFC Court of First Instance should
therefore recognise a foreign arbitral award if it complies with
the requirements of the New York Convention without re-examining
the merits of the case. The DIFC Law No. 1 of 2008 (the
"Arbitration Law") provides that an arbitral award, irrespective of
the State or jurisdiction in which it was made, shall be recognised
as binding within the DIFC and, upon application in writing to the
DIFC Courts, shall be enforced. However, Article 44 of the
Arbitration Law provides a number of grounds upon which the
recognition or enforcement of an arbitral award may be refused by
the DIFC Courts for procedural irregularities and fundamental
failings in the arbitral process, including where the DIFC Courts
finds that the subject-matter of the dispute would not have been
capable of settlement by arbitration under the laws of the DIFC or
the enforcement of the award would be contrary to the public policy
of the UAE. How the New York Convention provisions would be
interpreted and applied by the DIFC Courts in practice and whether
the DIFC Courts will enforce a foreign arbitration award in
accordance with the New York Convention (or any other multilateral
or bilateral enforcement convention), remains largely untested.
Accordingly, the grounds upon which DIFC Courts may decline to
enforce any judgment, order or award of the English courts or any
awards by the LCIA, as the case may be, against the Issuer are
still unclear. Further, some remedies available under the laws of
England and Wales may not be upheld in the DIFC Courts on the basis
that such remedies may amount to a penalty.
Risks relating to enforcement proceedings in the United Arab
Emirates
Under the terms and conditions of the Notes, the courts of
England have jurisdiction to settle disputes arising from the
Notes. Where proceedings to enforce an English judgment in the UAE
are contemplated, under current UAE law, the courts of the UAE are
unlikely to enforce such a judgment without re--examining the
merits of the claim. Investors should be aware that there could be
practical difficulties in bringing enforcement proceedings against
the Issuer in the UAE.
Floating Rate Notes - Reform of LIBOR and EURIBOR and other
interest rate index and equity, commodity and foreign exchange rate
index "benchmarks"
The London Inter-Bank Offered Rate ("LIBOR"), the Euro Interbank
Offered Rate ("EURIBOR") and other indices which are deemed
"benchmarks" are the subject of recent national, international and
other regulatory guidance and reform. Some of these reforms are
already effective whilst others are yet to apply. These reforms may
cause such "benchmarks" to perform differently than in the past, or
to disappear entirely, or have other consequences which cannot be
predicted. Any such consequence could have a material adverse
effect on any Notes linked to a "benchmark". Taking the United
Kingdom as an example, on 27 July 2017, the FCA announced that it
will no longer persuade or compel banks to submit rates for the
calculation of the LIBOR benchmark after 2021 (the "FCA
Announcement"). The FCA Announcement indicates that the
continuation of LIBOR on the current basis cannot and will not be
guaranteed after 2021.
Key international reforms of "benchmarks" include IOSCO's
Principles for Financial Market Benchmarks (July 2013) (the "IOSCO
Benchmark Principles") and the new European regulation on indices
used as benchmarks in financial instruments and financial contracts
or to measure the performance of investment funds (the "Benchmarks
Regulation").
The IOSCO Benchmark Principles aim to create an overarching
framework of principles for benchmarks to be used in financial
markets, specifically covering governance and accountability as
well as the quality and transparency of benchmark design and
methodologies. The first review published by IOSCO in February 2015
of the status of the voluntary market adoption of the IOSCO
Benchmark Principles noted that, as the benchmarks industry is in a
state of change, further steps may need to be taken by IOSCO in the
future, but that it is too early to determine what those steps
should be. The first review noted that there has been a significant
market reaction to the publication of the IOSCO Benchmark
Principles, and widespread efforts being made to implement the
IOSCO Benchmark Principles by the majority of administrators
surveyed.
The Benchmarks Regulation entered into force on 30 June 2016 and
the majority of its provisions apply from 1 January 2018. The
Benchmarks Regulation applies to "administrators" of,
"contributors" to, and "users" of "benchmarks" in the EU. Among
other things, the Benchmarks Regulation: (i) requires EU benchmark
administrators to be authorised or registered by a national
regulator (unless an exemption applies); (ii) provides that in
order to be used by supervised entities in the EU, a non-EU
benchmark must be qualified for use in the EU under the
third-country regime (through equivalence, recognition or
endorsement) and comply with extensive requirements in relation to
the administration of the non-EU benchmark; and (iii) bans the use
by "supervised entities" of: (a) EU "benchmarks" whose
administrators are not authorised or registered; and (b) non-EU
"benchmarks" that are not qualified for use in the EU under the
third-country regime. Although the Issuer is not a "supervised
entity" for the purposes of the Benchmarks Regulation, the terms
and conditions of Notes that are linked to a "benchmark" may
incorporate consequences similar to those as if the Issuer were a
"supervised entity".
The scope of the Benchmarks Regulation is wide and, in addition
to so-called "critical benchmarks" such as EURIBOR, could also
potentially apply to many other interest rate indices, as well as
equity, commodity and foreign exchange rate indices and other
indices (including "proprietary" indices or strategies) which are
referenced in certain financial instruments (including securities
or OTC derivatives traded on an EU regulated market, EU
multilateral trading facility (MTF), EU organised trading facility
(OTF) or via a "systematic internaliser"), certain financial
contracts and investment funds. Different types and categories of
"benchmark" are subject to more or less stringent requirements, and
in particular a lighter touch regime may apply where a "benchmark"
is not based on interest rates or commodities and the value of
financial instruments, financial contracts or investment funds
referring to a benchmark is less than EUR50bn, subject to further
conditions.
The Benchmarks Regulation and/or any international, national or
other reforms and/or the general increased regulatory scrutiny of
"benchmarks" could have a material impact on any listed Notes
linked to a "benchmark" index, including in any of the following
circumstances:
-- The costs and risks of administering or otherwise
participating in the setting of a "benchmark" and complying with
any such regulations or requirements could increase, discouraging
market participants from continuing to administer or participate in
certain "benchmarks" and/or leading to the disappearance of certain
"benchmarks". The disappearance of a "benchmark" (including,
without limitation, the LIBOR benchmark) could result in such
benchmark being deemed replaced (for the purposes of the Notes)
with an alternative benchmark selected by the Issuer (or an
Independent Advisor to the Issuer) or adjustment to the terms and
conditions pursuant to Condition 4(d) (Alternative Reference
Rates), including to the interest rate applicable to such Notes
effectively becoming fixed at the rate last set in accordance with
the Conditions.
-- The administrator of a rate or index which is a "benchmark" may not obtain authorisation/registration or not be able to rely on one of the regimes available to non-EU benchmarks. In such event, depending on the particular "benchmark" and the applicable terms of the Notes, such benchmark may be deemed replaced (for the purposes of the Notes) with an alternative benchmark selected by the Issuer (or an Independent Advisor to the Issuer), the terms and conditions of the Notes might be adjusted pursuant to Condition 4(d) (Alternative Reference Rates), or depending on the terms and conditions of the affected Notes, the Notes may be de-listed, redeemed or terminated early, or otherwise impacted.
-- The methodology or other terms of the "benchmark" could be
changed in order to comply with the terms of the Benchmarks
Regulation or other reforms, and such changes could have the effect
of reducing or increasing the rate or level or affecting the
volatility of the published rate or level and, depending on the
particular "benchmark" and the applicable terms of the Notes, could
lead to adjustments to the terms of the Notes, including
Calculation Agent determination or determination by the Independent
Advisor of the rate or level in its discretion.
Any of the above consequences could have a material adverse
effect on the value of and return on any such Notes. In addition,
if the terms and conditions of the Notes are adjusted pursuant to
Condition 4(d) (Alternative Reference Rates) so as to provide for
an Alternative Reference Rate, there can be no assurance that any
applicable Margin will be adjusted for any difference between the
Alternative Reference Rate and the original Reference Rate
applicable to the Notes or that any adjustment made will correspond
to the difference between the original Reference Rate and the
Alternative Reference Rate when assessed at any particular
date.
Modification, waiver and substitution
The Conditions of the Notes contain provisions for calling
meetings of Noteholders to consider matters affecting their
interests generally. These provisions permit defined majorities to
bind all Noteholders including Noteholders who did not attend and
vote at the relevant meeting and Noteholders who voted in a manner
contrary to the majority.
The Notes permit the substitution of an affiliate of the Issuer
as principal debtor in respect of the Notes, subject to a guarantee
of the Issuer.
Change of law
The Conditions of the Notes are based on English law in effect
as at the date of this Information Memorandum. No assurance can be
given as to the impact of any possible judicial decision or change
to English law or administrative practice after the date of this
Information Memorandum.
Value of Baskets
The value of a basket of Reference Asset(s) and/or Relevant
Factors to which any Notes relate may be affected by the number of
Reference Asset(s) or Relevant Factors included in such basket.
Generally, the value of a basket that includes Reference Asset(s)
from a number of companies or obligors or other components or which
gives relatively equal weight to each Reference Asset will be less
affected by changes in the value of any particular Reference Asset
included therein than a basket that includes fewer Reference
Asset(s) and/or Relevant Factors or that gives greater weight to
some Reference Asset(s) and/or Relevant Factors. In addition, if
the Reference Asset(s) and/or Relevant Factors included in a basket
are all in or relate to a particular industry, the value of such a
basket will be more affected by the economic, financial and other
factors affecting that industry than if the Reference Asset(s) or
Relevant Factors included in the basket relate to various
industries that are affected by different economic, financial or
other factors or are affected by such factors in different
ways.
The volatility of the Reference Asset(s) or Relevant Factors
If the volatility of Reference Asset(s) or Relevant Factors
increases, the trading value of a Note which relates to such
Reference Asset or Relevant Factor is expected to increase; if the
volatility decreases, the trading value of a Note is expected to
decrease.
Fluctuations in the value of the Underlying
Fluctuations in the price, value and/or level of Reference
Asset(s) and Relevant Factors will affect the value of Notes. Also,
due to the character of the particular markets on which Reference
Asset(s) may be traded, the absence of last sale information and
the limited availability of quotations for such Reference Asset(s)
may make it difficult for many investors to obtain timely, accurate
data for the price or yield of such Reference Asset(s). Purchasers
of Notes risk losing their entire investment if the value of the
relevant underlying basis of reference does not move in the
anticipated direction.
Capital risks relating to Notes
Save to the extent otherwise provided in the relevant Pricing
Supplement, the repayment of any amount invested in Notes and any
return on investment is variable and not guaranteed. The
performance of the investment depends on the value of a Reference
Asset throughout the term of the Notes. The value of the Reference
Asset(s) can alter sharply because it reflects the performance of
the constituent underlying assets which make up an index or the
performance of individual underlying assets and general stock and
other market conditions.
The main risks involved in capital--at--risk products are as
follows:
(i) the investors' capital can fall below the amount initially invested; and
(ii) the rate of return on the capital that investors receive
depends on specific conditions being met and it is possible that no
return may be provided to investors. Professionals may not be able
to accurately judge whether there will be a return.
Unlike a savings account or similar investment with a low return
and little or no capital risk, Notes issued under the Programme may
potentially have a greater return but there is a greater risk of
loss of capital. An investor should take advice from an investment
professional before purchasing such types of Notes.
Risks relating to Currency Linked--Notes
This section must be read in conjunction with the sections of
this Information Memorandum entitled "Risks relating to the Notes"
and "Risks relating to the Notes generally".
General - Investment in Notes which are linked to an emerging
market currency or an exchange rate may entail significant risks
which are not associated with a similar investment in a currency
which is more familiar to prospective investors, such as U.S.
dollars or euro (the "Principal Currency"). Currency--Linked Notes
may be issued in relation to which no interest is payable. The
redemption amount of the Notes payable at scheduled maturity is
linked to changes in the exchange rates of one or more currencies
specified in the Pricing Supplement (the "Reference Currency" or
"Reference Currencies") against the Principal Currency during the
period specified therein, and may be subject to a minimum
redemption amount per Note.
Volatility of exchange rates - Exchange rates can be volatile
and unpredictable. Investors should be aware of the possibility of
significant changes in rates of exchange between the Reference
Currency and the Principal Currency, such as a devaluation of the
Reference Currency against the Principal Currency resulting in a
decrease in the value of interest payments and the principal
payable on the Notes at maturity. As a consequence the market value
of the Notes may also fall.
Emerging market risk - Because of the special risks associated
with investing in emerging markets, Currency--Linked Notes which
are linked to a Reference Currency of an emerging market should be
considered speculative. Economies in emerging markets generally are
heavily dependent upon international trade and, accordingly, may be
affected adversely by trade barriers, foreign exchange controls
(including taxes), managed adjustments in relative currency values
and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also may be
affected adversely by their economic, financial, military and
political conditions and the supply and demand for the Reference
Currencies in the global markets.
Non--deliverability of the Reference Currency - Currency--Linked
Notes which are payable in an emerging market currency may provide
that, if the Reference Currency is not available at or about the
time when a payment is due to be made under the Notes because of
circumstances beyond the control of the Issuer, then the Issuer is
entitled to make the payments in U.S. dollars or delay making the
payment. These circumstances could include the imposition of
exchange controls or a disruption in the currency market which
prevents the Issuer from obtaining the Reference Currency.
Calculation Agent's discretion - Calculation of the interest
payments and/or redemption amount at scheduled maturity, as
appropriate, will be by reference to the screen rates specified
therein or if any such rate is not displayed at the relevant time a
rate determined by HSBC Bank plc as Calculation Agent in its sole
and absolute discretion. The Notes may be redeemable prior to their
scheduled maturity in certain circumstances at an amount determined
by HSBC Bank plc as Calculation Agent which may be less than their
nominal amount.
Risks relating to Interest Rate--Linked Notes
This section must be read in conjunction with the sections of
this Information Memorandum entitled "Risks relating to the Notes"
and "Risks relating to the Notes generally".
General - The redemption amount of the Notes payable at
scheduled maturity and/or the amount of interest payable in
relation to the Notes will be linked to changes in one or more
interest rates specified in the Pricing Supplement during the
period specified therein.
Volatility of interest rates - Interest rates can be volatile
and unpredictable. Investors should be aware of the possibility of
significant changes in interest rates resulting in a decrease in
the value of interest payments and the principal payable on the
Notes at maturity. As a consequence the market value of the Notes
may also fall.
Interest income risk - (i) In relation to certain types of
Interest Rate--Linked Notes including, without limitation, Range
Accrual Notes (as defined below), interest only accrues on days on
which the Interest Related Variable fixes within a predetermined
range set out in the Pricing Supplement. If the Interest--Related
Variable does not fix within such range on one or more days during
the term of the Notes, then the return on the Notes may be lower
than traditional fixed--rate securities, or even zero. Noteholders
should note that no interest accrues on days when the
Interest--Related Variable fixes outside of the range. (ii)
Noteholders should also note that Interest Rate-Linked Notes may be
subject to other criteria to determine the rate, if any, at which
interest accrues on the Notes. For example, there may be different
tiers of calculation whereby interest would only accrue for each
day that the specified Interest--Related Variable remains (a) above
the relevant trigger level, (b) within the range or (c) below the
relevant trigger level, in each case as set out in the Pricing
Supplement. Interest payable on the Notes would therefore be linked
to the volatility of the Interest--Related Variable.
Interest Rate--Linked Notes may therefore not be suitable for
investors who require regular income payments.
Risk of early termination (Knock--out risk) - (i) In relation to
certain types of Interest Rate--Linked Notes including, without
limitation Target Accrual Redemption Notes or Accumulator Notes,
the Notes will be mandatorily redeemed prior to their maturity if
the sum of the cumulative interest paid in relation to the Notes
reaches the predetermined Lifetime Cap, as specified in the Pricing
Supplement. Noteholders should note that there is increased
uncertainty of the maturity date of the Note, which would be the
earlier of the pre--specified maturity date or the interest payment
date when the cumulative interest amount has reached its Lifetime
Cap. If the Interest Related Variable performs poorly, Noteholders
may receive little or no interest during the term of the Notes and
then receive the balance of the Lifetime Cap at maturity. (ii)
Certain types of Notes including, without limitation, Trigger
Redemption Notes, may also be mandatorily redeemed early if a
specified trigger is breached during a specified period or on a
specified date.
Call risk - In relation to certain types of Interest
Rate--Linked Notes, the Notes may be callable by the Issuer, but
not the Noteholder, prior to maturity exposing Noteholders to
reinvestment risk. Noteholders should note that a call option
creates uncertainty for investors, as to whether the Notes will
remain outstanding until maturity.
Calculation Agent's discretion - Calculation of the interest
payments and/or redemption amount at scheduled maturity, as
appropriate, will be by reference to the screen rates specified
therein or if any such rate is not displayed at the relevant time a
rate determined by HSBC Bank plc as Calculation Agent in its sole
and absolute discretion. The Notes may be redeemable prior to their
scheduled maturity in certain circumstances at an amount determined
by HSBC Bank plc as Calculation Agent which may be less than their
nominal amount.
Risks relating to Steepener Notes - Interest Rate--Linked Notes
issued pursuant to the Programme may include Steepener Notes, which
are Notes in respect of which the rate of interest applicable for
some or all of the term of the Notes is determined by reference to
the difference (or spread) between two swap rates specified in the
relevant Pricing Supplement, which difference (or spread) may (if
so specified in the relevant Pricing Supplement) then be multiplied
by a factor (the leverage factor), subject to any minimum and/or
maximum interest rates specified.
Fluctuations in interest rates and Steepener Notes - The market
value of Steepener Notes will be affected by, among other things,
the amount of interest payable in each interest period. Save for
any interest period during the term of such Notes in respect of
which interest is to be determined by reference to fixed rates of
interest, the interest rate on Steepener Notes is obtained by
taking the amount (if any) by which a designated swap rate (the
"First Swap Rate") exceeds another designated swap rate (the
"Second Swap Rate") and multiplying that amount by the factor (the
leverage factor) (all as specified in the relevant Pricing
Supplement), subject to any maximum and minimum rate of interest.
Subject to any minimum and maximum rate of interest, as the
difference between the First Swap Rate and the Second Swap Rate
decreases the rate of interest payable will fall by the amount of
that decrease multiplied by the relevant leverage factor. In the
event that the First Swap Rate does not exceed the Second Swap Rate
on a date which is relevant to the calculation of interest for an
interest period, the interest rate on the Notes for that period
will equal zero or, if any minimum rate of interest has been
specified in the relevant Pricing Supplement and applies, will
equal that minimum rate of interest.
Risks relating to Credit-Linked Notes to which the "Additional
Terms and Conditions relating to Credit-Linked Notes (2014 ISDA
Credit Derivatives Definitions Version)" apply
This section must be read in conjunction with the sections of
this Information Memorandum entitled "Risks relating to the Notes"
and "Risks relating to the Notes generally".
General
The Issuer may issue Notes where the amount of principal and/or
interest payable is dependent upon whether certain events ("Credit
Events") have occurred in respect of one or more entities (together
"Reference Entities" and each, a "Reference Entity") and, if so, on
the value of certain specified assets of such Reference Entity(ies)
or, where, if such events have occurred, the Issuer's obligation is
to deliver certain specified assets upon redemption of the Notes.
In this respect the Notes provide investors with a return linked to
the credit of the Reference Entity or Reference Entities, as well
as the credit risk of the Issuer in performing its obligations
under the Notes, and will not provide protection of principal or a
guarantee of interest.
Prospective investors in any such Notes should be aware that
depending on the terms of the Credit Linked Notes (i) they may
receive no or a limited amount of interest, (ii) payment of
principal or interest or delivery of any specified assets may occur
at a different time than expected, (iii) they may lose all or a
substantial portion of their investment and (iv) the amount payable
or deliverable under the Notes may take into account the Issuer's
costs in relation to the termination, liquidation, transfer,
settlement or re-establishment of any Hedging Arrangements. It is
the responsibility of investors to ensure that their accounting,
regulatory and all other treatments of the Notes are consistent
with the conditional nature of their entitlement to receive
payments under the Notes.
The market price of such Notes may be volatile and will be
affected by factors that interrelate in complex ways, including
amongst other things, the Issuer's creditworthiness, the time
remaining to the redemption date and the creditworthiness of the
Reference Entity which in turn may be affected by the economic,
financial and political events in one or more jurisdictions. It is
important for investors to understand that the effect of one factor
may offset the increase in the market price of the Notes caused by
another factor, and that the effect of one factor may exacerbate
the decrease in the market price of the Notes caused by another
factor. For example, a drop in the creditworthiness of a Reference
Entity may more than offset any increase in the Issuer's
creditworthiness. The market price of the Notes may be zero.
Investors and prospective investors in Credit-Linked Notes
should conduct their own investigations and, in deciding whether or
not to purchase such Notes, prospective investors should form their
own views of the merits of an investment linked to the credit risk
of the reference entity or entities in question based upon such
investigations and not in reliance on any information given in the
relevant Pricing Supplement.
A credit deterioration or Credit Event in a reference entity may
be strongly correlated with credit deterioration or Credit Events
in several other related entities. As a result, the Notes may, over
a relatively short period of time, experience substantial losses
which reduce or eliminate their value.
Given the highly specialised nature of Credit-Linked Notes, the
Issuer considers that they are only suitable for highly
sophisticated investors who are willing to take considerable risks,
who are able to determine for themselves the risk of an investment
linked to the credit risk of the particular reference entity or
entities and who can absorb a substantial or total loss of
principal.
Consequently, investors who do not fall within the description
above should not consider purchasing the Credit-Linked Notes
without taking detailed advice from a specialised professional
adviser.
The "Additional Terms and Conditions relating to Credit-Linked
Notes (2014 ISDA Credit Derivatives Definitions Version)" section
of this Information Memorandum contains Additional Terms and
Conditions for Credit-Linked Notes with terms based on the 2014
ISDA Credit Derivatives Definitions (the "2014 ISDA
Definitions").
Any references in this section to ISDA will include any other
entity which succeeds to or is performing functions previously
undertaken by ISDA in relation to Credit Derivatives Determinations
Committees and references to Credit Derivatives Determinations
Committees in relation to ISDA will include any successor thereto.
The Calculation Agent may make such adjustments to the Credit
Linked Conditions and the relevant Pricing Supplement as it
determines appropriate to account for any other entity so
succeeding to or performing functions previously undertaken by
ISDA.
The Issuer's obligations in respect of Credit Linked Notes are
irrespective of the existence or amount of the Issuer's and/or any
affiliates' credit exposure to a Reference Entity and the Issuer
and/or any affiliate need not suffer any loss nor provide evidence
of any loss as a result of the occurrence of a Credit Event.
The holders of Credit Linked Notes will be exposed to the credit
of one or more Reference Entities, which exposure shall be, unless
otherwise stated in the relevant Pricing Supplement, to the full
extent of their investment in such Notes. Upon the occurrence of
any of the default events comprising a Credit Event with respect to
any Reference Entity, the Noteholders may suffer significant losses
at a time when losses may be suffered by a direct investor in
obligations of such Reference Entity. However, the holding of a
Note is unlikely to lead to outcomes which exactly reflect the
impact of investing in an obligation of a Reference Entity, and
losses could be considerably greater than would be suffered by a
direct investor in the obligations of a Reference Entity and/or
could arise for reasons unrelated to such Reference Entity.
Noteholders should also note that a Credit Event may occur even if
the obligations of a Reference Entity are unenforceable or their
performance is prohibited by any applicable law or exchange
controls.
The Calculation Agent may exercise its right to deliver a Credit
Event Notice even if the relevant Credit Event is no longer
continuing and Noteholders will have no right to compel the
exercise of this right or to control the timing of a Credit Event
Determination Date. Notwithstanding this, in most cases a Credit
Event can only be triggered (whether by an ISDA Credit Derivatives
Determinations Committee determination or the Calculation Agent) if
the relevant event occurred within a 60 calendar day look-back
period. These provisions mean that there is a time limit on the
ability to act on a Credit Event and that it is possible that the
Notes could be affected by a Credit Event that took place prior to
the Trade Date.
Not all of the Credit Events require an actual default with
respect to the Reference Entity's obligations. Thus Noteholders may
bear losses based on a deterioration in the credit of a Reference
Entity short of default. Also, not all Credit Events are triggered
by events which are easily ascertainable and disputes can and have
arisen as to whether a specific event did or did not constitute a
Credit Event. Under the terms of the Notes, subject to certain
Credit Derivatives Determinations Committee determinations, the
Calculation Agent's determination will be binding on the Issuer,
the Trustee and Noteholders and may be different from the view of
the Trustee, Noteholders, other financial institutions and/or
commentators.
The Issuer may determine that certain terms of the Notes (for
example the applicable Credit Events, Deliverable Obligations and
Obligations) be those set in the Credit Derivatives Physical
Settlement Matrix ("Physical Settlement Matrix") for the
Transaction Type(s) specified in the Pricing Supplement for the
Reference Entity(ies), rather than being specified in the Pricing
Supplement. The Physical Settlement Matrix sets out a number of
terms which, depending on the Transaction Type specified, will
apply to standard credit derivatives transactions if incorporated
into the documentation for those transactions and is published by
ISDA on its website at www.isda.org (or any successor website
thereto). If applicable to the Notes, the version of the Physical
Settlement Matrix which will apply will be that dated the date
specified in the relevant Pricing Supplement.
Redemption following a Credit Event
Where cash settlement or auction settlement applies, the
occurrence of a Credit Event in relation to any Reference Entity
from time to time may result in a redemption of the Notes in a
reduced nominal amount or at zero, and interest bearing Credit
Linked Notes may cease to bear interest on or prior to the date of
occurrence of such circumstance. The value of obligations of the
relevant Reference Entity which will affect the amount (if any) due
on such redemption may substantially decrease in value during the
period between the Credit Event and settlement of the Notes.
In such circumstances, where cash settlement applies and the
amount (if any) due on redemption of the Notes is to be calculated
by reference to the value of one or more Valuation Obligations of
the relevant Reference Entity, the Issuer will select the relevant
Valuation Obligations in its sole and absolute discretion
irrespective of their market value or liquidity and will not be
obliged to consider the interests of Noteholders or mitigate their
losses.
Where physical settlement is intended to apply, unless the
Issuer does not deliver a Notice of Physical Settlement following
the occurrence of a Credit Event because it determines that it
would not have any relevant assets to deliver or that all of the
relevant assets would be impossible, illegal or impractical to
deliver (in which case auction or cash settlement will apply as
above), the occurrence of a Credit Event in relation to any
Reference Entity from time to time may result in the redemption of
the Notes by delivery of certain direct or indirect obligations of
the affected Reference Entity and/or obligations received under
certain transactions which may be entered into by the Issuer and/or
its affiliates in connection with the Issuer's obligations under
the Notes, which obligations are likely to have a market value
which is substantially less than their par amount (and may
substantially decrease in value during the period between the
Credit Event and settlement of the Notes), and interest bearing
Credit Linked Notes may cease to bear interest on or prior to the
date of occurrence of such circumstance. Where the Notes provide
for physical settlement and the Issuer delivers a Notice of
Physical Settlement, the Calculation Agent may nonetheless
determine that the specified assets to be delivered are either (a)
assets which, for any reason (including, without limitation,
failure of the relevant clearance system or due to any law,
regulation, court order or market conditions or the non-receipt of
any requisite consents with respect to the delivery of assets which
are loans), are impossible, illegal or impractical to deliver on
the specified settlement date, or (b) assets which the Issuer
and/or any affiliate has not received under the terms of any
transaction entered into by the Issuer and/or such affiliate in
connection with the Issuer's obligations under the Notes. Any such
determination may delay settlement in respect of the Notes (in the
case of paragraph (b)) and/or cause the obligation to deliver such
specified assets to be replaced by an obligation to pay a cash
amount (if any) which, in either case, may affect the value of the
Notes and, in the case of payment of a cash amount, will affect the
timing of the valuation of such Notes and as a result, the amount
of principal payable on redemption. In this respect investors
should note that neither the Issuer nor its affiliates are under
any obligation to acquire any assets for delivery under the Notes
and if no such assets are held for these purposes the Notes will be
redeemed by payment of a cash amount (if any). Prospective
investors should review the "Additional Terms and Conditions
relating to Credit-Linked Notes (2014 ISDA Credit Derivatives
Definitions Version)" and the relevant Pricing Supplement to
ascertain whether and how such provisions should apply to the
Notes.
Investors in the Notes are accordingly exposed, as to both
principal and (if applicable) interest, to the credit risk of the
Reference Entity. The maximum loss to an investor in the Notes is
100 per cent. of their initial principal investment, together with
(if applicable) any accrued interest amounts.
Credit Event Maturity Settlement Notes
Credit-Linked Notes in relation to which Credit Event Maturity
Settlement is applicable will not, even following the occurrence of
a Credit Event, redeem earlier than the Scheduled Maturity Date,
notwithstanding that this may occur a significant time following
the occurrence of the relevant Credit Event. Following the
occurrence of a Credit Event investors may therefore not receive
any interest on their investment for a substantial period of time
and may miss the opportunity to invest the amount payable on
redemption, that would otherwise have been received earlier, in
other assets or investments.
A Credit Event may occur prior to the Trade Date
As mentioned above, holders of the Notes may suffer a loss of
some or all of the principal amount of the Notes in respect of one
or more Credit Events that occur prior to the Trade Date or the
Issue Date. Neither the Calculation Agent nor the Issuer nor any of
their respective affiliates has any responsibility to inform any
Noteholder, or avoid or mitigate the effects of a Credit Event that
has taken place prior to the Trade Date or the Issue Date.
Increased credit risk is associated with Basket Credit Linked
Notes
Where the Notes are Basket Credit Linked Notes, the Notes may be
subject to redemption in part as described above upon the
occurrence of a Credit Event in relation to each Reference Entity
in respect of which a Credit Event occurs, on the basis of the
proportional weighting of each such Reference Entity in the basket.
Additionally, if specified in the relevant Pricing Supplement, some
Basket Credit Linked Notes may be subject to redemption in full
upon the occurrence of a Credit Event in relation to only one or
some Reference Entities in the basket, notwithstanding that there
are no Credit Events with respect to the non-affected Reference
Entities in the same basket. The credit risk to Noteholders may
further be increased as a result of the concentration of Reference
Entities in a particular industry sector or geographic area or the
exposure of the Reference Entities to similar financial or other
risks.
Investors' exposure to the credit performance of the Reference
Entities may not correspond to actual market recovery on such
Reference Entities.
Interest and principal repayments on the Notes may be calculated
by reference to the Adjusted Credit Outstanding Nominal Amount. As
at the Issue Date the Adjusted Credit Outstanding Nominal Amount is
an amount equal to the Aggregate Principal Amount. If a Credit
Event occurs in respect of a Reference Entity, then the Adjusted
Credit Outstanding Nominal Amount will be reduced by (i) an amount
equal to a predefined portion of the Aggregate Principal Amount
(reflecting the Notes' exposure to such Reference Entity) and, if
"Unwind Costs" are specified as applicable in the relevant Pricing
Supplement, (ii) if hedging costs arising in relation to the
Issuer's and/or any of its affiliates' hedging arrangements in
connection with the partial or full redemption of such Basket
Credit Linked Notes exceed the relevant Recovery Value (if auction
settlement or cash settlement applies) or the market value of the
relevant Initial Deliverable Obligations (if physical settlement
applies), such excess. Therefore investors' exposure to each
Reference Entity may exceed the exposure that they might incur in
respect of having entered into a standard single name credit
default swap as protection seller in respect of each Reference
Entity and investors may lose the entire principal amount
invested.
Successors
A Reference Entity may be replaced as Reference Entity by one or
more Successor(s). For these purposes the relevant Succession Date
must occur within a 90 calendar day look-back period, other than in
the case of a universal succession, where the Succession Date must
have occurred on or after 1 January 2014. These provisions mean
that there is a time limit on the ability to act on a succession
and that it is possible that the Notes could be affected by a
succession that took place prior to the Trade Date.
The Calculation Agent may, if it determines appropriate, select
an alternative Transaction Type for any Successor to a Reference
Entity and adjust such of the Conditions, the Credit Linked
Conditions and/or the relevant Pricing Supplement as it determines
appropriate to reflect such new Transaction Type and determine the
effective date of any such change and adjustment.
In addition, where more than one Successor to a Reference Entity
has been identified the Calculation Agent shall adjust such of
Conditions, the Credit Linked Conditions and/or the relevant
Pricing Supplement as it shall determine to be appropriate
(including, without limitation, the relevant Reference Entity
Notional Amount and (if applicable) the relevant Transaction Type)
to reflect that the relevant Reference Entity has been succeeded by
more than one Successor and shall determine the effective date of
that adjustment.
Maturity Date extension, interest postponement and settlement
suspension
Investors should note that the maturity of the Notes may be
extended beyond the Scheduled Maturity Date in circumstances where
a Credit Event may have occurred in relation to a Reference Entity
or a Potential Credit Event has or may have occurred in relation to
a Reference Entity. As a result repayment to the Noteholders may be
delayed for a significant period of time even in circumstances
where it transpires no Credit Event has occurred. In addition, the
maturity of the Notes may be extended and ongoing interest payments
may be delayed if there is a pending Credit Derivatives
Determinations Committee decision at the relevant time.
The Credit Linked Conditions also provide that if, following the
determination of a Credit Event Determination Date but prior to a
cut-off date, there is a DC Credit Event Meeting Announcement, the
Calculation Agent may at its option determine that the applicable
timing requirements of the Credit Linked Conditions and the
definitions of Credit Event Redemption Date, Credit Event Payment
Date, Valuation Date, Maturity Date, Physical Settlement Period and
PSN Cut-off Date and any other Credit Linked Condition as
determined by the Calculation Agent, shall toll and be suspended
and remain suspended (such period of suspension, a "Suspension
Period") until the date of the relevant DC Credit Event
Announcement or DC Credit Event Question Dismissal (with no action
being taken in connection with the settlement of the Notes during
such Suspension Period). At that point, the relevant timing
requirements of the Credit Linked Conditions that have previously
tolled or been suspended shall resume on the Business Day following
such public announcement by the DC Secretary.
In the event of any such Suspension Period, the Calculation
Agent may make (i) such consequential or other adjustment(s) or
determination(s) to or in relation to the Credit Linked Conditions
as may be desirable or required either during or following any
relevant Suspension Period to account for or reflect such
suspension and (ii) determine the effective date of such
adjustment(s) or determination(s). In the case of interest bearing
Credit Linked Notes:
(a) if a Suspension Period falls in any one or more Interest
Period(s), then no interest shall accrue during each portion of an
Interest Period during which a Suspension Period exists; and
(b) if an Interest Payment Date falls in a Suspension Period,
payment of the relevant interest will be deferred until after the
end of the Suspension Period.
Amendment of Credit Linked Conditions in accordance with market
convention
The Calculation Agent may from time to time amend any provision
of the Credit Linked Conditions (i) to incorporate and/or reflect
further or alternative documents or protocols from time to time
published by ISDA with respect to the settlement of credit
derivative transactions and/or the operation or application of
determinations by the ISDA Credit Derivatives Determinations
Committees, including without limitation, in relation to
settlement, credit events and successors, and/or (ii) in any manner
which the Calculation Agent determines in a commercially reasonable
manner is necessary or desirable to reflect or account for market
practice for credit derivative transactions and/or reflect hedging
arrangements of the Issuer.
ISDA Credit Derivatives Definitions
Whilst there are many similarities between the terms used in
this Information Memorandum (in particular, in the "Additional
Terms and Conditions relating to Credit-Linked Notes (2014 ISDA
Credit Derivatives Definitions Version")) and the terms used in the
2014 ISDA Definitions, there are many substantial differences and a
prospective investor should understand that the complete terms and
conditions of the Notes are as set out in the relevant sections of
this Information Memorandum and the relevant Pricing Supplement and
that the 2014 ISDA Definitions are not incorporated by reference
herein. Consequently, investing in Credit Linked Notes is not
necessarily equivalent to investing a credit default swap that
incorporates the 2014 ISDA Definitions.
While ISDA has published and, where appropriate, supplemented
the 2014 ISDA Definitions in order to facilitate transactions and
promote uniformity in the credit derivatives market, the credit
derivatives market has evolved over time and is expected to
continue to change. Consequently, the 2014 ISDA Definitions and the
terms applied to credit derivatives generally, including Credit
Linked Notes are subject to further evolution. Past events have
shown that the view of market participants may differ as to how
sets of ISDA Definitions operate or should operate. As a result of
the continued evolution of the market, the Credit Linked Notes may
not conform to future market standards. Such a result may have a
negative impact on the Credit Linked Notes and there can be no
assurances that changes to the terms applicable to credit
derivatives generally will be predicable or favourable to the
Issuer or the Noteholders.
Risks relating to Auction Settlement of Credit Linked Notes
Where an Auction Final Price Determination Date occurs in
respect of Credit Linked Notes, the Auction Final Price will be
determined according to an auction procedure set out in the
applicable Transaction Auction Settlement Terms, a form of which
will be published by ISDA on its website at www.isda.org (or any
successor website thereto) from time to time and may be amended
from time to time. The Auction Final Price determined pursuant to
an auction may be less than the market value that would otherwise
have been determined in respect of the relevant Reference
Obligation.
The Issuer and the Noteholders may have little or no influence
in outcome of any such auction. However, there is a possibility
that the Issuer or the Calculation Agent (or one of their
affiliates) would act as a participating bidder in any such
auction. In such capacity, it may take certain actions which may
influence the Auction Final Price including (without limitation):
(a) providing rates of conversion to determine the applicable
currency conversion rates to be used to convert any obligations
which are not denominated in the auction currency into such
currency for the purposes of the auction; and (b) submitting bids,
offers and physical settlement requests with respect to the
relevant Deliverable Obligations. In deciding whether to take any
such action (or whether to act as a participating bidder in any
auction), neither the Issuer nor the Calculation Agent (or any of
their affiliates) shall be under any obligation to consider the
interests of any Noteholder.
No representation by Issuer, Calculation Agent and
affiliates
None of the Issuer, the Calculation Agent nor any of their
respective affiliates makes any representation whatsoever with
respect to any Reference Entity, Reference Obligation(s) or other
underlying obligation(s).
Dealings by Issuer, Calculation Agent and affiliates
The Issuer, the Calculation Agent and any of their respective
affiliates may deal in Reference Obligation(s) or other underlying
obligation(s) of any Reference Entity and may accept deposits from,
make loans or otherwise extend credit to, and generally engage in
any kind of commercial or investment banking or other business
with, any Reference Entity, any affiliate of any Reference Entity,
and/or any other person or entity having obligations relating to
any Reference Entity and may act with respect to such business in
the same manner as each of them would if the Notes had not been
issued, regardless of whether any such action might have an adverse
effect on any Reference Entity, Reference Obligation(s) or other
underlying obligation(s) or the Noteholders or otherwise
(including, without limitation, any action which might constitute
or give rise to a Credit Event).
No disclosure of information
The Issuer, the Calculation Agent and any of their respective
affiliates may, whether by virtue of the types of relationships
described herein or otherwise, on the issue date of any Notes or at
any time thereafter, be in possession of information in relation to
any Reference Entity, Reference Obligation(s) or other underlying
obligation(s) thereof that is or may be material in the context of
the issue of Notes and that may or may not be publicly available or
known to Noteholders. There is no obligation on the part of the
Issuer, the Calculation Agent or any such affiliates to disclose to
the Noteholders any such relationship or information (whether or
not confidential).
Potential conflicts of interest
HSBC Bank Middle East Limited as Issuer and HSBC Bank plc as
Calculation Agent will be entitled to make certain determinations
and actions and exercise certain discretions under the Credit
Linked Conditions including (inter alia) as to whether an event
constituting a Credit Event has occurred. HSBC Bank Middle East
Limited or HSBC Bank plc may also be a Quotation Dealer from which
the Calculation Agent may request quotations for the purposes of
determining the price of the Valuation Obligation(s) of a Reference
Entity following the occurrence of a Credit Event, which may affect
the level of any cash amount payable under the Notes in relation to
such Credit Event. As a result, potential conflicts of interest may
exist between HSBC Bank Middle East Limited and the Noteholders and
HSBC Bank plc and the Noteholders respectively. In their capacities
as Issuer and Calculation Agent respectively, neither HSBC Bank
Middle East Limited nor HSBC Bank plc acts as fiduciary for or as
an adviser to any of the Noteholders in respect of any such or
otherwise.
No post-issuance information
The Issuer will not provide investors with any post-issuance
information regarding any Reference Entity, Reference Obligation(s)
or other underlying obligation(s). In addition, prospective
investors should understand that historical performance of a
Reference Entity, Reference Obligation or other underlying
obligation should not be viewed as predictive of future
results.
Currency risk
Exchange rates can be volatile and unpredictable. Investors
should be aware of the possibility of significant changes in rates
of exchange between (i) the Specified Currency, (ii) the currency
of any relevant underlying obligation(s) of a Reference Entity and
(iii) the relevant local currency of the investor's domicile.
Risks relating to Equity--Linked Notes, Cash Equity Notes and
Index--Linked Notes
This section must be read in conjunction with the sections of
this Information Memorandum entitled "Risks relating to the Notes"
and "Risks relating to the Notes generally".
General - An investment in Equity--Linked Notes, Cash Equity
Notes or Index--Linked Notes is speculative and entails substantial
risks. Equity--Linked Notes, Cash Equity Notes and Index--Linked
Notes are only intended for investors who have the necessary
experience and knowledge in order to understand the risks involved
in relation to the Notes. Prospective Noteholders should understand
that in some instances they could suffer a partial or complete loss
of their investment subject, if applicable, to any minimum
redemption amount specified in the relevant Pricing Supplement. Any
investment return on a Note determined by reference to changes in
the value of the Reference Asset(s) described in the Pricing
Supplement is subject to fluctuation and may be less than would be
received by investing in a conventional debt instrument. Changes in
value of the Reference Asset(s) cannot be predicted. If so provided
in the relevant Pricing Supplement, the Notes may be subject to
early redemption by reference to changes in value of the Reference
Asset(s). On redemption, Equity--Linked Notes, Cash Equity Notes
and Index--Linked Notes may be redeemed in such manner as the
Pricing Supplement provides or, in certain circumstances, may be
exchanged for other securities. If Equity--Linked Notes, Cash
Equity Notes or Index--Linked Notes are redeemed prior to maturity
the value may be less than the nominal amount.
Information - No investigation has been made of the financial
condition or creditworthiness of any issuer of any Reference
Asset(s) in connection with the issue of any Equity--Linked Notes,
Cash Equity Notes or Index--Linked Notes. Prospective investors in
the Notes should obtain and evaluate the same information
concerning the Reference Asset(s) and each such issuer as they
would if they were investing directly in the securities underlying
the Reference Asset(s). In addition, prospective investors should
understand that the historical performance of the Reference
Asset(s) should not be viewed as predictive of future results.
Certain factors affecting value of Notes - The value of
Equity--Linked Notes, Cash Equity Notes or Index--Linked Notes
prior to maturity is expected to depend on a number of factors
including the performance achieved by the Reference Asset(s) until
that time, interest rates, volatility and time to maturity. The
price at which a holder will be able to sell the Notes prior to
maturity may be at a discount, which could be substantial, from the
principal balance thereof, based upon one or more of the factors
described below. The factors that will affect the trading value of
the Notes interrelate in complex ways (for example, one factor may
offset an increase in the trading value of the Notes caused by
another factor). Factors that may be expected to impact the value
of the Notes, assuming other conditions remain constant,
include:
Reference Asset value. The value of the Notes will depend
substantially on the value of the Reference Asset as such value is
taken into account in determining, as the case may be, any amount
of interest, the redemption amount, whether the Notes will be
redeemed prior to scheduled maturity and/or in cash or by delivery
of the Reference Asset. Fluctuations in the value of the Reference
Asset may affect the value of the Notes as may expectations of
fluctuation in value during the remaining period to the Maturity
Date or any earlier date for determining any price or value for the
purposes of determination the basis for redemption of the Notes.
Political, economic and other developments that affect the
Reference Asset may also affect the value of the Reference
Asset.
Interest rates. The value of the Notes may be affected by
changes in interest rates. Rising interest rates may lower the
value of the Reference Asset, and thus, the value of the Notes
while falling interest rates may increase the value of the
Reference Asset and thus, the value of the Notes. Changes in
interest rates may also affect the economy of a country in which
the Reference Asset is traded, and which (for the reasons discussed
above) would affect the value of the Notes.
Volatility of the Reference Asset. If the size and frequency of
market fluctuations in value of the Reference Asset increase or
decrease, the trading value of the Notes may be adversely
affected.
Time remaining to maturity. The Notes may trade at a value above
that which would be expected based on the level of interest rates
and the value of the Reference Asset. Any such difference will
reflect a "time premium" resulting from expectations concerning the
Reference Asset during the period prior to the stated maturity of
the Notes. As the time remaining to the stated maturity of the
Notes decreases, this time premium may decrease, adversely
affecting the value of the Notes.
Hedging - Prospective investors intending to acquire
Equity--Linked Notes, Cash Equity Notes or Index--Linked Notes to
hedge against the market risk associated with investing in any
securities or indices should recognise the complexities of
utilising Notes in this manner. For instance, due to fluctuating
supply and demand for the Notes, there is no assurance that their
value will correlate with fluctuations in value of the Reference
Asset(s).
No ownership rights - An investment in the Notes is not the same
as an investment in the Reference Asset(s) and does not (prior to
settlement of any exchange of Notes for the Reference Asset, where
applicable) confer any legal or beneficial interest in the
Reference Asset(s) or any voting rights, rights to receive
dividends or other rights that a holder of the Reference Asset(s)
would have. The Notes are unsubordinated and unsecured obligations
of the Issuer.
Actions or omissions of the issuer of the securities, the
sponsor of an index or other - In certain circumstances, the
actions or omissions of the issuer of securities to which the Notes
relate or for which the Notes are exchangeable, the sponsor of an
index to which Notes are linked or others outside the control of
the Issuer, may adversely affect the rights of the Noteholders
and/or the value of the Notes, including actions that may give rise
to an adjustment to, or early redemption of, the Notes.
Hedging activities of the Issuer and affiliates - The Issuer or
its affiliates may carry out hedging activities related to the
Notes, including purchasing the Reference Asset(s) or securities
underlying Reference Asset(s) (where such Reference Asset(s) is an
equity index), but will not be obliged to do so. Certain of the
Issuer's affiliates may also purchase and sell the Reference
Asset(s) or securities underlying Reference Asset(s) (where such
Reference Asset(s) is an equity index) on a regular basis as part
of their securities businesses. Any of these activities could
potentially affect the value of the Reference Asset(s) or
securities underlying Reference Asset(s) (where such Reference
Asset(s) is an equity index) and, accordingly, the value of the
Notes.
Redemption for tax reasons - The Issuer may redeem the Notes in
whole if the Issuer would be required to pay certain tax gross up
payments in respect of the Notes. The amount payable by the Issuer
on such redemption will be an amount determined by the Issuer in
its sole and absolute discretion and calculated in accordance with
the formula or other means specified in the relevant Pricing
Supplement which may be less than amounts invested in the Notes.
Noteholders may not benefit from any appreciation in value of the
Reference Asset(s) that may occur following such redemption.
Risks relating to Notes denominated in Renminbi
Notes denominated and/or settled in Renminbi ("Renminbi Notes")
outside the PRC may be issued. Set out below is a description of
some of the risks that should be taken into consideration by
investors in such Notes.
Renminbi is not freely convertible and there are significant
restrictions on the remittance of Renminbi into and out of the PRC
which may adversely affect the liquidity of the Notes
Renminbi is not freely convertible at present. The government of
the PRC (the "PRC Government") continues to regulate conversion
between Renminbi and foreign currencies including the Hong Kong
Dollar. However, there has been significant reduction in control by
the PRC Government in recent years, particularly over trade
transactions involving import and export of goods and services as
well as other frequent routine foreign exchange transactions. These
transactions are known as current account items.
On the other hand, remittance of Renminbi into and out of the
PRC for the settlement of capital account items, such as capital
contributions, debt financing and securities investment, is
generally only permitted upon obtaining specific approvals from, or
completing specific registrations or filings with, the relevant
authorities on a case-by-case basis and is subject to a strict
monitoring system. Regulations in and out of the PRC on the
remittance of Renminbi into the PRC for settlement of capital
account items are being developed.
Although Renminbi was added to the Special Drawing Rights basket
created by the International Monetary Fund in 2016 and policies
further improving accessibility to Renminbi to settle cross-border
transactions were implemented by the People's Bank of China
("PBoC") in 2018, there is no assurance that the PRC Government
will continue to gradually liberalise control over cross-border
remittance of Renminbi in the future, that the schemes for Renminbi
cross-border utilisation will not be discontinued or that new
regulations in the PRC will not be promulgated in the future which
have the effect of restricting or eliminating the remittance of
Renminbi into or out of the PRC. Despite Renminbi
internationalisation programme and efforts in recent years to
internationalise the currency, there can be no assurance that the
PRC Government will not impose interim or long-term restrictions on
the cross-border remittance of Renminbi. In the event that funds
cannot be repatriated out of the PRC in Renminbi, this may affect
the overall availability of Renminbi outside the PRC and the
ability of the Issuer to source Renminbi to finance its obligations
under Renminbi Notes.
There is only limited availability of Renminbi outside the PRC,
which may affect the liquidity of the Notes and the Issuer's
ability to source Renminbi outside the PRC to service Notes
As a result of the restrictions by the PRC Government on
cross-border Renminbi fund flows, the availability of Renminbi
outside the PRC is limited.
While the PBoC has entered into agreements (the "Settlement
Arrangements") on the clearing of Renminbi business with financial
institutions (the "Renminbi Clearing Banks") in a number of
financial centres and cities, including but not limited to Hong
Kong, has established the Cross-Border Inter-Bank Payments System
(CIPS) to facilitate cross-border Renminbi settlement and is
further in the process of establishing Renminbi clearing and
settlement mechanisms in several other jurisdictions, the current
size of Renminbi denominated financial assets outside the PRC is
limited.
There are restrictions imposed by PBoC on Renminbi business
participating banks in respect of cross-border Renminbi settlement,
such as those relating to direct transactions with PRC enterprises.
Furthermore, Renminbi business participating banks do not have
direct Renminbi liquidity support from PBoC, although PBoC has
gradually allowed participating banks to access the PRC's onshore
inter-bank market for the purchase and sale of Renminbi. The
Renminbi Clearing Banks only have access to onshore liquidity
support from PBoC for the purpose of squaring open positions of
participating banks for limited types of transactions and are not
obliged to square for participating banks any open positions
resulting from other foreign exchange transactions or conversion
services. In cases where the participating banks cannot source
sufficient Renminbi through the above channels, they will need to
source Renminbi from outside the PRC to square such open
positions.
Although it is expected that the offshore Renminbi market will
continue to grow in depth and size, its growth is subject to many
constraints as a result of PRC laws and regulations on foreign
exchange. There is no assurance that new PRC regulations will not
be promulgated or the Settlement Arrangements will not be
terminated or amended in the future which will have the effect of
restricting availability of Renminbi outside the PRC. The limited
availability of Renminbi outside the PRC may affect the liquidity
of the Notes. To the extent the Issuer is required to source
Renminbi in the offshore market to service its Notes, there is no
assurance that the Issuer will be able to source such Renminbi on
satisfactory terms, if at all.
Investment in the Renminbi Notes is subject to interest rate
risks
The PRC Government has gradually liberalised its regulation of
interest rates in recent years. Further liberalisation may increase
interest rate volatility. In addition, the interest rate for
Renminbi in markets outside the PRC may significantly deviate from
the interest rate for Renminbi in the PRC as a result of foreign
exchange controls imposed by PRC law and regulations and prevailing
market conditions.
As Renminbi Notes may carry a fixed interest rate, the trading
price of the Renminbi Notes will consequently vary with the
fluctuations in the Renminbi interest rates. If holders of the
Renminbi Notes propose to sell their Renminbi Notes before their
maturity, they may receive an offer lower than the amount they have
invested.
Investment in the Renminbi Notes is subject to exchange rate
risks
The value of Renminbi against other foreign currencies
fluctuates from time to time and is affected by changes in the PRC
and international political and economic conditions as well as many
other factors. Recently, the PBoC implemented changes to the way it
calculates the Renminbi's daily mid-point against the U.S. dollar
to take into account market-maker quotes before announcing such
daily mid-point. This change, and others that may be implemented,
may increase the volatility in the value of the Renminbi against
foreign currencies. All payments of interest and principal will be
made in Renminbi with respect to Renminbi Notes unless otherwise
specified. As a result, the value of these Renminbi payments may
vary with the changes in the prevailing exchange rates in the
marketplace. If the value of Renminbi depreciates against another
foreign currency, the value of the investment made by a holder of
the Renminbi Notes in that foreign currency will decline.
Investment in the Renminbi Notes is subject to currency risk
If the Issuer is not able, or it is impracticable for it, to
satisfy its obligation to pay any amounts as a result of
Inconvertibility, Non transferability or Illiquidity (each, as
defined in the Conditions), the Issuer shall be entitled, on giving
not less than five or more than 30 calendar days' irrevocable
notice to the investors prior to the due date for payment, to
settle any such payment in U.S. dollars or another currency on the
due date at the US Dollar Equivalent (as defined in the Conditions)
of any such amounts. In this case, the risk factors in the section
entitled "Risks relating to the Notes - Exchange rate risks and
exchange controls" would apply as if U.S. dollars were the
Specified Currency.
Payments with respect to Renminbi Notes may be made only in the
manner designated in Renminbi Notes
All Renminbi payments to investors in respect of Renminbi Notes
will be made solely (i) for so long as Renminbi Notes are
represented by global notes or global registered notes held with
the common depositary or common safekeeper, as the case may be, for
Euroclear and Clearstream, Luxembourg, or any alternative clearing
system, by transfer to a Renminbi bank account maintained in Hong
Kong, or (ii) for so long as Renminbi Notes are in definitive form,
by transfer to a Renminbi bank account maintained in Hong Kong in
accordance with prevailing rules and regulations. Other than
described in the Conditions, the Issuer cannot be required to make
payment by any other means (including in any other currency or in
bank instruments, by cheque or draft or by transfer to a bank
account in the PRC).
There may be PRC tax consequences with respect to investment in
Renminbi Notes
In considering whether to invest in Renminbi Notes, investors
should consult their individual tax advisers with regard to the
application of PRC tax laws to their particular situations as well
as any tax consequences arising under the laws of any other tax
jurisdictions. The value of the Noteholder's investment in Renminbi
Notes may be materially and adversely affected if the Noteholder is
required to pay PRC tax with respect to acquiring, holding or
disposing of and receiving payments under those Renminbi Notes.
Remittance of proceeds in Renminbi into or out of the PRC
In the event that the Issuer decides to remit some or all of the
proceeds into the PRC in Renminbi, its ability to do so will be
subject to obtaining all necessary approvals from, and/or
registration or filing with, the relevant PRC government
authorities. However, there is no assurance that the necessary
approvals from, and/or registration or filing with, the relevant
PRC government authorities will be obtained at all or, if obtained,
they will not be revoked or amended in the future. There is no
assurance that the PRC Government will continue to gradually
liberalise the control over cross-border Renminbi remittances in
the future, that the PRC Government will not impose any interim or
long-term restrictions on capital inflow or outflow which may
restrict cross-border Renminbi remittances, that the pilot schemes
introduced will not be discontinued or that new PRC regulations
will not be promulgated in the future which have the effect of
restricting or eliminating the remittance of Renminbi into or
outside the PRC. In the event that the Issuer does remit some or
all of the proceeds into the PRC in Renminbi and the
Issuer subsequently is not able to repatriate funds out of the
PRC in Renminbi, it will need to source Renminbi outside the PRC to
finance its obligations under Renminbi Notes, and its ability to do
so will be subject to the overall availability of Renminbi outside
the PRC.
INFORMATION RELATING TO THE ISSUER
History and Development of the Issuer
The Issuer is a company limited by shares incorporated in the
DIFC in Dubai, UAE under registration number 2199. The liability of
its members is limited. It has its registered office and head
office at Level 1, Building No. 8, Gate Village, DIFC, P.O. Box
502601, Dubai, UAE and its telephone contact number is +971 4 423
5607.
The Issuer was originally established as The Imperial Bank of
Persia in the United Kingdom in September 1889. In the early 1940s,
the Issuer pioneered banking in the Gulf States, with the sector
going on to play a vital role in the development of the oil
industry in the Middle East. Branches were opened in Kuwait (1942),
Bahrain (1944), Dubai (1946), Muscat (1948) and elsewhere in the
Middle East. In 1959, the Issuer became a member of the HSBC Group
when it was acquired by The Hongkong and Shanghai Banking
Corporation Limited.
The Issuer relocated its place of incorporation to Jersey,
Channel Islands on 1 July 2003, where it was incorporated as a
private limited company. The shareholder of the Issuer passed a
special resolution on 5 October 2004 to re--register it as a public
company with limited liability under the Companies (Jersey) Law
1991, as amended, for an unlimited duration. This re--registration
was registered with the Registrar of Companies of the Jersey
Financial Services Commission on 7 October 2004. On 30 June 2016,
the Issuer's head office and place of incorporation was moved from
Jersey to the DIFC and a certificate of continuance for the Issuer
as a company limited by shares was issued by the DIFC Registrar of
Companies on the same day.
The Issuer is a wholly-owned, indirectly held (via an
intermediate holding entity) subsidiary of HSBC Holdings, and
thereby a member of the HSBC Group. The Issuer is widely
represented in the MENAT region with its head office and place of
incorporation located in the DIFC, branches in the UAE, the State
of Qatar, Kuwait, Bahrain and Algeria and subsidiary undertakings
in the UAE, Lebanon and Morocco. The Issuer's equity shares are not
listed. As at June 2018, the Issuer employed 3792 staff within its
head office and branches, and 4 staff within its subsidiaries.
Ratings
As at the date of this Information Memorandum, the Issuer has
been assigned the following long--term credit ratings:
-- A3 (stable) by Moody's Investors Service Limited ("Moody's").
This means that Moody's is of the opinion that the obligations of
the Issuer are upper--medium grade and are subject to low credit
risk; and
-- AA- (stable) by Fitch Ratings Limited ("Fitch"). This means
that Fitch is of the opinion that the Issuer has very strong
capacity for payment of financial commitments. This capacity is not
significantly vulnerable to foreseeable events.
As at the date of this Information Memorandum, the Issuer has
also been assigned the following short--term credit ratings:
-- P-2 by Moody's. This means that Moody's is of the opinion
that the Issuer (or supporting institutions) have a superior
ability to repay short--term debt obligations; and
-- F1+ by Fitch. This means that Fitch is of the opinion that
the Issuer has the strongest intrinsic capacity for timely payment
of financial commitments.
A rating is not a recommendation to buy, sell or hold securities
issued by the Issuer (or beneficial interests therein), does not
address the likelihood of timing of repayment and may be subject to
revision, suspension or withdrawal at any time by the assigning
rating organisations.
Legislation
Both in its jurisdiction of incorporation and generally, the
Issuer is governed by, and is subject to, DIFC Law No. 1 of 2004 as
amended and the relevant subsidiary regulations of the DFSA.
In relation to securities issued under the Programme, the Issuer
is subject to primary and secondary legislation relating to
financial services and banking regulation in the Republic of
Ireland, including, inter alia, the listing rules of Euronext
Dublin.
Principal Business Activities of the Issuer
The Issuer, through its branch network and subsidiary
undertakings, provides a range of banking and related financial
services for both commercial and retail customers in Bahrain, the
State of Qatar, Kuwait, Algeria and the UAE.
The Issuer's principal business activities are as follows:
Retail Banking and Wealth Management
The Issuer offers a range of banking and personal financial
services, such as current and savings accounts, time deposits,
credit cards, mortgages, financial planning services, loans and
diverse payment services.
Private Banking
The Issuer offers offshore private banking services through some
of its offices within the MENAT region. Working with dedicated HSBC
Private Bank offices around the world, the Issuer facilitates and
coordinates the provision of advice and guidance on deposits,
securities, portfolios, asset protection (through the formation of
trusts and offshore companies) and other investments such as the
purchase of international real estate.
Commercial Banking
The Issuer offers a range of traditional products and services
tailored to help commercial customers with all their banking needs,
locally and internationally. Based on relationship banking blended
with innovative new ideas, the Issuer works closely with customers
to understand their business and develop practical, cost effective
solutions. Through ready access to an extensive team of product
specialists and dedicated relationship managers, the Issuer can
provide customers, including sovereigns, large corporates and small
and medium enterprises, with the tailored solutions, such as trade
finance, they need to assist them in achieving their business
goals.
Global Markets
The Issuer's Global Markets division offers various treasury,
transactional banking, financing, investments, advisory and risk
management products and services to its customers, in areas such as
foreign exchange, credit, rates and equities and related products
such as derivative and structured products.
The Issuer's hub for treasury services is located in Dubai, UAE
and provides support and services to the dealing rooms of its
branch network in the MENAT region.
Global Banking
As part of the HSBC Group's regional investment banking arm in
the MENAT region, the Issuer has one of the most significant
investment banking operations in the region.
The Issuer offers a range of investment banking services for
commercial and institutional clients. By drawing on local
commercial market knowledge and international product expertise,
the investment banking business is able to provide a combination of
global coverage and local market penetration.
Investment banking services offered include: debt capital
markets, corporate finance and advisory, asset management and
securities dealing services.
Shariah-compliant Financial Products
The Issuer offers wholesale Shariah-compliant financial products
to its client base from its UAE operations.
HSBC Group Operations in the MENAT region
The HSBC Group operates in the MENAT region through a number of
consolidated subsidiaries, which includes: the Issuer, HSBC Bank
Egypt S.A.E, HSBC Securities (Egypt) S.A.E., HSBC Bank Oman
S.A.O.G., HSBC Bank A.S. Turkey, HSBC Bank Middle East Limited
Representative Office Morocco SARL, HSBC Middle East Finance
Company Limited, HSBC Middle East Securities LLC, The Hongkong and
Shanghai Banking Corporation Limited Representative Office and HSBC
Middle East Leasing Partnership. An associate company of the HSBC
Group, The Saudi British Bank, and its subsidiaries, and a joint
venture, HSBC Saudi Arabia, also have operations in the Middle
East.
The Issuer also plays an important role in the community by
supporting a range of charitable and community projects,
principally through the annual Community Investment programme in
the MENAT region, an annual donation scheme into which the Issuer
contributed US$ 7,566,910 and 18,855 employee volunteering hours
(with an estimated value of US$ 218,666) in 2017.
Organisational Structure
The HSBC Group is one of the largest banking and financial
services organisations in the world, with a market capitalisation
of US$ 207.4 billion as at 31 December 2017.
As at 31 December 2017, the HSBC Group had total assets of US$
2,521,771 million, and total shareholders' equity of US$ 190,250
million. For the year ended 31 December 2017, the HSBC Group's
operating profit was US$ 14,792 million on a total operating income
of US$ 63,776 million. The HSBC Group had a CRD IV transitional
common equity tier 1 capital ratio of 14.5 per cent. and an
estimated CRD IV end point basis common equity tier 1 ratio of 14.5
per cent. as at 31 December 2017.
Headquartered in London, the HSBC Group operates through
long-established businesses and has an international network of
around 3,900 branches in 67 countries and territories in five
geographical regions: Europe, Asia, MENAT, North America and Latin
America. Within these regions, a comprehensive range of banking and
related financial services is offered to personal, commercial,
corporate, institutional, investment and private banking
clients.
The HSBC Group's products and services are delivered to clients
through four global businesses: Retail Banking and Wealth
Management, Commercial Banking, Global Banking and Markets, and
Global Private Banking.
Retail Banking and Wealth Management serves approximately 37
million customers worldwide through four main business areas:
Retail Banking, Wealth Management, Asset Management and Insurance.
The HSBC Group provides Retail Banking and Wealth Management
services to individuals under the HSBC Premier and Advance
propositions aimed at mass affluent and emerging affluent customers
who value international connectivity and benefit from the HSBC
Group's global reach and scale. For customers who have simpler
everyday banking needs, HSBC's Retail Banking and Wealth Management
business selectively offers a full range of banking products and
services reflecting local requirements.
The HSBC Group's Commercial Banking business serves
approximately 1.7 million customers in 53 countries and
territories, which range from small enterprises focused primarily
on their domestic markets through to corporates operating globally.
The HSBC Group's Commercial Banking business supports its customers
with tailored financial products and services to allow them to
operate efficiently and to grow. This includes providing customers
with working capital, term loans, payment services and
international trade facilitation, among other services. The HSBC
Group's Commercial Banking business offers its customers expertise
in mergers and acquisitions, and provides access to financial
markets.
The HSBC group's Global Banking and Markets business supports
major government, corporate and institutional clients worldwide in
achieving their long-term strategic goals through tailored and
innovative solutions. The HSBC Group's deep sector expertise
extends across transaction banking, financing, advisory, capital
markets and risk management. The HSBC Group's Global Banking and
Markets business serves approximately 4,100 clients in more than 50
countries and territories. The HSBC Group's Global Banking and
Markets business continues to deliver a comprehensive range of
transaction banking, financing, advisory, capital markets and risk
management services.
Global Private Banking serves high net worth individuals and
families, including those with international banking needs. The
HSBC Group works closely with its clients to provide solutions to
grow, manage and preserve wealth. The HSBC Group's Global Private
Banking business products and services include: Investment
Management, incorporating advisory, discretionary and brokerage
services; Private Wealth Solutions, comprising trusts and estate
planning, designed to protect wealth and preserve it for future
generations; and a full range of Private Banking services.
The Issuer is the HSBC Group's principal operating subsidiary
undertaking in the MENAT region. It is a wholly--owned, indirectly
held (via an intermediate holding entity) subsidiary of HSBC
Holdings.
As at the date of this Information Memorandum, the Issuer's
subsidiary undertakings are:
Country HBME's
of Incorporation interest
or registration in equity
capital
------------------- ------------
(per cent.)
HSBC Financial Services (Middle East) Limited Dubai,
(in liquidation) UAE 100
HSBC Middle East Finance Company Dubai,
Limited.............................................................. UAE 80
HSBC Middle East Securities LLC.................................................. Dubai,
.............................. UAE Lebanon 100
HSBC Insurance Services (Lebanon) S.A.L
(in liquidation)........................................... 100
HSBC Bank Middle East Limited Representative
Office Morocco SARL...................... Morocco 99
The countries of operation are the same as the countries of
incorporation.
In order to comply with local legal requirements, the ownership
of the investment in HSBC Middle East Securities LLC is held 49 per
cent. in the name of the Issuer and 51 per cent. in the personal
name of Mr Abdul Wahid Al Ulama as nominee. Under a Memorandum of
Understanding, the nominee has transferred his legal and/or
beneficial interest in HSBC Middle East Securities LLC to the
Issuer.
As at the date of this Information Memorandum, HSBC Financial
Services (Middle East) Limited is pending dissolution following the
submission of a liquidation request with the UAE Ruler's Court (as
a Royal Decree Company).
On 9 December 2013, HSBC Insurance Services (Lebanon) SAL, a
wholly-owned subsidiary of the Issuer, went into formal liquidation
and remains in liquidation as at the date of this Information
Memorandum.
Acquisitions / Disposals
The Issuer has not completed any acquisitions or disposals since
July 2017.
Authorised Share Capital
As at the date of this Information Memorandum:
-- the authorised share capital of the Issuer is U.S.$
1,501,350,000, divided into: 1,500,000,000 ordinary shares of U.S.$
1.00 each, 1,125,000 dated preference shares and 225,000 undated
preference shares of US$ 1.00 each; and
-- the issued share capital of the Issuer is US$ 932,005,001,
divided into 931,055,001 ordinary shares of US$ 1.00 each and
725,000 dated preference shares and 225,000 undated preference
shares of US$ 1.00 each.
Financial Trend Information
There are no known financial trends, uncertainties, demands,
commitments or events that are reasonably likely to have a material
effect on the Issuer's prospects for the current financial
year.
Management
At the date of this Information Memorandum, the Directors of the
Issuer, their functions and their principal outside activities (if
any) of significance to the Issuer, are as follows:
Name Function within the Principal Outside Activities
Issuer
----------------- ---------------------------- -------------------------------------------------------------
David Gordon Chairman and Non--Executive
Eldon Director * Investment Promotion Ambassador Scheme (Member)
* Hong Kong Academy for Performing Arts (Special
Adviser to the Staff Retirement Benefits Scheme)
* The Community Chest (Vice Patron) (Chairman Executive
Committee)
* Southern Capital Group (Advisor)
* HK Institute for the Humanities and Social Science
(Honorary Adviser)
* Global Institute for Tomorrow (GIFT) (Advisory
Council Member)
* Noble Group Ltd (Vice Chairman)
* HSBC Bank Middle East Limited. (Non-Executive
Chairman)
* DIFC Higher Board (Board Member)
* New Lily International Ltd. (Advisor)
* Octopus Holdings Limited (Non-Executive Chairman)
* Octopus Cards Limited (Non-Executive Chairman)
* Octopus Cards Client Funds Limited (Non-Executive
Chairman)
* HSBC Global Commercial Bank (Adviser to the CEO)
* CP Group (Corporate Governance Committee Member)
* HSBC Bank A.S. (Non-Executive Chairman)
* HSBC Bank Egypt S.A.E. (Non-Executive Chairman)
* HSBC Middle East Holdings BV (Non-Executive Chairman)
Georges Elhedery Chief Executive Officer
and Deputy Chairman * HSBC Bank Middle East Limited (Board member)
and Executive Director
* HSBC Saudi Arabia (Board member)
* HSBC Bank Egypt S.A.E. (Board member)
* The Saudi British Bank (Board member)
* HSBC Bank A.S. (Board member)
* HSBC Middle East Holdings BV (Board member)
Raja Easa Al Non--Executive Director
Gurg * Dubai Healthcare City Authority (Vice Chairperson of
the Board of Directors and Executive Director)
* Dubai Chamber of Commerce and Industry (Board Member)
* Free Zone Council in Dubai (Board Member)
* Board of Trustees of the University of Dubai (Member)
* Coutts Bank (Advisory Board MENA)
* Mohammad Bin Rashid University of Medicine and Health
Sciences (Vice-Chairperson of Board)
* Al Jalila Foundation (Chairperson of the Board of
Directors)
* Member of the Board of trustees of Hamdan Bin
Mohammed e- University
David Dew Non-Executive Director
* The Saudi British Bank (Director)
* HSBC Saudi Arabia
Abdul Hakeem Executive Director
Hashim Bin * INJAZ Qatar (Board member)
Mostafawi
* Member of the Advisory Council for The College of
Business and Economics, Qatar University
Sir William Non-Executive Director
Charters Patey * WCP Consultants Limited (Director)
* Government and International Affairs Adviser, Control
Risks Group
* CRT Trustees Limited (Director)
* Turquoise Mountain Trust (Trustee)
Abdulfattah Executive Director
Sayed Mansoor * HSBC Bank Oman S.A,O,G (Director - Member of the Risk
Sharaf Committee and Chairman of Remuneration Committee)
* DIFC Higher Board (Member)
* Noor Dubai Foundation (Board Member)
* Advisory Board Council of the American University of
Sharjah's School of Business and Management (Board
Member)
* Emirates Golf Federation (Board Member)
* Mastercard MENA Advisory Board (Director)
Christopher Non--Executive Director
David Spooner * Treasurer and member of the Council of the African
Bird Club - a United Kingdom charity supporting bird
conservation in Africa
* BB 2000 Limited as Finance Director (from December
2015)
John Bartlett Non-Executive Director
* BP Investment Management Ltd (Director)
* Barnardo's a Large United Kingdom Children's Charity
Director)
* BP Pension Trustees Ltd (Director)
On 13 September 2017 John Bartlett joined the Board as a
Non-Executive Director.
On 31 December 2017 Thomas Lindsay Slattery resigned from the
Board.
On 14 February 2018 Khalid Abdullah Abdulaziz Almolhem resigned
from the Board.
On 28 February 2018 Alan Keir resigned from the Board.
The business address for the purposes of correspondence for all
the Directors of the Issuer is Level 1, Building No. 8, Gate
Village, DIFC, P.O. Box 502601, Dubai, UAE.
The Company Secretary of the Issuer is John Alan Tothill, whose
business address for the purposes of correspondence is Level 1,
Building No. 8, Gate Village, DIFC, P.O. Box 502601, Dubai,
UAE.
There are no conflicts of interest between any duties owed to
the Issuer by its Directors or by its Company Secretary (as
described above) and their private interests and/or other duties,
and no such potential conflicts of interest exist to the knowledge
of the Issuer as at the date of this Information Memorandum. The
Issuer has procedures in place to manage any such potential
conflicts of interest which arise from time to time.
Major Shareholders
The whole of the ordinary issued share capital of the Issuer and
the majority of the issued preference share capital of the Issuer
is beneficially owned by HSBC Middle East Holdings B.V., the
Issuer's immediate parent shareholder and which is a wholly--owned,
indirectly held (via an intermediate holding entity), subsidiary of
HSBC Holdings. The appointment of auditors and any changes to the
Memorandum and Articles of Association of the Issuer require the
approval of the Issuer's shareholders in a general meeting.
Material Contracts
There are no material contracts that have been entered into in
the ordinary course of the Issuer's business, which could result in
any HSBC Group member being under an obligation or entitlement that
is material to the Issuer's ability to meet its obligations to
security holders in respect of the securities being issued under
the Programme.
INFORMATION INCORPORATED BY REFERENCE
The following documents shall be deemed to be incorporated in,
and to form part of, this Information Memorandum, provided that any
documents incorporated by reference in any of the documents set
forth below do not form part of this Information Memorandum:
-- the consolidated Annual Report and Accounts of the Issuer and
its subsidiary undertakings and, as it relates to the audited
consolidated financial statements included therein, the auditor's
report for the years ended 31 December 2016 and 2017;
-- the Terms and Conditions of the Notes contained in each of
the previous base prospectuses of the Issuer dated 28 September
2006, 17 January 2008, 5 February 2009, 22 April 2010, 17 May 2011
and 17 May 2012; and
-- the Terms and Conditions of the Notes contained in the
information memorandum dated 16 November 2004, in the information
memorandum dated 15 July 2013, in the information memorandum dated
15 July 2014, as amended by the supplementary listing particulars
dated 18 December 2014, in the information memorandum dated 15 July
2015, as amended by the supplementary listing particulars dated 20
October 2015, in the information memorandum dated 14 July 2016, as
amended by the supplementary listing particulars dated 26 September
2016, and in the information memorandum dated 13 July 2017, as
amended by the supplementary listing particulars dated 31 July 2017
and 20 February 2018,
save that any statement contained in this Information Memorandum
or any information incorporated by reference herein, shall be
deemed to be modified or superseded for the purpose of this
Information Memorandum to the extent that a statement contained in
any document subsequently incorporated by reference modifies or
supersedes such statement.
The Issuer will, at its registered office and at the specified
offices of the Paying Agents, make available for inspection during
normal business hours and free of charge, upon oral or written
request, a copy of this Information Memorandum and each document
incorporated by reference in this Information Memorandum. Written
or oral requests for inspection of such documents should be
directed to the specified office of any Paying Agent.
OVERVIEW OF PROGRAMME PARTIES
The following is an overview of the roles of certain of the
parties involved in the Programme. This overview does not contain
all of the information that an investor should consider before
investing in the Notes and is qualified in its entirety by the
remainder of this Information Memorandum, the relevant Pricing
Supplement and the documents relating to the Programme referred to
herein. Each investor should read the entire Information Memorandum
and the relevant Pricing Supplement carefully, especially the risks
of investing in the Notes issued under the Programme discussed
under "Risk Factors".
The Trustee acts as trustee in relation to the Notes pursuant to
the Terms and Conditions of the Notes and the Trust Deed. The
Trustee is entitled to exercise certain rights, duties, powers,
trusts, authorities and discretions as set out in the Terms and
Conditions of the Notes and the Trust Deed.
The Principal Paying Agent is appointed under the Agency
Agreement for the purposes of, among other things, making payments
on behalf of the Issuer to the Noteholders, dealing with
replacements of Bearer Notes and Coupons and performing various
other administrative functions in relation to the Notes (see
further Condition 8 (Payments), Condition 12 (Paying Agents,
Transfer Agents, Calculation Agent and Registrar) and Condition 13
(Replacement and Transfer)).
The ICSD Registrar is appointed under the Agency Agreement for
the purposes of, among other things, maintaining the register of
the names and addresses of the Noteholders for Registered Notes and
dealing with transfers of Registered Notes (see further Condition
12 (Paying Agents, Transfer Agents, Calculation Agent and
Registrar) and Condition 13 (Replacement, and Transfer)).
The Issuer may, from time to time, appoint a CMU Registrar under
the Agency Agreement for the purposes of, among other things,
maintaining the register of the names and addresses of the
Noteholders for Registered Notes in the CMU system and performing
various other administrative functions (see further Condition 12
(Paying Agents, Transfer Agents, Calculation Agent and Registrar)
and Condition 13 (Replacement and Transfer)).
References to Registrars in this Information Memorandum mean the
ICSD Registrar and/or the CMU Registrar, as the case may be, and
any successor or additional persons appointed as such (each a
"Registrar").
The Transfer Agent is appointed under the Agency Agreement for
the purposes of, among other things, dealing with any transfers of
Notes and performing various other administrative functions,
including, providing replacement Notes (see further Condition 1
(Form, Denomination and Title), Condition 12 (Paying Agents,
Transfer Agents, Calculation Agent and Registrar) and Condition 13
(Replacement and Transfer)).
The Calculation Agent is appointed under the Agency Agreement
for the purposes of, among other things, calculating and publishing
the rate of interest and the interest amount from time to time
payable under the Notes (see further Condition 4 (Interest on
Floating Rate Notes)).
A Calculation Agent, or in the case for Notes held in the CMU
system, a Renminbi Calculation Agent may be appointed to calculate
the interest payable on the Notes by, among other things, obtaining
quotes and performing determinations and calculations. The identity
of such Calculation Agent and/or Renminbi Calculation Agent shall
be specified in the relevant Pricing Supplement.
The Issuer may, from time to time, appoint a CMU Lodging and
Paying Agent under the Agency Agreement for the purposes of, among
other things, making payment of principal and interest on behalf of
the Issuer to the Noteholders in the CMU system and performing
various other administrative functions in relation to the issue of
the Notes (see further Condition 12 (Paying Agents, Transfer
Agents, Calculation Agent and Registrar)).
References to Paying Agents in this Information Memorandum mean
the Principal Paying Agent and/or the CMU Lodging and Paying Agent,
as the case may be, and any successor or additional persons
appointed as such (each a "Paying Agent"). The identity of such CMU
Lodging and Paying Agent and any additional Paying Agents, if any,
shall be specified in the relevant Pricing Supplement.
The Dealers are appointed under the Dealer Agreement for the
purposes of subscribing for Notes; procuring a third party to
purchase or subscribe for Notes; agreeing to procure the purchase
or subscription for Notes by a third party and, in default thereof,
themselves subscribing for Notes.
The Arranger or Arrangers (if applicable) act in an
administrative capacity to facilitate the establishment and/or
maintenance of the Programme.
TERMS AND CONDITIONS OF THE NOTES
The following (disregarding any sentences in italics) is the
text of the terms and conditions applicable to the Notes, which, as
supplemented or varied in accordance with the provisions of the
relevant Pricing Supplement(s), will be incorporated by reference
into each Global Note and which will be endorsed on the Notes in
definitive form (if any) issued in exchange for Global Notes
representing each Tranche, details of the relevant Tranche being as
set out in the relevant Pricing Supplement. The Pricing Supplement
in relation to any Tranche may specify other terms and conditions
which shall, to the extent so specified or to the extent
inconsistent with such terms and conditions, replace or modify the
following terms and conditions for the purpose of such Tranche.
This Note is one of a Series of Notes (the "Notes") issued
pursuant to the debt issuance programme (the "Programme")
established by HSBC Bank Middle East Limited (the "Bank" or the
"Issuer") and is constituted by a Trust Deed dated 16 November 2004
(such Trust Deed as last modified and restated by a modified and
restated trust deed dated 12 July 2018 and as further modified
and/or supplemented and/or restated from time to time, the "Trust
Deed") made between the Issuer and The Law Debenture Trust
Corporation p.l.c. (the "Trustee" which expression shall wherever
the context so admits include its successors) and has the benefit
of an Agency Agreement dated 16 November 2004 (such Agency
Agreement as last modified and restated on 12 July 2018 and as
further modified and/or supplemented and/or restated from time to
time, the "Agency Agreement") made between, amongst others, the
Issuer, the Principal Paying Agent (the "Principal Paying Agent"
which expression shall wherever the context so admits include its
successors as such in respect of the Notes), any CMU Lodging and
Paying Agent (as defined below) and any successor or additional
paying agents appointed in respect of the Notes (together with the
Principal Paying Agent and any CMU Lodging and Paying Agent (as
defined below), the "Paying Agents"), the ICSD Registrar (the "ICSD
Registrar" which expression shall wherever the context so admits
include any successor or additional person appointed as such in
respect of the Notes), the Transfer Agent (the "Transfer Agent",
which expression shall wherever the context so admits include any
successor or additional person appointed as such in respect of the
Notes), any CMU Registrar (as defined below) (together with the
ICSD Registrar, the "Registrars" and each, a "Registrar") each
named therein and the Trustee. The initial Principal Paying Agent,
the initial ICSD Registrar and the initial Calculation Agent are
named below. In addition, the Issuer may from time to time, in
relation to any Notes denominated in Renminbi, appoint a CMU
Lodging and Paying Agent (the "CMU Lodging and Paying Agent" which
expression shall wherever the context so admits include any
successor or additional person appointed as such in respect of the
Notes, as appointed from time to time). In relation to any Notes
denominated in Renminbi, a CMU Registrar (the "CMU Registrar" which
expression shall wherever the context so admits include any
successor or additional person appointed as such in respect of the
Notes) may also be appointed. Details of any such CMU Lodging and
Paying Agent and CMU Registrar shall be given in the relevant
Pricing Supplement (as defined below).
The Trustee shall exercise the duties, power, trusts,
authorities and discretions vested in it by the Trust Deed
separately in relation to each Series of Notes in accordance with
the provisions of the Trust Deed. Copies of the Trust Deed and the
Agency Agreement are available for inspection during normal
business hours at the principal office for the time being of the
Trustee and at the specified office of each of the Principal Paying
Agent, the CMU Lodging and Paying Agent, the other Paying Agents
(if any), the Registrars and the Transfer Agents appointed from
time to time pursuant to the terms of the Agency Agreement. The
Holders (as defined below) for the time being of Notes (the
"Noteholders") and of any coupons ("Coupons") or talons ("Talons")
(the "Couponholders") are entitled to the benefit of, are bound by,
and are deemed to have notice of, all the provisions of the Trust
Deed and the Agency Agreement applicable to them.
References in these terms and conditions (the "Conditions") to
"Notes" shall, where the context so requires include the temporary
global Notes, the permanent global Notes, subordinated Notes
("Subordinated Notes"), Notes which are not subordinated and such
other Notes as may from time to time be issued under the Programme,
as the case may be, and the term "Notes" includes debt instruments,
by whatever name called, issued under the Programme. References to
the "Issuer" means HSBC Bank Middle East Limited in its capacity as
issuer of Notes under the Programme. All Notes will be issued in
series (each, a "Series") and each Series may comprise one or more
tranches (each, a "Tranche") of Notes. Each Tranche will be the
subject of a pricing supplement (the "Pricing Supplement"), a copy
of which will be attached to or incorporated by reference in each
Note of such Tranche. Subject as set out in the relevant Pricing
Supplement, all Notes issued pursuant to the Programme on the same
date, denominated in the same currency, having the same maturity
date, bearing interest, if any, on the same basis and issued on
identical terms will constitute one Tranche of Notes.
Capitalised terms used but not defined herein shall have the
meaning given to them in the relevant Pricing Supplement.
1. FORM, DENOMINATION AND TITLE
(a) Form
Notes are issued in bearer form ("Bearer Notes") or in
registered form ("Registered Notes") as set out in the relevant
Pricing Supplement.
(b) Form of Bearer Notes
Bearer Notes will be in substantially the relevant form (subject
to amendment and completion) scheduled to the Trust Deed or in such
other form as from time to time may be agreed. Interest--bearing
Bearer Notes will, if so specified in the relevant Pricing
Supplement, have attached at the time of their initial delivery
Coupons, presentation of which will be a prerequisite to the
payment of interest in certain circumstances specified below.
Interest--bearing Bearer Notes will also, if so specified in the
relevant Pricing Supplement, have attached at the time of their
initial delivery a Talon exchangeable for further Coupons and the
expression "Coupons" shall, where the context so requires, include
Talons.
(c) Form of Registered Notes
Registered Notes will be in substantially the relevant form
(subject to amendment and completion) scheduled to the Trust Deed
or in such other form as may from time to time be agreed.
(d) Instalment Notes
Notes the principal amounts of which are repayable by
instalments ("Instalment Notes") which are definitive Notes will
have endorsed thereon a grid for recording the repayment of
principal or will, if so specified in the relevant Pricing
Supplement, have attached thereto at the time of their initial
delivery, payment receipts ("Receipts") in respect of the
instalments of principal.
(e) Partly Paid Notes
Notes may be issued on a partly paid basis ("Partly Paid Notes")
if so specified in the relevant Pricing Supplement and any further
or alternative terms applicable thereto shall be as set out in the
relevant Pricing Supplement.
(f) Denomination
Subject to Condition 9 (Redenomination), Bearer Notes will be in
the denomination(s) set out in the relevant Pricing Supplement.
Registered Notes will be in the denomination(s) and multiples set
out in the relevant Pricing Supplement.
(g) Title
Title to Bearer Notes, Coupons and Talons will pass by delivery.
Title to Registered Notes passes by registration in the register
which is kept by the relevant Registrar. References herein to the
"Holders" of Bearer Notes or of Coupons are to the bearers of such
Bearer Notes or such Coupons and references herein to the "Holders"
of Registered Notes are to the persons in whose names such
Registered Notes are so registered in the register.
To the extent permitted by law and subject to the provisions of
the fourth paragraph of Condition 14(a) (Notices), while the Notes
of any Series are represented by a Note or Notes in global form,
the Issuer, the Principal Paying Agent, the CMU Lodging and Paying
Agent (as the case may be), any other Paying Agents, the Transfer
Agents, the Calculation Agent and the relevant Registrar may deem
and treat the Holder of any Bearer Note or of any Coupon and the
Holder of any Registered Note (and, if more than one, the first
named thereof) as the absolute owner thereof (whether or not such
Note shall be overdue and notwithstanding any notice of ownership
or writing thereon or notice of any previous loss or theft thereof)
for the purpose of receiving payment on account thereof and for all
other purposes.
(h) Transfer of Registered Notes
Subject as provided in the final sentence of this Condition
1(h), a Registered Note may, upon the terms and subject to the
conditions set forth in the Agency Agreement, be transferred in
whole or in part only (provided that each of such part transferred
and the balance not transferred is, or is an integral multiple of,
the minimum denomination specified in the relevant Pricing
Supplement) upon the surrender of the Registered Note to be
transferred, together with the form of transfer (including, without
limitation, any certification as to compliance with restrictions on
transfer included in such form of transfer) endorsed on it duly
completed and executed, at the specified office of the relevant
Registrar or any of the Transfer Agents together with such evidence
as such Registrar, or as the case may be, such Transfer Agent may
reasonably require to prove the title of the transferor and the
authority of the persons who have executed the form of transfer. A
new Registered Note will be issued to the transferee and, in the
case of a transfer of part only of a Registered Note, a new
Registered Note in respect of the balance not transferred will be
issued to the transferor. No Holder may require the transfer of a
Registered Note to be registered during the period of 15 calendar
days ending on the due date for any payment (whether of principal,
redemption amount, interest or otherwise) in respect of such
Note.
(i) Delivery
Each new Registered Note to be issued upon the transfer of a
Registered Note will, within five Relevant Banking Days (as defined
in Condition 19 (Definitions)) of the Transfer Date (as defined in
Condition 19 (Definitions)), be available for delivery at the
specified office of the relevant Registrar or, as the case may be,
the relevant Transfer Agent or (at the request and risk of the
Holder of such Registered Note) be mailed by uninsured post to such
address as may be specified by such Holder. For these purposes, a
form of transfer received by the relevant Registrar or any of the
Transfer Agents after the Record Date (as defined in Condition 8(b)
(Payments)) in respect of any payment due in respect of Registered
Notes shall be deemed not to be effectively received by such
Registrar or such Transfer Agent until the day following the due
date for such payment.
(j) No charge
The issue of new Registered Notes on transfer will be effected
without charge to the Holder or the transferee by or on behalf of
the Issuer, the relevant Registrar or the relevant Transfer Agent,
but upon payment by the applicant of (or the giving by the
applicant of such indemnity as the relevant Registrar or, as the
case may be, the relevant Transfer Agent may require in respect of)
any tax or other duty of whatsoever nature which may be levied or
imposed in connection with such transfers or exchanges.
(k) Regulations concerning transfer and registration of Registered Notes
All transfers of Registered Notes and entries on the Register
will be made subject to the detailed regulations (the
"Regulations") concerning exchange and transfer of Registered Notes
scheduled to the Agency Agreement. The Regulations may be amended,
supplemented or replaced by the Issuer with the prior written
approval of the relevant Registrar but without the consent of the
Holders of any Notes. A copy of the current Regulations are
available for inspection during usual business hours at the
specified office of the relevant Registrar and the Transfer
Agents.
(l) No Exchange
Registered Notes may not be exchanged for Bearer Notes and
Bearer Notes may not be exchanged for Registered Notes.
2. STATUS AND SUBORDINATION
The Notes of each Series (other than Subordinated Notes)
constitute direct, unsecured and unsubordinated obligations of the
Issuer, ranking pari passu without any preference among themselves
and, at their date of issue, ranking pari passu with all other
unsecured and unsubordinated obligations of the Issuer other than
any such obligations preferred by law.
The Notes of each Series of Subordinated Notes constitute
direct, unsecured and subordinated obligations of the Issuer
ranking pari passu without any preference among themselves. The
rights of Holders of Subordinated Notes will, in the event of the
winding up of the Issuer, be subordinated in right of payment to
the claims of depositors and all other creditors of the Issuer
other than claimants in respect of Subordinated Indebtedness (as
defined in the Trust Deed) in the manner provided in the Trust
Deed.
Claims in respect of any Notes or Coupons may not be set off, or
be the subject of a counterclaim, by the Holder against or in
respect of any obligations of his to the Issuer, the Trustee or any
other person, and every Holder waives, and shall be treated for all
purposes as if he had waived, any right that he might otherwise
have to set off, or to raise by way of counterclaim any claim of
his in respect of any Notes or Coupons, against or in respect of
any obligations of his to the Issuer, the Trustee or any other
person. If, notwithstanding the preceding sentence, any Holder
receives or recovers any sum or asset or the benefit of any sum or
asset in respect of any Note or Coupon by virtue of any such set
off or counterclaim, he shall hold the same on trust for the Issuer
and shall pay the amount thereof to the Issuer or, in the event of
the winding up of the Issuer, to the liquidator of the Issuer.
3. INTEREST ON FIXED RATE NOTES
(a) Application
This Condition 3 is applicable to the Notes only if the Fixed
Rate Note provisions are specified in the relevant Pricing
Supplement as being applicable.
(b) Accrual of interest
Fixed Rate Notes bear interest from the Interest Commencement
Date at the Rate of Interest payable in arrear on each Interest
Payment Date, subject as provided in Condition 8 (Payments). Each
Note will cease to bear interest from the due date for final
redemption unless payment of the redemption amount and/or delivery
of all assets deliverable is improperly withheld or refused, in
which case it will continue to bear interest in accordance with
this Condition 3 (as well after as before judgment) until whichever
is the earlier of: (i) the day on which all sums due in respect of
such Note up to that day are received by or on behalf of the
relevant Noteholder and/or all assets in respect of such Note have
been delivered; and (ii) the day which is seven days after the day
the Principal Paying Agent or the Trustee has notified the
Noteholders that it or (as applicable) any agent appointed by the
Issuer to deliver the relevant assets to the Noteholders has
received all sums and/or all assets due in respect of the Notes up
to such seventh day (except to the extent that there is any
subsequent default in payment and/or delivery, in which case the
Notes will continue to bear interest as aforesaid).
(c) Fixed Coupon Amount
The amount of interest payable in respect of each Note for any
Interest Period shall be the relevant Fixed Coupon Amount and, if
the Notes are in more than one denomination (as specified in the
relevant Pricing Supplement), shall be the relevant Fixed Coupon
Amount in respect of the relevant denomination.
(d) Calculation of interest amount
The amount of interest payable in respect of each Note for any
period for which a Fixed Coupon Amount is not specified shall be
calculated by applying the Rate of Interest to the Calculation
Amount, multiplying the product by the relevant Day Count Fraction,
rounding the resulting figure to the nearest sub--unit of the
Specified Currency (as defined in Condition 19 (Definitions)) (half
a sub--unit being rounded upwards) and multiplying such rounded
figure by a fraction equal to the principal outstanding amount of
such Note (as specified in the relevant Pricing Supplement) divided
by the Calculation Amount. For this purpose a "sub--unit" means, in
the case of any currency other than euro, the lowest amount of such
currency that is available as legal tender in the country of such
currency and, in the case of euro, means one cent.
4. INTEREST ON FLOATING RATE NOTES
(a) Application
This Condition 4 is applicable to the Notes only if the Floating
Rate Note provisions, the Index--Linked Interest Note provisions or
other variable--linked interest Note provisions are specified in
the relevant Pricing Supplement as being applicable.
(b) Accrual of interest
Floating Rate Notes bear interest from the Interest Commencement
Date at the Rate of Interest payable in arrear on each Interest
Payment Date, subject as provided in Condition 8 (Payments). Each
Note will cease to bear interest from the due date for final
redemption unless payment of the redemption amount and/or delivery
of all assets deliverable is improperly withheld or refused, in
which case it will continue to bear interest in accordance with
this Condition 4 (as well after as before judgment) until whichever
is the earlier of: (i) the day on which all sums due in respect of
such Note up to that day are received by or on behalf of the
relevant Noteholder and/or all assets in respect of such Note have
been delivered; and (ii) the day which is seven days after the day
the Principal Paying Agent or the Trustee has notified the
Noteholders that it or (as applicable) any agent appointed by the
Issuer to deliver the relevant assets to the Noteholders has
received all sums and/or all assets due in respect of the Notes up
to such seventh day (except to the extent that there is any
subsequent default in payment and/or delivery, in which case the
Notes will continue to bear interest as aforesaid).
(c) Screen Rate Determination
If Screen Rate Determination is specified in the relevant
Pricing Supplement as the manner in which the Rate(s) of Interest
is/are to be determined, the Rate of Interest applicable to the
Notes for each Interest Period will be determined by the
Calculation Agent on the following basis:
(i) if the Reference Rate is a composite quotation or
customarily supplied by one entity, the Calculation Agent will
determine the Reference Rate which appears on the Relevant Screen
Page as of the Relevant Time on the relevant Interest Determination
Date;
(ii) if Linear Interpolation is specified as applicable in
respect of an Interest Period or generally in relation to the Notes
in the relevant Pricing Supplement, the Rate of Interest for such
Interest Period shall be calculated by the Calculation Agent by
straight-line linear interpolation by reference to two rates for
the relevant Reference Rate which appear on the Relevant Screen
Page as of the Relevant Time on the relevant Interest Determination
Date, where:
(A) one such rate shall be determined as if the Relevant Period
were the period of time for which rates for the relevant Reference
Rate are available next shorter than the length of the relevant
Interest Period; and
(B) the other such rate shall be determined as if the Relevant
Period were the period of time for which rates for the relevant
Reference Rate are available next longer than the length of the
relevant Interest Period,
provided, however, that if no such rate is available for a
period of time next shorter or, as the case may be, next longer
than the length of the relevant Interest Period, then the
Calculation Agent, acting in a commercially reasonable manner,
shall determine such rate for the relevant Reference Rate at such
time and by reference to such sources as it determines
appropriate;
(iii) in any other case, the Calculation Agent will determine
the arithmetic mean of the Reference Rates which appear on the
Relevant Screen Page as of the Relevant Time on the relevant
Interest Determination Date;
(iv) if a Screen Rate Fallback Trigger has occurred, then:
(A) if ISDA Determination for Fallback provisions is specified
in the relevant Pricing Supplement as being applicable, the
Calculation Agent will determine the relevant Floating Rate for the
relevant Interest Determination Date in accordance with Condition
4(e) (ISDA Determination) on the basis of the Floating Rate Option,
Designated Maturity and Reset Date specified in the relevant
Pricing Supplement; and
(B) in all other cases where ISDA Determination for Fallback
provisions is not specified in the relevant Pricing Supplement as
being applicable, the Calculation Agent will:
(1) request the Relevant Financial Centre office of each of the
Reference Banks to provide a quotation at approximately the
Relevant Time on the Interest Determination Date of the rate
offered by it to prime banks in the Relevant Financial Centre
interbank market for a period equal to the Relevant Period and in
an amount that is representative for a single transaction in that
market at that time; and
(2) determine the arithmetic mean (rounded, if necessary, to the
nearest four decimal places, with 0.00005 being rounded upwards) of
such quotations; and
(3) if fewer than the Relevant Number of Quotations are provided
as requested, the Calculation Agent will determine the arithmetic
mean of the rates quoted by major banks in the Relevant Financial
Centre of the Specified Currency, selected by the Calculation
Agent, at approximately the Relevant Time in the Relevant Financial
Centre of the Specified Currency on the first day of the relevant
Interest Period for loans in the Specified Currency to Leading
Banks for a period equal to the Relevant Period and in an amount
that is representative for a single transaction in that market at
that time,
and the Rate of Interest for such Interest Period shall be the
sum of the Margin and the rate or (as the case may be) the
arithmetic mean so determined; provided, however, that if the
Calculation Agent is unable to determine a rate or (as the case may
be) an arithmetic mean in accordance with the above provisions in
relation to any Interest Period, the Rate of Interest applicable to
the Notes during such Interest Period will be the sum of the Margin
and the rate determined by the Calculation Agent at such time and
by reference to such sources as it determines appropriate.
(d) Alternative Reference Rates
If Alternative Reference Rates is specified as applicable in the
relevant Pricing Supplement and notwithstanding the provisions of
Condition 4(c) (Screen Rate Determination), if the Issuer (in
consultation with the Calculation Agent) determines that the
Reference Rate specified in the relevant Pricing Supplement has
ceased to be published on the Relevant Screen Page as a result of
such Reference Rate ceasing to be calculated or administered,
then:
(i) if the Pricing Supplement specifies an "Alternative
Pre-nominated Reference Rate", then the Rate of Interest applicable
to the Notes for all future Interest Periods shall be such
Alternative Pre-nominated Reference Rate and the Issuer shall
promptly give notice of the change of the Reference Rate to the
Alternative Pre-nominated Reference Rate with respect to the Notes
to the Trustee, the Principal Paying Agent, the Calculation Agent
and the relevant Noteholders (in accordance with Condition 14
(Notices)); or
(ii) if the Pricing Supplement does not specify an "Alternative
Pre-nominated Reference Rate" then the following provisions of this
Condition 4(d)(ii) will apply:"
(A) the Issuer shall use reasonable endeavours to appoint an
Independent Adviser to determine an alternative rate (the
"Alternative Reference Rate") and an alternative screen page or
source (the "Alternative Relevant Screen Page") no later than five
Business Days prior to the Interest Determination Date relating to
the next Interest Period (the "IA Determination Cut-off Date") for
the purposes of determining the Rate of Interest applicable to the
Notes for all future Interest Periods (subject to the subsequent
operation of this Condition 4(d));
(B) the Alternative Reference Rate shall be such rate as the
Independent Adviser determines has replaced the relevant Reference
Rate in customary market usage for the purposes of determining
floating rates of interest in respect of Eurobonds denominated in
the Specified Currency, or, if the Independent Adviser determines
that there is no such rate, such other rate as the Independent
Adviser determines in its sole discretion is most comparable to the
relevant Reference Rate, and the Alternative Relevant Screen Page
shall be such page of an information service as displays the
Alternative Reference Rate;
(C) if the Issuer is unable to appoint an Independent Adviser,
or the Independent Adviser appointed by it fails to determine an
Alternative Reference Rate and Alternative Relevant Screen Page
prior to the IA Determination Cut-off Date, then the Issuer (in
consultation with the Calculation Agent and acting in good faith
and a commercially reasonable manner) shall determine which (if
any) rate has replaced the relevant Reference Rate in customary
market usage for purposes of determining floating rates of interest
in respect of Eurobonds denominated in the Specified Currency, or,
if it determines that there is no such rate, which (if any) rate is
most comparable to the relevant Reference Rate, and the Alternative
Reference Rate shall be the rate so determined by the Issuer and
the Alternative Relevant Screen Page shall be such page of an
information service as displays the Alternative Reference Rate;
provided, however, that if this Condition 4(d)(ii)(C) applies and
the Issuer is unable to determine an Alternative Reference Rate and
Alternative Relevant Screen Page prior to the Interest
Determination Date relating to the next Interest Period, the Rate
of Interest applicable to such Interest Period shall be equal to
the sum of the Margin and the rate last determined in relation to
the Notes in respect of a preceding Interest Period;
(D) if an Alternative Reference Rate and Alternative Relevant
Screen Page is determined in accordance with the preceding
provisions, such Alternative Reference Rate and Alternative
Relevant Screen Page shall be the Reference Rate and the Relevant
Screen Page in relation to the Notes for all future Interest
Periods (subject to the subsequent operation of this Condition
4(d));
(E) if the Independent Adviser or, in accordance with Condition
4(d)(ii)(C) above, the Issuer determines an Alternative Reference
Rate in accordance with the above provisions, the Independent
Adviser or the Issuer (as the case may be) may also, following
consultation with the Calculation Agent, specify changes to the
Relevant Time, Relevant Financial Centre, Reference Banks, Relevant
Number of Quotations, Leading Banks, Day Count Fraction, Business
Day Convention, Business Days and/or Interest Determination Date
applicable to the Notes, and the method for determining the Rate of
Interest in relation to the Notes if the Alternative Reference Rate
is not available, or fewer than the required number of rates
appear, on the Alternative Relevant Screen Page at any time, in
order to follow market practice in relation to the Alternative
Reference Rate, and shall also specify any other changes (including
to the Margin) which the Issuer, following consultation with the
Independent Adviser (where appointed), determines in good faith are
reasonably necessary to ensure the proper operation and
comparability to the Reference Rate of the Alternative Reference
Rate, which changes shall apply to the Notes for all future
Interest Periods (subject to the subsequent operation of this
Condition 4(d)) and, for the avoidance of doubt, the Trustee shall,
at the direction and expense of the Issuer, and having received a
certificate from the Issuer, signed by two Authorised Signatories,
confirming that the Issuer or the Independent Adviser has made the
relevant determinations in accordance with this Condition 4(d) and
attaching the proposed amendments to the Conditions effect such
amendments to the Conditions together with such consequential
amendments to the Trust Deed and Agency Agreement as the Trustee
may deem appropriate in order to give effect to this Condition 4(d)
and the Trustee shall not be liable to any person for any
consequences thereof, save as provided in the Trust Deed. No
consent of the Holders of the Notes of the relevant Series or of
the Holders of the Coupons appertaining thereto shall be required
in connection with effecting the Alternative Reference Rate,
Alternative Relevant Screen Page or such other changes, including
for the execution of any documents or the taking of other steps by
the Trustee, the Issuer or any of the parties to the Agency
Agreement (if required)). The Trustee shall not be obliged to agree
to any amendments which in the sole opinion of the Trustee would
have the effect of (A) exposing the Trustee to any liabilities
against which it has not been indemnified and/or secured and/or
pre-funded to its satisfaction or (B) increasing the obligations or
duties, or decreasing the rights or protection, of the Trustee in
the documents to which it is a party and/or these Conditions;
and
(F) the Issuer shall promptly following the determination of any
Alternative Reference Rate and Alternative Relevant Screen Page
give notice thereof and of any changes pursuant to Condition
4(d)(ii)(E) to the Trustee, the Principal Paying Agent, the
Calculation Agent and the Noteholders (in accordance with Condition
14 (Notices)).
(e) ISDA Determination
If ISDA Determination is specified in the relevant Pricing
Supplement as the manner in which the Rate(s) of Interest is/are to
be determined, the Rate of Interest applicable to the Notes for
each Interest Period will be the sum of the Margin and the relevant
ISDA Rate where "ISDA Rate" in relation to any Interest Period
means a rate equal to the Floating Rate (as defined in the ISDA
Definitions) that would be determined by the Calculation Agent
under an interest rate swap transaction if the Calculation Agent
were acting as calculation agent for that interest rate swap
transaction under the terms of an agreement incorporating the ISDA
Definitions and under which:
(i) the Floating Rate Option (as defined in the ISDA
Definitions) is as specified in the relevant Pricing
Supplement;
(ii) the Designated Maturity (as defined in the ISDA
Definitions) is a period specified in the relevant Pricing
Supplement; and
(iii) the relevant Reset Date (as defined in the ISDA
Definitions) as specified in the relevant Pricing Supplement;
(iv) if Linear Interpolation is specified as applicable in
respect of an Interest Period in the relevant Pricing Supplement,
the Rate of Interest for such Interest Period shall be calculated
by the Calculation Agent by straight-line linear interpolation by
reference to two rates based on the relevant Floating Rate Option,
where:
(A) one rate shall be determined as if the Designated Maturity
were the period of time for which rates are available next shorter
than the length of the relevant Interest Period; and
(B) the other rate shall be determined as if the Designated
Maturity were the period of time for which rates are available next
longer than the length of the relevant Interest Period;
provided, however, that if there is no rate available for a
period of time next shorter than the length of the relevant
Interest Period or, as the case may be, next longer than the length
of the relevant Interest Period, then the Calculation Agent shall
determine such rate at such time and by reference to such sources
as it determines appropriate.
(f) Index--Linked Interest and other variable--linked interest
If the Index--Linked Interest Note provisions are specified in
the relevant Pricing Supplement as being applicable, the Rate(s) of
Interest applicable to the Notes for each Interest Period will be
determined in the manner specified in the relevant Pricing
Supplement.
(g) Maximum or Minimum Rate of Interest
If any Maximum Rate of Interest or Minimum Rate of Interest is
specified in the relevant Pricing Supplement, then the Rate of
Interest shall in no event be greater than the maximum or be less
than the minimum so specified.
(h) Determination of Rate of Interest and Calculation of Interest Amount
The Calculation Agent will, as soon as practicable after the
Relevant Time on each Interest Determination Date, determine the
Rate of Interest and calculate the amount of interest payable in
respect of each denomination of the relevant Floating Rate Notes
(the "Interest Amount") for the relevant Interest Period.
The Interest Amount will be calculated by applying the Rate of
Interest for such Interest Period to the Calculation Amount,
multiplying the product by the relevant Day Count Fraction,
rounding the resulting figure to the nearest sub--unit of the
Specified Currency (half a sub--unit being rounded upwards) or
otherwise in accordance with applicable market convention, as
determined by the Calculation Agent, and multiplying such rounded
figure by a fraction equal to the principal outstanding amount of
the relevant Note divided by the Calculation Amount. For this
purpose a "sub--unit" means, in the case of any currency other than
euro, the lowest amount of such currency that is available as legal
tender in the country of such currency and, in the case of euro,
means one cent.
(i) Calculation of other amounts
If the relevant Pricing Supplement specifies that any other
amount is to be calculated by the Calculation Agent, the
Calculation Agent will, as soon as practicable after the time or
times at which any such amount is to be determined, calculate the
relevant amount. The relevant amount will be calculated by the
Calculation Agent in the manner specified in the relevant Pricing
Supplement.
(j) Determination or Calculation by agent appointed by the Trustee
If the Calculation Agent does not at any time for any reason
determine the Rate of Interest or calculate the Interest Amount,
the Trustee may (at the expense of the Issuer) appoint an agent to
do so and such determination or calculation shall be deemed to have
been made by the Calculation Agent. In doing so, such agent
appointed by the Trustee shall apply the foregoing provisions of
this Condition 4, with any necessary consequential amendments, to
the extent that, in its opinion, it can do so, and in all other
respects it shall do so in such manner as it shall deem fair and
reasonable in all the circumstances.
(k) Publication
The Calculation Agent will cause each Rate of Interest and
Interest Amount determined by it, together with the relevant
Interest Payment Date, and any other amount(s) required to be
determined by it together with any relevant payment date(s), to be
notified to the Paying Agents and each competent authority, stock
exchange and/or quotation system (if any) by which the Notes have
then been admitted to listing, trading and/or quotation as soon as
practicable after such determination but (in the case of each Rate
of Interest, Interest Amount and Interest Payment Date) in any
event not later than the first day of the relevant Interest Period.
Notice thereof shall also promptly be given to the Noteholders. The
Calculation Agent will be entitled to recalculate any Interest
Amount (on the basis of the foregoing provisions) without notice in
the event of an extension or shortening of the relevant Interest
Period. If the Calculation Amount is less than the minimum
denomination, the Calculation Agent shall not be obliged to publish
each Interest Amount but instead may publish only the Calculation
Amount and the Interest Amount in respect of a Note having the
minimum denomination.
(l) Notifications etc.
All notifications, opinions, determinations, certificates,
calculations, quotations and decisions given, expressed, made or
obtained for the purposes of this Condition 4 by the Calculation
Agent will (in the absence of manifest error) be binding on the
Issuer, the Paying Agents, the Noteholders and the Couponholders
and (subject as aforesaid) no liability to any such person will
attach to the Calculation Agent in connection with the exercise or
non--exercise by it of its powers, duties and discretions for such
purposes.
(m) Dividend Equivalent Payments
In respect of any Series of Notes where the principal and/or
interest in respect to such Notes is determined by reference to one
or more variables such as an index, formula, security, commodity,
currency exchange rate, interest rate, inflation index, the credit
of one or more entities or other factor (each variable being a
"Reference Asset(s)"), if the Pricing Supplement in respect of such
Notes states the Notes are "Section 871(m) Notes", the Pricing
Supplement shall further specify whether the "Dividend Withholding"
or "Issuer Withholding" approach to withholding in relation to
Section 871(m) of the Code shall be applicable to the Notes.
If "Dividend Withholding" is specified in the relevant Pricing
Supplement, the relevant Pricing Supplement shall provide for the
Issuer to make payments to Noteholders in respect of any dividend
equivalent amounts attributable to any Reference Asset(s) and shall
include provisions relating to the amount and timing of such
payments.
If "Issuer Withholding" is specified in the relevant Pricing
Supplement, the Pricing Supplement shall specify whether any
dividend equivalent amounts are to be treated as being reinvested
during the term of the Notes and what portion thereof is expected
as of the Issue Date to be treated for U.S. federal income tax
purposes as having been withheld from a payment due to the
Noteholders.
(n) Certificates, etc. to be Final
All certificates, communications, opinions, determinations,
calculations, quotations and decisions given, expressed, made or
obtained for the purpose of the provisions of this Condition 4
whether by the Calculation Agent, the Independent Adviser or any
agent appointed by the Trustee shall (in the absence of manifest
error) be final and binding on the Issuer, the Trustee (or such
agent appointed by the Trustee), the Paying Agents, (where
appropriate) the Registrar and the Holders of Notes and of the
Coupons appertaining thereto. No Holder of Notes or of the Coupons
appertaining thereto shall be entitled to proceed against the
Calculation Agent, the Independent Adviser, the Trustee or any
agent appointed by the Trustee, the Paying Agents, the Registrar or
any of them in connection with the exercise or non-exercise by them
of their powers, duties and discretions hereunder, including,
without limitation, in respect of any notification, opinion,
communication, determination, certificate, calculation, quotation
or decision given, expressed or made for the purposes of this
Condition 4.
5. VARIABLE COUPON AMOUNT NOTES AND ZERO COUPON NOTES
In the case of Notes which bear interest at a variable rate or
rates ("Variable Coupon Amount Notes"), the dates on which interest
shall be payable and the method of calculation of the interest
payable on each such date shall be as set out in the relevant
Pricing Supplement.
If any amount in respect of any Note which is non--interest
bearing (a "Zero Coupon Note") is not paid when due, interest shall
accrue on the overdue amount at a rate determined in accordance
with the provisions of the relevant Pricing Supplement.
6. REDEMPTION AND PURCHASE
(a) Final Redemption
Unless previously redeemed or purchased and cancelled and
subject as otherwise set out in the relevant Pricing Supplement,
Notes will be redeemed at their principal amount or such other
redemption amount as may be set out in or determined in accordance
with the relevant Pricing Supplement on the Maturity Date specified
in the relevant Pricing Supplement (or, in the case of Instalment
Notes, in such number of instalments and in such amounts
("Instalment Amounts") as may be specified in, or determined in
accordance with the provisions of, the relevant Pricing
Supplement).
(b) Redemption for Taxation Reasons
If the Issuer satisfies the Trustee immediately prior to the
giving of the notice referred to below that:
(i) on a subsequent date for the payment of interest on any
Series of Notes the Issuer would be required to pay any additional
amounts in accordance with the provisions of Condition 7
(Taxation); or
(ii) if the Issuer were to seek to redeem the Notes (for which
purpose no regard shall be had as to whether or not the Issuer
would otherwise be entitled to redeem such Notes), the Issuer would
(notwithstanding its having made such endeavours as the Trustee
shall consider reasonable) be required to pay any additional
amounts in accordance with the provisions of Condition
7(Taxation),
the Issuer may, having given not less than 30 nor more than 45
days' notice (ending, in the case of Floating Rate Notes, on an
Interest Payment Date) to the Noteholders in respect of such Series
of Notes, redeem all, but not some only, of the Notes, at their
principal amount or such other redemption amount as may be set out
in the relevant Pricing Supplement together with interest accrued
and unpaid, if any, to the date fixed for redemption provided that
no such notice of redemption shall be given earlier than 90 days
(or in the case of Floating Rate Notes or Variable Coupon Amount
Notes a number of days which is equal to the aggregate of the
number of days in the then current Interest Period plus 60 days
provided that such aggregate number of days shall not be greater
than 90 days) prior to the earliest date on which the Issuer would
be obliged to pay such additional amounts were a payment in respect
of the Notes then due.
The Issuer may exercise such option in respect of any Note
notwithstanding the prior exercise by the Holder thereof or by the
Issuer (as the case may be) of their respective options to require
the redemption of such Note under paragraphs (c) and (d) below, if
the due date for redemption under this paragraph (b) would occur
prior to that under paragraphs (c) or (d) (as the case may be) but
not otherwise and, in such circumstances, the exercise of the
option under paragraphs (c) or (d) (as the case may be) shall be
rendered ineffective.
Subject only to the obligation of the Issuer to use such
endeavours as aforesaid, it shall be sufficient, to establish the
circumstances required to be established pursuant to this Condition
6(b), if the Issuer shall deliver to the Trustee a certificate of
an independent legal adviser or accountant satisfactory to the
Trustee to the effect either that such circumstances do exist or
that, upon a change in or amendment to the laws (including any
regulations pursuant thereto), or in the interpretation or
administration thereof, of the Dubai International Financial Centre
("DIFC") or the United Arab Emirates ("UAE") (as the case may be)
or any political subdivision or any authority thereof or therein
having power to tax, which at the date of such certificate is
proposed and in the opinion of such legal adviser or accountant is
reasonably expected to become effective on or prior to the date on
which the relevant payment of principal or interest in respect of
the Notes would otherwise be made, becoming so effective, such
circumstances would exist and, for these purposes, the Trustee
shall accept such certificate or opinion without further enquiry
and without liability to any person as sufficient evidence of the
existence of such circumstances and such certificate or opinion
shall be conclusive and binding on the Noteholders and
Couponholders.
(c) Redemption at the Option of the Issuer
If this Condition 6(c) is stated to be applicable in the
relevant Pricing Supplement, Notes shall be redeemable at the
option of the Issuer. In such case, the Issuer may at any time (in
the case of Fixed Rate Notes or Zero Coupon Notes), on any Interest
Payment Date (in the case of Floating Rate Notes or Variable Coupon
Amount Notes) or otherwise as set out in the relevant Pricing
Supplement, on giving (in accordance with Condition 14 (Notices))
not less than 30 nor more than 60 days' notice (or such other
period as set out in the relevant Pricing Supplement) to the
Noteholders (such notice being irrevocable) specifying the date
fixed for such redemption, on the date so fixed, redeem all of such
Notes (or, if so specified in the relevant Pricing Supplement and
subject as therein specified, some only of the Notes) at their
principal amount or such other early redemption amount as set out
in the relevant Pricing Supplement together with interest accrued
but unpaid thereon to the date fixed for redemption.
If the Notes of a Series are to be redeemed in part only on any
date in accordance with this paragraph (c):
(i) in the case of Bearer Notes (other than a temporary global
Note or permanent global Note), the Notes to be redeemed shall be
drawn by lot in such European city as the Principal Paying Agent
may specify or, as the case may be, a city as the CMU Lodging and
Paying Agent may specify, or identified in such other manner or in
such other place as the Principal Paying Agent or the CMU Lodging
and Paying Agent (as the case may be) and the Trustee may approve
and deem appropriate and fair, subject to the rules and procedures
of Euroclear and/or Clearstream, Luxembourg (such redemption to be
reflected in the records of Euroclear and Clearstream, Luxembourg
as either a pool factor or a reduction in nominal amount, at their
discretion); and
(ii) in the case of Registered Notes, the Notes shall be
redeemed (so far as may be practicable) pro rata to their principal
amounts, provided always that the amount redeemed in respect of
each Note shall be equal to the minimum denomination thereof or an
appropriate multiple thereof,
subject always to compliance with all applicable laws and the
requirements of each listing authority, stock exchange and/or
quotation system (if any) by which the relevant Notes may have been
admitted to listing, trading and/or quotation.
In the case of the redemption of part only of a Registered Note,
a new Registered Note in respect of the unredeemed balance shall be
issued in accordance with Condition 13 (Replacement and Transfer)
which shall apply as in the case of a transfer of Registered Notes
as if such new Registered Note were in respect of the untransferred
balance.
(d) Redemption at the Option of the Noteholders
If this Condition 6(d) is stated to be applicable in the
relevant Pricing Supplement, Notes shall be redeemable at the
option of the Noteholders. In such case, upon any Noteholder giving
to the Issuer notice of redemption (such notice being irrevocable)
the Issuer will, in accordance with the provisions set out in the
relevant Pricing Supplement, redeem in whole (but not in part) the
Note(s) specified in such notice at their principal amount or such
other amount as may be set out in or determined in accordance with
the relevant Pricing Supplement together with interest accrued but
unpaid thereon to the date fixed for redemption.
In order to give such notice, the Holder must, not less than 45
days before the date for redemption as set out in the relevant
Pricing Supplement (or such other period as may be set out in the
Pricing Supplement), deposit the relevant Note (together, in the
case of an interest--bearing Definitive Note, with any unmatured
Coupons appertaining thereto) with, in the case of a Bearer Note,
any Paying Agent, or, in the case of a Registered Note, the
relevant Registrar or any Transfer Agent together with a duly
completed redemption notice in the form which is available from the
specified office of any of the Paying Agents or, as the case may
be, the relevant Registrar or any Transfer Agent. The Holder of a
Note may not exercise such option in respect of any Note which is
the subject of an exercise by the Issuer of its option to redeem
such Note under Condition 6(b), (c) or (i).
(e) Purchases
The Issuer or any holding or subsidiary company of it or any
subsidiary of any such holding company may at any time purchase
Notes at any price in the open market or otherwise and may resell
the same.
(f) Cancellation
All Notes redeemed pursuant to paragraph (a), (b), (c), (d) or
(i) of this Condition 6 shall, and all Notes purchased pursuant to
paragraph (e) of this Condition 6 may, at the option of the Issuer,
be cancelled forthwith (together with, in the case of Definitive
Bearer Notes, all unmatured Coupons and unexchanged Talons attached
thereto or surrendered therewith) by the Paying Agent through which
they are redeemed or by the Principal Paying Agent or the CMU
Lodging and Paying Agent (as the case may be) to which they are
surrendered. All Notes redeemed or purchased and cancelled as
aforesaid may not be re--issued or resold.
(g) Zero Coupon Notes
Where Zero Coupon Notes are redeemed by the Issuer prior to the
Maturity Date set out in the relevant Pricing Supplement, they
shall be redeemed at a redemption amount determined in accordance
with the provisions set out in the relevant Pricing Supplement.
(h) Other Redemption Provisions
The relevant Pricing Supplement may provide for other
circumstances in which Notes may or shall be redeemed, the amount
payable on such redemption in respect of principal only, principal
and interest or interest only and whether or not Notes so redeemed
shall or may be cancelled pursuant to paragraph (f) of this
Condition 6.
(i) Illegality and Force Majeure
The Issuer shall have the right to terminate its obligations
under the Notes, if the Issuer shall have determined in its
absolute discretion, that the performance of such obligations shall
have become unlawful or impracticable in whole or in part for any
reason whatsoever, including (without prejudice to the generality
of the foregoing) as a result of compliance with any applicable
present or future law, rule, regulation, judgment, order or
directive or with any requirement or request of any governmental,
administrative, legislative or judicial authority or power. In such
circumstances the Notes shall be redeemable at the option of the
Issuer in accordance with Condition 6(c) (Redemption at the Option
of the Issuer) even if Condition 6(c) (Redemption at the Option of
the Issuer) is specified as "Not Applicable" in the relevant
Pricing Supplement.
For Notes which are specified as Credit-Linked Notes, please
also refer to the section entitled "Additional Terms and Conditions
relating to Credit-Linked Notes (2014 ISDA Credit Derivatives
Definitions Version)" which includes additional redemption and
purchase circumstances relating to such Notes.
For Notes which are specified as Equity--Linked Notes, Cash
Equity Notes and Index--Linked Notes, please also refer to the
section entitled "Additional Terms and Conditions relating to
Equity--Linked Notes, Cash Equity Notes and Index--Linked Notes"
which includes additional redemption and purchase circumstances
relating to such Notes.
7. TAXATION
Except as otherwise set out in the relevant Pricing Supplement,
all payments by the Issuer of principal and interest in respect of
the Notes will be made without withholding or deduction for or on
account of any taxes, duties, assessments or governmental charges
of whatever nature, present or future, as are imposed or levied by
or on behalf of the DIFC or the UAE (or any authority or political
subdivision therein or thereof having power to tax) unless the
Issuer is required by law to withhold or deduct any such taxes,
duties, assessments or governmental charges.
In that event, the Issuer will pay such additional amounts in
respect of payments of principal and interest (in the case of Notes
which are not Subordinated Notes) or in respect of interest but not
principal (in the case of Subordinated Notes) as may be necessary
in order that the net amounts received by the Noteholders or
Couponholders, as the case may be, after such withholding or
deduction shall equal the respective amounts which would have been
received by them in respect of the relevant payments of principal
and interest (in the case of Notes which are not Subordinated
Notes) or of principal only (in the case of Subordinated Notes) in
the absence of such withholding or deduction; except that no such
additional amounts shall be payable with respect to any Note or
Coupon:
(a) to, or to a third party on behalf of, a Holder of a Note or
Coupon who is liable to such taxes, duties, assessments or
governmental charges in respect of such Note or Coupon by reason of
his having some connection with the DIFC or the UAE other than the
mere holding of such Note or Coupon; or
(b) unless it is proved, in the case of Bearer Notes, to the
satisfaction of the Principal Paying Agent, the CMU Lodging and
Paying Agent (as the case may be) or the Paying Agent to whom the
same is presented, or, in the case of Registered Notes, to the
satisfaction of the relevant Registrar, that the Holder is unable
to avoid such withholding or deduction by satisfying any statutory
requirement or by making a declaration of non--residence or other
similar claim for exemption to a Paying Agent or the relevant tax
authorities (as applicable) or by notifying (and/or presenting
evidence of such notification) any tax authorities of such payment
of principal or interest or by presenting the relevant Note or
Coupon at the specified office of another Paying Agent (whether
within or outside the European Union); or
(c) more than 30 days after the Relevant Date (defined below)
except, in the case of Bearer Notes, to the extent that the Holder
thereof would have been entitled to such additional amounts on
presenting the same for payment on the last day of such period of
30 days; or
(d) in the case of Registered Notes, unless the Holder,
immediately upon becoming the Holder, is otherwise entitled to a
complete exemption from withholding taxes on payments under the
Notes; or
(e) to, or to a third party on behalf of, a Holder who is not
the sole beneficial owner of the Note or any Coupon, or a portion
of either, or that is a fiduciary or partnership, but only to the
extent that a beneficiary or settlor with respect to the fiduciary,
a beneficial owner or member of the partnership would not have been
entitled to the payment of an additional amount had the
beneficiary, settlor, beneficial owner or member received directly
its beneficial or distributive share of the payment.
As used herein the "Relevant Date" means the date on which such
payment first becomes due but, in the case of Bearer Notes, if the
full amount of the money payable has not been received by the
Principal Paying Agent, the CMU Lodging and Paying Agent (as the
case may be) or the Trustee on or prior to such due date, it means
the date on which, the full amount of such money having been so
received, notice to that effect shall have been duly given to the
relevant Noteholders in accordance with Condition 14.
Any reference in these Conditions to principal or interest or
both in respect of the relevant Notes shall be deemed to include,
as applicable:
(i) any additional amounts which may be payable under this
Condition 7 or pursuant to any undertakings given in addition
thereto or in substitution therefor pursuant to the Trust Deed;
(ii) the principal amount payable on the relevant Notes on the
Maturity Date specified in the relevant Pricing Supplement;
(iii) the principal amount payable on redemption of the relevant
Notes prior to such Maturity Date; and
(iv) any premium and any other amounts which may be payable
under or in respect of the relevant Notes.
Notwithstanding any other provision in these Conditions, the
Issuer shall be permitted to withhold or deduct any amounts
permitted or required by the rules of Section 871(m) of the Code or
Sections 1471 through 1474 of the Code (or any amended or successor
provisions), pursuant to any inter--governmental agreement, or
implementing legislation adopted by another jurisdiction in
connection with these provisions, or pursuant to any agreement with
the US Internal Revenue Service ("U.S. Permitted Withholding"). The
Issuer and the Paying Agents will have no obligation to pay
additional amounts or otherwise indemnify a holder for any U.S.
Permitted Withholding deducted or withheld by the Issuer, a Paying
Agent or any other party as a result of any person (other than an
agent of the Issuer) not being entitled to receive payments free of
U.S. Permitted Withholding.
8. PAYMENTS
(a) Bearer Notes
Payments of principal and interest (if any) in respect of Bearer
Notes will (subject as provided below) be made against presentation
and (save in the case of partial payment or payment of an
Instalment Amount (other than the final Instalment Amount))
surrender of the relevant Note or, in the case of payments of
interest, surrender of the relevant Coupon at the specified office
of any Paying Agent outside the United States (subject to the next
paragraph).
Payments of amounts due in respect of interest on Bearer Notes
and exchanges of Talons for Coupon sheets will not be made at the
specified office of any Paying Agent in the United States (as
defined in the United States Internal Revenue Code of 1986 and
Regulations thereunder) unless (a) payment in full of amounts due
in respect of interest on such Notes when due or, as the case may
be, the exchange of Talons at all the specified offices of the
Paying Agents outside the United States is illegal or effectively
precluded by exchange controls or other similar restrictions and
(b) such payment or exchange is permitted by applicable United
States law, in which case the Issuer shall forthwith appoint a
further Paying Agent with a specified office in New York City.
If the due date for payment of any amount due in respect of any
Bearer Note is not both a Relevant Financial Centre Day and, if
such Bearer Note is a Definitive Bearer Note or if the Pricing
Supplement so specifies, a Local Banking Day (each as defined
below), then the Holder thereof will not be entitled to payment
thereof until the next day which is such a day and no further
payment on account of interest or otherwise shall be due in respect
of such postponed payment unless there is a subsequent failure to
pay in accordance with these Conditions in which event interest
shall continue to accrue as provided in Condition 3 (Interest on
Fixed Rate Notes), 4 (Interest on Floating Rate Notes) or 5
(Variable Coupon Amount Notes and Zero Coupon Notes), as
appropriate.
Payment of Instalment Amounts (other than the final Instalment
Amount) in respect of an Instalment Note which is a Definitive
Bearer Note with Receipts will be made against presentation of the
Note together with the relevant Receipt and surrender of such
Receipt.
The Receipts are not and shall not in any circumstances be
deemed to be documents of title and if separated from the Note to
which they appertain will not represent any obligation of the
Issuer. Accordingly, the presentation of a Note without the
relative Receipt or the presentation of a Receipt without the Note
to which it appertains shall not entitle the Holder to any payment
in respect of the relevant Instalment Amount.
Upon the due date for redemption of any Definitive Bearer Note
other than a Fixed Rate Note all unmatured Coupons and Talons (if
any) relating to such Definitive Bearer Note (whether or not
attached) shall become void and no payment shall be made in respect
of them. Definitive Bearer Notes which are Fixed Rate Notes should
be presented for payment with all unmatured Coupons appertaining
thereto, failing which the face value of any missing unmatured
Coupon (or, in the case of payment not being made in full, that
portion of the amount of such missing unmatured Coupon which the
sum of principal so paid bears to the total amount of principal
due) will be deducted from the sum due for payment. Any amount of
principal so deducted will be paid in the manner mentioned above
against surrender of the relevant missing Coupon within a period of
ten years from the Relevant Date (as defined in Condition 7
(Taxation)) for the payment of such principal, whether or not such
Coupon has become void pursuant to Condition 11 (Prescription) or,
if later, five years from the date on which such Coupon would have
become due.
Notwithstanding the above, if any Definitive Bearer Notes should
be issued with a Maturity Date and an interest rate or rates such
that, on the presentation for payment of any such Definitive Bearer
Note without any unmatured Coupons attached thereto or surrendered
therewith, the amount required to be deducted would be greater than
the amount otherwise due for payment, then, upon the due date for
redemption, such unmatured Coupons (whether or not attached) shall
become void (and no payment shall be made in respect thereof) as
shall be required so that the amount required to be deducted would
not be greater than the amount otherwise due for payment. Where the
application of the foregoing sentence requires some but not all of
the unmatured Coupons relating to a Definitive Bearer Note to
become void, the relevant Paying Agent shall determine which
unmatured Coupons are to become void, and shall select for such
purpose Coupons maturing on later dates in preference to Coupons
maturing on earlier dates. Upon any Definitive Bearer Notes
becoming due and repayable prior to their Maturity Date, all
unmatured Talons (if any) appertaining thereto will become void and
no further Coupons will be issued in respect thereof.
In relation to Definitive Bearer Notes initially delivered with
Talons attached thereto, on or after the due date for the payment
of interest on which the final Coupon comprised in any Coupon sheet
matures, the Talon comprised in the Coupon sheet may be surrendered
at the specified office of any Paying Agent outside the United
States (save as provided above) in exchange for a further Coupon
sheet (including any appropriate further Talon), subject to the
provisions of Condition 11 (Prescription). Each Talon shall, for
the purpose of these Conditions, be deemed to mature on the due
date for the payment of interest on which the final Coupon
comprised in the relative Coupon sheet matures.
If (otherwise than by reason of the application of the above)
the due date for redemption of any Definitive Bearer Note is not
the due date for the payment of a Coupon appertaining thereto,
interest accrued in respect of such Note from (and including) the
last preceding due date for the payment of a Coupon (or from the
Issue Date or the Interest Commencement Date, as the case may be)
will be paid only against surrender of such Bearer Note and all
unmatured Coupons appertaining thereto.
(b) Registered Notes
Payment of the amount due on final redemption (the "Redemption
Amount") in respect of Registered Notes will be made against
presentation and, save in the case of partial payment of the
Redemption Amount, surrender of the relevant Registered Notes at
the specified office of the relevant Registrar. If the due date for
payment of the Redemption Amount of any Registered Note is not both
a Relevant Financial Centre Day and, if such Registered Note is not
in global form or if the Pricing Supplement so specify, a Local
Banking Day (each as defined below), then the Holder thereof will
not be entitled to payment thereof until the next day which is such
a day and no further payment on account of interest or otherwise
shall be due in respect of such postponed payment unless there is a
subsequent failure to pay in accordance with these Conditions in
which event interest shall continue to accrue as provided in
Condition 3 (Interest on Fixed Rate Notes), 4 (Interest on Floating
Rate Notes) or 5 (Variable Coupon Amount Notes and Zero Coupon
Notes), as appropriate.
Payment of amounts (whether principal, interest or otherwise)
due (other than the Redemption Amount) in respect of Registered
Notes will be paid to the Holder thereof (or, in the case of joint
Holders, the first--named) as appearing in the register kept by the
relevant Registrar at the close of business (local time in the
place of the specified office of the relevant Registrar) on the
fifteenth day prior to the due date for such payment (the "Record
Date").
Payment will be made in the currency in which such amount is due
either by cheque posted to the Noteholder's registered address (or,
in the case of joint Holders, the first--named) not later than the
relevant due date for payment unless prior to the relevant Record
Date the Holder thereof (or, in the case of joint Holders, the
first named) has applied to the relevant Registrar and such
Registrar has acknowledged such application for payment to be made
to a designated account denominated in the relevant currency, in
each case as specified in paragraph 8(c) below.
(c) Payment of US Dollar Equivalent
The following provisions apply to both Bearer Notes and
Registered Notes denominated in Renminbi only.
Notwithstanding the foregoing, if by reason of Inconvertibility,
Non--transferability or Illiquidity, the Issuer is not able to
satisfy payments of principal or interest in respect of Notes
denominated in Renminbi when due in Renminbi in Hong Kong, the
Issuer may, on giving not less than 5 or more than 30 calendar
days' irrevocable notice to the Noteholders prior to the due date
for payment, settle any such payment in U.S. Dollars on the due
date at the US Dollar Equivalent of any such Renminbi denominated
amount.
All notifications, opinions, determinations, certificates,
calculations, quotations and decisions given, expressed, made or
obtained for the purposes of the provisions of this Condition 8(d)
above by the Renminbi Calculation Agent, will (in the absence of
manifest error) be binding on the Issuer, the Agents and all
Noteholders.
(d) General Provisions
The following provisions apply to both Bearer Notes and
Registered Notes. Payments of amounts due (whether principal,
interest or otherwise) in respect of Notes will be made in the
currency in which such amount is due by transfer to an account
denominated in the relevant currency specified by the payee,
provided that payments in respect of Notes held in the CMU Service
will be made to the person(s) for whose account(s) interests in the
relevant Bearer Note or, as the case may be, Registered Note are
credited as being held with the CMU Service in accordance with the
CMU Rules (as defined in the Trust Deed) at the relevant time as
notified to the CMU Lodging and Paying Agent by the CMU Service in
a relevant CMU Instrument Position Report (as defined in the Trust
Deed) or any other relevant notification by the CMU Service, which
notification shall be conclusive evidence of the records of the CMU
Service (save in the case of manifest error) and payment made in
accordance thereof shall discharge the obligations of the Issuer in
respect of that payment. For the avoidance of doubt, so long as any
Note or Coupon is held by the CMU Service, presentation thereof to
the CMU Lodging and Paying Agent shall not be required as a
precondition of its making payments in respect thereof.
Payments of principal, interest and other amounts (if any) in
respect of Notes are subject in all cases to any fiscal or other
laws and regulations applicable in the place of payment but without
prejudice to the provisions of Condition 7 (Taxation).
Without prejudice to the generality of the foregoing, the Issuer
reserves the right to require any person receiving payment of
principal, interest and/or other sums, or as the case may be,
payment of interest with respect to any Note or Coupon to provide a
Paying Agent with such certification or information as may be
required to enable the Issuer to comply with the requirements of
the United States Federal Income Tax laws or such other laws as the
Issuer may be required to comply with.
9. REDENOMINATION
(a) General
Where redenomination is specified in the relevant Pricing
Supplement as being applicable, and in respect of Notes denominated
in a National Currency Unit (as defined below) (the "Relevant
Currency") the Issuer may, without the consent of the Trustee or
the Noteholders, on giving at least 30 days' prior notice to the
Noteholders in accordance with Condition 14 (Notices), designate a
Redenomination Date in respect of such Notes.
With effect from the Redenomination Date:
(i) each Note shall (unless already so provided by mandatory
provisions of applicable law) be deemed to be redenominated into an
amount of euro in the denomination of euro 0.01 with a principal
amount for each Note equal to the principal amount of that Note in
the Relevant Currency converted into euro at the rate for the
conversion of the Relevant Currency into euro established by the
Council of the European Union pursuant to the Treaty (including
compliance with rules relating to roundings in accordance with EC
regulations); Provided, however, that, if the Issuer determines,
with the prior approval of the Trustee, that the market practice in
respect of the redenomination into euro 0.01 of internationally
offered securities is different from that specified above, such
provisions shall be deemed to be amended so as to comply with such
market practice and the Issuer shall promptly notify the
Noteholders, each listing authority, stock exchange and/or
quotation system (if any) by which the Notes have then been
admitted to listing, trading and/or quotation and the Paying Agents
of such deemed amendments;
(ii) if Notes are in definitive form:
(A) all unmatured Coupons denominated in the Relevant Currency
(whether or not attached to the Notes) will become void with effect
from the date (the "Euro Exchange Date") on which the Issuer gives
notice (the "Euro Exchange Notice") to the Noteholders that
replacement Notes and Coupons denominated in euro are available for
exchange (provided that such Notes and Coupons are available) and
no payments will be made in respect thereof;
(B) the payment obligations contained in all Notes denominated
in the Relevant Currency will become void on the Euro Exchange Date
but all other obligations of the Issuer thereunder (including the
obligation to exchange such Notes in accordance with this Condition
9(a)(ii)) shall remain in full force and effect; and
(C) new Notes and Coupons denominated in euro will be issued in
exchange for Notes and Coupons denominated in the Relevant Currency
in such manner as the Principal Paying Agent may specify and as
shall be notified to the Noteholders in the Euro Exchange
Notice;
(iii) all payments in respect of the Notes (other than, unless
the Redenomination Date is on or after such date as the Relevant
Currency ceases to be a sub--division of the euro, payments of
interest in respect of periods commencing before the Redenomination
Date) will be made solely in euro, as though references in the
Notes to the Relevant Currency were to euro. Such payments will be
made in euro by credit or transfer to a euro account (or any other
account to which euro may be credited or transferred) maintained by
the payee with a bank in the principal financial centre of any
member state of the European Communities; and
(iv) such other changes will be made to the Programme as the
Issuer may decide, with the prior written approval of the Trustee,
to conform such Notes to conventions then applicable to instruments
denominated in euro. Any such other changes will not take effect
until after they have been notified to the Noteholders in
accordance with Condition 14 (Notices).
None of the Issuer, the Trustee, or any Paying Agent will be
liable to any Noteholder or other person for any commissions,
costs, losses or expenses in relation to or resulting from any
credit or transfer of euro or any currency conversion or rounding
effected in connection therewith.
(b) Interest
Following redenomination of the Notes pursuant to Condition 9(a)
above:
(i) where Notes are in definitive form, the amount of interest
due in respect of the Notes will be calculated by reference to the
aggregate principal amount of the Notes presented (or, as the case
may be, in respect of which Coupons are presented) for payment by
the relevant holder and the amount of such payment shall be rounded
down to the nearest euro 0.01;
(ii) in respect of Fixed Rate Notes where interest is payable
annually, any interest required to be calculated for a period of
less than one year in respect of the Notes shall be calculated on
the basis of the actual number of days elapsed divided by 365 (or,
if any of the days elapsed fall in a leap year, the sum of (a) the
number of those days falling in a leap year divided by 366 and (b)
the number of those days falling in a non--leap year divided by
365); provided, however, that if the Issuer determines, with the
prior agreement of the Trustee, that the market practice in respect
of internationally offered euro denominated securities is different
from that specified above, the above shall be deemed to be amended
so as to comply with such market practice and the Issuer shall
promptly notify the Noteholders, each listing authority, stock
exchange and/or quotation system (if any) by which the Notes have
then been admitted to listing, trading and/or quotation and the
Paying Agents of such deemed amendment;
(iii) in respect of Fixed Rate Notes where interest is payable
quarterly or semi--annually, the amount of interest payable in
respect of each Note on any Interest Payment Date shall be
calculated by applying the Rate of Interest to the principal amount
of such Note, dividing the product by four or two (as the case may
be) and rounding the figure down to the nearest euro 0.01. If
interest is required to be calculated for any other period, it
shall be calculated on the basis of the actual number of days
elapsed divided by 365 (or, if any of the days elapsed fall in a
leap year, the sum of (a) the number of those days falling in a
leap year divided by 366 and (b) the number of those days falling
in a non--leap year divided by 365); provided, however, that if the
Issuer determines, with the prior agreement of the Trustee, that
the market practice in respect of such internationally offered euro
denominated securities is different from that specified above, the
above shall be deemed to be amended so as to comply with such
market practice and the Issuer shall promptly notify the
Noteholders, each listing authority, stock exchange and/or
quotation system (if any) by which the Notes have then been
admitted to listing, trading and/or quotation and the Paying Agents
of such deemed amendment;
(iv) in respect of Floating Rate Notes, the Interest Amount
payable in respect of the Notes for each Interest Period will be
calculated by applying the Rate of Interest for such Interest
Period to the principal amount of such Note during the Interest
Period, multiplying the product by the actual number of days in
such Interest Period divided by 360 and rounding the resulting
figure down to the nearest euro 0.01; and
(v) in respect of Floating Rate Notes, the Rate of Interest for
any subsequent Interest Period shall be determined by the
Calculation Agent on the basis of provisions which it determines,
in its sole and absolute discretion, reflects the market practice
in respect of internationally offered euro denominated
securities.
10. ENFORCEMENT
(a) In the case of any Series of Notes other than Subordinated
Notes, if default is made for a period of 14 days or more in the
repayment of any principal or the delivery of any Entitlement due
on the Notes of such Series or any of them or in the payment of any
interest due in respect of the Notes of such Series or any of them,
then the Trustee may at its discretion, and if so requested by the
Holders of at least one--fifth in principal amount of such Notes
then outstanding or if so directed by an Extraordinary Resolution
(as defined in the Trust Deed) of the Holders of such Notes
(subject in each case to being indemnified and/or secured and/or
prefunded to its satisfaction) shall, give written notice to the
Issuer that the Notes of such Series are immediately due and
repayable, whereupon the principal amount of such Notes or such
other amount as set out in the relevant Pricing Supplement shall
become immediately due and repayable together with interest accrued
to (but excluding) the date of actual repayment;
Provided that it shall not be such a default to withhold or
refuse any such payment or delivery (1) in order to comply with any
fiscal or other law or regulation or with the order of any court of
competent jurisdiction, in each case applicable to such payment or
delivery or (2) in cases of doubt as to the validity or
applicability of any such law, regulation or order, in accordance
with advice given at any time during the said period of 14 days by
independent legal advisers acceptable to the Trustee as to such
validity or applicability.
(b) In the case of any Series of Subordinated Notes:
(i) if default is made for a period of 7 days or more in the
repayment of any principal due on the Notes of such Series or any
of them or for a period of 14 days or more in the payment of any
interest due in respect of the Notes of such Series or any of them,
then the Trustee may, in order to enforce payment, at its
discretion and without further notice, in the case of a Series of
Subordinated Notes, institute proceedings for the winding up of the
Issuer in the DIFC,
Provided that it shall not be such a default to withhold or
refuse any such payment (1) in order to comply with any fiscal or
other law or regulation or with the order of any court of competent
jurisdiction, in each case applicable to such payment or (2) in
cases of doubt as to the validity or applicability of any such law,
regulation or order, in accordance with advice given at any time
during the said period of 7 or 14 days, as the case may be, by
independent legal advisers acceptable to the Trustee as to such
validity or applicability;
(ii) the Trustee may at its discretion and without further
notice institute such proceedings against the Issuer as it may
think fit and may, subject as hereinafter provided, institute
proceedings for the winding up of the Issuer in the DIFC to enforce
any obligation, condition or provision binding on the Issuer under
the Trust Deed in relation to such Series of Subordinated Notes or
under such Notes or the Coupons appertaining thereto (other than
any obligation for the payment of any principal or interest in
respect of such Notes or Coupons or any other payment obligation in
respect thereof) provided that the Issuer shall not by virtue of
the institution of any such proceedings other than proceedings for
the winding up of the Issuer be obliged to pay any sum or sums
(whether in respect of principal or interest or other sums in
respect of the relevant Notes or the Coupons appertaining thereto
or by way of damages in respect of any breach of any such
obligation, condition or provision or otherwise howsoever). The
Trustee may only institute proceedings for the winding up of the
Issuer to enforce the obligations above referred to in this
paragraph if a default by the Issuer thereunder is not remedied to
the satisfaction of the Trustee within 60 days (or such longer
period as the Trustee may permit) after notice of such default has
been given to the Issuer by the Trustee requiring such default to
be remedied.
NB: The restriction on the payment of damages would have the
effect of limiting the remedies available to the Trustee in the
event of a breach of certain covenants by the Issuer.
(c) In the case of any Series of Notes, in the event of an order
being made or an effective resolution being passed for the winding
up of the Issuer in the DIFC (otherwise than in connection with a
scheme of reconstruction or amalgamation the terms of which shall
previously have been approved in writing by the Trustee or by an
Extraordinary Resolution of the Holders of the relevant Series of
Notes) the Trustee may declare the Notes of the relevant Series to
be due and redeemable immediately (and such Notes shall thereby
become so due and redeemable) at their principal amount together
with accrued interest as provided in the Trust Deed and the
relevant Pricing Supplement or at such other amount, or at such
amount calculated in accordance with such other formula, as is set
out in the relevant Pricing Supplement.
(d) The Trustee shall not in any event be bound to take any of
the actions referred to in Condition 10(b)(i) or (ii) or Condition
10(c) above in respect of any Series of Notes unless (i) it shall
have been so requested in writing by the Holders of at least
one--fifth of the principal amount of the Notes of the relevant
Series then outstanding or it shall have been so directed by an
Extraordinary Resolution of the Holders of the Notes of the
relevant Series and (ii) it shall have been indemnified and/or
secured and/or prefunded to its satisfaction.
(e) No remedy against the Issuer other than as specifically
provided by this Condition 10 or the Trust Deed shall be available
to the Trustee, the Noteholders or Couponholders in respect of any
Series of Notes whether for the recovery of amounts or assets owing
in respect of such Notes or the Coupons appertaining thereto or
under the Trust Deed or in respect of any breach by the Issuer of
any obligation, condition or provision under the Trust Deed or such
Notes or Coupons or otherwise, and no Noteholder or Couponholder
shall be entitled to proceed directly against the Issuer unless the
Trustee, having become bound to proceed, fails to do so within a
reasonable period and such failure shall be continuing in which
case any such Holder may, upon giving an indemnity satisfactory to
the Trustee, in the name of the Trustee (but not otherwise),
himself institute proceedings against the Issuer for the relevant
remedy to the same extent (but not further or otherwise) that the
Trustee would have been entitled to do so.
11. PRESCRIPTION
Notes and Coupons will become void unless presented for payment
within a period of ten (10) years and five (5) years, respectively,
from the Relevant Date (as defined in Condition 7 (Taxation)) in
respect thereof. Any monies paid by the Issuer to the Principal
Paying Agent, CMU Lodging and Paying Agent (as the case may be) or
the Trustee for the payment of the principal or interest in respect
of any Notes or Coupons and remaining unclaimed when such Notes or
Coupons become void will then revert to the Issuer and all
liability of the Principal Paying Agent, the CMU Lodging and Paying
Agent (as the case may be) or the Trustee with respect thereto will
thereupon cease.
There shall not be included in any Coupon sheet issued in
exchange for a Talon any Coupon the claim for payment in respect of
which would be void pursuant to this Condition 11 or Condition 8
(Payments).
12. PAYING AGENTS, TRANSFER AGENTS, CALCULATION AGENT AND REGISTRAR
(a) The Agency Agreement contains provisions indemnifying the
Principal Paying Agent, the CMU Lodging and Paying Agent, the
Paying Agents and Transfer Agents (if any) and the Registrars and
absolving them from responsibility in connection with certain
matters. The Agency Agreement may be amended by the parties thereto
in relation to any Series of Notes if, in the opinion of the Issuer
and the Trustee, the amendment will not materially adversely affect
the interests of the relevant Holders.
(b) The Issuer reserves the right at any time to vary or
terminate the appointment of the Principal Paying Agent, the CMU
Lodging and Paying Agent, any Paying Agent or Transfer Agent, the
Calculation Agent or any Registrar and to appoint additional or
other Paying Agents and/or Transfer Agents or a substitute
Calculation Agent or a substitute Registrar, provided that it will,
so long as any Notes are outstanding, maintain (i) a Calculation
Agent, (ii) a Paying Agent, and (iii) in the case of any Registered
Notes, a Registrar with a specified office in England or such City
as may be specified in the relevant Pricing Supplement. Notice of
all changes in the identities or specified offices of any Paying
Agent, Calculation Agent or Registrar will be given by the Issuer
to Noteholders in accordance with Condition 14.
(c) For the purposes of any calculations referred to in these
Conditions (unless otherwise specified in these Conditions or the
relevant Pricing Supplements), all percentages resulting from such
calculations will be rounded, if necessary, to five decimal places
(with 0.000005 per cent. being rounded up to 0.00001 per
cent.).
13. REPLACEMENT AND TRANSFER
Should any Note or Coupon be lost, stolen, mutilated, defaced or
destroyed it may be replaced at the specified office (in the case
of a Bearer Note or Coupon) of the Principal Paying Agent, the CMU
Lodging and Paying Agent (as the case may be) or such other Paying
Agent or office as the Trustee may approve or (in the case of
Registered Notes) of the relevant Registrar upon payment by the
claimant of the expenses incurred in connection therewith and on
such terms as to evidence and indemnity as the Issuer may
reasonably require. Mutilated or defaced Notes or Coupons must be
surrendered before replacements will be issued.
Upon the terms and subject to the conditions set out in the
Agency Agreement, a Registered Note may be transferred in whole or
in part only (provided that such part is, or is an appropriate
multiple of, the minimum denomination set out in the Pricing
Supplement) by the Holder or Holders surrendering the Registered
Note for registration of transfer at the office of the relevant
Registrar, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Issuer and the relevant
Registrar, duly executed by the Holder or Holders thereof or his or
their attorney duly authorised in writing. A new Registered Note
will be issued to the transferee and, in the case of a transfer of
part only of a Registered Note, a new Registered Note in respect of
the balance not transferred will be issued to the transferor.
Each new Registered Note to be issued upon the transfer of a
Registered Note will, within three Relevant Banking Days of the
Transfer Date be available for delivery at the specified office of
the relevant Registrar or, at the option of the Holder requesting
such transfer be mailed (by uninsured post at the risk of the
Holder(s) entitled thereto) to such address(es) as may be specified
by such Holder.
The costs and expenses of effecting any registration of transfer
pursuant to the foregoing provisions, except for the expenses of
delivery by other than regular mail or insurance charges that may
be imposed in relation thereto, shall be borne by the Issuer.
The relevant Registrar shall not be required to register the
transfer of Registered Notes for a period of 15 days preceding the
due date for any payment of principal of or interest in respect of
such Notes.
14. NOTICES
(a) All notices to the Holders of Bearer Notes or the Coupons
appertaining thereto will be valid if published in one leading
daily newspaper with general circulation in London (which is
expected to be the Financial Times) or Asia (as the case may be)
and, if such publication is not practicable, if published in a
leading English language daily newspaper having general circulation
in Europe or Asia (as the case may be) and, if the Notes are
admitted to listing, trading and/or quotation by any listing
authority, stock exchange and/or quotation system by publication in
a manner such that the rules of such listing authority, stock
exchange and/or quotation system by which the Notes have then been
admitted to listing, trading and/or quotation have been complied
with. Any such notice shall be deemed to have been given on the
date of such publication or, if published more than once, on the
date of the first such publication (or, if required to be published
in more than one newspaper, on the first date on which publication
shall have been made in all the required newspapers).
Holders of any Coupons appertaining to Bearer Notes will be
deemed for all purposes to have notice of the contents of any
notice given to the Holders of such Bearer Notes in accordance
herewith.
Any notices to Holders of Registered Notes will be deemed to
have been validly given if mailed to their registered addresses (as
advised by the relevant Registrar) or to that of the first named of
them in the case of joint Holders. Any such notice shall be deemed
to be given on the second day after the date of mailing.
Notwithstanding the foregoing, while the Notes of any Series are
represented by a Note or Notes in global form ("Global Notes") and
such Global Notes are deposited with, or with a depositary for or
on behalf of, Euroclear and/or Clearstream, Luxembourg and/or any
other clearing system or depositary, each person who has for the
time being a particular principal amount of the Notes credited to
his securities account in the records of Euroclear or Clearstream,
Luxembourg or such other clearing system or depositary shall be
treated as the Holder in respect of that principal amount of the
Notes for all purposes other than for the purposes of payment of
principal and interest on such Notes, and in such case notices to
the Holders may be given by delivery of the relevant notice to the
relevant clearing system or depositary and such notices shall be
deemed to have been given to the Holders holding through the
relevant clearing system or depositary on the date of delivery to
the relevant clearing system or depositary.
Notwithstanding the foregoing, while the Notes of any Series are
represented by a Global Note, and such Global Notes are deposited
with a sub--custodian for and registered in the name of The Hong
Kong Monetary Authority ("HKMA"), as operator of the CMU, notices
to Holders may be given by delivery of the relevant notice to
persons shown in the CMU Instrument Position Report (as defined in
the Agency Agreement) issued by the HKMA on the business day prior
to the date of despatch of such notice. Any such notice shall be
deemed to have been given to the Holders on the second day after
the day on which such notice is delivered to the persons shown in
the relevant CMU Instrument Position Report.
(b) Notices given by any Noteholder shall be in writing and
given by lodging the same, together with the relative Note or
Notes, with the Principal Paying Agent, the CMU Lodging and Paying
Agent (as the case may be) or other Paying Agent (if any) at its
specified office.
15. MODIFICATION OF TERMS, WAIVER AND SUBSTITUTION
The Trust Deed contains provisions for convening meetings of the
Holders of the Notes of any Series to consider any matter affecting
their interests, including, subject to the agreement of the Issuer,
the modification by Extraordinary Resolution of the terms and
conditions of such Notes or the provisions of the Trust Deed with
respect to such Notes. The quorum for any meeting convened to
consider an Extraordinary Resolution will be one or more persons
holding or representing a clear majority in principal amount of the
Notes for the time being outstanding, or any adjourned meeting one
or more persons being or representing Holders of the Notes whatever
the principal amount of the Notes so held or represented; provided,
however, that the modification of certain terms concerning, among
other things, the amount and currency and the postponement of the
due date of payment of the Notes and the Coupons appertaining
thereto or interest or other amount payable in respect thereof or
the Asset Amount and due date for delivery under the Notes, may
only be sanctioned by an Extraordinary Resolution if passed at a
meeting the quorum at which is persons holding or representing not
less than two-thirds, or at any adjourned such meeting not less
than one third, in principal amount of the Notes of such Series for
the time being outstanding.
The Trust Deed provides that (i) a resolution passed at a
meeting duly convened and held in accordance with the Trust Deed by
a majority consisting of not less than three-quarters of the votes
cast on such resolution, (ii) a resolution in writing signed by or
on behalf of the holders of not less than three-quarters in
principal amount of the Notes for the time being outstanding or
(iii) consent given by way of electronic consents through the
relevant clearing system(s) (in a form satisfactory to the Trustee)
by or on behalf of the holders of not less than three-quarters in
principal amount of the Notes for the time being outstanding,
shall, in each case, be effective as an Extraordinary Resolution of
the Holders of Notes. An Extraordinary Resolution passed at any
meeting of the Holders of the Notes of any Series will be binding
on all Holders of Notes of that Series, whether or not they are
present at the meeting, and on the Holders of Coupons appertaining
to the Notes of that Series.
The Trust Deed contains provisions for convening a single
meeting of holders of Notes of more than one Series in certain
circumstances where the Trustee so decides.
Subject to certain exceptions, the Trustee may agree, without
the consent of the Holders of Notes of any Series or the Holders of
the Coupons appertaining thereto (if any) to making any
modification to the Conditions or to the provisions of the Trust
Deed or to the relative Notes or Coupons if in the opinion of the
Trustee such alteration:
(i) is of a formal, minor or technical nature; or
(ii) is made to correct a manifest error; or
(iii) is not materially prejudicial to the interests of such
Noteholders and/or Couponholders.
In addition, the Trustee shall agree to such modification to the
Trust Deed, the Agency Agreement and these Conditions as may be
required in order to give effect to Condition 4(d) (Alternative
Reference Rates) in connection with effecting any Alternative
Reference Rate or Alternative Relevant Screen Page. Any such
modification, waiver, authorisation or determination shall be
binding on the Holders of Notes of that Series and the Holders of
the Coupons appertaining thereto and, unless the Trustee agrees
otherwise, shall be notified to the Holders of Notes of that Series
as soon as practicable thereafter in accordance with Condition 14
(Notices).
Subject to certain exceptions, the Trustee may, in relation to
each Series of Notes, without prejudice to its rights in respect of
any subsequent breach or event, from time to time and at any time,
but only if and insofar as in its opinion the respective interests
of the Holders of Notes of such Series and the Holders of the
Coupons appertaining thereto shall not be materially prejudiced
thereby, waive or authorise any breach or prospective breach by the
Issuer of any of the covenants or provisions contained in the Trust
Deed or such Notes or Coupons or determine that any Default or any
event which with the lapse of time and/or giving of notice would be
a Default, but for such determination, shall not be treated as
such.
For the purposes of this Condition, "Default" means any of the
defaults set out in Condition 10 paragraph (a) and (b)(i) and any
failure to meet any obligation, condition or provision referred to
in paragraphs (b)(ii) or (c) of Condition 10.
Any such waiver, authorisation or determination may be given or
made on such terms and subject to such conditions as shall seem fit
and proper to the Trustee and shall be binding on the Holders of
Notes of that Series and the Holders of the Coupons appertaining
thereto and if, but only if, the Trustee shall so reasonably
require, shall be notified by the Issuer to the Holders of Notes of
that Series as soon as practicable thereafter.
Subject to such amendment of the Trust Deed and such other
conditions as the Trustee may require, but without the consent of
the Holders of Notes of any Series or the Holders of the Coupons
appertaining thereto (if any), the Trustee may also agree, subject
to such Notes and the Coupons appertaining thereto being
irrevocably guaranteed by the Issuer (on a subordinated basis in
the case of Subordinated Notes), to the substitution of a
subsidiary or holding company of the Issuer or any subsidiary of
any such holding company in place of the Issuer as principal debtor
under such Notes and the Coupons appertaining thereto (if any) and
the Trust Deed insofar as it relates to such Notes.
In connection with the exercise of its powers, trusts,
authorities or discretions (including, but not limited to those in
relation to any proposed modification, waiver, authorisation, or
substitution as aforesaid) the Trustee shall have regard to the
interests of the Holders of the Notes of the relevant Series as a
class and in particular, but without limitation, shall not have
regard to the consequences of such exercise for individual
Noteholders or Couponholders resulting from the individual
Noteholders or Couponholders being for any purpose domiciled or
resident in, or otherwise connected with, or subject to the
jurisdiction of, any particular territory and the Trustee shall not
be entitled to require, nor shall any Noteholder or Couponholder be
entitled to claim, from the Issuer any indemnification or payment
in respect of any tax consequence of any such exercise upon
individual Noteholders or Couponholders.
16. FURTHER ISSUES
The Issuer shall be at liberty from time to time without the
consent of the Holders of Notes of any Series or Holders of the
Coupons appertaining thereto (if any), to the extent permitted by
applicable laws and regulations, create and issue further notes
ranking equally in all respects (or in all respects save as
specified in the relevant Pricing Supplement) with the Notes of
such Series so that the same shall be consolidated and form a
single series with such Notes for the time being outstanding.
17. LAW AND JURISDICTION
17.1 Governing Law
The Trust Deed, the Notes and the Coupons (if any) and all
non-contractual obligations arising out of, from or in connection
with them, shall be governed by, and shall be construed in
accordance with English law.
17.2 Arbitration
Without limiting the rights of the Noteholders under Condition
17.3, any dispute, claim, difference or controversy arising out of,
relating to, or having any connection with the Trust Deed, the
Notes and the Coupons (if any) (including any dispute regarding
their existence, validity, interpretation, performance, breach or
termination or the consequences of their nullity and any dispute
relating to any non-contractual obligations arising out of or in
connection with them (a "Dispute")) shall be referred to and
finally resolved by arbitration under the London Court of
International Arbitration ("LCIA") Rules (the "Rules"), which rules
(as amended from time to time) are deemed to be incorporated by
reference into this Condition 17.2. For these purposes:
(i) the seat of arbitration shall be London;
(ii) there shall be three arbitrators, each of whom shall be
disinterested in the arbitration, shall have no connection with any
party thereto and shall be an attorney experienced in international
securities transactions; and
(iii) the language of the arbitration shall be English.
17.3 Jurisdiction
Notwithstanding Condition 17.2, the Trustee (or, but only where
permitted to take action in accordance with the terms of the Trust
Deed, any Noteholder) may, in the alternative, and at its sole
discretion, by notice in writing to the Issuer:
(i) within 28 days of service of a Request for Arbitration (as defined in the Rules); or
(ii) in the event no arbitration is commenced,
require that a Dispute be heard by the courts of England. If the
Trustee (or any Noteholder) gives such notice, the Dispute to which
such notice refers shall be determined in accordance with this
Condition 17.3 and, subject as provided below, any arbitration
commenced under Condition 17.2 in respect of that Dispute will be
terminated.
If any notice to terminate is given after service of any Request
for Arbitration in respect of any Dispute, the Trustee (or the
relevant Noteholder) must also promptly give notice to the LCIA
Court and to any Tribunal (each as defined in the Rules) already
appointed in relation to the Dispute that such Dispute will be
settled by the courts. Upon receipt of such notice by the LCIA
Court, the arbitration and any appointment of any arbitrator in
relation to such Dispute will immediately terminate. Any such
arbitrator will be deemed to be functus officio. The termination is
without prejudice to:
(i) the validity of any act done or order made by that
arbitrator or by the court in support of that arbitration before
his appointment is terminated;
(ii) his entitlement to be paid his proper fees and disbursements; and
(iii) the date when any claim or defence was raised for the
purpose of applying any limitation bar or any similar rule or
provision.
In the event that a notice pursuant to this Condition 17.3 is
issued, the following provisions shall apply:
(i) the courts of England shall have exclusive jurisdiction to
settle any Dispute and the Issuer submits to the exclusive
jurisdiction of such courts; and
(ii) the Issuer agrees that the courts of England are the most
appropriate and convenient courts to settle any Dispute and,
accordingly, that it will not argue to the contrary.
17.4 Service of Process
The Issuer agrees that the documents which start any proceedings
relating to any Dispute ("Proceedings") and any other documents
required to be served in relation to those Proceedings may be
served on it by being delivered to the Company Secretary, HSBC
Holdings plc, 8 Canada Square, London E14 5HQ or, if different, its
registered office for the time being or at any address of the
Issuer in Great Britain at which process may be served on it in
accordance with Part 34 of the Companies Act 2006. If such person
is not or ceases to be effectively appointed to accept service of
process on behalf of the Issuer, the Issuer shall, on the written
demand of the Trustee addressed and delivered to the Issuer or to
the specified office of the Principal Paying Agent or, as the case
may be, the CMU Lodging and Paying Agent appoint a further person
in England to accept service of process on its behalf and, failing
such appointment within 15 days, the Trustee shall be entitled to
appoint such a person by written notice addressed to the Issuer and
delivered to the Issuer or to the Specified Office of the Principal
Paying Agent or, as the case may be, the CMU Lodging and Paying
Agent. Nothing in this paragraph shall affect the right of the
Trustee to serve process in any other manner permitted by law. This
Condition applies to Proceedings in England and to Proceedings
elsewhere.
17.5 Consent
The Issuer irrevocably and generally consents in respect of any
Proceedings anywhere to the giving of any relief or the issue of
any process in connection with those Proceedings including, without
limitation, the making, enforcement or execution against any assets
whatsoever (irrespective of their use or intended use) of any order
or judgment which may be made or given in those Proceedings.
17.6 Substitution
In the case of a substitution under Condition 15, the Trustee
may agree, without the consent of the Holders of the Notes of any
Series or of the Coupons appertaining thereto, to a change of the
law governing the Notes of any Series or the Coupons appertaining
thereto and/or the Trust Deed insofar as it relates to such Series
of Notes provided that such change would not in the opinion of the
Trustee be materially prejudicial to the interests of the Holders
of the Notes of such Series, but the Trustee shall, in giving such
agreement, have regard to the interests of the Holders of the Notes
of such Series as a class and in particular, but without
limitation, shall not have regard to the consequences of such
change for individual Noteholders or Couponholders resulting from
their being for any purpose domiciled or resident in, or otherwise
connected with, or subject to the jurisdiction of, any particular
territory, and the Trustee shall not be entitled to require, nor
shall any Holders of the Notes of any Series or of the Coupons
appertaining thereto be entitled to claim, from the Issuer any
indemnification or payment in respect of any tax consequences of
any such substitution upon individual Holders of the Notes of any
Series or of the Coupons appertaining thereto.
18. THIRD PARTY RIGHTS
No person shall have any right to enforce any term or condition
of the Notes or the Trust Deed under the Contracts (Rights of Third
Parties) Act 1999.
19. DEFINITIONS
As used in these Conditions, the following expressions shall
have the following meaning:
"Alternative Pre-nominated Reference Rate" has the meaning given
in the relevant Pricing Supplement.
"Authorised Signatory" means any person who is represented by
the Issuer as being for the time being authorised to sign (whether
alone or with any other person or other persons) on behalf of the
Issuer and so as to bind it;
"Business Day" means, unless otherwise specified in the relevant
Pricing Supplement:
(i) in relation to any sum payable in euro, a Euro Business Day
and a day on which commercial banks and foreign exchange markets
settle payments generally in each (if any) Business Centre; and
(ii) in relation to any sum payable in a currency other than
euro, a day on which commercial banks and foreign exchange markets
settle payments generally in the principal financial centre of the
relevant currency and in each (if any) Business Centre;
"Business Day Convention", in relation to any particular date,
has the meaning given in the relevant Pricing Supplement and, if so
specified in the relevant Pricing Supplement, may have different
meanings in relation to different dates and, in this context, the
following expressions shall have the following meanings:
(i) "Following Business Day Convention" means that the relevant
date shall be postponed to the first following day that is a
Business Day;
(ii) "Modified Following Business Day Convention" or "Modified
Business Day Convention" means that the relevant date shall be
postponed to the first following day that is a Business Day unless
that day falls in the next calendar month in which case that date
will be the first preceding day that is a Business Day;
(iii) "Preceding Business Day Convention" means that the
relevant date shall be the first preceding day that is a Business
Day;
(iv) "FRN Convention", "Floating Rate Convention" or "Eurodollar
Convention" means that each relevant date shall be the date which
numerically corresponds to the preceding such date in the calendar
month which is the number of months specified in the relevant
Pricing Supplement as the Specified Period after the calendar month
in which the preceding such date occurred provided, however,
that:
(A) if there is no such numerically corresponding day in the
calendar month in which any such date should occur, then such date
will be the last day which is a Business Day in that calendar
month;
(B) if any such date would otherwise fall on a day which is not
a Business Day, then such date will be the first following day
which is a Business Day unless that day falls in the next calendar
month, in which case it will be the first preceding day which is a
Business Day; and
(C) if the preceding such date occurred on the last day in a
calendar month which was a Business Day, then all subsequent such
dates will be the last day which is a Business Day in the calendar
month which is the specified number of months after the calendar
month in which the preceding such date occurred; and
(v) "No Adjustment" means that the relevant date shall not be
adjusted in accordance with any Business Day Convention;
"Calculation Agent" means the entity as is specified as such in
the relevant Pricing Supplement and includes any successor or other
person appointed as such in respect of the Notes or any Series of
Notes;
"Calculation Amount" has the meaning given in the relevant
Pricing Supplement;
"Clearing System" means, in relation to a Series of Notes,
Euroclear, Clearstream, Luxembourg and CMU and/or any other
clearing system located outside the United States specified in the
relevant Pricing Supplement in which Notes of the relevant Series
are for the time being held, or, in relation to an individual Note,
in which that Note is for the time being held;
"Clearstream, Luxembourg" means Clearstream Banking S.A.;
"CMU" means the Central Moneymarkets Unit Service operated by
the Hong Kong Monetary Authority;
"CMU Service" means the Central Moneymarkets Unit Service,
operated by the Hong Kong Monetary Authority;
"Day Count Fraction" means, in respect of the calculation of an
amount for any period of time (the "Calculation Period"), such day
count fraction as may be specified in the relevant Pricing
Supplement and:
(i) if "Actual/Actual", "Actual/Actual (ISDA)", "Act/Act" or
"Act/Act (ISDA)" is specified, the actual number of days in the
Calculation Period in respect of which payment is being made
divided by 365 (or, if any portion of that Calculation Period falls
in a leap year, the sum of (i) the actual number of days in that
portion of the Calculation Period falling in a leap year divided by
366 and (ii) the actual number of days in that portion of the
Calculation Period falling in a non--leap year divided by 365);
(ii) if "Actual/Actual (ICMA)" or "Act/Act (ICMA)" is so specified means:
(A) where the Calculation Period is equal to or shorter than the
Regular Period during which it falls, the actual number of days in
the Calculation Period divided by the product of (1) the actual
number of days in such Regular Period and (2) the number of Regular
Periods in any year; and
(B) where the Calculation Period is longer than one Regular Period, the sum of:
(1) the actual number of days in such Calculation Period falling
in the Regular Period in which it begins divided by the product of
(1) the actual number of days in such Regular Period and (2) the
number of Regular Periods in any one year; and
(2) the actual number of days in such Calculation Period falling
in the next Regular Period divided by the product of (1) the actual
number of days in such Regular Period and (2) the number of Regular
Periods in any year;
(iii) if "Actual/365 (Fixed)", "Act/365 (Fixed)", "A/365
(Fixed)" or "A/365F" is specified, the actual number of days in the
Calculation Period in respect of which payment is being made
divided by 365;
(iv) if "Actual/360", "Act/360" or "A/360" is specified, the
actual number of days in the Calculation Period in respect of which
payment is being made divided by 360;
(v) if "30/360", "360/360" or "Bond Basis" is specified, the
number of days in the Calculation Period in respect of which
payment is being made divided by 360, calculated on a formula basis
as follows:
Day Count Fraction =
where:
"Y1" is the year, expressed as a number, in which the first day
of the Calculation Period falls;
"Y2" is the year, expressed as a number, in which the day
immediately following the last day included in the Calculation
Period falls;
"M1" is the calendar month, expressed as a number, in which the
first day of the Calculation Period falls;
"M2" is the calendar month, expressed as number, in which the
day immediately following the last day included in the Calculation
Period falls;
"D1" is the first calendar day, expressed as a number, of the
Calculation Period, unless such number would be 31, in which case
D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately
following the last day included in the Calculation Period, unless
such number would be 31 and D1 is greater than 29, in which case D2
will be 30;
(vi) if "30E/360" or "Eurobond Basis" is specified, the number
of days in the Calculation Period in respect of which payment is
being made divided by 360, calculated on a formula basis as
follows:
Day Count Fraction =
where:
"Y1" is the year, expressed as a number, in which the first day
of the Calculation Period falls;
"Y2" is the year, expressed as a number, in which the day
immediately following the last day included in the Calculation
Period falls;
"M1" is the calendar month, expressed as a number, in which the
first day of the Calculation Period falls;
"M2" is the calendar month, expressed as number, in which the
day immediately following the last day included in the Calculation
Period falls;
"D1" is the first calendar day, expressed as a number, of the
Calculation Period, unless such number would be 31, in which case
D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately
following the last day included in the Calculation Period, unless
such number would be 31, in which case D2 will be 30;
(vii) if "30E/360 (ISDA)" is specified, the number of days in
the Calculation Period in respect of which payment is being made
divided by 360, calculated on a formula basis as follows:
Day Count Fraction =
where:
"Y1" is the year, expressed as a number, in which the first day
of the Calculation Period falls;
"Y2" is the year, expressed as a number, in which the day
immediately following the last day included in the Calculation
Period falls;
"M1" is the calendar month, expressed as a number, in which the
first day of the Calculation Period falls;
"M2" is the calendar month, expressed as number, in which the
day immediately following the last day included in the Calculation
Period falls;
"D1" is the first calendar day, expressed as a number, of the
Calculation Period, unless (i) that day is the last day of February
or (ii) such number would be 31, in which case D1 will be 30;
and
"D2" is the calendar day, expressed as a number, immediately
following the last day included in the Calculation Period, unless
(i) that day is the last day of February but not the Maturity Date
or (ii) such number would be 31, in which case D2 will be 30;
"Determination Business Day" means a day (other than a Saturday
or Sunday) on which commercial banks are open for general business
(including dealings in foreign exchange) in Hong Kong and in New
York City;
"Determination Date" means the day which is two Determination
Business Days before the due date for any payment of the relevant
amount under these Conditions;
"Disrupted Day Related Payment Date" means any payment date on
the Notes on which the amount payable is calculated by reference to
the price or level (as applicable) of a Security, Index, basket of
Securities or basket of Indices determined on the related Valuation
Date or Limit Valuation Date;
"euro" and "EUR" means the lawful currency of the member states
of the European Union that have adopted or adopt the single
currency in accordance with the Treaty;
"Euro Business Day" or "TARGET Business Day" means a day on
TARGET2 is open for settlement of payments in euro;
"Euroclear" means Euroclear Bank SA/NV;
"First Interest Payment Date" means the date specified in the
relevant Pricing Supplement;
"Hong Kong Governmental Authority" means any de facto or de jure
government (or any agency or instrumentality thereof), court,
tribunal, administrative or other governmental authority or any
other entity (private or public) charged with the regulation of the
financial markets (including the central bank) of Hong Kong;
"Hong Kong" means the Hong Kong Special Administrative
Region;
"Illiquidity" means where the general Renminbi exchange market
in Hong Kong becomes illiquid and, as a result of which, the Issuer
cannot obtain sufficient Renminbi in order to satisfy its
obligation to pay interest and principal (in whole or in part) in
respect of the Notes as determined by the Issuer in good faith and
in a commercially reasonable manner following consultation (if
practicable) with two Renminbi Dealers;
"Inconvertibility" means the occurrence of any event that makes
it impossible for the Issuer to convert any amount due in respect
of the Notes in the general Renminbi exchange market in Hong Kong,
other than where such impossibility is due solely to the failure of
the Issuer to comply with any law, rule or regulation enacted by
any Hong Kong Governmental Authority (unless such law, rule or
regulation is enacted after date of the relevant Pricing Supplement
and it is impossible for the Issuer, due to an event beyond its
control, to comply with such law, rule or regulation);
"Independent Adviser" means an independent financial institution
of international repute or other independent financial adviser
experienced in the international capital markets, in each case
appointed by the Issuer at its own expense;
"Interest Determination Date" means the day determined by the
Calculation Agent, in its sole and absolute discretion, to be
customary for fixing the Reference Rate applicable to deposits in
the relevant currency for the relevant Interest Period; provided
that where so specified in the relevant Pricing Supplement, such
day shall be a day (i) if such currency is euro, which is a Euro
Business Day, and (ii) if such currency is any other currency, on
which commercial banks and foreign exchange markets are open for
general business (including dealings in foreign exchange and
foreign currency deposits) in the principal financial centre or
centres of the country of such currency (or where such currency is
a National Currency Unit (as defined in Condition 20(i) (Effects of
European Monetary Union)) and the Notes have been redenominated
into euro pursuant to Condition 9 (Redenomination), the former
principal financial centre or centres);
"Interest Payment Date" means the First Interest Payment Date
and any other date or dates specified as such in, or determined in
accordance with the provisions of, the relevant Pricing Supplement
and, if a Business Day Convention is specified in the relevant
Pricing Supplement:
(i) as the same may be adjusted in accordance with the relevant
Business Day Convention; or
(ii) if the Business Day Convention is the FRN Convention,
Floating Rate Convention or Eurodollar Convention and an interval
of a number of calendar months is specified in the relevant Pricing
Supplement as being the Specified Period, each of such dates as may
occur in accordance with the FRN Convention, Floating Rate
Convention or Eurodollar Convention at such Specified Period of
calendar months following the Interest Commencement Date (in the
case of the First Interest Payment Date) or the previous Interest
Payment Date (in any other case);
"Interest Period" means each period beginning on (and including)
the Interest Commencement Date or any Interest Payment Date and
ending on (but excluding) the next Interest Payment Date;
"IRC" means the U.S. Internal Revenue Code of 1986;
"ISDA Definitions" means the 2006 ISDA Definitions (as amended
and supplemented as at the date of issue of the first Tranche of
the Notes of the relevant Series), as published by the
International Swaps and Derivatives Association, Inc (formerly the
International Swap Dealer Association, Inc.);
"Leading Banks" means the banks specified as such in the
relevant Pricing Supplement, or, if no banks are so specified,
leading European Banks selected by the Calculation Agent;
"Local Banking Day" means a day (other than a Saturday or
Sunday) on which commercial banks are open for general business
(including dealings in foreign exchange and foreign currency
deposits) in the city in which the Principal Paying Agent, the
Paying Agent or the Registrar or the Transfer Agent to which the
relevant Note or Coupon is presented for payment is located;
"Margin" means the percentage specified as such in the relevant
Pricing Supplement;
"National Currency Unit" means the national currency unit of any
Participating Member State that becomes a denomination of the euro
by reason of Council Regulation (EC) No. 1103/97, Council
Regulation (EC) No. 974/98 or any other applicable laws;
"Non--transferability" means the occurrence of any event that
makes it impossible for the Issuer to transfer Renminbi between
accounts inside Hong Kong or from an account inside Hong Kong to an
account outside Hong Kong and outside the PRC or from an account
outside Hong Kong and outside the PRC to an account inside Hong
Kong, other than where such impossibility is due solely to the
failure of the Issuer to comply with any law, rule or regulation
enacted by any Hong Kong Governmental Authority (unless such law,
rule or regulation is enacted after date of the relevant Pricing
Supplement and it is impossible for the Issuer, due to an event
beyond its control, to comply with such law, rule or
regulation);
"Participating Member State" means any member state of the
European Union that has adopted or adopts the single currency in
accordance with the Treaty;
"PRC" means the People's Republic of China which, for the
purpose of these Conditions, shall exclude Hong Kong, the Macau
Special Administrative Region of the People's Republic of China and
Taiwan;
"Redenomination Date" means a date (being, in case of
interest--bearing Notes, shall be a date on which interest in
respect of such Notes is payable) which:
(i) is specified by the Issuer in the notice given to the
Noteholders pursuant to Condition 9(a); and
(ii) falls on or after such date as the country of the Relevant
Currency becomes a Participating Member State;
"Reference Bank" has the meaning ascribed thereto in the
relevant Pricing Supplement or, if none, four major banks selected
by the Calculation Agent in the market that is most closely
connected with Reference Rate;
"Reference Rate" has the meaning given in the relevant Pricing
Supplement;
"Regular Period" means:
(i) in the case of Notes where interest is scheduled to be paid
only by means of regular payments, each period from and including
the Interest Commencement Date to but excluding the First Interest
Payment Date and each successive period from and including one
Interest Payment Date to but excluding the next Interest Payment
Date;
(ii) in the case of Notes where, apart from the first Interest
Period, interest is scheduled to be paid only by means of regular
payments, each period from and including a Regular Date falling in
any year to but excluding the next Regular Date, where "Regular
Date" means the day and month (but not the year) on which any
Interest Payment Date falls; and
(iii) in the case of Notes where, apart from one Interest Period
other than the first Interest Period, interest is scheduled to be
paid only by means of regular payments, each period from and
including a Regular Date falling in any year to but excluding the
next Regular Date, where "Regular Date" means the day and month
(but not the year) on which any Interest Payment Date falls other
than the Interest Payment Date falling at the end of the irregular
Interest Period;
"Relevant Banking Day" means a day on which commercial banks are
open for business (including dealings in foreign exchange and
foreign currency deposits) in the place where the specified office
of the relevant Registrar is located;
"Relevant Financial Centre" shall be as specified in the
relevant Pricing Supplement or, if not so specified, means:
(i) London, in the case of a determination of LIBOR; and
(ii) Brussels, in the case of a determination of EURIBOR;
"Relevant Financial Centre Day" means a day on which commercial
banks and foreign exchange markets settle payments and are open for
general business (including dealings in foreign exchange and
foreign currency deposits) in the principal financial centre or
centres for the currency in which payment falls to be made (or,
where such currency is a National Currency Unit and the Notes have
been redenominated into euro pursuant to Condition 9
(Redenomination), the former principal financial centre or centres)
and in any other place set out in the Pricing Supplement. In the
case of payments which fall to be made in euro (save for payments
in relation to Notes which have been redenominated into euros
pursuant to Condition 9 (Redenomination)), a Euro Business Day. The
Relevant Financial Centre Days in relation to any Tranche
determined in accordance with the above provisions as at the Issue
Date shall be specified in the relevant Pricing Supplement;
"Relevant Number of Quotations" means the number of quotations
specified in the relevant Pricing Supplement or, if no number of
quotations is so specified, two quotations;
"Relevant Period" has the meaning given in the relevant Pricing
Supplement;
"Relevant Screen Page" means the page, section or other part of
a particular information service (including, without limitation,
Reuters) specified as the Relevant Screen Page in the relevant
Pricing Supplement, or such other page, section or other part as
may replace it on that information service, in each case, as may be
nominated by the person providing or sponsoring the information
appearing there for the purpose of displaying rates or prices
comparable to the Reference Rate;
"Relevant Time" has the meaning given in the relevant Pricing
Supplement;
"Renminbi" means the lawful currency of the PRC;
"Renminbi Calculation Agent" has the meaning given in the
relevant Pricing Supplement;
"Renminbi Dealer" means an independent foreign exchange dealer
of international repute active in the Renminbi exchange market in
Hong Kong;
"Restricted Global Registered Note" means a Registered Note in
global form issued and sold solely within the United States or to
US Persons (as defined in Regulation S under the Securities Act) in
reliance on Rule 144A of the Securities Act;
"Screen Rate Fallback Trigger" means the occurrence of any of
the following events or circumstances:
(i) if Condition 4(c)(i) (Screen Rate Determination) applies,
the Reference Rate does not appear on the Relevant Screen Page;
(ii) if Condition 4(c)(ii) (Screen Rate Determination) applies,
either of the required rates do not appear on the required Relevant
Screen page;
(iii) if Condition 4(c)(iii) (Screen Rate Determination)
applies, fewer than two rates appear on the Relevant Screen Page;
or
(iv) in any case, the Relevant Screen Page is unavailable;
"Specified Currency" has the meaning given in the relevant
Pricing Supplement;
"Specified Maximum Number of Disrupted Days" means, in relation
to an Equity-Linked Note, Cash Equity Note or an Index-Linked Note,
the eighth Scheduled Trading Day or such other number of Scheduled
Trading Days specified as such in the relevant Pricing
Supplement;
"Specified Period" has the meaning given in the relevant Pricing
Supplement;
"Spot Rate" means the spot CNY/US dollar exchange rate for the
purchase of U.S. dollars with Renminbi in the over--the--counter
Renminbi exchange market in Hong Kong for settlement in two
Determination Business Days, as determined by the Renminbi
Calculation Agent at or around 11 a.m. (Hong Kong time) on the
Determination Date, on a deliverable basis by reference to Reuters
Screen Page TRADCNY3, or if no such rate is available, by reference
to Reuters Screen Page CNHFIX01. If neither rate is available, the
Renminbi Calculation Agent will determine the Spot Rate at or
around 11 a.m. (Hong Kong time) on the Determination Date as the
most recently available CNY/U.S. dollar official fixing rate for
settlement in two Determination Business Days reported by The State
Administration of Foreign Exchange of the PRC, which is reported on
the Reuters Screen Page CNY=SAEC. Reference to a page on the
Reuters Screen means the display page so designated on the Reuter
Monitor Money Rates Service (or any successor service) or such
other page as may replace that page for the purpose of displaying a
comparable currency exchange rate;
"TARGET2" means the Trans--European Automated Real--Time Gross
Settlement Express Transfer payment system which utilises a single
shared platform and which was launched on 19 November 2007;
"Transfer Date" shall be the Relevant Banking Day following the
day on which the relevant Registered Note shall have been
surrendered for transfer in accordance with the foregoing
provisions;
"Treaty" means the Treaty establishing the European Communities,
as amended;
"US Dollar Equivalent" means the Renminbi amount converted into
U.S. Dollars using the Spot Rate for the relevant Determination
Date; and
"U.S. Dollars" means the lawful currency of the United States of
America.
ADDITIONAL TERMS AND CONDITIONS OF THE NOTES
ADDITIONAL TERMS AND CONDITIONS RELATING TO CURRENCY--LINKED
NOTES
The following additional conditions shall be deemed to be added
as Condition 20 to the terms and conditions set out in the section
headed "Terms and Conditions of the Notes" of this Information
Memorandum in respect of any issue of Currency--Linked Notes:
20. Provisions relating to Currency--Linked Notes
Each of the following Conditions 20A, 20B, 20C and 20D shall
apply to any Tranche of Notes which are Currency--Linked Notes,
unless the Pricing Supplement specify otherwise.
A Additional Disruption Event
Following the occurrence of any Additional Disruption Event, the
Calculation Agent will, in its sole and absolute discretion,
determine whether or not the relevant Notes shall continue and, if
so, determine, in its sole and absolute discretion, any adjustments
to be made. If the Calculation Agent determines that the relevant
Notes shall continue, it may make such adjustment(s) as it, in its
sole and absolute discretion, determines to be appropriate, if any,
to the formula for the final redemption amount set out in the
relevant Pricing Supplement and, in any case, any other variable
relevant to the settlement or payment terms of the relevant Notes
and/or any other adjustment which change or adjustment shall be
effective on such date selected by the Calculation Agent in its
sole and absolute discretion. If the Calculation Agent determines
in its sole and absolute discretion that the relevant Notes shall
be terminated, then the Notes shall be terminated as of the date
selected by the Calculation Agent in its sole and absolute
discretion and the entitlements of the relevant Noteholders to
receive the relevant final redemption amount (or any other payment
to be made by the Issuer) shall cease and the Issuer's obligations
under the relevant Notes shall be satisfied in full upon payment of
such amount as in the opinion of the Calculation Agent (such
opinion to be made in its sole and absolute discretion) is fair in
the circumstances by way of compensation for the termination of the
Notes.
For the purposes any Series of Notes, "Additional Disruption
Event" means any event specified as such in the relevant Pricing
Supplement, and for such purpose the following terms if so
specified shall be deemed to have the following meanings unless
otherwise provided in the relevant Pricing Supplement:
(i) "Change in Law" means that, on or after the Issue Date, (A)
due to the adoption of or any change in any applicable law or
regulation (including without limitation, any tax law), or (B) due
to the promulgation of or any change in the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction
of any applicable law or regulation (including any action taken by
a taxing authority), the Issuer determines in its sole and absolute
discretion that (x) it has become illegal for the Issuer to hold,
acquire or dispose of the currency of such Notes, (y) it has become
illegal for the Issuer to hold, acquire, purchase, sell or maintain
one or more (i) positions or contracts in respect of any
securities, options, futures, derivatives or foreign exchange in
relation to such Notes or (ii) other instruments or arrangements
(howsoever described) held by the Issuer in order to hedge,
individually or on a portfolio basis, such Notes or (z) the Issuer
will incur a materially increased cost in performing its
obligations under the Notes (including, without limitation, due to
any increase in tax liability, decrease in tax benefit or other
adverse effect on its tax position);
(ii) "Hedging Disruption" means that the Issuer is unable, after
using commercially reasonable efforts, to (A) acquire, establish,
re--establish, substitute, maintain, unwind or dispose of any
transaction(s) or asset(s) it deems necessary to hedge the currency
exchange rate risk of issuing and performing its obligations with
respect to the Notes or (B) realise, recover or remit the proceeds
of any such transaction(s) or asset(s);
(iii) "Increased Cost of Hedging" means that the Issuer would
incur a materially increased cost (as compared with circumstances
existing on the Issue Date), amount of tax, duty, expense or fee
(other than brokerage commissions) to (A) acquire, establish,
re--establish, substitute, maintain, unwind or dispose of any
transaction(s) or asset(s) it deems necessary to hedge the currency
exchange rate risk of entering into and performing its obligations
with respect to the Notes, or (B) realise, recover or remit the
proceeds of any such transaction(s) or asset(s), provided that any
such materially increased amount that is incurred solely due to the
deterioration of the creditworthiness of the Issuer shall not be
deemed an Increased Cost of Hedging;
(iv) "FX Disruption" means the occurrence, as determined by the
Calculation Agent in its sole and absolute discretion, of (a) an
Inconvertibility, (b) Non-transferability (c) Illiquidity, or (d)
any other event affecting the Reference Currency or Specified
Currency (as applicable) (the "FX Disruption Relevant Currency")
which would make it unlawful or impractical in whole or in part
(including without limitation, as a result of compliance with any
applicable present or future law, rule, regulation, judgment, order
or directive or with any requirement or request of any
governmental, administrative, legislative or judicial power) for
the Issuer (or the Issuer's affiliate) to pay or receive amounts in
the FX Disruption Relevant Currency under or in respect of any
hedging arrangement relating to or connected with the FX Disruption
Relevant Currency.
For the purposes hereof:
"Governmental Authority" means any de facto or de jure
government (or any agency or instrumentality thereof), court,
tribunal, administrative or other governmental authority or any
other entity (private or public) charged with the regulation of the
financial markets (including the central bank) in the Specified
Currency Jurisdiction;
"Illiquidity" means where the foreign exchange market in the
Specified Currency Jurisdiction becomes illiquid after the Issue
Date and, as a result of which, the Issuer cannot obtain sufficient
Specified Currency in order to satisfy its obligation to pay any
amount in respect of the Notes as determined by the Issuer acting
in good faith and in a commercially reasonable manner following
consultation (if practicable) with two Reference Dealers;
"Inconvertibility" means the occurrence of any event after the
Issue Date that makes it impossible for the Issuer to convert any
amount due in respect of the Notes in the foreign exchange market
in the Specified Currency Jurisdiction, other than where such
impossibility is due solely to the failure of the Issuer to comply
with any law, rule or regulation enacted by any Governmental
Authority (unless such law, rule or regulation is enacted after the
Issue Date and it is impossible for the Issuer, due to an event
beyond its control, to comply with such law, rule or
regulation);
"Non transferability" means the occurrence of any event after
the Issue Date that makes it impossible for the Issuer to transfer
any Specified Currency between accounts inside the Specified
Currency Jurisdiction or from an account inside the Specified
Currency Jurisdiction to an account outside the Specified Currency
Jurisdiction or from an account outside the Specified Currency
Jurisdiction to an account inside the Specified Currency
Jurisdiction, other than where such impossibility is due solely to
the failure of the Issuer to comply with any law, rule or
regulation enacted by any Governmental Authority (unless such law,
rule or regulation is enacted after the Issue Date and it is
impossible for the Issuer, due to an event beyond its control, to
comply with such law, rule or regulation);
"Reference Currency" and "Reference Currency Jurisdiction" have
the respective meanings given to them in the relevant Pricing
Supplement;
"Reference Dealers" means leading dealers in the relevant
foreign exchange market, as determined by the Calculation Agent in
its sole and absolute discretion; and
"Specified Currency" and "Specified Currency Jurisdiction" have
the respective meanings given to them in the relevant Pricing
Supplement.
B "Non--deliverability of Specified Currency" at the time any
payment of principal, premium, interest and/or additional or other
amounts, if any, in respect of the Notes is due (each a "Required
Payment"), the Specified Currency is no longer (i) used by the
government of the Specified Currency Jurisdiction for the payment
of public and private debts or (ii) used for settlement of
transactions by public institutions in the Specified Currency
Jurisdiction or within the international banking community, or
(iii) expected to be available, when any Required Payment is due as
a result of circumstances beyond the control of the Issuer, the
Issuer shall be entitled to satisfy its obligations in respect of
such Required Payment by making such Required Payment in the
Alternative Payment Currency, converted from the Specified
Currency, on the basis of the Relevant Screen Rate (the
"Alternative Payment Amount"). Any payment made under such
circumstances in the Alternative Payment Currency will constitute
valid payment and will not constitute a default in respect of the
Notes. The Issuer's communications, opinions, determinations,
calculations, quotations and decisions given, expressed, made or
obtained by the Issuer hereunder shall be at its sole discretion
and shall (in the absence of manifest error, wilful default or bad
faith) be conclusive for all purposes and binding on the Issuer,
the Paying Agents, and the holders of the Notes or Coupons. By
acceptance thereof, purchasers of the Notes will be deemed to have
acknowledged and agreed and to have waived any and all actual or
potential conflicts of interest that may arise as a result of the
calculation of the Alternative Payment Amount by the Issuer.
For the purposes hereof, "Alternative Payment Currency",
"Relevant Screen Rate" and "Specified Currency Jurisdiction" have
the respective meanings given to them in the relevant Pricing
Supplement.
C Screen Rate Unavailability
Where the Screen Rate is unavailable, for any reason, at the
specified time on any date on which an exchange rate is required to
be determined, the Calculation Agent will, if a Screen Rate
Fall--Back is specified in the relevant Pricing Supplement,
determine the relevant exchange rate in accordance with the Screen
Rate Fall--Back provisions specified in the Pricing Supplement. If
the Calculation Agent is unable to determine the exchange rate in
accordance with such Fall--Back provisions or no such Screen Rate
Fall--Back provisions are so specified, then the Calculation Agent
shall determine the exchange rate in its sole and absolute
discretion, acting in good faith.
For the purposes hereof, "Screen Rate" and "Screen Rate
Fall--Back" have the respective meanings given to them in the
relevant Pricing Supplement.
D Price Source Disruption
If "Price Source Disruption" is specified as being applicable in
the relevant Pricing Supplement, then, if on any Scheduled FX
Fixing Date:
(A) a Price Source Disruption occurs, (other than as a result of
an Unscheduled Holiday) and no Screen Rate Fall-Back provisions or
any other fall-back provisions for the calculation of the Relevant
Rate (as applicable) are specified in the relevant Pricing
Supplement, then the Calculation Agent shall:
(1) determine the Relevant Rate by reference to the rate of
exchange published by available recognised financial information
vendors (as selected by the Calculation Agent acting in good faith
and in a commercially reasonable manner) on the Scheduled FX Fixing
Date (the "Fallback Reference Price"); or
(2) unless the Pricing Supplement specifies Dealer Poll as not
applicable, in the event that the Calculation Agent is unable to
determine a Fallback Reference Price in accordance with paragraph
(1) above or the Calculation Agent determines that the Fallback
Reference Price so determined does not accurately represent the
rate which the Calculation Agent determines that the Issuer would
be able to obtain in the general foreign exchange market, the
Calculation Agent will request four Reference Dealers to provide a
quotation of their rate for the Relevant Rate as of the Scheduled
FX Fixing Date. If at least two quotations are provided, the
Relevant Rate will be the arithmetic mean of such quotations;
and
(3) if (i) the Pricing Supplement specifies Dealer Poll as not
applicable and the Calculation Agent is unable to determine a
Fallback Reference Price in accordance with paragraph (1) above or
the Calculation Agent determines that the Fallback Reference Price
so determined does not accurately represent the rate which the
Calculation Agent determines that the Issuer would be able to
obtain in the general foreign exchange market; (ii) the Calculation
Agent determines that the Relevant Rate determined in accordance
with paragraph (2) above does not accurately represent the rate
which the Calculation Agent determines that the Issuer would be
able to obtain in the general foreign exchange market; or (iii)
fewer than 2 quotations are provided by Reference Dealers following
the Calculation Agent's request pursuant to paragraph (2) above,
the Calculation Agent will determine the Relevant Rate on the first
succeeding Business Day on which the Price Source Disruption ceases
to exist; provided, however, that if the Price Source Disruption
continues for thirty consecutive calendar days (or such other
number of calendar days as may be specified in the relevant Pricing
Supplement) after the Scheduled FX Fixing Date (the "FX Cut-off
Date"), the Calculation Agent shall determine its good faith
estimate of the Relevant Rate on that FX Cut-off Date; or
(B) an Unscheduled Holiday occurs (whether or not a Price Source
Disruption also occurs), the Scheduled FX Fixing Date for such
Relevant Rate and all other Relevant Rates which have the same
Scheduled FX Fixing Date shall be postponed to the first succeeding
Relevant Currency Business Day; provided, however, that in the
event that the Scheduled FX Fixing Date is postponed as a result of
the occurrence of an Unscheduled Holiday (a "Postponed FX Fixing
Day"), and if the Postponed FX Fixing Day has not occurred on or
before the thirtieth consecutive calendar day (or such other number
of calendar days as may be specified in the relevant Pricing
Supplement) after the Scheduled FX Fixing Date (any such period
being a "Deferral Period"), then the next day after the Deferral
Period that is or would have been a Relevant Currency Business Day
but for an Unscheduled Holiday, shall be deemed to be the Postponed
FX Fixing Day and the Calculation Agent shall determine its good
faith estimate of the Relevant Rate on that Postponed FX Fixing
Day.
If a Scheduled FX Fixing Date is postponed in accordance with
this Condition 20D(A)(3)(Price Source Disruption), any Related
Payment Date will also be postponed, if needed, such that the
Related Payment Date shall fall at least three (3) local banking
days (or such other number of days as may be specified in the
relevant Pricing Supplement) following the postponed Scheduled FX
Fixing Date or, if later, the FX Cut-off Date or Postponed FX
Fixing Day, as applicable.
Unless Interest Adjustment is specified in the relevant Pricing
Supplement as being applicable, no further payment on account of
interest or otherwise shall be due in respect of any payment
postponed pursuant to this Condition 20D(A)(3)(Price Source
Disruption) so that, for the avoidance of doubt, any interest
payable in respect of the Notes on a Related Payment Date which is
so postponed shall be calculated as if such Related Payment Date
had not been postponed pursuant to this Condition 20D(A)(3)(Price
Source Disruption) unless, in the case of a Fixed Rate Note, a
Floating Rate Note or a Zero Coupon Note, there is a subsequent
failure to pay in accordance with these Conditions, in which event
interest shall continue to accrue as provided in Condition 3
(Interest on Fixed Rate Notes), 4 (Interest on Floating Rate Notes)
or 5 (Variable Coupon Notes and Zero Coupon Notes), as
appropriate.
E Definitions
For the purposes of this Condition 20,
"Price Source Disruption" means, in relation to a Relevant Rate,
such Relevant Rate is not available for any reason as determined by
the Calculation Agent;
"Reference Dealers" means leading dealers in the relevant
foreign exchange market, as determined by the Calculation
Agent;
"Relevant Currency Business Day" means in respect of a Relevant
Rate, the day specified as such in the relevant Pricing
Supplement;
"Related Payment Date" means any payment date on the Notes on
which the amount payable is calculated by reference to the Relevant
Rate determined on the related Scheduled FX Fixing Date;
"Relevant Rate" means the Screen Rate, Relevant Screen Rate or
such other exchange rate as specified in the relevant Pricing
Supplement;
"Scheduled FX Fixing Date" means any day on which the
Calculation Agent is required to determine a Relevant Rate; and
"Unscheduled Holiday" means, in relation to a Relevant Rate, a
day, determined by the Calculation Agent, that is not a Relevant
Currency Business Day and the market was not aware of such fact (by
means of a public announcement or by reference to other publicly
available information) until on or prior to the second Relevant
Currency Business Day (or such other number of Relevant Currency
Business Days specified in the relevant Pricing Supplement)
immediately preceding the Scheduled FX Fixing Date.
ADDITIONAL TERMS AND CONDITIONS RELATING TO EQUITY--LINKED
NOTES, CASH EQUITY NOTES AND INDEX--LINKED NOTES
The following additional conditions shall be deemed to be added
as Condition 20 to the terms and conditions set out in the section
headed "Terms and Conditions of the Notes" of this Information
Memorandum in respect of any issue of Equity--Linked Notes, Cash
Equity Notes or Index--Linked Notes:
20. Provisions relating to Equity--Linked Notes, Cash Equity Notes and Index--Linked Notes
(a) Definitions
As used in this Condition 20, and unless otherwise provided in
the relevant Pricing Supplement, the following expressions shall
have the following meanings:
"Additional Disruption Event" has the meaning ascribed thereto
in Condition 20(h);
"Automatic Early Redemption Notes" means a Series of Notes in
respect of which the relevant Pricing Supplement specifies that
Automatic Early Redemption is applicable;
"Averaging Date" means, in respect of each Valuation Date, each
date specified as such or otherwise determined as provided in the
relevant Pricing Supplement (or, if such date is not a Scheduled
Trading Day, the next following Scheduled Trading Day), subject to
the provisions of Condition 20(e)(ii);
"Cash Equity Note" means a Series of Notes in respect of which
the amount payable at maturity is calculated by reference to the
value of a Security or Securities and/or a formula (as indicated in
the relevant Pricing Supplement);
"Cash Settlement" means, in relation to a Series of Notes, that
the relevant Noteholder is entitled to receive from the Issuer on
the Maturity Date an amount calculated in accordance with the
relevant Pricing Supplement in the Specified Currency;
"Clearing System Business Day" means, in respect of a Clearing
System, any day on which such Clearing System is (or, but for the
occurrence of a Settlement Disruption Event, would have been) open
for the acceptance and execution of settlement instructions;
"Component Security" means, with respect to an Index, each
component security of that Index;
"Conversion" means, in respect of any Securities, any
irreversible conversion by the Underlying Company of such
Securities into other securities;
"Delisting" means that the Exchange announces that, pursuant to
the rules of such Exchange, the Securities cease (or will cease) to
be listed, traded or publicly quoted on the Exchange for any reason
(other than a Merger Event or Tender Offer) and are not immediately
re--listed, re--traded or re--quoted on an exchange or quotation
system located in the same country as the Exchange (or, where the
Exchange is within the European Union, in any member state of the
European Union);
"Delivery Disruption Event" means, as determined by the
Calculation Agent in its sole and absolute discretion, the failure
by the Issuer to deliver or to procure delivery on the relevant
Settlement Date the Securities Transfer Amount under the relevant
Note due to illiquidity in the market for such Securities;
"Deposit Agreement" means, in relation to each Depositary
Receipt, the agreement(s) or other instrument(s) constituting such
Depositary Receipt, as from time to time amended or
supplemented;
"Depositary" means, in relation to a Depositary Receipt, the
issuer of such Depositary Receipt as appointed under the Deposit
Agreement, including its successors from time to time;
"Depositary Receipt(s)" means any Security specified as such in
the relevant Pricing Supplement provided that if the relevant
Deposit Agreement is terminated at any time, any reference to any
Depositary Receipt(s) shall thereafter be construed as a reference
to the relevant Underlying Securities and the Calculation Agent
will make such adjustment as it, in its sole and absolute
discretion, determines to be appropriate to the relevant Notes and
determine, in its sole and absolute discretion, the effective date
of such adjustment;
"Disrupted Day" means (a) any Scheduled Trading Day on which a
relevant Exchange or any Related Exchange fails to open for trading
during its regular trading session or on which a Market Disruption
Event has occurred; or (b) if the Notes are Multiple Exchange
Index--Linked Notes, any Scheduled Trading Day on which (i) the
Index Sponsor fails to publish the level of the Index; (ii) the
Related Exchange fails to open for trading during its regular
trading session; or (iii) a Market Disruption Event has
occurred;
"DR Linked Notes" means a Series of Equity--Linked Notes or Cash
Equity Notes which relate to one or more Securities which are
Depositary Receipts;
"DTC" means the Depository Trust Company;
"Early Closure" means (a) the closure on any Exchange Business
Day of the relevant Exchange (in the case of Equity--Linked Notes
or Cash Equity Notes) or any relevant Exchange(s) relating to
securities that comprise 20 per cent. or more of the level of the
relevant Index (in the case of Index--Linked Notes) or any Related
Exchange(s) prior to its Scheduled Closing Time unless such earlier
closing time is announced by such Exchange(s) or Related
Exchange(s) at least one hour prior to the earlier of: (i) the
actual closing time for the regular trading session on such
Exchange(s) or Related Exchange(s) on such Exchange Business Day
and (ii) the submission deadline for orders to be entered into the
Exchange or Related Exchange system for execution at the Valuation
Time on such Exchange Business Day; or (b) if the Notes are
Multiple Exchange Index--Linked Notes, the closure on any Exchange
Business Day of the Exchange in respect of any Component Security
or the Related Exchange prior to its Scheduled Closing Time unless
such earlier closing is announced by such Exchange or Related
Exchange (as the case may be) at least one hour prior to the
earlier of: (i) the actual closing time for the regular trading
session on such Exchange or Related Exchange (as the case may be)
on such Exchange Business Day; and (ii) the submission deadline for
orders to be entered into such Exchange or Related Exchange system
for execution at the Valuation Time on such Exchange Business
Day;
"Equity--Linked Note" means a Series of Notes in respect of
which either an amount, which shall be calculated by reference to
the value of a Security or Securities and/or a formula, is payable
or a Securities Transfer Amount is deliverable (as indicated in the
relevant Pricing Supplement);
"Exchange" means (a) with respect to a Security or an Index,
each exchange or quotation system specified as such in the relevant
Pricing Supplement, any successor to such exchange or quotation
system or any substitute exchange or quotation system to which
trading in the Security or the components of the Index, as the case
may be, has temporarily relocated (provided that the Calculation
Agent has determined that there is comparable liquidity relative to
such Security or components, as the case may be, as on the original
Exchange); or (b) in the case of a Multiple Exchange Index and each
relevant Component Security, the principal stock exchange on which
such Component Security is principally traded, as determined by the
Calculation Agent (which exchange or quotation system as of the
Issue Date may be specified as such in the relevant Pricing
Supplement);
"Exchange Business Day" means (a) any Scheduled Trading Day on
which each Exchange and any relevant Related Exchange are open for
trading during their respective regular trading sessions,
notwithstanding any such Exchange or Related Exchange closing prior
to its Scheduled Closing Time; or (b) with respect to a Multiple
Exchange Index, any Scheduled Trading Day on which (i) the Index
Sponsor publishes the level of the Index and (ii) the Related
Exchange is open for trading during its regular trading session,
notwithstanding the Related Exchange closing prior to its Scheduled
Closing Time;
"Exchange Disruption" means (a) any event (other than an Early
Closure) that disrupts or impairs (as determined by the Calculation
Agent) the ability of market participants in general (i) to effect
transactions in, or obtain market values for, the Securities on the
Exchange (in the case of an Equity--Linked Note or Cash Equity
Note) or on any relevant Exchange(s) in securities that comprise 20
per cent. or more of the level of the relevant Index (in the case
of an Index--Linked Note), or (ii) to effect transactions in, or
obtain market values for, future or options contracts relating to
the Securities (in the case of an Equity--Linked Note or Cash
Equity Note) or the relevant Index (in the case of an Index--Linked
Note) on any relevant Related Exchange; or (b) with respect to a
Multiple Exchange Index, any event (other than an Early Closure)
that disrupts or impairs (as determined by the Calculation Agent)
the ability of market participants in general to effect
transactions in, or obtain market values for (i) any Component
Security on the Exchange in respect of such Component Security or
(ii) futures or options contracts relating to the Index on the
relevant Related Exchange;
"Exchange Rate" means, in respect of a relevant date and time,
the currency exchange rate of one currency against another
currency, as specified in the Pricing Supplement, quoted by the
relevant exchange rate provider on such date, as displayed on the
Reuters Page specified in the Pricing Supplement and as determined
by the Calculation Agent. If such Exchange Rate cannot be or ceases
to be determined, then the Calculation Agent shall select another
Reuters page or determine in good faith such Exchange Rate by
reference to such sources as it may select in its absolute
discretion;
"Extraordinary Dividend" means the amount per Security specified
or otherwise determined as provided in the relevant Pricing
Supplement or, if no such amount is so specified or determined, any
dividend or the portion of any dividend which the Calculation Agent
determines in its sole and absolute discretion should be
characterised as an Extraordinary Dividend;
"Extraordinary Event" means (a) in all cases other than where
the Pricing Supplement specify that the Securities are Units in a
Fund, a Merger Event, Tender Offer, Nationalisation, Insolvency or
Delisting; or (b) in the case where the Pricing Supplement specify
that the Securities are Units in a Fund, a Merger Event,
Nationalisation, Insolvency, Delisting or Extraordinary Fund
Event;
"Extraordinary Fund Event" means, in the determination of the
Calculation Agent, the occurrence or existence of any of the
following:
(i) the Fund (A) is dissolved or has a resolution passed for its
dissolution, winding--up, official liquidation (other than pursuant
to a consolidation, amalgamation or merger); (B) makes a general
assignment or arrangement with or for the benefit of its creditors;
(C)(1) institutes or has instituted against it, by a regulator,
supervisor or any similar official with primary insolvency,
rehabilitative or regulatory jurisdiction over it in the
jurisdiction of its incorporation or organisation or the
jurisdiction of its head or home office, a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding--up
or liquidation by it or such regulator, supervisor or similar
official, or (2) has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding--up
or liquidation, and such proceeding or petition is instituted or
presented by a person or entity not described in (1) above and
either (x) results in a judgment of insolvency or bankruptcy or the
entry of an order for relief or the making of an order for its
winding--up or liquidation or (y) is not dismissed, discharged,
stayed or restrained in each case within 15 days of the institution
or presentation thereof; (D) seeks or becomes subject to the
appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official
for it or for all or substantially all its assets; (E) has a
secured party take possession of all or substantially all of its
assets or has a distress, execution, attachment, sequestration or
other legal process levied, enforced or sued on or against all or
substantially all of its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 15 days thereafter; or
(F) causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an analogous
effect to any of the events specified in (A) to (E) above;
(ii) the Fund has violated any leverage restriction that is
applicable to, or affecting, such Fund or its assets by operation
of any law, any order or judgment of any court or other agency of
government applicable to it or any of its assets, the Fund
Documents or any contractual restriction binding on or affecting
the Fund or any of its assets;
(iii) the resignation, termination or replacement of the Fund Adviser (as defined below);
(iv) any change or modification of the Fund Documents that could
reasonably be expected to affect the value of the Units or the
rights or remedies of any holders thereof (in each case, as
determined by the Calculation Agent) from those prevailing on the
Issue Date;
(v) any breach or violation of any strategy or investment
guidelines stated in the Fund Documents that is reasonably likely
to affect the value of the Units or the rights or remedies of any
holders thereof (in each case, as determined by the Calculation
Agent);
(vi) the Issuer, or any of its affiliates, is unable, or it is
impractical for it, after using commercially reasonable efforts, to
(A) acquire, establish, re--establish, substitute, maintain, unwind
or dispose of any transaction or asset it deems necessary or
appropriate to hedge the price risk relating to the Units of
entering into and performing its obligations with respect to the
Notes, or (B) realise, recover or remit the proceeds of any such
transaction or asset, including, without limitation, where such
inability or impracticability has arisen by reason of (1) any
restrictions or increase in charges or fees imposed by the Fund on
any investor's ability to redeem the Units, in whole or in part, or
any existing or new investor's ability to make new or additional
investments in such Units, or (2) any mandatory redemption, in
whole or in part, of such Units imposed by the Fund (in each case
other than any restriction in existence on the Issue Date);
(vii) (A) cancellation, suspension or revocation of the
registration or approval of the Units or the Fund by any
governmental, legal or regulatory entity with authority over the
Units or the Fund, (B) any change in the legal, tax, accounting or
regulatory treatments of the Fund or the Fund Adviser that is
reasonably likely to have an adverse impact on the value of the
Units or on any investor therein (as determined by the Calculation
Agent), or (C) the Fund or the Fund Adviser becoming subject to any
investigation, proceeding or litigation by any relevant
governmental, legal or regulatory authority involving the alleged
violation of applicable law for any activities relating to or
resulting from the operation of the Fund;
(viii) (A) the occurrence of any event affecting the Units that,
in the determination of the Calculation Agent, would make it
impossible or impracticable to determine the value of the Units,
and such event is likely, in the determination of the Calculation
Agent, to continue for the foreseeable future; or (B) any failure
of the Fund to deliver, or cause to be delivered (1) information
that the Fund has agreed to deliver, or cause to be delivered to
the Issuer and/or Calculation Agent or (2) information that has
been previously delivered to the Issuer and/or Calculation Agent in
accordance with the Fund's, or its authorised representative's,
normal practice and that the Issuer and/or Calculation Agent deems
necessary for it to monitor the Fund's compliance with any
investment guidelines, asset allocation methodologies or any other
similar policies relating to the Units;
(ix) on or after the Strike Date (A) due to the adoption of or
any change in any applicable law or regulation (including, without
limitation, any tax law), or (B) due to the promulgation of or any
change in the interpretation by any court, tribunal or regulatory
authority with competent jurisdiction of any applicable law or
regulation (including any action taken by a taxing authority), the
Calculation Agent determines in good faith that (X) it has become
illegal to hold, acquire or dispose of the Units, or (Y) the Issuer
will incur a materially increased cost in performing its
obligations under the Notes (including, without limitation, due to
any increase in tax liability, decrease in tax benefit or other
adverse effect on its tax position);
(x) the Issuer would incur a materially increased (as compared
with circumstances existing on the Strike Date) amount of tax,
duty, expense or fee (other than brokerage commissions) to (A)
acquire, establish, re--establish, substitute, maintain, unwind or
dispose of any transaction(s) or asset(s) it deems necessary to
hedge the price risk relating to the Units of entering into and
performing its obligations with respect to the Notes, or (B)
realise, recover or remit the proceeds of any such transaction(s)
or asset(s), provided that any such materially increased amount
that is incurred solely due to the deterioration of the
creditworthiness of the Issuer shall not be deemed an Extraordinary
Fund Event; and
(xi) (A) the cancellation or cessation of any Underlying Index
or (B) a material change in the formula for or the method of
calculating or any other material modification to any Underlying
Index (other than a modification prescribed in that formula or
method to maintain such Underlying Index in the event of changes in
constituent stock and capitalisation and other routine events) or
(C) the relevant sponsor of any Underlying Index fails to calculate
and announce such Underlying Index.
"Final Index Level" means, with respect to an Index and a
Valuation Date, the level determined as provided in the relevant
Pricing Supplement or, if no such level is so provided (a) the
level of the relevant Index as determined by the Calculation Agent
as of the Valuation Time on the relevant Exchange on the Valuation
Date or (b) with respect to a Multiple Exchange Index, the official
closing level of the Index on the Valuation Date as calculated and
published by the Index Sponsor or (c) if Averaging Dates are
specified in the relevant Pricing Supplement in respect of such
Valuation Date, the arithmetic average as determined by the
Calculation Agent (rounded down to the nearest unit of the relevant
currency in which the Index is published, one half of a unit being
rounded upwards) of the Reference Levels on such Averaging
Dates;
"Final Price" means, with respect to a Security and a Valuation
Date, the price determined as provided in the relevant Pricing
Supplement, or if no such price is so provided (a) the price of
such Security as determined by the Calculation Agent as of the
Valuation Time on the relevant Exchange on such Valuation Date or
(b) if Averaging Dates are specified in the relevant Pricing
Supplement in respect of such Valuation Date, the arithmetic
average as determined by the Calculation Agent (rounded down to the
nearest unit of the relevant currency in which the Security is
valued, one half of a unit being rounded upwards) of the Reference
Prices on such Averaging Dates;
"Fund" means the exchange traded fund or similarly traded or
listed fund as specified in the relevant Pricing Supplement;
"Fund Adviser" means, with respect to a Fund, any person
appointed in the role of discretionary investment manager or
non--discretionary investment manager (including a
non--discretionary investment manager to a discretionary investment
manager or to another non--discretionary investment manager), as
provided in the related Fund Documents;
"Fund Documents" means, in relation to any Fund, the
constitutive and governing documents, subscription agreements and
other agreements of such Fund specifying the terms and conditions
relating to such Fund, in each case as amended and supplemented
from time to time;
"Government Bonds" means, in relation to a Series of Notes,
bonds or any other debt securities issued by a government,
government agency or subdivision or a transnational or
supranational organisation as specified in the relevant Pricing
Supplement and "Government Bond" shall be construed
accordingly;
"Index" means, in relation to a Series of Notes, the index to
which such Notes relates, as specified in the relevant Pricing
Supplement, subject to adjustment pursuant to this Condition 20,
and "Indices" shall be construed accordingly;
"Index--Linked Note" means a Series of Notes in respect of which
an amount calculated by reference to an Index or Indices and/or a
formula is payable (as indicated in the relevant Pricing
Supplement);
"Index Sponsor" means the corporation or other entity that (a)
is responsible for setting and reviewing the rules and procedures
and the methods of calculation and adjustments, if any, related to
the relevant Index and (b) announces (directly or through an agent)
the level of the relevant Index on a regular basis during each
Scheduled Trading Day (which corporation or entity as of the Issue
Date may be specified as such in the relevant Pricing
Supplement);
"Initial Index Level" means, with respect to an Index, the level
specified as such or otherwise determined as provided in the
relevant Pricing Supplement or, if no such level is so specified or
otherwise determined, the level of the relevant Index as determined
by the Calculation Agent as of the Valuation Time on the relevant
Exchange on the Strike Date or, with respect to a Multiple Exchange
Index, the official closing level of the Index on the Strike Date
as calculated and published by the Index Sponsor;
"Initial Price" means, with respect to a Security, the price
specified as such or otherwise determined as provided in the
relevant Pricing Supplement or, if no such price is so specified or
otherwise determined, the price of such Security as determined by
the Calculation Agent as of the Valuation Time on the relevant
Exchange on the Strike Date;
"Insolvency" means that by reason of the voluntary or
involuntary liquidation, bankruptcy, insolvency, dissolution or
winding--up of or any analogous proceeding affecting an Underlying
Company, (A) all the Securities of that Underlying Company are
required to be transferred to a trustee, liquidator or other
similar official or (B) holders of the Securities of that
Underlying Company become legally prohibited from transferring
them;
"Market Disruption Event" means (a) the occurrence or existence
of (i) a Trading Disruption, (ii) an Exchange Disruption, which in
either case the Calculation Agent determines is material, at any
time during the one--hour period that ends at the relevant
Valuation Time, Knock--in Valuation Time or Knock--out Valuation
Time, as the case may be or (iii) an Early Closure provided that
for the purposes of determining whether a Market Disruption Event
in respect of an Index exists at any time, if a Market Disruption
Event occurs in respect of a component of the Index at any time,
then the relevant percentage contribution of that security to the
level of the Index shall be based on a comparison of (x) the
portion of the level of the Index attributable to that security and
(y) the overall level of the Index, in each case immediately before
the occurrence of such Market Disruption Event; or (b) with respect
to a Multiple Exchange Index, either
(A) (1) the occurrence or existence, in respect of any Component
Security, of (aa) a Trading Disruption, (bb) an Exchange
Disruption, which in either case the Calculation Agent determines
is material, at any time during the one hour period that (i) for
the purposes of the occurrence of a Knock--in Event or a Knock--out
Event begins and/or ends at the time at which the relevant price or
level triggers the Knock--in Level or the Knock--out Level, as the
case may be, or (ii) in all other circumstances, ends at the
relevant Valuation Time in respect of the Exchange on which such
Component Security is principally traded, OR (cc) an Early Closure;
AND (2) the aggregate of all Component Securities in respect of
which a Trading Disruption, an Exchange Disruption or an Early
Closure occurs or exists comprises 20 per cent. or more of the
level of the Index; OR
(B) the occurrence or existence, in respect of futures or
options contracts relating to the Index of: (aa) a Trading
Disruption, (bb) an Exchange Disruption, which in either case the
Calculation Agent determines is material, at any time during the
one hour period that (i) for the purposes of the occurrence of a
Knock--in Event or a Knock--out Event begins and/or ends at the
time at which the relevant price or level triggers the Knock--in
Level or the Knock--out Level, as the case may be, or (ii) in all
other circumstances, ends at the relevant Valuation Time in respect
of the Related Exchange; or (cc) an Early Closure.
For the purposes of determining whether a Market Disruption
Event exists in respect of a Multiple Exchange Index at any time,
if a Market Disruption Event occurs in respect of a Component
Security at that time, then the relevant percentage contribution of
that Component Security to the level of the Index shall be based on
a comparison of (x) the portion of the level of the Index
attributable to that Component Security to (y) the overall level of
the Index, in each case using the official opening weightings as
published by the Index Sponsor as part of the market "opening
data";
"Merger Event" means in respect of any relevant Securities, any
(i) reclassification or change of such Securities that results in a
transfer of or an irrevocable commitment to transfer all of such
Securities outstanding to another entity or person, (ii)
consolidation, amalgamation, merger or binding share exchange of
the Underlying Company with or into another entity or person (other
than a consolidation, amalgamation or merger in which such
Underlying Company is the continuing entity and which does not
result in a reclassification or change of all of such Securities
outstanding), (iii) takeover offer, tender offer, exchange offer,
solicitation, proposal or other event by any entity or person to
purchase or otherwise obtain 100 per cent. of the outstanding
Securities of the Underlying Company that results in a transfer of
or an irrevocable commitment to transfer all such Securities (other
than such Securities owned or controlled by such other entity or
person); or (iv) consolidation, amalgamation, merger or binding
share exchange of the Underlying Company or its subsidiaries with
or into another entity in which the Underlying Company is the
continuing entity and which does not result in a reclassification
or change of all of such Securities outstanding but results in the
outstanding Securities (other than Securities owned or controlled
by such other entity) immediately prior to such event collectively
representing less than 50 per cent. of the outstanding Securities
immediately following such event, in each case if the closing date
of a Merger Event (or, where a closing date cannot be determined
under the local law applicable to such Merger Event, such other
date as determined by the Calculation Agent) is on or before, in
the case of any Equity--Linked Note which is to be redeemed by
delivery of a Securities Transfer Amount, the Maturity Date or, in
any other case, the final Valuation Date;
If the Notes are DR Linked Notes, "Merger Event" shall include
the occurrence of any of the events described in (i) to (iv)
(inclusive) above in relation to the relevant Underlying
Securities;
"Multiple Exchange Index" means an Index identified or specified
as such in the relevant Pricing Supplement;
"Multiple Exchange Index--Linked Notes" means Notes which relate
to a Multiple Exchange Index;
"Nationalisation" means that all the Securities (or, if the
Notes are DR Linked Notes, the relevant Underlying Securities) or
all or substantially all the assets of an Underlying Company are
nationalised, expropriated or are otherwise required to be
transferred to any governmental agency, authority or entity;
"Notional Sale Date" has the meaning given in the definition of
Settlement Date below;
"Potential Adjustment Event" means (i) a subdivision,
consolidation or reclassification of relevant Securities (unless
resulting in a Merger Event), or a free distribution or dividend of
any such Securities to existing holders whether by way of bonus,
capitalisation or similar issue; or (ii) a distribution, issue or
dividend to existing holders of the relevant Securities of (A) such
Securities or (B) other share capital or securities granting the
right to payment of dividends and/or the proceeds of liquidation of
the Underlying Company equally or proportionately with such
payments to holders of such Securities or (C) any other type of
securities, rights or warrants or other assets, in any case for
payment (cash or other consideration) at less than the prevailing
market price as determined by the Calculation Agent in its sole and
absolute discretion; or (iii) an Extraordinary Dividend; or (iv) a
call by the Underlying Company in respect of relevant Securities
that are not fully paid; or (v) a repurchase by the Underlying
Company or any of its subsidiaries of relevant Securities whether
out of profits or capital and whether the consideration for such
repurchase is cash, securities or otherwise; or (vi) in respect of
the Underlying Company, an event that results in any shareholder
rights being distributed or becoming separated from shares of
common stock or other shares of the capital stock of the Underlying
Company pursuant to a shareholder rights plan or arrangement
directed against hostile takeovers that provides upon the
occurrence of certain events for a distribution of preferred stock,
warrants, debt instruments or stock rights at a price below their
market value, as determined by the Calculation Agent, provided that
any adjustment effected as a result of such an event shall be
readjusted upon any redemption of such rights; or (vii) any other
event that may have a diluting or concentrative effect on the
theoretical value of the relevant Securities; or (viii) any other
event specified as such in the relevant Pricing Supplement.
With respect to Depositary Receipts, "Potential Adjustment
Event" shall also include (x) the occurrence of any of the events
described in (i) to (viii) (inclusive) above in respect of the
relevant Underlying Securities and (y) the making of any amendment
or supplement to the terms of the Deposit Agreement;
"Reference Level" means, unless otherwise specified in the
relevant Pricing Supplement (a) in respect of an Index and an
Averaging Date, the level of such Index as determined by the
Calculation Agent as of the Valuation Time on the Exchange on such
Averaging Date and (b) in respect of a Multiple Exchange Index and
an Averaging Date, the official closing level of such Multiple
Exchange Index on such Averaging Date as calculated and published
by the Index Sponsor;
"Reference Price" means, unless otherwise specified in the
relevant Pricing Supplement, in respect of a Security and an
Averaging Date, the price of such Security as determined by the
Calculation Agent as of the Valuation Time on the Exchange on such
Averaging Date;
"Related Exchange" means, subject to the proviso below, in
respect of a Security or an Index, each exchange or quotation
system specified as such for such Security or Index in the relevant
Pricing Supplement, any successor to such exchange or quotation
system or any substitute exchange or quotation system to which
trading in futures or options contracts relating to such Security
or Index, as the case may be, has temporarily relocated (provided
that the Calculation Agent has determined that there is comparable
liquidity relative to the futures or options contracts relating to
such Security or Index, as the case may be, as on the original
Related Exchange) provided, however, that where "All Exchanges" is
specified as the Related Exchange in the relevant Pricing
Supplement, "Related Exchange" shall mean each exchange or
quotation system where trading has a material effect (as determined
by the Calculation Agent) on the overall market for futures or
options contracts relating to such Security or Index, as the case
may be;
"Residual Amount" means, in relation to a Noteholder and a Note,
the fraction of a Security rounded down pursuant to Condition
20(b), as determined by the Calculation Agent or such amount as
otherwise specified in the relevant Pricing Supplement;
"Residual Cash Amount" means, in respect of a Residual Amount,
the product of such Residual Amount and the fraction of which the
numerator is the Final Price and the denominator is the Strike
Price;
"Scheduled Closing Time" means, in respect of an Exchange or
Related Exchange and a Scheduled Trading Day, the scheduled weekday
closing time of such Exchange or Related Exchange on such Scheduled
Trading Day, without regard to after hours or any other trading
outside of the regular trading session hours;
"Scheduled Trading Day" means (a) any day on which the relevant
Exchange and the relevant Related Exchange are scheduled to be open
for trading for their respective regular trading sessions; or (b)
with respect to a Multiple Exchange Index, any day on which (i) the
Index Sponsor is scheduled to publish the level of the Index and
(ii) the Related Exchange is scheduled to be open for trading for
its regular trading session;
"Scheduled Valuation Date" means any original date that, but for
the occurrence of an event causing a Disrupted Day, would have been
a Valuation Date;
"Securities" means, in relation to a Series of Notes, the equity
securities, debt securities (including without limitation
Government Bonds), depositary receipts or other securities or
property, as adjusted pursuant to this Condition 20, to which such
Notes relate, as specified in the relevant Pricing Supplement and
"Security" shall be construed accordingly;
"Securities Transfer Amount" means the number of Securities per
Note as specified in the relevant Pricing Supplement or if no such
number is so specified, the number of Securities per Note
calculated by the Calculation Agent and equal to the fraction of
which the numerator is the Denomination and the denominator is the
Strike Price;
"Settlement Cycle" means, in respect of a Security or an Index,
the period of Clearing System Business Days following a trade in
the relevant Security or the securities underlying such Index, as
the case may be, on the Exchange in which settlement will
customarily occur according to the rules of such Exchange (or, if
there are multiple Exchanges in respect of an Index, the longest
such period);
"Settlement Date" means, in relation to Securities to be
delivered in respect of an Equity--Linked Note (a) in the case of
Equity--Linked Notes which relate to equity securities and unless
otherwise specified in the relevant Pricing Supplement, the later
of (i) the Maturity Date and (ii) the date that falls one
Settlement Cycle after the Exchange Business Day following the
Valuation Date (the "Notional Sale Date") (or if such day is not a
Clearing System Business Day, the next following Clearing System
Business Day) subject to the provisions of Condition 20(b) or, (b)
in any other case, and unless otherwise specified in the relevant
Pricing Supplement, the date specified as such in the relevant
Pricing Supplement, subject to adjustment in accordance with the
Following Business Day Convention unless another Business Day
Convention (as defined in Condition 19) is specified in the
relevant Pricing Supplement. In each case, if a Settlement
Disruption Event prevents delivery of such Securities on that day,
then the Settlement Date shall be determined in accordance with
Condition 20 (b) (ii);
"Settlement Disruption Event" in relation to a Security means an
event which the Calculation Agent, in its sole and absolute
discretion, determines to be beyond the control of the Issuer or
relevant obligor and to be an event as a result of which the
relevant Clearing System cannot clear the transfer of such
Security;
"Strike Date" means the date specified as such in the relevant
Pricing Supplement;
"Strike Price" has the meaning ascribed thereto in the relevant
Pricing Supplement;
"Successor Index" has the meaning given in Condition 20(d);
"Tender Offer" means a takeover offer, tender offer, exchange
offer, solicitation, proposal or other event by any entity or
person that results in such entity or person purchasing, or
otherwise obtaining or having the right to obtain, by conversion or
other means, greater than 10 per cent. and less than 100 per cent.
of the outstanding voting shares of the Underlying Company, as
determined by the Calculation Agent, based upon the making of
filings with governmental or self--regulatory agencies or such
other information as the Calculation Agent deems relevant;
"Trading Disruption" means (a) any suspension of or limitation
imposed on trading by the relevant Exchange or Related Exchange or
otherwise and whether by reason of movements in price exceeding
limits permitted by the relevant Exchange or Related Exchange or
otherwise (i) relating to the Securities on the Exchange (in the
case of an Equity--Linked Note or Cash Equity Note) or on any
relevant Exchange(s) relating to securities that comprise 20 per
cent. or more of the level of the relevant Index (in the case of
Equity--Linked Notes); or (ii) in futures or options contracts
relating to the Securities or the relevant Index on any relevant
Related Exchange; or (b) with respect to a Multiple Exchange Index,
any suspension of or limitation imposed on trading by the relevant
Exchange or Related Exchange or otherwise and whether by reason of
movements in price exceeding limits permitted by the relevant
Exchange or Related Exchange or otherwise (i) relating to any
Component Security on the Exchange in respect of such Component
Security, or (ii) in futures or options contracts relating to the
Index on any relevant Related Exchange;
"Transfer Expenses" means, with respect to any Notes, all stamp,
transfer, registration and similar duties and all expenses, scrip
fees, levies and registration charges payable on or in respect of
or arising on, or in connection with, the purchase or transfer,
delivery or other disposition by the transferor to the order of the
relevant Noteholders of any Securities;
"Transfer Notice" means a notice in the form from time to time
approved by the Issuer, which must:
(i) specify the name and address of the Noteholder;
(ii) specify the number of Notes in respect of which it is the Noteholder;
(iii) specify the number of the Noteholder's account at
Euroclear, Clearstream, Luxembourg, CMU, DTC and/or any other
relevant clearing system, as the case may be, to be debited with
such Notes;
(iv) irrevocably instruct and authorise Euroclear, Clearstream,
Luxembourg, CMU, DTC and/or any other relevant clearing system, as
the case may be, (A) to debit the Noteholder's account with such
Notes on the Settlement Date, if physical delivery applies, or
otherwise on the Maturity Date and (B) that no further transfers of
the Notes specified in the Transfer Notice may be made;
(v) contain a representation and warranty from the Noteholder to
the effect that the Notes to which the Transfer Notice relates are
free from all liens, charges, encumbrances and other third party
rights;
(vi) specify the number and account name of the account at the
Clearing System to be credited with the Securities if physical
delivery applies;
(vii) contain an irrevocable undertaking to pay the Transfer
Expenses (if any) and an irrevocable instruction to Euroclear,
Clearstream, Luxembourg, CMU, DTC and/or any other relevant
clearing system, as the case may be, to debit on or after the
Settlement Date the cash or other account of the Noteholder with
Euroclear, Clearstream, Luxembourg, CMU, DTC and/or any other
relevant clearing system, as the case may be, specified in the
Transfer Notice with such Transfer Expenses;
(viii) include a certificate of non--US beneficial ownership in
the form required by the Issuer; and
(ix) authorise the production of the Transfer Notice in any
applicable administrative or legal proceedings;
"Underlying Company" means the issuer of the Security as
specified in the relevant Pricing Supplement and, if the Notes are
DR Linked Notes, each of the Depositary and the issuer of the
relevant Underlying Security, in each case subject to adjustment in
accordance with Condition 20(g);
"Underlying Index", in relation to a Fund, has the meaning given
to it in the relevant Pricing Supplement;
"Underlying Security" means, with respect to DR Linked Notes and
a Depositary Receipt, the security and any other property to which
such Depositary Receipt relates;
"Unit", in relation to a Fund, has the meaning given to it in
the relevant Pricing Supplement;
"Valid Date" means a Scheduled Trading Day that is not a
Disrupted Day and on which another Averaging Date in respect of the
relevant Valuation Date does not or is not deemed to occur;
"Valuation Date" means each date specified or otherwise
determined as provided in the relevant Pricing Supplement (or, if
such date is not a Scheduled Trading Day, the next following
Scheduled Trading Day), in each case subject to Condition 20(e);
and
"Valuation Time" means:
(a) in relation to each Security to be valued or each Index
(other than a Multiple Exchange Index) the level of which falls to
be determined on any date, the time on such date specified as such
in the relevant Pricing Supplement or, if no such time is
specified, the Scheduled Closing Time on the relevant Exchange on
such date in relation to such Security or Index, as applicable. If
the relevant Exchange closes prior to its Scheduled Closing Time
and the specified Valuation Time is after the actual closing time
for its regular trading session, then the Valuation Time shall be
such actual closing time; or
(b) in relation to a Multiple Exchange Index, (i) for the
purposes of determining whether a Market Disruption Event has
occurred: (a) in respect of any Component Security, the Scheduled
Closing Time on the Exchange in respect of such Component Security,
and (b) in respect of any options contracts or future contracts on
the Index, the close of trading on the Related Exchange; and (ii)
in all other circumstances, the time at which the official closing
level of the Index is calculated and published by the Index
Sponsor.
(b) Physical Delivery
In relation to Equity--Linked Notes which are to be redeemed by
the delivery of a Securities Transfer Amount, and subject to the
other provisions of these Conditions and the relevant Pricing
Supplement:
(i)
(A) Each Noteholder shall, on or before the date five calendar
days before the Maturity Date (or such earlier date as the Issuer
shall determine is necessary for the Issuer, the Paying Agents,
Euroclear, Clearstream, Luxembourg, CMU, DTC and/or any other
relevant clearing system to perform their respective obligations in
relation to the Notes and notify to the Paying Agents and the
Noteholders) send to Euroclear, Clearstream, Luxembourg, CMU, DTC
and/or any other relevant clearing system, as the case may be, in
accordance with its then applicable operating procedures, and
copied to the Principal Paying Agent or, as the case may be, the
CMU Lodging and Paying Agent, a duly completed Transfer Notice.
(B) A Transfer Notice, once delivered to Euroclear, Clearstream,
Luxembourg, CMU, DTC and/or any other relevant clearing system,
shall be irrevocable and may not be withdrawn without the consent
in writing of the Issuer. A Noteholder may not transfer any Note
which is the subject of a Transfer Notice following delivery of
such Transfer Notice to Euroclear, Clearstream, Luxembourg, CMU,
DTC and/or any other relevant clearing system. A Transfer Notice
shall only be valid to the extent that Euroclear, Clearstream,
Luxembourg, CMU, DTC and/or any other relevant clearing system have
not received conflicting prior instructions in respect of the Notes
which are the subject of the Transfer Notice.
(C) Failure properly to complete and deliver a Transfer Notice
may result in such notice being treated as null and void. Any
determination as to whether such notice has been properly completed
and delivered as provided shall be made by the Principal Paying
Agent or, as the case may be, the CMU Lodging and Paying Agent and
shall be conclusive and binding on the Issuer and the
Noteholder.
(D) The Principal Paying Agent or, as the case may be, the CMU
Lodging and Paying Agent shall promptly on the local banking day
following receipt of a Transfer Notice send a copy thereof to the
Issuer or such person as the Issuer may previously have
specified.
(E) Delivery of the Securities will be via the relevant Clearing
System. The delivery or transfer of Securities to each Noteholder
is at the relevant Noteholder's risk and if delivery occurs later
than the earliest possible date for delivery, no additional amounts
will be payable by the Issuer.
(F) the Issuer shall discharge its obligation to redeem the
relevant proportion of the Notes by delivering, or procuring the
delivery of, the Securities Transfer Amount on the Settlement Date
to the Clearing System for credit to the account with the Clearing
System specified in the Transfer Notice of the relevant
Noteholder.
(G) The amount of Securities to be delivered to or for the
account of each Noteholder shall be an amount of Securities equal
to the number of Notes in respect of which such Noteholder is the
holder as specified in the relevant Transfer Notice multiplied by
the Securities Transfer Amount provided, however, that if a
Noteholder would become entitled to a number of Securities which is
not equal to a board lot of the Securities at such time, as
determined by the Calculation Agent, or an integral multiple
thereof, then the Noteholder's entitlement to delivery of
Securities shall be rounded down to the nearest whole Security.
(H) In relation to each Noteholder, the Calculation Agent shall
calculate the Residual Amount and the Residual Cash Amount. The
Residual Cash Amount shall be paid by the Issuer to the relevant
Noteholder on the Settlement Date.
(I) Each Noteholder shall be required as a condition of its
entitlement to delivery of Securities in respect of any Notes to
pay all Transfer Expenses in respect of such Notes.
(J) After delivery to or for the account of a Noteholder of the
relevant Securities Transfer Amount and for such period of time as
the transferor or its agent or nominee shall continue to be
registered in any clearing system as the owner of the Securities
comprised in such Securities Transfer Amount (the "Intervening
Period"), none of such transferor or any agent or nominee for the
Issuer or such transferor shall (i) be under any obligation to
deliver to such Noteholder or any other person any letter,
certificate, notice, circular, dividend or any other document or
payment whatsoever received by the Issuer or such transferor, agent
or nominee in its capacity as holder of such Securities, (ii) be
under any obligation to exercise any rights (including voting
rights) attaching to such Securities during the Intervening Period,
or (iii) be under any liability to such Noteholder or any other
person in respect of any loss or damage which the Noteholder or any
other person may sustain or suffer as a result, whether directly or
indirectly, of the Issuer or such transferor, agent or nominee
being registered in such clearing system during such Intervening
Period as legal owner of such Securities.
(L) All dividends on Securities to be delivered will be payable
to the party that would receive such dividends according to market
practice for a sale of the Securities executed on the Notional Sale
Date to be delivered in the same manner as such Securities. Any
such dividends will be paid to or for credit to the account
specified by the Noteholder in the relevant Transfer Notice. No
right to dividends on the Securities will accrue to Noteholders
prior to the Notional Sale Date.
(ii) the Calculation Agent shall determine, in its sole and
absolute discretion, whether or not at any time a Settlement
Disruption Event has occurred and where it determines such an event
has occurred and so has prevented delivery of Securities on the
original day that but for such Settlement Disruption Event would
have been the Settlement Date, then the Settlement Date will be the
first succeeding day on which delivery of such Securities can take
place through the relevant Clearing System unless a Settlement
Disruption Event prevents settlement on each of the eight relevant
Clearing System Business Days immediately following the original
date (or during such other period (the "Disruption Period")
specified in the relevant Pricing Supplement) that, but for the
Settlement Disruption Event, would have been the Settlement Date.
In that case, if the Securities are debt securities, the Issuer
shall use reasonable efforts to deliver such Securities promptly
thereafter in a commercially reasonable manner (as determined by
the Calculation Agent in its sole and absolute discretion) outside
the Clearing System and in all other cases (a) if such Securities
can be delivered in any other commercially reasonable manner (as
determined by the Calculation Agent in its sole and absolute
discretion), then the Settlement Date will be the first Business
Day on which settlement of a sale of Securities executed on that
eighth relevant Clearing System Business Day, or during such other
period specified in the relevant Pricing Supplement, customarily
would take place using such other commercially reasonable manner
(as determined by the Calculation Agent in its sole and absolute
discretion) of delivery (which other manner of delivery will be
deemed the relevant Clearing System for the purposes of delivery of
the relevant Securities), and (b) if such Securities cannot be
delivered in any other commercially reasonable manner (as
determined by the Calculation Agent in its sole and absolute
discretion), then the Settlement Date will be postponed until
delivery can be effected through the relevant Clearing System or in
any other commercially reasonable manner.
For the avoidance of doubt, where a Settlement Disruption Event
affects some but not all of the Securities comprised in a basket,
the Settlement Date for Securities not affected by the Settlement
Disruption Event will be the first day on which settlement of a
sale of such Securities executed on the Maturity Date customarily
would take place through the relevant Clearing System.
(iii) if the Calculation Agent determines, in its sole and
absolute discretion, that a Delivery Disruption Event has occurred,
it shall notify the Issuer who shall promptly notify the relevant
Noteholder(s) and the Issuer may then:
(A) determine, in its sole and absolute discretion, that the
obligation to deliver the relevant Securities Transfer Amount will
be terminated and the Issuer will pay such amount as in the opinion
of the Calculation Agent (such opinion to be made in its sole and
absolute discretion) is fair in the circumstances by way of
compensation for the non--delivery of the Securities Transfer
Amount, in which event the entitlements of the respective
Noteholder(s) to receive the relevant Securities Transfer Amount
shall cease and the Issuer's obligations under the Notes shall be
satisfied in full upon payment of such amount; or
(B) deliver on the Settlement Date such amount of the Securities
Transfer Amount (if any) as it can deliver on that date and pay
such amount as in the opinion of the Calculation Agent (such
opinion to be made in its sole and absolute discretion) is fair in
the circumstances by way of compensation for the non--delivery of
the remainder of the Securities Transfer Amount, in which event the
entitlements of the respective Noteholder(s) to receive the
relevant Securities Transfer Amount shall cease and the Issuer's
obligations under the Notes shall be satisfied in full upon payment
of such amount.
Where this Condition 20(b) (iii) fails to be applied, insofar as
the Calculation Agent determines in its sole and absolute
discretion to be practical, the same shall be applied as between
the Noteholders on a pro rata basis, but subject to such rounding
down (whether of the amount of a payment or of a number of
Securities to be delivered) and also to such other adjustments as
the Calculation Agent determines, in its sole and absolute
discretion, to be appropriate to give practical effect to such
provisions.
(c) Automatic Early Redemption
This Condition 20(c) is applicable only to Automatic Early
Redemption Notes.
If on any Automatic Early Redemption Valuation Date, the
Automatic Early Redemption Event occurs, then unless previously
redeemed or purchased and cancelled, the Notes will be
automatically redeemed in whole, but not in part, on the Automatic
Early Redemption Date together with any interest accrued but unpaid
thereon to the Automatic Early Redemption Date (unless otherwise
specified in the relevant Pricing Supplement) immediately following
such Automatic Early Redemption Valuation Date and the redemption
amount payable by the Issuer on such date upon redemption of each
Note shall be an amount in the relevant currency equal to the
relevant Automatic Early Redemption Amount.
As used herein:
"Automatic Early Redemption Amount" means (a) an amount in the
relevant currency specified in the relevant Pricing Supplement or
if such amount is not specified, (b) the product of (i) the nominal
amount of one Note and (ii) the relevant Automatic Early Redemption
Rate relating to that Automatic Early Redemption Date;
"Automatic Early Redemption Date(s)" means each of the date(s)
specified as such in the relevant Pricing Supplement, subject in
each case to adjustment in accordance with the Business Day
Convention specified in the relevant Pricing Supplement;
"Automatic Early Redemption Event" means (unless otherwise
specified in the relevant Pricing Supplement) that the price of the
relevant Security or, as the case may be, the level of the Index,
in either case as determined by the Calculation Agent as of the (or
any) Valuation Date is, as specified in the relevant Pricing
Supplement, (i) "greater than", (ii) "greater than or equal to",
(iii) "less than" or (iv) "less than or equal to" the Automatic
Early Redemption Price, or as the case may be, the Automatic Early
Redemption Level;
"Automatic Early Redemption Level" means the level of the Index
specified as such or otherwise determined in the relevant Pricing
Supplement;
"Automatic Early Redemption Price" means the price per Security
specified as such or otherwise determined in the relevant Pricing
Supplement;
"Automatic Early Redemption Rate" means, in respect of any
Automatic Early Redemption Date, the rate specified as such in the
relevant Pricing Supplement; and
"Automatic Early Redemption Valuation Date(s)" means each of the
date(s) specified as such in the relevant Pricing Supplement or, if
any such date is not a Scheduled Trading Day, the next following
Scheduled Trading Day, subject to the provisions of Condition
20(e)(i) which shall apply as if such Automatic Early Redemption
Valuation Date were a Valuation Date.
(d) Knock--in and Knock--out Provisions
If "Knock--in Event" is specified as applicable in the Pricing
Supplement in relation to any Cash Equity Note, Equity--Linked Note
or Index--Linked Note, then each payment and/or delivery in respect
of which a Knock--in Event applies, as specified in the relevant
Pricing Supplement, shall be conditional upon the occurrence of
such Knock--in Event.
For the purposes hereof:
"Knock--in Determination Day" means each Scheduled Trading Day
during the Knock--in Determination Period, unless such day is a
Disrupted Day due to the occurrence of an event giving rise to a
Disrupted Day prior to the Knock--in Valuation Time on such day. If
such day is a Disrupted Day due to the occurrence of such an event,
then the Knock--in Determination Day shall be the first succeeding
Scheduled Trading Day that is not a Disrupted Day, unless each of
the eight Scheduled Trading Days immediately following the original
date that, but for the occurrence of a Disrupted Day, would have
been the Knock--in Determination Day is a Disrupted Day. In that
case, that eighth Scheduled Trading Day shall be deemed to be the
Knock--in Determination Day, notwithstanding the fact that such day
is a Disrupted Day, and the Calculation Agent shall determine the
price of the Security or, as the case may be, the level of the
Index in the same manner that it would determine a price of a
Security or, as the case may be, a level of an Index on a deemed
Valuation Date that is also a Disrupted Day in accordance with the
provisions of Condition 20(e)(i)(A), (B) or (C), as the case may
be;
"Knock--in Determination Period" means the period which
commences on, and includes, the Knock--in Period Beginning Date and
ends on, and includes, the Knock--in Period Ending Date;
"Knock--in Event" means (a) the event or occurrence specified as
such in the relevant Pricing Supplement; and (b) (unless otherwise
specified in the relevant Pricing Supplement) that the price of the
Security or, as the case may be, the level of the Index, determined
by the Calculation Agent as of the Knock--in Valuation Time on any
Knock--in Determination Day is, as specified in the relevant
Pricing Supplement, (i) "greater than", (ii) "greater than or equal
to", (iii) "less than" or (iv) "less than or equal to" the
Knock--in Price or, as the case may be, the Knock--in Level;
"Knock--in Level" means the level of the Index specified as such
or otherwise determined in the relevant Pricing Supplement;
"Knock--in Period Beginning Date" means the date specified as
such in the relevant Pricing Supplement or, if such date is not a
Scheduled Trading Day, the next following relevant Scheduled
Trading Day, subject to the provisions of "Knock--in Determination
Day" above;
"Knock--in Period Ending Date" means the date specified as such
in the relevant Pricing Supplement or, if such date is not a
Scheduled Trading Day, the next following relevant Scheduled
Trading Day, subject to the provisions of "Knock--in Determination
Day" above;
"Knock--in Price" means the price per Security specified as such
or otherwise determined in the relevant Pricing Supplement; and
"Knock--in Valuation Time" means the time or period of time on
any Knock--in Determination Day specified as such in the relevant
Pricing Supplement or in the event that the relevant Pricing
Supplement do not specify a Knock--in Valuation Time, the Knock--in
Valuation Time shall be the Valuation Time.
If "Knock--out Event" is specified as applicable in the Pricing
Supplement in relation to any Cash Equity Note, Equity--Linked Note
or Index--Linked Note, then each payment and/or delivery in respect
of which a Knock--out Event applies, as specified in the relevant
Pricing Supplement, shall be conditional upon such Knock--out Event
not having occurred.
For the purposes hereof:
"Knock--out Determination Day" means each Scheduled Trading Day
during the Knock--out Determination Period, unless such day is a
Disrupted Day due to the occurrence of an event giving rise to a
Disrupted Day prior to the Knock--out Valuation Time on such day.
If such day is a Disrupted Day due to the occurrence of such an
event, then the Knock--out Determination Day shall be the first
succeeding Scheduled Trading Day that is not a Disrupted Day,
unless each of the eight Scheduled Trading Days immediately
following the original date that, but for the occurrence of a
Disrupted Day, would have been the Knock--out Determination Day is
a Disrupted Day. In that case, that eighth Scheduled Trading Day
shall be deemed to be the Knock--out Determination Day,
notwithstanding the fact that such day is a Disrupted Day, and the
Calculation Agent shall determine the price of the Security or, as
the case may be, the level of the Index in the same manner that it
would determine a price of a Security or, as the case may be, a
level of an Index on a deemed Valuation Date that is a Disrupted
Day in accordance with the provisions of Condition 20(e)(i)(A), (B)
or (C), as the case may be;
"Knock--out Determination Period" means the period which
commences on, and includes, the Knock--out Period Beginning Date
and ends on, and includes, the Knock--out Period Ending Date;
"Knock--out Event" means that (i) the event or occurrence
specified as such in the relevant Pricing Supplement; and (ii)
(unless otherwise specified in the relevant Pricing Supplement)
that the price of the Security or, as the case may be, the level of
the Index, determined by the Calculation Agent as of the Knock--out
Valuation Time on any Knock--out Determination Day is, as specified
in the relevant Pricing Supplement, (i) "greater than", (ii)
"greater than or equal to", (iii) "less than" or (iv) "less than or
equal to" the Knock--out Price or, as the case may be, Knock--out
Level;
"Knock--out Level" means the level of the Index specified as
such or otherwise determined in the relevant Pricing
Supplement;
"Knock--out Period Beginning Date" means the date specified as
such in the relevant Pricing Supplement or, if such date is not a
Scheduled Trading Day, the next following relevant Scheduled
Trading Day, subject to the provisions of "Knock--out Determination
Day" above;
"Knock--out Period Ending Date" means the date specified as such
in the relevant Pricing Supplement or, if such date is not a
Scheduled Trading Day, the next following relevant Scheduled
Trading Day, subject to the provisions of "Knock--out Determination
Day" above;
"Knock--out Price" means the price per Security specified as
such or otherwise determined in the relevant Pricing Supplement;
and
"Knock--out Valuation Time" means the time or period of time on
any Knock--out Determination Day specified as such in the relevant
Pricing Supplement or in the event that the relevant Pricing
Supplement do not specify a Knock--out Valuation Time, the
Knock--out Valuation Time shall be the Valuation Time.
(e) Consequences of Disrupted Days
For the purposes of this Condition 20(e) "Limit Valuation Date"
shall mean, if any Valuation Date in respect of a Note is a
Disrupted Day, the Specified Maximum Number of Disrupted Days
following such Valuation Date, notwithstanding the fact that such
day is a Disrupted Day.
(i) If any Valuation Date is a Disrupted Day, then:
(A) in the case of an Equity--Linked Note, a Cash Equity Note or
an Index--Linked Note which, in each case, relates to a single
Security or Index, the Valuation Date shall be the first succeeding
Scheduled Trading Day that is not a Disrupted Day, provided that
the Valuation Date shall not fall after the Limit Valuation Date.
In that case:
(1) in respect of an Index-Linked Note, the Limit Valuation Date
will be deemed to be the Valuation Date, notwithstanding the fact
that such day is a Disrupted Day, and the Calculation Agent shall
determine the level of the Index as of the Valuation Time on the
Limit Valuation Date determined in accordance with the formula for
and method of calculating the Index last in effect prior to the
occurrence of the first Disrupted Day using the Exchange traded or
quoted price as of the Valuation Time on the Limit Valuation Date
of each security or other property comprised in the Index (or, if
an event giving rise to a Disrupted Day has occurred in respect of
the relevant security or other property on the Limit Valuation
Date, its good faith estimate of the value for the relevant
security or other property as of the Valuation Time on the Limit
Valuation Date); and
(2) in respect of an Equity--Linked Note or a Cash Equity Note,
the Limit Valuation Date shall be deemed to be the Valuation Date,
notwithstanding the fact that such day is a Disrupted Day and the
Calculation Agent shall determine its good faith estimate of the
value for the relevant Security as of the Valuation Time on that
Limit Valuation Date;
(B) in the case of an Index--Linked Note which relates to a
basket of Indices, the Valuation Date for each Index not affected
by the occurrence of a Disrupted Day shall be the Scheduled
Valuation Date and the Valuation Date for each Index affected by
the occurrence of a Disrupted Day shall be the first succeeding
Scheduled Trading Day which is not a Disrupted Day relating to that
Index, unless each of the succeeding Scheduled Trading Days (up to
and including the Limit Valuation Date) immediately following the
Scheduled Valuation Date is a Disrupted Day relating to that Index.
In that case, the Limit Valuation Date shall be deemed to be the
Valuation Date for the relevant Index notwithstanding the fact that
such day is a Disrupted Day relating to that Index and the
Calculation Agent shall determine, in its sole and absolute
discretion, the level of that Index, as of the Valuation Time on
the Limit Valuation Date in accordance with the formula for and
method of calculating that Index last in effect prior to the
occurrence of the first Disrupted Day using the Exchange traded or
quoted price as of the Valuation Time on the Limit Valuation Date
of each security or other property comprised in the relevant Index
(or, if an event giving rise to a Disrupted Day has occurred in
respect to the relevant security or other property on the Limit
Valuation Date, its good faith estimate of the value for the
relevant security or other property as of the Valuation Time on the
Limit Valuation Date); and
(C) in the case of an Equity--Linked Note or a Cash Equity Note
which, in each case, relates to a basket of Securities, the
Valuation Date for each Security not affected by the occurrence of
a Disrupted Day shall be the Scheduled Valuation Date, and the
Valuation Date for each Security affected by the occurrence of a
Disrupted Day shall be the first succeeding Scheduled Trading Day
that is not a Disrupted Day relating to that Security, unless each
of the Scheduled Trading Days (up to and including the Limit
Valuation Date) immediately following the Scheduled Valuation Date
is a Disrupted Day relating to that Security. In that case, (1) the
Limit Valuation Date shall be deemed to be the Valuation Date for
the relevant Security, notwithstanding the fact that such day is a
Disrupted Day, and (2) the Calculation Agent shall determine, in
its sole and absolute discretion, its good faith estimate of the
value for that Security as of the Valuation Time on the Limit
Valuation Date.
(ii) If Averaging Dates are specified in the relevant Pricing
Supplement, then notwithstanding any other provisions of these
Conditions, the following provisions will apply to the valuation of
the relevant Index or Securities:
(A) The Final Price or Final Index Level will be, in relation to any Valuation Date:
(1) in respect of an Index--Linked Note or an Equity--Linked
Note settled by way of Cash Settlement or a Cash Equity Note which,
in each case, relates to a single Security or Index (as the case
may be), the arithmetic mean of the Reference Price of the Security
or (as the case may be) of the Reference Level of the Index on each
Averaging Date;
(2) in respect of an Index--Linked Note settled by way of Cash
Settlement or a Cash Equity Note which, in each case, relates to a
basket of indices, the arithmetic mean of the amounts for such
basket determined by the Calculation Agent in its sole and absolute
discretion as provided in the relevant Pricing Supplement as of the
relevant Valuation Time(s) on each Averaging Date or, if no means
for determining the Final Index Level is so provided, the
arithmetic mean of the amounts for such basket calculated on each
Averaging Date as the sum of the Reference Level of each Index
comprised in such basket (weighted or adjusted in relation to each
Index as provided in the relevant Pricing Supplement); and
(3) in respect of an Equity--Linked Note settled by way of Cash
Settlement or a Cash Equity Note which relates to a basket of
Securities, the arithmetic mean of the prices for such basket
determined by the Calculation Agent in its sole and absolute
discretion as provided in the relevant Pricing Supplement as of the
relevant Valuation Time(s) on each Averaging Date or, if no means
for determining the Final Price is so provided, the arithmetic mean
of the prices for such basket calculated on each Averaging Date as
the sum of the values calculated for the Securities of each
Underlying Company as the product of (aa) the Reference Price of
such Security and (bb) the number of such Securities comprised in
such basket (weighted or adjusted in relation to each Security as
provided in the relevant Pricing Supplement).
(B) If any Averaging Date is a Disrupted Day, then, if the
consequence specified in the relevant Pricing Supplement in
relation to "Averaging Date Market Disruption" is:
(1) "Omission", then such Averaging Date will be deemed not to
be a relevant Averaging Date for purposes of determining the
relevant Final Price or Final Index Level, as applicable, provided
that, if through the operation of this provision no Averaging Date
would occur with respect to the relevant Valuation Date, then
Condition 20 (e)(i) will apply for purposes of determining the
relevant level, price or amount on the final Averaging Date in
respect of that Valuation Date as if such final Averaging Date were
a Valuation Date that was a Disrupted Day. If any Averaging Dates
in relation to a Valuation Date occur after that Valuation Date as
a result of the occurrence of a Disrupted Day, then (i) the
relevant Maturity Date or any early redemption date in accordance
with the Conditions or the relevant Settlement Date, as the case
may be, or (ii) the occurrence of an Extraordinary Event or a
Potential Adjustment Event shall be determined by reference to the
last such Averaging Date as though it were that Valuation Date;
(2) "Postponement", then Condition 20(e)(i) will apply for
purposes of determining the relevant level, price or amount on that
Averaging Date as if such Averaging Date were a Valuation Date that
was a Disrupted Day irrespective of whether, pursuant to such
determination, that deferred Averaging Date would fall on a day
that already is or is deemed to be an Averaging Date for the
relevant Notes. If any Averaging Dates in relation to a Valuation
Date occur after that Valuation Date as a result of the occurrence
of a Disrupted Day, then (i) the relevant Maturity Date or any
early redemption date in accordance with the Conditions or the
relevant Settlement Date, as the case may be, or (ii) the
occurrence of an Extraordinary Event or a Potential Adjustment
Event shall be determined by reference to the last such Averaging
Date as though it were that Valuation Date; or
(3) "Modified Postponement", then:
(aa) in the case of an Index--Linked Note or an Equity--Linked
Note or a Cash Equity Note which relates to a single Index or
Security, the Averaging Date shall be the first succeeding Valid
Date. If the first succeeding Valid Date has not occurred as of the
Valuation Time on the Limit Valuation Date immediately following
the original date that, but for the occurrence of another Averaging
Date or Disrupted Day, would have been the final Averaging Date
(the "Scheduled Final Averaging Date") in relation to the relevant
Scheduled Valuation Date, then the Limit Valuation Date shall be
deemed to be the Averaging Date, notwithstanding the fact that such
day is a Disrupted Day (irrespective of whether that Limit
Valuation Date is already an Averaging Date) and:
(i) in respect of an Index Linked Note, the Calculation Agent
shall determine the relevant level for that Averaging Date in
accordance with Condition 20(e) (i)(A)(1); and
(ii) in respect of an Equity--Linked Note or a Cash Equity Note,
the Calculation Agent shall determine the relevant price for that
Averaging Date in accordance with Condition 20(e) (i)(A)(2);
and
(bb) in the case of an Index--Linked Note, an Equity--Linked
Note or a Cash Equity Note which relates to a basket of Indices or
Securities, the Averaging Date for each Index or Security not
affected by the occurrence of a Disrupted Day shall be the day
specified in the relevant Pricing Supplement as an Averaging Date
in relation to the relevant Valuation Date (the "Scheduled
Averaging Date") and the Averaging Date for an Index or Security
affected by the occurrence of a Disrupted Day shall be the first
succeeding Valid Date in relation to such Index or Security. If the
first succeeding Valid Date in relation to such Index or Security
has not occurred as of the Valuation Time on the Limit Valuation
Date immediately following the Scheduled Final Averaging Date, then
the Limit Valuation Date shall be deemed to be the Averaging Date
(irrespective of whether that Limit Valuation Date is already an
Averaging Date) and:
(i) in respect of an Index--Linked Note, the Calculation Agent
shall determine the relevant level for that Averaging Date in
accordance with Condition 20(e)(i)(B); and
(ii) in respect of an Equity--Linked Note or a Cash Equity Note,
the Calculation Agent shall determine the relevant amount for that
Averaging Date in accordance with Condition 20(e) (i)(C).
If any Averaging Dates in relation to a Valuation Date occur
after that Valuation Date as a result of the occurrence of a
Disrupted Day, then (i) the relevant Maturity Date or any early
redemption date in accordance with the Conditions or Settlement
Date, as the case may be, or (ii) the occurrence of an
Extraordinary Event or Potential Adjustment Event shall be
determined by reference to the last such Averaging Date as though
it were that Valuation Date.
(C) If (1) on or prior to any Averaging Date, in respect of an
Index--Linked Note, an Index Modification, Index Cancellation or
Index Disruption (each as defined in Condition 20(f)(ii)) occurs,
or (2) on any Averaging Date in respect of an Index--Linked Note an
Index Disruption Event occurs, then the Calculation Agent shall
determine, in its sole and absolute discretion, the Final Index
Level using, in lieu of a published level of the relevant Index,
the level for that Index as determined by the Calculation Agent in
its sole and absolute discretion in accordance with the formula for
and method of calculating that Index last in effect prior to that
change or failure, but using only those securities that comprised
that Index immediately prior to that change or failure (other than
those securities that have since ceased to be listed on any
relevant Exchange).
If a Valuation Date is postponed in accordance with this
Condition 20(e) (Consequences of Disrupted Days), any Disrupted Day
Related Payment Date will also be postponed, if needed, such that
the Disrupted Day Related Payment Date shall fall at least three
(3) local banking days (or such other number of local banking days
as may be specified in the Pricing Supplement) following the
postponed Valuation Date or, if later, the Limit Valuation Date, as
applicable.
Unless Interest Adjustment is specified in the relevant Pricing
Supplement as being applicable, no further payment on account of
interest or otherwise shall be due in respect of any payment
postponed pursuant to this Condition 20(e) (so that, for the
avoidance of doubt, any interest payable in respect of the Notes on
a Disrupted Day Related Payment Date which is so postponed shall be
calculated as if such Disrupted Day Related Payment Date had not
been postponed pursuant to this Condition 20(e)) unless, in the
case of a Fixed Rate Note, a Floating Rate Note, Variable Coupon
Amount Note or a Zero Coupon Note, there is a subsequent failure to
pay in accordance with these Conditions, in which event interest
shall continue to accrue as provided in Condition 3 (Interest on
Fixed Rate Notes), 4 (Interest on Floating Rate Notes) or 5
(Variable Coupon Amount Notes and Zero Coupon Notes), as
appropriate.
(f) Adjustments to Indices
This Condition 20(f) is applicable only in relation to
Index--Linked Notes.
(i) Successor Index
If a relevant Index is (A) not calculated and announced by the
Index Sponsor but is calculated and published by a successor to the
Index Sponsor acceptable to the Calculation Agent, or (B) replaced
by a successor index using, in the determination of the Calculation
Agent, the same or a substantially similar formula for and method
of calculation as used in the calculation of that Index, then in
each case that Index (the "Successor Index") will be deemed to be
the Index.
(ii) Index Adjustment Events
If on or prior to any Valuation Date, Automatic Early Redemption
Valuation Date or Averaging Date (A) a relevant Index Sponsor
announces that it will make a material change in the formula for or
the method of calculating that Index or in any other way materially
modifies that Index (other than a modification prescribed in that
formula or method to maintain that Index in the event of changes in
constituent stock and capitalisation or other routine events) (an
"Index Modification") or permanently cancels the Index (an "Index
Cancellation"), or (B) the Index Sponsor fails to calculate and
announce a relevant Index (an "Index Disruption" and together with
an Index Modification and an Index Cancellation, each an "Index
Adjustment Event"), then the Calculation Agent shall determine, in
its sole and absolute discretion, the Final Index Level using, in
lieu of a published level of that Index, the level for that Index
as at that Valuation Date, Automatic Early Redemption Valuation
Date or Averaging Date, as the case may be, as determined by the
Calculation Agent in its sole and absolute discretion in accordance
with the formula for and method of calculating that Index last in
effect prior to the change, failure or cancellation, but using only
those securities that comprised that Index immediately prior to
that Index Adjustment Event.
(iii) Correction of Index Levels
If the level of an Index published by the Index Sponsor at any
time and used or to be used by the Calculation Agent for any
calculation or determination under the Notes is subsequently
corrected and the correction is published by the Index Sponsor
within one Settlement Cycle after the original publication, the
Calculation Agent will make such adjustment as it in its sole and
absolute discretion determines to be appropriate, if any, to the
settlement or payment terms of the Notes to account for such
correction provided that if any amount has been paid in an amount
which exceeds the amount that would have been payable if the
correction had been taken into account, no further amount in an
amount at least equal to the excess is payable in respect of the
Notes and the Calculation Agent determines that it is not
practicable to make such an adjustment to account fully for such
correction, the Issuer shall be entitled to reimbursement of the
relevant excess payment (or, as the case may be, the proportion
thereof not accounted for by an adjustment made by the Calculation
Agent) by the relevant Noteholder, together with interest on that
amount for the period from and including the day on which payment
was originally made to (but excluding) the day of payment of
reimbursement by the Noteholder (all as calculated by the
Calculation Agent in its sole and absolute discretion). Any such
reimbursement shall be effected in such manner as the Issuer shall
determine.
(g) Adjustments and Events affecting Securities
This Condition 20(g) is applicable only in relation to
Equity--Linked Notes and Cash Equity Notes.
(i) Potential Adjustment Events
The Calculation Agent shall determine, in its sole and absolute
discretion, whether or not at any time a Potential Adjustment Event
has occurred and where it determines such an event has occurred,
the Calculation Agent will, in its sole and absolute discretion,
determine whether such Potential Adjustment Event has a diluting or
concentrative effect on the theoretical value of the relevant
Securities and, if so, will make such adjustment(s) as it in its
sole and absolute discretion determines to be appropriate, if any,
to the formula for the final redemption amount set out in the
relevant Pricing Supplement, the number of Securities to which each
Note relates, the number of Securities comprised in a basket, the
amount, the number of or type of shares, other securities or other
property which may be delivered pursuant to such Notes and/or any
other adjustment(s) and, in any case, any other variable relevant
to the settlement or payment terms of the relevant Notes as the
Calculation Agent determines, in its sole and absolute discretion,
to be appropriate to account for that diluting or concentrative
effect and determine, in its sole and absolute discretion, the
effective date(s) of such adjustment(s).
(ii) Extraordinary Events
Following the occurrence of any Extraordinary Event, the
Calculation Agent will, in its sole and absolute discretion,
determine whether or not the relevant Notes shall continue and, if
so, determine, in its sole and absolute discretion, any adjustments
to be made. If the Calculation Agent determines that the relevant
Notes shall continue, it may make such adjustment(s) as it, in its
sole and absolute discretion, determines to be appropriate, if any,
to the formula for the final redemption amount set out in the
relevant Pricing Supplement, the number of Securities to which each
Note relates, the number of Securities comprised in a basket, the
amount, the number of or type of shares, other securities or other
property which may be delivered pursuant to such Notes and, in any
case, any other variable relevant to the settlement or payment
terms of the relevant Notes and/or any other adjustment which
change or adjustment shall be effective on such date selected by
the Calculation Agent in its sole and absolute discretion. If the
Calculation Agent determines in its sole and absolute discretion
that the relevant Notes shall be redeemed, then the Notes shall be
redeemed as of the date selected by the Calculation Agent in its
sole and absolute discretion and the entitlements of the relevant
Noteholders to receive the relevant Securities Transfer Amount or
final redemption amount (or any other payment to be made by the
Issuer) as the case may be, shall cease and the Issuer's
obligations under the relevant Notes shall be satisfied in full
upon payment of such amount as in the opinion of the Calculation
Agent (such opinion to be made in its sole and absolute discretion)
is fair in the circumstances by way of compensation for the
redemption of the Notes.
(iii) Conversion
In respect of an Equity--Linked Note or a Cash Equity Note which
relates to debt securities, following the occurrence of any
Conversion, the Calculation Agent will, in its sole and absolute
discretion, determine whether or not the Notes will continue and,
if so, determine, in its sole and absolute discretion, any
adjustment(s) to be made. If the Calculation Agent determines that
the Notes shall continue, it may make such adjustment(s) as it, in
its sole and absolute discretion, determines to be appropriate to
the formula for the final redemption amount set out in the relevant
Pricing Supplement, the number of Securities to which each Note
relates, the number of Securities comprised in a basket, the
amount, number of or type of shares, other securities or other
property which may be delivered under such Notes and, in any case,
any other variable relevant to the settlement or payment terms of
the relevant Notes and/or any other adjustment and determine, in
its sole and absolute discretion, the effective date(s) of such
adjustment(s). If the Calculation Agent determines in its sole and
absolute discretion that the Notes shall be redeemed, then the
Notes shall be redeemed as of the date selected by the Calculation
Agent in its sole and absolute discretion and the entitlements of
the relevant Noteholders to receive the relevant Securities
Transfer Amount or final redemption amount (or any other payment to
be made by the Issuer), as the case may be, shall cease and the
Issuer's obligations under the relevant Notes shall be satisfied in
full upon payment of such amount as, in the opinion of the
Calculation Agent (such opinion to be made by the Calculation Agent
in its sole and absolute discretion) is fair in the circumstances
by way of compensation for the redemption of the Notes.
(iv) Correction of Prices
In the event that any price published or announced on a given
day and utilised or to be utilised for the purpose of any
calculation or determination under the Notes is subsequently
corrected and the correction is published or announced by the
Exchange within one Settlement Cycle after the original
publication, the Calculation Agent will make such adjustment(s) as
it in its sole and absolute discretion determines to be
appropriate, if any, to the amount payable in respect of the Notes
and their terms to account for such correction and the Calculation
Agent shall determine, in its sole and absolute discretion, the
effective date(s) of such adjustment(s) provided that if any amount
has been paid in an amount which exceeds the amount that would have
been payable if the correction had been taken into account, no
further amount in an amount at least equal to the excess is payable
in respect of the Notes and the Calculation Agent determines that
it is not practicable to make such an adjustment to account fully
for such correction, the Issuer shall be entitled to reimbursement
of the relevant excess payment (or, as the case may be, the
proportion thereof not accounted for by an adjustment made by the
Calculation Agent) by the relevant Noteholder, together with
interest on that amount for the period from and including the day
on which payment was originally made to (but excluding) the day of
payment of reimbursement by the Noteholder (all as calculated by
the Calculation Agent in its sole and absolute discretion). Any
such reimbursement shall be effected in such manner as the Issuer
shall determine.
(h) Additional Disruption Events
Following the occurrence of any Additional Disruption Event, the
Calculation Agent will, in its sole and absolute discretion,
determine whether or not the relevant Notes shall continue and, if
so, determine, in its sole and absolute discretion, any adjustments
to be made. If the Calculation Agent determines that the relevant
Notes shall continue, it may make such adjustment(s) as it, in its
sole and absolute discretion, determines to be appropriate, if any,
to the formula for the final redemption amount set out in the
relevant Pricing Supplement, the number of Securities to which each
Note relates, the number of Securities comprised in a basket, the
amount, the number of or type of shares, other securities or other
property which may be delivered pursuant to such Notes and, in any
case, any other variable relevant to the settlement or payment
terms of the relevant Notes and/or any other adjustment which
change or adjustment shall be effective on such date selected by
the Calculation Agent in its sole and absolute discretion. If the
Calculation Agent determines in its sole and absolute discretion
that the relevant Notes shall be redeemed, then the Notes shall be
redeemed as of the date selected by the Calculation Agent in its
sole and absolute discretion and the entitlements of the relevant
Noteholders to receive the relevant Securities Transfer Amount or
final redemption amount (or any other payment to be made by the
Issuer), as the case may be, shall cease and the Issuer's
obligations under the relevant Notes shall be satisfied in full
upon payment of such amount as in the opinion of the Calculation
Agent (such opinion to be made in its sole and absolute discretion)
is fair in the circumstances by way of compensation for the
redemption of the Notes.
For the purposes any Series of Notes, "Additional Disruption
Event" means any event specified as such in the relevant Pricing
Supplement, and for such purpose the following terms if so
specified shall be deemed to have the following meanings unless
otherwise provided in the relevant Pricing Supplement:
(i) "Change in Law" means that, on or after the Issue Date, (A)
due to the adoption of or any change in any applicable law or
regulation (including without limitation, any tax law), or (B) due
to the promulgation of or any change in the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction
of any applicable law or regulation (including any action taken by
a taxing authority), the Issuer determines in its sole and absolute
discretion that (x) it has become illegal for the Issuer to hold,
acquire or dispose of Securities relating to such Notes, (y) it has
become illegal for the Issuer to hold, acquire, purchase, sell or
maintain one or more (i) positions or contracts in respect of any
securities, options, futures, derivatives or foreign exchange in
relation to such Notes, (ii) stock loan transactions in relation to
such Notes or (iii) other instruments or arrangements (howsoever
described) held by the Issuer in order to hedge, individually or on
a portfolio basis, such Notes or (z) the Issuer will incur a
materially increased cost in performing its obligations under the
Notes (including, without limitation, due to any increase in tax
liability, decrease in tax benefit or other adverse effect on its
tax position);
(ii) "Failure to Deliver" means the failure of a party to
deliver, when due, the relevant Securities in respect of the Notes,
where such failure is due to illiquidity in the market for such
Securities;
(iii) "Insolvency Filing" means that the issuer of the
Securities institutes or has instituted against it by a regulator,
supervisor or any similar official with primary insolvency,
rehabilitative or regulatory jurisdiction over it in the
jurisdiction of its incorporation or organisation or the
jurisdiction of its head or home office, or it consents to a
proceeding seeking a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency law or other
similar law affecting creditors' rights, or a petition is presented
for its winding--up or liquidation by it or such regulator,
supervisor or similar official or it consents to such petition,
provided that proceedings instituted or petitions presented by
creditors and not consented to by the issuer of the Securities
shall not be deemed an Insolvency Filing;
(iv) "Hedging Disruption" means that the Issuer is unable, after
using commercially reasonable efforts, to (A) acquire, establish,
re--establish, substitute, maintain, unwind or dispose of any
transaction(s) or asset(s) it deems necessary to hedge the equity
price risk of issuing and performing its obligations with respect
to the Notes or (B) realise, recover or remit the proceeds of any
such transaction(s) or asset(s); and
(v) "Increased Cost of Hedging" means that the Issuer would
incur a materially increased costs (as compared with circumstances
existing on the Issue Date), amount of tax, duty, expense or fee
(other than brokerage commissions) to (A) acquire, establish,
re--establish, substitute, maintain, unwind or dispose of any
transaction(s) or asset(s) it deems necessary to hedge the equity
price risk of entering into and performing its obligations with
respect to the Notes, or (B) realise, recover or remit the proceeds
of any such transaction(s) or asset(s), provided that any such
materially increased amount that is incurred solely due to the
deterioration of the creditworthiness of the Issuer shall not be
deemed an Increased Cost of Hedging.
(i) Effects of European Economic and Monetary Union
Following the occurrence of an EMU Event, the Calculation Agent
shall make such adjustment (and determine, in its sole and absolute
discretion, the effective date of such adjustment) as it, in its
sole and absolute discretion, determines to be appropriate, if any,
to the formula for the final redemption amount set out in the
relevant Pricing Supplement, the formula for and method of
calculating the relevant Index and/or the securities or other
property comprising the relevant Index, the number of and type of
Securities to which each Note relates, the number of and type of
Securities comprised in a basket, the amount, the number of or type
of shares, other securities or other property which may be
delivered under such Notes and/or any other adjustment and, in any
case, any other variable relevant to the settlement or payment
terms of the relevant Notes.
Following the occurrence of an EMU Event, without prejudice to
the generality of the foregoing, the Issuer shall be entitled to
make such conversions between amounts denominated in the national
currency units (the "National Currency Units") of the Participating
Member States and the euro, and the euro and the National Currency
Units, in each case, in accordance with the conversion rates and
rounding rules in Regulation (EC) No. 1103/97 as it, in its sole
and absolute discretion, determines to be appropriate.
Neither the Issuer nor the Calculation Agent will be liable to
any Noteholder or other person for any commissions, costs, losses
or expenses in relation to or resulting from any currency
conversion or rounding effected in connection therewith.
For the purposes hereof:
"EMU Event" means the occurrence of any of the following, as
determined by the Calculation Agent, in its sole and absolute
discretion:
(i) the redenomination of any security into euro;
(ii) the change by any organised market, exchange or clearing,
payment or settlement system in the unit of account of its
operating procedures to the euro;
(iii) any change in the currency of denomination of any Index; or
(iv) any change in the currency in which some or all of the
securities or other property comprising any Index is denominated;
and
"Participating Member State" means any member state of the
European Union which adopts the single currency in accordance with
the Treaty.
(j) Other Adjustments
Upon the occurrence of any event(s) that the Calculation Agent
determines (in its discretion, but acting reasonably) affects or
could potentially affect the value of an Index--Linked Note, an
Equity--Linked Note or a Cash Equity Note, the Calculation Agent
may (in its discretion, but acting reasonably) make any additional
adjustments to the Strike Price, the number and/or type of
Securities and/or Indices to which such an Index--Linked Note, an
Equity--Linked Note or a Cash Equity Note relates, and to any other
exercise, settlement, payment or other term of such an
Index--Linked Note, an Equity--Linked Note or a Cash Equity Note
including, without limitation, the amount, number or type of cash,
shares, other securities or property which may be transferred under
such Index--Linked Note, an Equity--Linked Note or a Cash Equity
Note, and determine the effective date(s) of such adjustments.
(k) Adjustments where the Securities are Units in a Fund
Where the Securities are specified in the relevant Pricing
Supplement as being Units in a Fund, in the case of the occurrence
at any time on or prior to the Valuation Date of any Extraordinary
Event affecting the Fund or the value of the Units, the Calculation
Agent may make any adjustment as provided in the preceding
provisions of this Condition 20 or:
(i) if the Calculation Agent determines that no adjustment that
it could make under the preceding provisions of this Condition 20
would produce a commercially reasonable result:
(A) the Calculation Agent will use commercially reasonable
efforts to identify a new underlying asset with characteristics,
investment objectives and policies similar to those in effect for
the Affected Units immediately prior to the occurrence of the
relevant Extraordinary Event and any substitution of the new
underlying asset for the Affected Units shall be effected at such
time and in such manner as determined by the Calculation Agent in
its sole and absolute discretion; and
(B) if necessary, the Calculation Agent will adjust any relevant
terms, including, but not limited to, adjustments to account for
changes in volatility, investment strategy or liquidity relevant to
the Units or the Notes; or
(ii) if the Calculation Agent determines in its sole and
absolute discretion that the relevant Notes shall be redeemed, then
the Notes shall be redeemed as of the date selected by the
Calculation Agent in its sole and absolute discretion and the
entitlements of the relevant Noteholders to receive the relevant
Securities Transfer Amount or final redemption amount, as the case
may be, shall cease and the Issuer's obligations under the relevant
Notes shall be satisfied in full upon payment of an amount as in
the opinion of the Calculation Agent (such opinion to be made in
its sole and absolute discretion) is fair in the circumstances by
way of compensation for the redemption of the Notes.
In this Condition 20(k) "Affected Unit(s)" means each Unit
subject to an applicable Extraordinary Event.
ADDITIONAL TERMS AND CONDITIONS RELATING TO CREDIT-LINKED NOTES
(2014 ISDA CREDIT DERIVATIVES DEFINITIONS VERSION)
The section headed "Terms and Conditions of the Notes" of this
Information Memorandum shall be supplemented and modified by the
following "Additional Terms and Conditions relating to
Credit-Linked Notes (2014 ISDA Credit Derivatives Definitions
Version)" (the "Credit Linked Conditions" and, together with the
Terms and Conditions of the Notes, the "Base Conditions") in
respect of any issue of Credit-Linked Notes as amended or
supplemented by the terms of each Tranche of Notes set out in the
Pricing Supplement (the "Pricing Supplement") for which "Additional
Terms and Conditions relating to Credit-Linked Notes (2014 ISDA
Credit Derivatives Definitions Version)" is specified as applicable
therein.
In the event of any inconsistency between the "Terms and
Conditions of the Notes" and the "Additional Terms and Conditions
relating to Credit-Linked Notes (2014 ISDA Credit Derivatives
Definitions Version)", such "Additional Terms and Conditions
relating to Credit-Linked Notes (2014 ISDA Credit Derivatives
Definitions Version)" shall prevail and the "Terms and Conditions
of the Notes" shall be amended accordingly.
Unless otherwise stated in these Credit Linked Conditions or in
the relevant Pricing Supplement, in the event that any day
specified in the section "Credit Linked Redemption" in the relevant
Pricing Supplement or the last day of any period calculated by
reference to calendar days falls on a day that is not a Business
Day, such day or last day shall be subject to adjustment in
accordance with the applicable Business Day Convention.
In the case of Credit Linked Notes for which more than one
Reference Entity is specified in the relevant Pricing Supplement,
all references to "the Reference Entity" herein shall be construed
to refer to the Reference Entity in respect of which the relevant
determination falls to be made at any relevant time and all related
provisions and determinations will be construed accordingly. In
addition, where an event, date, determination or circumstance
relates to a Reference Entity, only those Business Centre(s)
specified in relation to that Reference Entity will be deemed to
apply for the purposes of the definition of "Business Day" in
relation thereto and otherwise all of the Business Centre(s)
specified in the relevant Pricing Supplement (including those for
all Reference Entities) will apply for the purposes of the
definition of "Business Day".
For the avoidance of doubt no Credit Linked Notes will be
considered frustrated, or otherwise void or voidable (whether for
mistake or otherwise) solely because:
(a) any relevant Reference Entity does not exist on, or ceases
to exist on or following, the Trade Date; and/or
(b) Obligations, Deliverable Obligations, Valuation Obligations
or the Reference Obligation do not exist on, or cease to exist on
or following, the Trade Date.
Any references in these Credit Linked Conditions to ISDA will
include any other entity which succeeds to or is performing
functions previously undertaken by ISDA in relation to Credit
Derivatives Determinations Committees and references to Credit
Derivatives Determinations Committees in relation to ISDA will
include any successor thereto and the Calculation Agent may make
such adjustments to these Credit Linked Conditions and the relevant
Pricing Supplement as it determines appropriate to account for the
application of these provisions.
For the avoidance of doubt, the application of any of Credit
Linked Conditions 7, 8, 9, 10 or 12 below shall not preclude the
application of any other such Credit Linked Condition either
contemporaneously or subsequently and in the event that any such
Credit Linked Conditions are inconsistent or the Calculation Agent
becomes entitled to exercise a discretion under one or more of such
Credit Linked Conditions, the Calculation Agent may elect in its
discretion which Credit Linked Condition shall apply and under
which Credit Linked Condition or Credit Linked Conditions it shall
exercise its discretion.
Credit Linked Notes may take the form of Single Reference Entity
Credit Linked Notes or Basket Credit Linked Notes. The Settlement
Method for Credit Linked Notes may be Auction Settlement, Physical
Settlement or Cash Settlement (for which purposes the Final Price
will be fixed) and Credit Event Maturity Settlement may apply to
Credit Linked Notes where the Settlement Method is Auction
Settlement or Cash Settlement. The relevant Pricing Supplement
shall specify (depending upon the particular Credit Linked Notes),
amongst other things:
(a) the type of Credit Linked Notes;
(b) the Settlement Method and (if applicable) the Final Price
and whether Credit Event Maturity Settlement applies;
(c) the Reference Entity or Reference Entities in respect of
which a Credit Event may occur;
(d) the Reference Obligation(s) (if any) in respect of each Reference Entity;
(e) the Trade Date and the Scheduled Maturity Date; and
(f) the Reference Entity Notional Amount in respect of each Reference Entity.
1. Redemption of Credit Linked Notes
(a) Unless previously redeemed or purchased and cancelled and
subject as provided in Credit Linked Condition 2, Credit Linked
Condition 3, Credit Linked Condition 4 or Credit Linked Condition
5, the Issuer shall redeem each Credit Linked Note on the Maturity
Date by payment of the final redemption amount set out in the
relevant Pricing Supplement. The final redemption amount will be
rounded to the nearest sub-unit of the Specified Currency (half a
sub-unit being rounded upwards).
In the case of Instalment Notes, subject as provided in Credit
Linked Condition 2, Credit Linked Condition 3 or Credit Linked
Condition 4, as applicable, the Issuer shall redeem each Credit
Linked Note in such number of instalments and in such amounts
("Instalment Amounts") as may be specified in, or determined herein
or in accordance with the provisions of, the relevant Pricing
Supplement.
Following any partial redemption of a Note, references to a
nominal amount of Credit Linked Notes (or Notes) equal to the
Calculation Amount shall be deemed to be to a nominal amount which
as of the Issue Date had a nominal amount equal to the Calculation
Amount.
If a Credit Event Determination Date has occurred in respect of
any Reference Entity the Issuer shall redeem each Credit Linked
Note as described below.
References in these Credit Linked Conditions to a Credit Linked
Note or Note are to a nominal amount of Credit Linked Notes equal
to the Calculation Amount (subject as provided above). Any payment
of a "pro rata" amount in respect of a Note will be determined by
reference to its nominal amount relative to the then nominal amount
of Notes. For the avoidance of doubt, Condition 6(a) will not
apply.
(b) Where the Notes are Single Reference Entity Credit Linked
Notes, if a Credit Event Determination Date has occurred in
relation to the Reference Entity, then the Notes will be settled in
accordance with Credit Linked Condition 2, Credit Linked Condition
3 or Credit Linked Condition 4, as applicable.
(c) Where the Notes are Basket Credit Linked Notes, if a Credit
Event Determination Date has occurred in respect of any specified
Reference Entity, then the provisions of Credit Linked Condition 5
will apply.
(d) Where any Credit Event Redemption Amount is or would be zero
then, other than for the payment of accrued interest (if any) or
any other due but unpaid amounts, the Notes will be cancelled as of
the Credit Event Redemption Date with no payment being due other
than any final amount of accrued interest or any other due but
unpaid amounts. The Issuer will have no further obligations in
respect of the Credit Linked Notes.
(e) If any purchase and cancellation of Notes occurs under
Condition 6(e) (Purchases) or any further issue under Condition 16
(Further Issues), the Calculation Agent will make such adjustments
to the relevant Pricing Supplement and/or these Credit Linked
Conditions as it determines appropriate (including Reference Entity
Notional Amounts and/or the Original Notional Amount, as
applicable) to ensure the Notes continue to reflect economic
intentions.
2. Auction Settlement
(a) Where (i) Auction Settlement is specified as the applicable
Settlement Method in the relevant Pricing Supplement for Single
Reference Entity Credit Linked Notes and a Credit Event
Determination Date occurs on or prior to the Auction Final Price
Determination Date or (ii) Credit Linked Condition 4(a) applies and
the Issuer does not give a Notice of Physical Settlement, the
Issuer shall give notice (such notice an "Auction Settlement
Notice") to the Noteholders in accordance with Condition 14
(Notices), and, subject to these Credit Linked Conditions, in
particular Credit Linked Condition 1, redeem all but not some only
of the Credit Linked Notes, each Credit Linked Note being redeemed
by the Issuer at the Credit Event Redemption Amount on the Credit
Event Redemption Date. Any delay in the delivery of an Auction
Settlement Notice or failure by the Issuer to deliver an Auction
Settlement Notice shall not affect the validity of a Credit Event
Determination Date.
(b) Unless settlement has occurred in accordance with the paragraph above, if:
(i) an Auction Cancellation Date occurs;
(ii) a No Auction Announcement Date occurs (and in circumstances
where such No Auction Announcement Date occurs pursuant to
paragraphs (b) or (c)(ii) of the definition of No Auction
Announcement Date, the Issuer has not exercised the Movement
Option);
(iii) a DC Credit Event Question Dismissal occurs;
(iv) a Credit Event Determination Date was determined pursuant
to paragraph (a)(i) of the definition of Credit Event Determination
Date or paragraph (a) of the definition of Non-Standard Credit
Event Determination Date and no Credit Event Resolution Request
Date has occurred on or prior to the date falling three Business
Days after such Credit Event Determination Date; or
(v) the Calculation Agent determines that it is otherwise
reasonably likely that the Reference Transaction would be settled
in accordance with the Fallback Settlement Method and gives notice
of such to the Issuer (the date on which the Calculation Agent
gives such notice, the "Calculation Agent Fallback Settlement
Determination Date"),
then the Issuer shall redeem the Credit Linked Notes in
accordance with Credit Linked Condition 3 below.
If a Credit Event Determination Date has occurred and the Notes
become redeemable in accordance with this Credit Linked Condition
2, upon payment of the Credit Event Redemption Amounts in respect
of the Notes, the Issuer shall have discharged its obligations in
respect of the Notes and shall have no other liability or
obligation whatsoever in respect thereof. The Credit Event
Redemption Amount may be less than the nominal amount of a Credit
Linked Note. Any shortfall shall be borne by the Noteholders and no
liability shall attach to the Issuer.
3. Cash Settlement
If a Credit Event Determination Date has occurred and (i) Cash
Settlement is specified as the applicable Settlement Method in the
relevant Pricing Supplement for Single Reference Credit Linked
Notes or (ii) Credit Linked Condition 2(b) above applies, the
Issuer shall give notice (such notice a "Cash Settlement Notice")
to the Noteholders in accordance with Condition 14 (Notices), and,
subject to these Credit Linked Conditions, in particular Credit
Linked Condition 1, redeem all but not some only of the Credit
Linked Notes, each Credit Linked Note being redeemed by the Issuer
at the Credit Event Redemption Amount on the Credit Event
Redemption Date. Any delay in the delivery of a Cash Settlement
Notice or failure by the Issuer to deliver a Cash Settlement Notice
shall not affect the validity of a Credit Event Determination
Date.
If a Credit Event Determination Date has occurred and the Notes
become redeemable in accordance with this Credit Linked Condition
3, upon payment of the Credit Event Redemption Amounts in respect
of the Notes, the Issuer shall have discharged its obligations in
respect of the Notes and shall have no other liability or
obligation whatsoever in respect thereof. The Credit Event
Redemption Amount may be less than the nominal amount of a Credit
Linked Note. Any shortfall shall be borne by the Noteholders and no
liability shall attach to the Issuer.
4. Physical Settlement
(a) If a Credit Event Determination Date has occurred, then
where Physical Settlement is specified as the applicable Settlement
Method in the relevant Pricing Supplement for Single Reference
Entity Credit Linked Notes, the Issuer shall give notice (such
notice a "Notice of Physical Settlement") to the Noteholders in
accordance with Condition 14 (Notices), and, subject to these
Credit Linked Conditions, in particular Credit Linked Condition 1,
redeem all but not some only of the Credit Linked Notes each Credit
Linked Note being redeemed by the Issuer by the Delivery of the
Deliverable Obligations comprising the Entitlement on or prior to
the Credit Settlement Date, subject to and in accordance with the
Conditions and these Credit Linked Conditions, unless in the
determination of the Issuer in its sole and absolute discretion in
its opinion (i) it would not have any Deliverable Obligations to so
Deliver or (ii) all of the Deliverable Obligations would be
Undeliverable Obligations, in which case the provisions of Credit
Linked Condition 2 above shall apply as if Auction Settlement were
thereafter specified as the applicable the Settlement Method in the
relevant Pricing Supplement and these Credit Linked Conditions and
the relevant Pricing Supplement will be construed accordingly and
the Issuer shall redeem the Credit Linked Notes in accordance with
Credit Linked Condition 2. Any delay in the delivery of a Notice of
Physical Settlement or failure by the Issuer to deliver a Notice of
Physical Settlement shall not affect the validity of a Credit Event
Determination Date.
In the Notice of Physical Settlement, the Issuer shall specify
the Deliverable Obligations comprising the Entitlement that it
reasonably expects to Deliver and the Outstanding Principal Balance
or Due and Payable Amount, as applicable, or the equivalent amount
in the Credit Settlement Currency (in each case the relevant
"Outstanding Amount") and, if different, the face amount, of each
such Deliverable Obligation and the aggregate Outstanding Amount of
such Deliverable Obligations (the "Aggregate Outstanding Amount").
For the avoidance of doubt, the Issuer shall be entitled to select
any of the Deliverable Obligations to constitute the Entitlement,
irrespective of their market value.
The Issuer may, from time to time, amend a Notice of Physical
Settlement by delivering a notice to Noteholders in accordance with
Condition 14 (Notices), (each such notification, a "Physical
Settlement Amendment Notice") that the Issuer is replacing, in
whole or in part, one or more Deliverable Obligations specified in
the Notice of Physical Settlement or a prior Physical Settlement
Amendment Notice, as applicable, (to the extent the relevant
Deliverable Obligation has not been Delivered as of the date such
Physical Settlement Amendment Notice is effective). A Physical
Settlement Amendment Notice shall specify each replacement
Deliverable Obligation that the Issuer will Deliver (each, a
"Replacement Deliverable Obligation") and shall also specify the
Outstanding Amount of each Deliverable Obligation identified in the
Notice of Physical Settlement or a prior Physical Settlement
Amendment Notice, as applicable, that is being replaced (with
respect to each such Deliverable Obligation, the "Replaced
Deliverable Obligation Outstanding Amount"). The Outstanding Amount
of each Replacement Deliverable Obligation identified in the
Physical Settlement Amendment Notice shall be determined by
applying the Revised Currency Rate to the relevant Replaced
Deliverable Obligation Outstanding Amount. The Outstanding Amount
of the Replacement Deliverable Obligation(s) specified in any
Physical Settlement Amendment Notice in aggregate with the
Outstanding Amount of the Deliverable Obligation(s) specified in
the Notice of Physical Settlement or any earlier Physical
Settlement Amendment Notice which, in each case, are not being
replaced must not be greater than the Aggregate Outstanding Amount.
Each such Physical Settlement Amendment Notice must be effective on
or prior to the Credit Settlement Date (determined without
reference to any change resulting from such Physical Settlement
Amendment Notice). Notwithstanding the foregoing, (i) the Issuer
may correct any errors or inconsistencies contained in the Notice
of Physical Settlement or any Physical Settlement Amendment Notice,
as applicable, by notice to Noteholders in accordance with
Condition 14 (Notices), prior to the relevant Delivery Date; and
(ii) if Asset Package Delivery is applicable, the Issuer shall on
the relevant PSN Effective Date, or as soon as reasonably
practicable thereafter (but in any case, prior to the Delivery
Date), notify the Noteholders (in accordance with Condition 14
(Notices)) of the detailed description of the Asset Package, if
any, that the Issuer will Deliver in lieu of the Prior Deliverable
Obligation or Package Observable Bond, if any, specified in the
Notice of Physical Settlement or Physical Settlement Amendment
Notice, as applicable, it being understood in each case that any
such notice shall not constitute a Physical Settlement Amendment
Notice.
If "Mod R" is specified as applicable in the relevant Pricing
Supplement and Restructuring is the only Credit Event specified in
a Credit Event Notice, then unless the Deliverable Obligation falls
within paragraph (e) of the definition thereof or the Deliverable
Obligation or Valuation Obligation, as applicable, is a Prior
Deliverable Obligation and Asset Package Delivery applies due to a
Governmental Intervention, a Deliverable Obligation may be included
in the Entitlement only if it (i) is a Fully Transferable
Obligation and (ii) has a final maturity date not later than the
applicable Restructuring Maturity Limitation Date, in each case, as
of each such date as the Calculation Agent determines relevant for
purposes of the Hedging Arrangements or, if none at the relevant
time, both the PSN Effective Date and the Delivery Date.
If "Mod Mod R" is specified as applicable in the relevant
Pricing Supplement and Restructuring is the only Credit Event
specified in a Credit Event Notice, then unless the Deliverable
Obligation falls within paragraph (e) of the definition thereof or
the Deliverable Obligation is a Prior Deliverable Obligation and
Asset Package Delivery applies due to a Governmental Intervention,
a Deliverable Obligation may be included in the Entitlement only if
it (i) is a Conditionally Transferable Obligation and (ii) has a
final maturity date not later than the applicable Modified
Restructuring Maturity Limitation Date, in each case, as of each
such date as the Calculation Agent determines relevant for purposes
of the Hedging Arrangements or, if none at the relevant time, both
the PSN Effective Date and the Delivery Date. For the purposes of
this paragraph only and notwithstanding the foregoing, in the case
of a Restructured Bond or Loan with a final maturity date on or
prior to the 10-year Limitation Date, the final maturity date of
such Bond or Loan shall be deemed to be the earlier of such final
maturity date or the final maturity date of such Bond or Loan
immediately prior to the relevant Restructuring.
For the purposes of making a determination pursuant to the two
prior paragraphs or the definition of Restructuring Maturity
Limitation Date, the final maturity date shall, subject as provided
in the prior paragraph, be determined on the basis of the terms of
the Deliverable Obligation in effect at the time of making such
determination and, in the case of a Deliverable Obligation that is
due and payable, the final maturity date shall be deemed to be the
date on which such determination is made.
Asset Package Delivery will apply if an Asset Package Credit
Event occurs, unless (i) such Asset Package Credit Event occurs
prior to the Credit Event Backstop Date determined in respect of
the Credit Event specified in the Credit Event Notice or DC Credit
Event Announcement applicable to the Credit Event Determination
Date, or (ii) if the Reference Entity is a Sovereign, no Package
Observable Bond exists immediately prior to such Asset Package
Credit Event. Notwithstanding the foregoing, if Sovereign No Asset
Package Delivery is specified as applicable in the relevant Pricing
Supplement, it shall be deemed that no Package Observable Bond
exists with respect to a Reference Entity that is a Sovereign (even
if such a Package Observable Bond has been published by ISDA) and
accordingly, Asset Package Delivery shall not apply thereto.
Where Asset Package Delivery applies, the Calculation Agent may
make any adjustment in relation to provisions for physical
settlement and determination of the Entitlement to take account of
the relevant Asset Package.
If a Credit Event Determination Date has occurred and the Notes
become redeemable in accordance with this Credit Linked Condition
4, upon Delivery of the Deliverable Obligations and/or payment of
the Partial Cash Settlement Amounts, as the case may be, the Issuer
shall have discharged its obligations in respect of the Notes and
shall have no other liability or obligation whatsoever in respect
thereof. The value of such Deliverable Obligations and/or the
Partial Cash Settlement Amount, as the case may be, may be less
than the nominal amount of a Credit Linked Note. Any shortfall
shall be borne by the Noteholders and no liability shall attach to
the Issuer.
(b) Terms relating to Physical Settlement
(i) Asset Transfer Notices
In relation to Credit Linked Notes to be redeemed (whether in
whole or in part) by Delivery of the Entitlement(s), in order to
obtain Delivery of the Entitlement in respect of the Credit Event
Portion of any Note, the relevant Noteholder must:
(A) if such Note is in global form, deliver to the relevant
Clearing System and (in the case of Registered Notes) the
Registrar, with a copy to the Principal Paying Agent, the Issuer
and any entity appointed by the Issuer to Deliver the Entitlement
on its behalf (the "Delivery Agent") no later than the close of
business in each place of reception on the Cut-off Date, a duly
completed asset transfer notice (the "Asset Transfer Notice")
substantially in the form set out in the Annex (Form of Asset
Transfer Notice) to these Credit Linked Conditions; and
(B) if such Note is in definitive form, deliver (i) if such Note
is a Bearer Note, to any Paying Agent or (ii) if such Note is a
Registered Note, to the Registrar or any Paying Agent, in each
case, with a copy to the Principal Paying Agent, the Issuer and the
Delivery Agent (as defined above) no later than the close of
business in each place of reception on the Cut-Off Date, a duly
completed Asset Transfer Notice.
For the purposes hereof, "Cut-Off Date" means the date specified
as such in the Notice of Physical Settlement or Physical Settlement
Amendment Notice, as applicable.
A form of Asset Transfer Notice may be obtained during normal
business hours from the specified office of the Registrar or any
Paying Agent.
An Asset Transfer Notice may only be delivered (i) if such Note
is in global form, in such manner as is acceptable to the relevant
Clearing System or (ii) if such Note is in definitive form, in
writing.
If a Note is in definitive form, it must be delivered together
with the duly completed Asset Transfer Notice.
The Asset Transfer Notice shall:
(1) specify the name, address and contact telephone number of
the relevant Noteholder and the person from whom the Issuer or
Delivery Agent may obtain details for the Delivery of the
Entitlement;
(2) specify the series number of the Notes and the number of
Notes which are the subject of such notice;
(3) in the case of Notes in global form, specify the nominal
amount which is the subject of such notice and the number of the
Noteholder's account at the relevant Clearing System which, where
the relevant Delivery represents the final settlement due in
respect of the Notes, is to be debited with such Notes and in such
case irrevocably instruct and authorise the relevant Clearing
System to debit the relevant Noteholder's account with such Notes
on or before the relevant Credit Settlement Date;
(4) include an undertaking to pay all Expenses and, in the case
of a Note in global form, an authority to the relevant Clearing
System to debit a specified account of the Noteholder with the
relevant Clearing System in respect thereof and to pay such
Expenses;
(5) include such details as are required for Delivery of the
Entitlement which may include account details and/or the name and
address of any person(s) into whose name evidence of the
Entitlement is to be registered and/or any bank, broker or agent to
whom documents evidencing the Entitlement are to be Delivered
and/or any other Delivery instructions and specify the name and
number of the Noteholder's account to be credited with any cash
payable by the Issuer, (including, where applicable, pursuant to
Credit Linked Condition 11, in respect of any cash amount
constituting the Entitlement); and
(6) authorise the production of such certification in any
applicable administrative or legal proceedings,
all as provided therein.
(ii) Verification of the Noteholder
In the case of Notes in global form, upon receipt of an Asset
Transfer Notice, the relevant Clearing System shall verify that the
person delivering the Asset Transfer Notice is the holder of the
nominal amount of Notes described therein according to its records.
Subject thereto, the relevant Clearing System will confirm to the
Principal Paying Agent the series number and number of Notes the
subject of such notice, the relevant account details and the
details for the Delivery of the Entitlement in respect of the
Credit Event Portion of such Notes. Upon receipt of such
confirmation, the Principal Paying Agent will inform the Issuer and
any Delivery Agent thereof. The relevant Clearing System will on or
before the relevant Credit Settlement Date, where the relevant
Delivery represents the final settlement due in respect of the
Notes, debit the securities account of the relevant Noteholder with
the relevant Notes the subject of such Asset Transfer Notice.
(iii) Determination and Delivery
Any determination as to whether an Asset Transfer Notice is duly
completed and in proper form shall be made by the relevant Paying
Agent or the Registrar, as the case may be, in each case in
consultation with the Principal Paying Agent, and shall be
conclusive and binding on the Issuer, the Principal Paying Agent,
any Delivery Agent and the relevant Noteholder. Subject as set out
below, any Asset Transfer Notice so determined to be incomplete or
not in proper form, or which is not copied to the Principal Paying
Agent, the Issuer and any Delivery Agent immediately after being
delivered or sent as provided in paragraph (i) above, shall be null
and void.
If such Asset Transfer Notice is subsequently corrected to the
satisfaction of, in the case of Notes in global form, the relevant
Clearing System, or, in the case of Notes in definitive form, by
the relevant Paying Agent or the Registrar, as the case may be, in
each case in consultation with the Principal Paying Agent, it shall
be deemed to be a new Asset Transfer Notice submitted at the time
such correction was delivered as provided above.
The relevant Clearing System or the relevant Registrar or the
Paying Agent, as applicable, shall use its reasonable efforts as
soon as reasonably practicable to notify the Noteholder submitting
an Asset Transfer Notice, if, in consultation with the Principal
Paying Agent and the Issuer, it has determined that such Asset
Transfer Notice is incomplete or not in proper form. In the absence
of negligence or wilful misconduct on its part, none of the Issuer,
the Paying Agents, the Registrar or the relevant Clearing System
shall be liable to any person with respect to any action taken or
omitted to be taken by it in connection with such determination or
the notification of such determination to a Noteholder.
No Asset Transfer Notice may be withdrawn after receipt thereof
by the relevant Clearing System, the Registrar or a Paying Agent,
as the case may be, as provided above. After delivery of an Asset
Transfer Notice, the relevant Noteholder may not transfer the Notes
which are the subject of such notice.
In relation to each Deliverable Obligation comprising an
Entitlement the Issuer will Deliver or procure the Delivery of the
relevant Deliverable Obligation on or prior to the relevant Credit
Settlement Date at the risk of the relevant Noteholder in the
manner provided below and provided that the Asset Transfer Notice
is duly delivered as provided above not later than the close of
business in each place of reception on the Cut-Off Date, Provided
That if all or some of the Deliverable Obligations included in such
Entitlement are Undeliverable Obligations and/or Hedge Disruption
Obligations as of the Credit Settlement Date, then the provisions
of Credit Linked Condition 11 below will apply.
If a Noteholder fails to give an Asset Transfer Notice as
provided herein with a copy to each relevant party prior to the
close of business in each place of reception on the Cut-Off Date,
then the Deliverable Obligations comprising each relevant
Entitlement will be treated as Hedge Disruption Obligations and the
provisions of Credit Linked Condition 11 below will apply.
The Issuer (or any Delivery Agent on its behalf) shall, at the
risk of the relevant Noteholder, Deliver (or procure the Delivery)
of the Entitlement in respect of the Credit Event Portion of a
Note, in such commercially reasonable manner as the Calculation
Agent shall in its sole discretion determine and notify to the
person designated by the Noteholder in the relevant Asset Transfer
Notice or in such manner as is specified in the relevant Pricing
Supplement. All Expenses shall be for the account of the relevant
Noteholder and no Delivery of the Entitlement shall be made until
all Expenses have been paid by the relevant Noteholder to the
satisfaction of the Issuer.
(iv) General
Credit Linked Notes held by the same Holders will be aggregated
for the purpose of determining the aggregate Entitlements in
respect of the Credit Event Portion of such Notes, provided that,
the aggregate Entitlements in respect of the same Holder will be
rounded down to the nearest whole unit of the Deliverable
Obligation or each of the Deliverable Obligations, as the case may
be, in such manner as the Calculation Agent shall determine.
Fractions of the Deliverable Obligation or of each of the
Deliverable Obligations, as the case may be, will not be delivered
and in lieu thereof a cash adjustment calculated by the Calculation
Agent shall be paid to the Noteholder.
After Delivery of the Entitlement in respect of the Credit Event
Portion of a Note and for the Intervening Period, none of the
Issuer, the Paying Agents, the Registrar, any Delivery Agent or any
other person shall at any time (i) be under any obligation to
deliver or procure delivery to any Noteholder any letter,
certificate, notice, circular or any other document or, except as
provided herein, payment whatsoever received by that person in
respect of the securities or obligations included in such
Entitlement, (ii) be under any obligation to exercise or procure
exercise of any or all rights attaching to such securities or
obligations or (iii) be under any liability to a Noteholder in
respect of any loss or damage which such Noteholder may sustain or
suffer as a result, whether directly or indirectly, of that person
being registered during such Intervening Period as legal owner of
such securities or obligations.
(c) Rights of Noteholders and Calculations
None of the Issuer, the Calculation Agent, any Delivery Agent
and the Agents shall have any responsibility for any errors or
omissions in any calculation or determination in respect of the
Notes.
The purchase of the Notes does not confer on any holder of such
Notes any rights (whether in respect of voting, distributions or
otherwise) attaching to any Deliverable Obligation.
5. Consequences of a Credit Event Determination Date for Basket Credit Linked Notes
(a)
(i) Auction Settlement or Cash Settlement for Basket Credit Linked Notes
If (x) Auction Settlement or Cash Settlement is specified as the
applicable Settlement Method in the relevant Pricing Supplement and
a Credit Event Determination Date has occurred in respect of any
specified Reference Entity or (y) (ii) below applies in respect of
a Series of Basket Credit Linked Notes and the Issuer does not give
a Notice of Physical Settlement, (i) the Issuer shall give notice
in each case that a Credit Event Determination Date has occurred
(such notice a "Settlement Notice") to the Noteholders in
accordance with Condition 14 (Notices) and (ii) in respect of each
Basket Credit Linked Note:
(A) the Issuer shall pay as an Instalment Amount for the
purposes of Credit Linked Condition 1(a) above an amount equal to
the relevant Credit Event Amount (for which purposes, subject as
provided below, the Settlement Method shall apply), if any, on the
relevant Credit Event Payment Date which will be the relevant
Instalment Date. For the avoidance of doubt, where Credit Event
Maturity Settlement is specified to be applicable in the relevant
Pricing Supplement each such Credit Event Payment Date and the
related Instalment Date will fall on the Maturity Date;
(B) the interest calculation basis described in paragraph (b) below will apply; and
(C) other than where Credit Event Maturity Settlement is
specified to be applicable in the relevant Pricing Supplement,
notwithstanding anything to the contrary herein and subject to the
following sentence, if on any date on or prior to the Maturity Date
the Adjusted Credit Outstanding Nominal Amount is equal to zero,
each Credit Linked Note will be redeemed at the final Credit Event
Amount on the final Credit Event Payment Date. If such final Credit
Event Amount is zero, then the Credit Linked Notes will be
cancelled as of the final Credit Event Payment Date, with no
payment being due in respect thereof and the Issuer will have no
further liability in respect of the Notes.
Unless settlement has occurred in accordance with part (A)
above, if the Settlement Method is Auction Settlement and:
(1) an Auction Cancellation Date occurs;
(2) a No Auction Announcement Date occurs (and in circumstances
where such No Auction Announcement Date occurs pursuant to
paragraphs (b) or (c)(ii) of the definition of No Auction
Announcement Date, the Issuer has not exercised the Movement
Option);
(3) a DC Credit Event Question Dismissal occurs;
(4) a Credit Event Determination Date was determined pursuant to
paragraph (a)(i) of the definition of Credit Event Determination
Date or paragraph (a) of the definition of Non-Standard Credit
Event Determination Date and no Credit Event Resolution Request
Date has occurred on or prior to the date falling three Business
Days after such Credit Event Determination Date; or
(5) a Calculation Agent Fallback Settlement Determination Date occurs,
then the Fallback Settlement Method shall apply for the purposes
of the Credit Event Amount.
For the avoidance of doubt parts (A) and (B) of this provision
will apply and part (C) of this provision will continue to apply in
relation to each Reference Entity in respect of which a Credit
Event Determination Date has occurred.
Any delay in the delivery of a Settlement Notice or failure by
the Issuer to deliver a Settlement Notice shall not affect the
validity of the Credit Event Determination Date in respect of the
affected Reference Entity.
A Credit Event Determination Date may occur more than once
except that, subject as provided in Credit Linked Condition 14 and
the definition of Credit Event Determination Date in Credit Linked
Condition 13, a Credit Event Notice (if applicable) may only be
delivered on one occasion and a Credit Event Determination Date may
occur once only, with respect to any Reference Entity (unless
subsequent to the occurrence of a Credit Event Determination Date
with respect to any Reference Entity, that Reference Entity becomes
the Successor to one or more other Reference Entities in respect of
which a Credit Event Determination Date has not occurred, in which
case a Credit Event Determination Date may occur again).
(ii) Partial Physical Settlement for Basket Credit Linked Notes
If Partial Physical Settlement provisions is specified in the
relevant Pricing Supplement as being applicable and a Credit Event
Determination Date has occurred in respect of any specified
Reference Entity, the Issuer shall give notice (such notice a
"Notice of Physical Settlement") to the Noteholders in accordance
with Condition 14 (Notices), and, subject to these Credit Linked
Conditions, in particular Credit Linked Condition 1, redeem the
Credit Event Portion of all but not some only of the Credit Linked
Notes and Deliver in respect of each such Credit Event Portion the
Deliverable Obligations comprising the Entitlement on or prior to
the Credit Settlement Date, subject to and in accordance with the
Conditions and these Credit Linked Conditions, unless in the
determination of the Issuer in its sole and absolute discretion in
its opinion (i) it would not have any Deliverable Obligations to so
Deliver or (ii) all of the Deliverable Obligations would be
Undeliverable Obligations, in which case the provisions of
sub-paragraph (i)(C)(1) of this Condition 5 above shall apply in
relation to such Credit Event Portion as if Auction Settlement were
thereafter specified as the applicable Settlement Method in the
relevant Pricing Supplement and these Credit Linked Conditions and
the relevant Pricing Supplement will be construed accordingly and
the Issuer shall redeem the Credit Event Portion of all of the
Credit Linked Notes in accordance with sub-paragraph (i)(C)(1). Any
delay in the delivery of a Notice of Physical Settlement or failure
by the Issuer to deliver a Notice of Physical Settlement shall not
affect the validity of the Credit Event Determination Date in
respect of the affected Reference Entity.
If the Notes are subject to this Credit Linked Condition 5(ii),
the interest calculation basis described in paragraph (b) below
will apply.
Notwithstanding anything to the contrary herein and subject to
the following sentence, if on any date on or prior to the Maturity
Date the Adjusted Credit Outstanding Nominal Amount is equal to
zero, each Credit Linked Note will be redeemed by Delivery of the
final Entitlement on the final Credit Settlement Date (and/or, as
applicable, by payment of the Partial Cash Settlement Amount(s) on
the Partial Cash Settlement Date(s) if the provisions of Credit
Linked Condition 11 below apply). If such final Entitlement (or
final Partial Cash Settlement Amount, as applicable) is zero, then
each relevant Credit Linked Note will be cancelled, with no further
payment or delivery being due in respect thereof and the Issuer
will have no further liability in respect thereof.
For the avoidance of doubt the provisions above will apply, or
continue to apply as applicable, in relation to each Reference
Entity in respect of which a Credit Event Determination Date has
occurred.
A Credit Event Determination Date may occur more than once
except that, subject as provided in Credit Linked Condition 14 and
the definition of Credit Event Determination Date in Credit Linked
Condition 13, a Credit Event Notice (if applicable) may only be
delivered on one occasion and a Credit Event Determination Date may
occur once only, with respect to any Reference Entity (unless
subsequent to the occurrence of a Credit Event Determination Date
with respect to any Reference Entity, that Reference Entity becomes
the Successor to one or more other Reference Entities in respect of
which a Credit Event Determination Date has not occurred, in which
case a Credit Event Determination Date may occur again).
Each Credit Linked Note or, if the Credit Linked Notes are in
global form, the relevant Global Note, shall be endorsed to reflect
such partial redemption. If the Calculation Agent, at any time,
determines that the aggregate nominal amount of the Credit Linked
Notes is thereby reduced to zero, the Issuer's obligations in
respect of such Credit Linked Notes shall immediately be discharged
and the Issuer shall have no further liability in respect
thereof.
In the Notice of Physical Settlement, the Issuer shall specify
the Deliverable Obligations comprising the Entitlement that it
reasonably expects to Deliver and the Outstanding Principal Balance
or Due and Payable Amount, as applicable, or the equivalent amount
in the Credit Settlement Currency (in each case the relevant
"Outstanding Amount") and, if different, the face amount, of each
such Deliverable Obligation and the aggregate Outstanding Amount of
such Deliverable Obligations (the "Aggregate Outstanding Amount").
For the avoidance of doubt, the Issuer shall be entitled to select
any of the Deliverable Obligations to constitute the Entitlement,
irrespective of their market value.
The Issuer may, from time to time, amend a Notice of Physical
Settlement by delivering a notice to Noteholders in accordance with
Condition 14 (Notices), (each such notification, a "Physical
Settlement Amendment Notice") that the Issuer is replacing, in
whole or in part, one or more Deliverable Obligations specified in
the Notice of Physical Settlement or a prior Physical Settlement
Amendment Notice, as applicable, (to the extent the relevant
Deliverable Obligation has not been Delivered as of the date such
Physical Settlement Amendment Notice is effective). A Physical
Settlement Amendment Notice shall specify each replacement
Deliverable Obligation that the Issuer will Deliver (each, a
"Replacement Deliverable Obligation") and shall also specify the
Outstanding Amount of each Deliverable Obligation identified in the
Notice of Physical Settlement or a prior Physical Settlement
Amendment Notice, as applicable, that is being replaced (with
respect to each such Deliverable Obligation, the "Replaced
Deliverable Obligation Outstanding Amount"). The Outstanding Amount
of each Replacement Deliverable Obligation identified in the
Physical Settlement Amendment Notice shall be determined by
applying the Revised Currency Rate to the relevant Replaced
Deliverable Obligation Outstanding Amount. The Outstanding Amount
of the Replacement Deliverable Obligation(s) specified in any
Physical Settlement Amendment Notice in aggregate with the
Outstanding Amount of the Deliverable Obligation(s) specified in
the Notice of Physical Settlement or any earlier Physical
Settlement Amendment Notice which, in each case, are not being
replaced must not be greater than the Aggregate Outstanding Amount.
Each such Physical Settlement Amendment Notice must be effective on
or prior to the Credit Settlement Date (determined without
reference to any change resulting from such Physical Settlement
Amendment Notice). Notwithstanding the foregoing, (i) the Issuer
may correct any errors or inconsistencies contained in the Notice
of Physical Settlement or any Physical Settlement Amendment Notice,
as applicable, by notice to Noteholders in accordance with
Condition 14 (Notices), prior to the relevant Delivery Date; and
(ii) if Asset Package Delivery is applicable, the Issuer shall on
the relevant PSN Effective Date, or as soon as reasonably
practicable thereafter (but in any case, prior to the Delivery
Date), notify the Noteholders (in accordance with Condition 14
(Notices)) of the detailed description of the Asset Package, if
any, that the Issuer will Deliver in lieu of the Prior Deliverable
Obligation or Package Observable Bond, if any, specified in the
Notice of Physical Settlement or Physical Settlement Amendment
Notice, as applicable, it being understood in each case that any
such notice shall not constitute a Physical Settlement Amendment
Notice.
If "Mod R" is specified as applicable in the relevant Pricing
Supplement and Restructuring is the only Credit Event specified in
a Credit Event Notice, then unless the Deliverable Obligation falls
within paragraph (e) of the definition thereof or the Deliverable
Obligation or Valuation Obligation, as applicable, is a Prior
Deliverable Obligation and Asset Package Delivery applies due to a
Governmental Intervention, a Deliverable Obligation may be included
in the Entitlement only if it (i) is a Fully Transferable
Obligation and (ii) has a final maturity date not later than the
applicable Restructuring Maturity Limitation Date, in each case, as
of each such date as the Calculation Agent determines relevant for
purposes of the Hedging Arrangements or, if none at the relevant
time, both the PSN Effective Date and the Delivery Date.
If "Mod Mod R" is specified as applicable in the relevant
Pricing Supplement and Restructuring is the only Credit Event
specified in a Credit Event Notice, then unless the Deliverable
Obligation falls within paragraph (e) of the definition thereof or
the Deliverable Obligation is a Prior Deliverable Obligation and
Asset Package Delivery applies due to a Governmental Intervention,
a Deliverable Obligation may be included in the Entitlement only if
it (i) is a Conditionally Transferable Obligation and (ii) has a
final maturity date not later than the applicable Modified
Restructuring Maturity Limitation Date, in each case, as of each
such date as the Calculation Agent determines relevant for purposes
of the Hedging Arrangements or, if none at the relevant time, both
the PSN Effective Date and the Delivery Date. For the purposes of
this paragraph only and notwithstanding the foregoing, in the case
of a Restructured Bond or Loan with a final maturity date on or
prior to the 10-year Limitation Date, the final maturity date of
such Bond or Loan shall be deemed to be the earlier of such final
maturity date or the final maturity date of such Bond or Loan
immediately prior to the relevant Restructuring.
For the purposes of making a determination pursuant to the two
prior paragraphs or the definition of Restructuring Maturity
Limitation Date, the final maturity date shall, subject as provided
in the prior paragraph, be determined on the basis of the terms of
the Deliverable Obligation in effect at the time of making such
determination and, in the case of a Deliverable Obligation that is
due and payable, the final maturity date shall be deemed to be the
date on which such determination is made.
Asset Package Delivery will apply if an Asset Package Credit
Event occurs, unless (i) such Asset Package Credit Event occurs
prior to the Credit Event Backstop Date determined in respect of
the Credit Event specified in the Credit Event Notice or DC Credit
Event Announcement applicable to the Credit Event Determination
Date, or (ii) if the Reference Entity is a Sovereign, no Package
Observable Bond exists immediately prior to such Asset Package
Credit Event. Notwithstanding the foregoing, if Sovereign No Asset
Package Delivery is specified as applicable in the relevant Pricing
Supplement, it shall be deemed that no Package Observable Bond
exists with respect to a Reference Entity that is a Sovereign (even
if such a Package Observable Bond has been published by ISDA) and
accordingly, Asset Package Delivery shall not apply thereto.
Where Asset Package Delivery applies, the Calculation Agent may
make any adjustment in relation to provisions for physical
settlement and determination of the Entitlement to take account of
the relevant Asset Package.
(b) Each Note will bear interest pursuant to, and in accordance
with, Condition 3 (Interest on Fixed Rate Notes) or Condition 4
(Interest on Floating Rate Notes), as applicable, provided that (i)
for the purposes of determining the interest amounts payable, the
Calculation Amount shall be deemed to be each Note's pro rata share
of the Interest Credit Outstanding Nominal Amount in respect of the
relevant Interest Period and (ii) without duplication to any
adjustment pursuant to the final paragraph of "Credit Event
Determination Date" below, if one or more Interest Payment Dates
has occurred between the Credit Event Determination Date and its
determination, the Issuer may elect in its sole and absolute
discretion to instigate the clawback of any overpaid interest in
respect of such Interest Payment Date(s).
(c) The final redemption amount will be, unless otherwise
specified in the relevant Pricing Supplement, an amount calculated
by the Calculation Agent equal to a Note's pro rata share of the
Adjusted Credit Outstanding Nominal Amount as of the Maturity Date.
Such final redemption amount will be rounded to the nearest
sub-unit of the Specified Currency (half a sub-unit being rounded
upwards). For the avoidance of doubt, if the Adjusted Credit
Outstanding Nominal Amount as of the Maturity Date is zero, then
the relevant final redemption amount will be zero and no amounts
will be payable in respect thereof.
(d) For the purposes of Basket Credit Linked Notes:
"Adjusted Credit Outstanding Nominal Amount" means, on any date,
(i) the Aggregate Principal Amount minus (ii) the aggregate
Reference Entity Notional Amounts of Reference Entities in respect
of which a Credit Event Determination Date has occurred on or prior
to the relevant date minus (iii) the aggregate of (x) any Shortfall
Amounts for each Reference Entity in respect of which a Credit
Event Determination Date has occurred on or prior to the relevant
date, provided that in no event shall the Adjusted Credit
Outstanding Nominal Amount be less than zero;
"Interest Credit Outstanding Nominal Amount" means, in respect
of an Interest Period:
(i) the arithmetic average of the Adjusted Credit Outstanding
Nominal Amounts for each day in such Interest Period, calculated
without the deduction of any Shortfall Amounts or Unwind Costs, as
applicable; or
(ii) if "Accrual of Interest upon Credit Event" is specified as
"Applicable - Scheduled Maturity Date" in the relevant Pricing
Supplement, the amount determined pursuant to Credit Linked
Condition 6; and
"Shortfall Amount" means, for a Reference Entity in respect of
which a Credit Event Determination Date has occurred:
(i) if Auction Settlement or Cash Settlement is specified as the
applicable Settlement Method in the relevant Pricing Supplement,
the aggregate, for all of the Notes, of (a) (i) the relevant Unwind
Costs minus (ii) the Recovery Value related to the relevant Credit
Event Amount or, if greater, (b) zero; or
(ii) if Partial Physical Settlement is specified as applicable
in the relevant Pricing Supplement, the aggregate, for all of the
Notes, of (a) (i) the relevant Unwind Costs minus (ii) the market
value, determined by the Calculation Agent on the Market Value
Determination Date, of the Initial Deliverable Obligations related
to the relevant Entitlement or, if greater, (b) zero.
If a Credit Event Determination Date occurs the Adjusted Credit
Outstanding Nominal Amount will be reduced in accordance with this
Credit Linked Condition 5 proportionately to the weighting of the
relevant Reference Entity in the portfolio and to reflect the
relevant Shortfall Amounts or Unwind Costs, as applicable.
Any Credit Event Amount payable or the value of any Deliverable
Obligations deliverable and/or Partial Cash Settlement Amount
payable, as the case may be, on the related partial redemption of
each Note may be less than the amount of such reduction and upon
such payment and/or delivery, as applicable, the Issuer shall have
discharged its obligations in respect of the amount of the Notes so
redeemed and shall have no other liability or obligation whatsoever
in respect thereof. Any shortfall shall be borne by the Noteholders
and no liability shall attach to the Issuer.
In the event that the Adjusted Credit Outstanding Nominal Amount
is reduced to zero, the Issuer's obligations in respect of the
Credit Linked Notes will be discharged (after payment of any Credit
Event Amount(s) or Delivery of any Deliverable Obligation(s) and/or
payment of any Partial Cash Settlement Amount(s) as the case may
be) and the Issuer will have no further liability in respect of the
Notes.
6. Accrual of Interest
(a) In the case of Single Reference Entity Credit Linked Notes,
if "Accrual of Interest upon Credit Event" is specified as "Not
Applicable" in the relevant Pricing Supplement, notwithstanding
Condition 3(b) (Accrual of Interest) and Condition 4(b) (Accrual of
Interest), as applicable, no interest shall be payable (and
accordingly will be deemed not to have accrued) in respect of a
Note in respect of which the relevant date for payment thereof (as
may be adjusted pursuant to these Credit Linked Conditions) has not
occurred on or prior to the Credit Event Determination Date or, if
the Credit Event Determination Date falls prior to the first such
payment date, no interest shall accrue on the Notes;
(b) in the case of Single Reference Entity Credit Linked Notes,
if "Accrual of Interest upon Credit Event" is specified as
"Applicable - Credit Event Determination Date" in the relevant
Pricing Supplement, notwithstanding Condition 3(b) (Accrual of
Interest) and Condition 4(b) (Accrual of Interest), as applicable,
each Note shall cease to bear interest from the Credit Event
Determination Date or, if earlier, the last day of the Interest
Period ending on (but excluding) the Scheduled Maturity Date;
or
(i) if "Accrual of Interest upon Credit Event" is specified as
"Applicable - Scheduled Maturity Date" in the relevant Pricing
Supplement:
(ii) in the case of Single Reference Entity Credit Linked Notes
interest will continue to accrue and be payable following a Credit
Event Determination Date in accordance with Condition 3 (Interest
on Fixed Rate Notes) or Condition 4 (Interest on Floating Rate
Notes), as applicable; or
(iii) in the case of Basket Credit Linked Notes, interest will
continue to accrue and be payable following a Credit Event
Determination Date in accordance with Credit Linked Condition 5(b)
calculated on the basis of an Interest Credit Outstanding Nominal
Amount equal to the Calculation Amount,
Provided that, if:
(A)
(1) Credit Linked Condition 7, Credit Linked Condition 8 or
Credit Linked Condition 9 applies in respect of the Notes and, in
the case of Credit Linked Condition 7, a Repudiation/Moratorium has
not occurred on or prior to the Repudiation/Moratorium Evaluation
Date or, in the case of Credit Linked Condition 8, a Failure to Pay
has not occurred on the Grace Period Extension Date or, in the case
of Credit Linked Condition 9, a Credit Event has not occurred on or
prior to the DC Determination Cut-off Date, as the case may be;
and/or
(2) Credit Linked Condition 10 applies in respect of the Notes
and a Credit Event Determination Date or the Repudiation/Moratorium
Extension Condition, as applicable, has not occurred or is not
satisfied on or prior to the Postponed Cut-off Date,
then interest will accrue as provided in Credit Linked Condition
7, Credit Linked Condition 8, Credit Linked Condition 9 or Credit
Linked Condition 10, as the case may be; and
(B) without duplication to any adjustment pursuant to the final
paragraph of "Credit Event Determination Date" below, if one or
more Interest Payment Dates has occurred between the Credit Event
Determination Date and its determination, the Issuer may elect in
its sole and absolute discretion to instigate the clawback,
withholding and/or repayment by the Noteholder (whether by way of
claim, set off, adjustment in future amounts payable or deliverable
by the Issuer under the Notes or otherwise) of any overpaid
Interest Amount(s) paid in respect of such Interest Payment
Date(s).
7. Repudiation/Moratorium Extension
If "Repudiation/Moratorium" is specified as a Credit Event in
the relevant Pricing Supplement, the provisions of this Credit
Linked Condition 7 shall apply.
Where a Credit Event Determination Date has not occurred on or
prior to the Scheduled Maturity Date but the Repudiation/Moratorium
Extension Condition has been satisfied on or prior to the Scheduled
Maturity Date or, if Credit Linked Condition 10(y) applies, the
Postponed Cut-off Date and the Repudiation/Moratorium Evaluation
Date in respect of such Potential Repudiation Moratorium may, in
the sole opinion of the Calculation Agent, fall after the Scheduled
Maturity Date, then the Calculation Agent shall notify the
Noteholders in accordance with Condition 14 (Notices) that a
Potential Repudiation/Moratorium has occurred and the maturity of
the Notes will be delayed (without prejudice to any other later
Maturity Date also determined pursuant to the Notes) to the fifth
Business Day following the Repudiation/Moratorium Evaluation Date
or, if later, the Postponed Cut-off Date and:
(a) where (1) a Repudiation/Moratorium has not occurred on or
prior to the Repudiation/Moratorium Evaluation Date or (2) a
Repudiation/Moratorium has occurred on or prior to the
Repudiation/Moratorium Evaluation Date but a Credit Event
Determination Date has not occurred:
(i) each nominal amount of Credit Linked Notes equal to the
Calculation Amount will be redeemed by the Issuer at the final
redemption amount set out in the relevant Pricing Supplement on the
Maturity Date; and
(ii) in the case of interest bearing Credit Linked Notes, the
Issuer shall be obliged to pay interest (if any) calculated as
provided herein, accruing from (and including) the Interest Payment
Date immediately preceding the Scheduled Maturity Date or, if none,
the Interest Commencement Date to (but excluding) the Scheduled
Maturity Date but shall only be obliged to make such payment of
interest on the Maturity Date and no further or other amount in
respect of interest shall be payable and no additional amount shall
be payable in respect of such delay; or
(b) where a Repudiation/Moratorium has occurred on or prior to
the Repudiation/Moratorium Evaluation Date and a Credit Event
Determination Date has occurred, the provisions of Credit Linked
Condition 1 and Credit Linked Condition 2, Credit Linked Condition
3, Credit Linked Condition 4 or Credit Linked Condition 5, as
applicable, shall apply to the Credit Linked Notes.
Any failure to provide notice of any such delay to Noteholders
will not constitute an Event of Default under the Notes and will
not affect the validity of any of the above provisions.
8. Grace Period Extension
If "Grace Period Extension" is specified as applicable in the
relevant Pricing Supplement, the provisions of this Credit Linked
Condition 8 shall apply.
Where a Credit Event Determination Date has not occurred on or
prior to the Scheduled Maturity Date but, in the determination of
the Calculation Agent, a Potential Failure to Pay has occurred with
respect to one or more Obligation(s) in respect of which a Grace
Period is applicable on or prior to the Scheduled Maturity Date
(and such Grace Period(s) is/are continuing as at the Scheduled
Maturity Date), then the Calculation Agent shall notify the
Noteholders in accordance with Condition 14 (Notices) that a
Potential Failure to Pay has occurred and the maturity of the Notes
will be delayed (without prejudice to any other later Maturity Date
also determined pursuant to the Notes) to the fifth Business Day
following the Grace Period Extension Date and:
(a) where (1) a Failure to Pay has not occurred on the Grace
Period Extension Date or (2) a Failure to Pay has occurred on the
Grace Period Extension Date but a Credit Event Determination Date
has not occurred:
(i) each nominal amount of Credit Linked Notes equal to the
Calculation Amount will be redeemed by the Issuer at the final
redemption amount set out in the relevant Pricing Supplement on the
Maturity Date; and
(ii) in the case of interest bearing Credit Linked Notes, the
Issuer shall be obliged to pay interest calculated as provided
herein, accruing from (and including) the Interest Payment Date
immediately preceding the Scheduled Maturity Date or, if none, the
Interest Commencement Date to (but excluding) the Scheduled
Maturity Date but shall only be obliged to make such payment of
interest on the Maturity Date and no further or other amount in
respect of interest shall be payable and no additional amount shall
be payable in respect of such delay; or
(b) where a Failure to Pay has occurred on the Grace Period
Extension Date and a Credit Event Determination Date has occurred,
the provisions of Credit Linked Condition 1 and Credit Linked
Condition 2, Credit Linked Condition 3, Credit Linked Condition 4
or Credit Linked Condition 5, as applicable, shall apply to the
Credit Linked Notes.
Any failure to provide notice of any such delay to Noteholders
will not constitute an Event of Default under the Notes and will
not affect the validity of any of the above provisions.
9. Credit Derivatives Determinations Committee Extension
If, in the determination of the Calculation Agent, a Potential
Credit Event has occurred and following a Credit Event Resolution
Request Date the Credit Derivatives Determinations Committee has
not made its determination on or prior to the Scheduled Maturity
Date or any Interest Payment Date then the Calculation Agent shall
notify Noteholders in accordance with Condition 14 (Notices) that
(without prejudice to any other later Maturity Date also determined
pursuant to the Notes) the Maturity Date or the relevant interest
payment has been postponed to a date (the "DC Determination
Postponed Date") being the day falling five Business Days after (a)
if the Credit Derivatives Determinations Committee Resolves that a
Credit Event has occurred, fifteen (15) Business Days following the
relevant DC Credit Event Announcement or (b) if the Credit
Derivatives Determinations Committee Resolves that a Credit Event
has not occurred, the second Business Day following the relevant DC
No Credit Event Announcement or, as applicable, (c) fifteen (15)
Business Days following the DC Credit Event Question Dismissal (the
date of the relevant DC Credit Event Announcement, DC No Credit
Event Announcement or DC Credit Event Dismissal, as applicable, the
"DC Determination Cut-off Date"), and:
(a) in the case of the Maturity Date, where (1) a Credit Event
has not occurred on or prior to the DC Determination Cut-off Date
or (2) a Credit Event has occurred on or prior to the DC
Determination Cut-off Date but a Credit Event Determination Date
has not occurred:
(i) each nominal amount of Credit Linked Notes equal to the
Calculation Amount will be redeemed by the Issuer at the final
redemption amount set out in the relevant Pricing Supplement on the
Maturity Date; and
(ii) in the case of interest bearing Credit Linked Notes, the
Issuer shall be obliged to pay interest calculated as provided
herein, accruing from (and including) the Interest Payment Date
immediately preceding the Scheduled Maturity Date or if none the
Interest Commencement Date to (but excluding) the Scheduled
Maturity Date but shall only be obliged to make such payment of
interest on the Maturity Date and no further or other amount in
respect of interest shall be payable and no additional amount shall
be payable in respect of such delay; or
(b) where a Credit Event has occurred on or prior to the DC
Determination Cut-off Date and a Credit Event Determination Date
has occurred, the provisions of Credit Linked Condition 1 and
Credit Linked Condition 2, Credit Linked Condition 3, Credit Linked
Condition 4 or Credit Linked Condition 5, as applicable, shall
apply to the Credit Linked Notes; or
(c) in relation to such event as of an Interest Payment Date,
the Calculation Agent may delay the relevant amount of interest
which would otherwise be payable on the relevant Interest Payment
Date. In this case where (i) a Credit Event has not occurred on or
prior to the DC Determination Cut-off Date then, without
duplication to any interest payable pursuant to paragraph (a)
above, the relevant amount of interest shall be payable on the
relevant DC Determination Postponed Date but no additional interest
will be payable in respect of the relevant delay and for the
avoidance of doubt no amendment will be made to any Interest Period
or basis of calculation of the relevant amount of interest, other
than as described above; or (ii) where a Credit Event has occurred
on or prior to the DC Determination Cut-off Date and a Credit Event
Determination Date has occurred thereafter, if applicable, the
relevant amount of interest will be adjusted accordingly and may be
zero and (if any) will be payable on the relevant DC Determination
Postponed Date or, in the case of any interest due at maturity, on
the Maturity Date.
Any failure to provide notice of any such postponement to
Noteholders will not constitute an Event of Default under the Notes
and will not affect the validity of any of the above
provisions.
10. Maturity Date Extension in the case of Credit Linked Notes
The following provisions of this Credit Linked Condition 10
apply to Credit Linked Notes and, for the avoidance of doubt, may
be applied on more than one occasion:
Without prejudice to Credit Linked Condition 12, if:
(x) on (A) the Scheduled Maturity Date, (B), if applicable, the
Repudiation/Moratorium Evaluation Date, (C) if Grace Period
Extension is specified as applying in the relevant Pricing
Supplement, the Grace Period Extension Date, (D) the last day of
the Notice Delivery Period or (E) the DC Determination Cut-off
Date, as the case may be, a Credit Event Determination Date has not
occurred but, in the opinion of the Calculation Agent, a Credit
Event or Potential Credit Event may have occurred or may occur;
or
(y) on the Scheduled Maturity Date, in the opinion of the Calculation Agent, a Potential Repudiation/Moratorium may have occurred,
the Calculation Agent may at its option notify the Noteholders
in accordance with Condition 14 (Notices) that redemption of the
Notes has been postponed (without prejudice to any other later
Maturity Date also determined pursuant to the Notes) to the
Postponed Maturity Date and, in the case of (x) above, the
Repudiation/Moratorium Evaluation Date, the Grace Period Extension
Date, the last day of the Notice Delivery Period (which for these
purposes shall apply in the case of 10(x)(A) as well as 10(x)(D)
above) or the DC Determination Cut-off Date, as the case may be,
has been postponed to the Postponed Cut-off Date and:
where:
(a) in the case of Credit Linked Condition 10(x), a Credit Event
Determination Date has not occurred on or prior to the Postponed
Cut-off Date or, in the case of Credit Linked Condition 10(y), the
Repudiation/Moratorium Extension Condition is not satisfied on or
prior to the Postponed Cut-off Date:
(i) subject as provided below, each Note will be redeemed by the
Issuer at the final redemption amount set out in the relevant
Pricing Supplement on the Maturity Date; and
(ii) in the case of interest bearing Credit Linked Notes, the
Issuer shall be obliged to pay interest calculated as provided
herein accruing from (and including) the Interest Payment Date
immediately preceding the Scheduled Maturity Date or, if none, the
Interest Commencement Date to (but excluding) the Scheduled
Maturity Date but shall only be obliged to make such payment of
interest on the Maturity Date and no further or other amount in
respect of interest shall be payable and no additional amount shall
be payable in respect of such delay; or
(b) where:
(i) in the case of Credit Linked Condition 10(x), a Credit Event
Determination Date has occurred on or prior to the Postponed
Cut-off Date, the provisions of Credit Linked Condition 1 and
Credit Linked Condition 2, Credit Linked Condition 3, Credit Linked
Condition 4 or Credit Linked Condition 5, as applicable, shall
apply to the Credit Linked Notes; or
(ii) in the case of Credit Linked Condition 10(y), the
Repudiation/Moratorium Extension Condition is satisfied on or prior
to the Postponed Cut-off Date, the provisions of Credit Linked
Condition 7 shall apply to the Credit Linked Notes.
For the purposes hereof:
"Postponed Cut-off Date" means the fifteenth (15th) Business Day
after the Scheduled Maturity Date, the relevant
Repudiation/Moratorium Evaluation Date or Grace Period Extension
Date, or the last day of the Notice Delivery Period or the DC
Determination Cut-off Date, as the case may be; and
"Postponed Maturity Date" means the fifth (5th) Business Day
after the Postponed Cut-off Date.
11. Partial Cash Settlement
If all or a portion of the Obligations comprising an Entitlement
are Undeliverable Obligations and/or Hedge Disruption Obligations,
the Issuer shall give notice (a "Partial Cash Settlement Notice")
to the Noteholders in accordance with Condition 14 (Notices) and
the Issuer shall pay in respect of each Undeliverable Obligation
and/or Hedge Disruption Obligation, as the case may be, the Partial
Cash Settlement Amount on the Partial Cash Settlement Date. Any
failure to provide a Partial Cash Settlement Notice will not
constitute an Event of Default under the Notes and will not affect
the validity of any of the foregoing provisions.
In the Partial Cash Settlement Notice, the Issuer must give
details of why it is unable to deliver the relevant Undeliverable
Obligations or Hedge Disruption Obligation, as the case may be.
Unless otherwise specified in the relevant Pricing Supplement,
for the purposes of this Credit Linked Condition 11 only the
following terms shall be defined as follows and such definitions
will apply notwithstanding other definitions of such terms in
Credit Linked Condition 13:
"Indicative Quotation" means, in accordance with the Quotation
Method, each quotation obtained from a Quotation Dealer at the
Valuation Time for (to the extent reasonably practicable) an amount
of the Undeliverable Obligation or Hedge Disruption Obligations, as
the case may be, equal to the Quotation Amount, which reflects such
Quotation Dealer's reasonable assessment of the price of such
Undeliverable Obligation or Hedge Disruption Obligation, as the
case may be, based on such factors as such Quotation Dealer may
consider relevant, which may include historical prices and recovery
rates.
"Market Value" means, with respect to an Undeliverable
Obligation or Hedge Disruption Obligation, as the case may be, on a
Valuation Date, (i) if more than three Full Quotations are
obtained, the arithmetic mean of such Full Quotations, disregarding
the Full Quotations having the highest and lowest values (and, if
more than one such Full Quotations have the same highest or lowest
value, then one of such highest or lowest Full Quotations shall be
disregarded); (ii) if exactly three Full Quotations are obtained,
the Full Quotation remaining after disregarding the highest and
lowest Full Quotations (and, if more than one such Full Quotations
have the same highest value or lowest value, then one of such
highest or lowest Full Quotations shall be disregarded); (iii) if
exactly two Full Quotations are obtained, the arithmetic mean of
such Full Quotations; (iv) if fewer than two Full Quotations are
obtained and a Weighted Average Quotation is obtained, such
Weighted Average Quotation; (v) if Indicative Quotations are
specified as applying in the relevant Pricing Supplement and
exactly three Indicative Quotations are obtained, the Indicative
Quotation remaining after disregarding the highest and lowest
Indicative Quotations (and, if more than one such Indicative
Quotations have the same highest or lowest value, then one of such
highest or lowest Indicative Quotations shall be disregarded); (vi)
if fewer than two Full Quotations are obtained and no Weighted
Average Quotation is obtained (and, if Indicative Quotations are
applicable, fewer than three Indicative Quotations are obtained)
then, subject to paragraph (b) of the definition of "Quotation"
below, an amount as determined by the Calculation Agent on the next
Business Day on which at least two Full Quotations or a Weighted
Average Quotation or, if applicable, three Indicative Quotations
are obtained; and (vii) if fewer than two Full Quotations are
obtained and no Weighted Average Quotation is obtained (and, if
Indicative Quotations are applicable, fewer than three Indicative
Quotations are obtained) on the same Business Day on or prior to
the tenth Business Day following the Valuation Date the Market
Value shall be any Full Quotation obtained from a Quotation Dealer
at the Valuation Time on such tenth Business Day or, if no Full
Quotation is obtained, the weighted average of any firm quotations
(or, if applicable, Indicative Quotations) for the Undeliverable
Obligation or Hedge Disruption Obligation, as the case may be,
obtained from Quotation Dealers at the Valuation Time on such tenth
Business Day with respect to the aggregate portion of the Quotation
Amount for which such quotations were obtained and a quotation
deemed to be zero for the balance of the Quotation Amount for which
firm quotations (or, if applicable, Indicative Quotations) were not
obtained on such day.
"Partial Cash Settlement Amount" is deemed to be, for an
Undeliverable Obligation or a Hedge Disruption Obligation, as the
case may be, an amount calculated by the Calculation Agent equal to
the greater of:
(a)
(i) the Outstanding Principal Balance, the Due and Payable
Amount or the Currency Amount, as applicable, of each Undeliverable
Obligation or Hedge Disruption Obligation, as the case may be;
multiplied by
(ii) (x) the Final Price with respect to such Undeliverable
Obligation or Hedge Disruption Obligation, determined as provided
in this Credit Linked Condition or (y) in the case of a Hedge
Disruption Obligation, if a Hedging Auction has been held on or
prior to the relevant Credit Settlement Date, the Hedging Auction
Final Price; less if applicable
(iii) Unwind Costs, if any (but excluding any Unwind Costs
already taken into account in calculating the relevant
Entitlement); less
(iv) Expenses, if any (but excluding any Expenses already taken
into account in calculating the relevant Entitlement); and
(b) zero,
provided that where the relevant Undeliverable Obligation or
Hedge Disruption Obligation forms part of the Asset Package and (in
the case of (x) above) the Calculation Agent determines that a
Final Price cannot reasonably be determined in respect of such
Undeliverable Obligation or Hedge Disruption Obligation, then the
Partial Cash Settlement Amount will be an amount calculated by the
Calculation Agent equal to the fair market value of the relevant
Undeliverable Obligation or Hedge Disruption Obligation less Unwind
Costs if any (but excluding any Unwind Costs already taken into
account in calculating the relevant Entitlement) and less Expenses,
if any (but excluding any Expenses already taken into account in
calculating the relevant Entitlement).
"Partial Cash Settlement Date" is deemed to be the date falling
five Business Days after the calculation of the Final Price or, if
the Hedging Auction Final Price applies, the relevant Credit
Settlement Date.
"Quotation" means each Full Quotation, the Weighted Average
Quotation and, if Indicative Quotations are specified as applying
in the relevant Pricing Supplement, each Indicative Quotation
obtained and expressed as a percentage of the Outstanding Principal
Balance or Due and Payable Amount, as applicable, of the relevant
Undeliverable Obligation or Hedge Disruption Obligation with
respect to a Valuation Date in the manner that follows:
(a) The Calculation Agent shall attempt to obtain Full
Quotations with respect to each Valuation Date from five or more
Quotation Dealers. If the Calculation Agent is unable to obtain two
or more such Full Quotations on the same Business Day within three
Business Days of a Valuation Date, then on the next following
Business Day (and, if necessary, on each Business Day thereafter
until the tenth Business Day following the relevant Valuation Date)
the Calculation Agent shall attempt to obtain Full Quotations from
five or more Quotation Dealers, and, if two or more Full Quotations
are not available, a Weighted Average Quotation. If two or more
such Full Quotations or a Weighted Average Quotation are not
available on any such Business Day and Indicative Quotations are
specified as applying in the relevant Pricing Supplement, the
Calculation Agent shall attempt to obtain three Indicative
Quotations from five or more Quotation Dealers.
(b) If the Calculation Agent is unable to obtain two or more
Full Quotations or a Weighted Average Quotation (or, if Indicative
Quotations are specified as applying in the relevant Pricing
Supplement, three Indicative Quotations) on the same Business Day
on or prior to the tenth Business Day following the Valuation Date,
the Quotations shall be deemed to be any Full Quotation obtained
from a Quotation Dealer at the Valuation Time on such tenth
Business Day or, if no Full Quotation is obtained, the weighted
average of any firm quotations (or, if applicable, Indicative
Quotations) for the Undeliverable Obligation or the Hedge
Disruption Obligation, as the case may be, obtained from Quotation
Dealers at the Valuation Time on such tenth Business Day with
respect to the aggregate portion of the Quotation Amount for which
such quotations were obtained and a quotation deemed to be zero for
the balance of the Quotation Amount for which firm quotations (or,
if applicable, Indicative Quotations) were not obtained on such
day.
(c) The Calculation Agent shall determine, based on the then
current market practice in the market of the relevant Undeliverable
Obligation or Hedge Disruption Obligations, as the case may be,
whether such Quotations shall include or exclude accrued but unpaid
interest. All Quotations shall be obtained in accordance with this
determination.
"Quotation Amount" is deemed to be, with respect to each type or
issue of Undeliverable Obligation or Hedge Disruption Obligation,
as the case may be, an amount equal to at least the Outstanding
Principal Balance or Due and Payable Amount (or, in either case,
its equivalent in the relevant Obligation Currency converted by the
Calculation Agent by reference to exchange rates in effect at the
time that the relevant Quotation is being obtained), as applicable,
of such Undeliverable Obligation or Hedge Disruption Obligations,
as the case may be.
"Quotation Method" is deemed to be Bid.
"Valuation Date" is the fifth Business Day following the
relevant Credit Settlement Date.
"Valuation Method" is deemed to be Highest unless fewer than two
Full Quotations are obtained or a Weighted Average Quotation
applies (or, if applicable, Indicative Quotations), in which case
"Valuation Method" is deemed to be Market.
"Valuation Obligation" is deemed to be each Undeliverable
Obligation or Hedge Disruption Obligation, as the case may be.
"Valuation Time" is the time specified as such in the relevant
Pricing Supplement, or, if no time is so specified, 11:00 a.m. in
the principal trading market for the Undeliverable Obligation or
the Hedge Disruption Obligation, as the case may be.
"Weighted Average Quotation" means, in accordance with the
Quotation Method, the weighted average of firm quotations obtained
from Quotation Dealers at the Valuation Time, to the extent
reasonably practicable, each for an amount of the Undeliverable
Obligation or the Hedge Disruption Obligation, as the case may be,
with an Outstanding Principal Balance or Due and Payable Amount, as
applicable, of as large a size as available but less than the
Quotation Amount that in aggregate are approximately equal to the
Quotation Amount.
12. Settlement Suspension
(a) Suspension
Without prejudice to Credit Linked Condition 10, if, following
the determination of a Credit Event Determination Date but prior to
the Credit Settlement Date or, to the extent applicable, a
Valuation Date, there is a DC Credit Event Meeting Announcement,
the Calculation Agent may, at its option, determine that the
applicable timing requirements of the Credit Linked Conditions and
the definitions of Credit Event Redemption Date, Credit Event
Payment Date, Valuation Date, Maturity Date, Physical Settlement
Period and PSN Cut-off Date, and any other Credit Linked Condition
provision(s) as determined by the Calculation Agent, shall toll and
be suspended and remain suspended (such period of suspension, a
"Suspension Period") until the date of the relevant DC Credit Event
Announcement or DC Credit Event Question Dismissal. During such
Suspension Period none of the Issuer, the Calculation Agent or any
Noteholder are obliged to, nor are they entitled to, take any
action in connection with the settlement of the Credit Linked
Notes. Once the relevant DC Credit Event Announcement or DC Credit
Event Question Dismissal has occurred, the relevant timing
requirements of the Credit Linked Conditions that have previously
tolled or been suspended shall resume on the Business Day following
such public announcement by the DC Secretary with the Issuer having
the benefit of the full day notwithstanding when the tolling or
suspension began in accordance with this Credit Linked Condition
12.
In the event of any such Suspension Period, the Calculation
Agent may make (x) such consequential or other adjustment(s) or
determination(s) to or in relation to the Conditions and these
Credit Linked Conditions as may be desirable or required either
during or following any relevant Suspension Period to account for
or reflect such suspension and (y) determine the effective date of
such adjustment(s) or determination(s).
(b) Interest
In the case of interest bearing Credit Linked Notes:
(i) if a Suspension Period falls in any one or more Interest
Period(s), then no interest (or any interest on any delayed payment
of interest) shall accrue during each portion of an Interest Period
during which a Suspension Period exists; and
(ii) if an Interest Payment Date falls in a Suspension Period,
payment of the relevant interest will be deferred until such date
as determined by the Calculation Agent falling no earlier than the
first Business Day and no later than the fifth Business Day
following the end of the Suspension Period, all subject to the
provisions of Condition 8 (Payments) and Credit Linked Conditions
7, 8, 9 and 10.
13. Definitions applicable to Credit Linked Notes
"2.5-year Limitation Date" has the meaning given to that term in
the definition of "Limitation Date".
"10-year Limitation Date" has the meaning given to that term in
the definition of "Limitation Date".
"Accrued Interest" means for the purpose of these Credit Linked
Conditions:
(a) in respect of any Notes for which "Physical Settlement" is
specified to be the Settlement Method in the relevant Pricing
Supplement, the Outstanding Principal Balance of the Deliverable
Obligations being Delivered will exclude accrued but unpaid
interest, unless "Include Accrued Interest" is specified in the
relevant Pricing Supplement, in which case, the Outstanding
Principal Balance of the Deliverable Obligations being Delivered
will include accrued but unpaid interest (as the Calculation Agent
shall determine);
(b) in respect of any Notes for which the Fallback Settlement
Method applies in accordance with Credit Linked Condition 2 or
Credit Linked Condition 5(a)(i), as applicable, and:
(i) "Include Accrued Interest" is specified in the relevant
Pricing Supplement, the Outstanding Principal Balance of the
relevant Valuation Obligation shall include accrued but unpaid
interest;
(ii) "Exclude Accrued Interest" is specified in the relevant
Pricing Supplement, the Outstanding Principal Balance of the
relevant Valuation Obligation shall not include accrued but unpaid
interest; or
(iii) neither "Include Accrued Interest" nor "Exclude Accrued
Interest" is specified in the relevant Pricing Supplement, the
Calculation Agent shall determine, based on the then current market
practice in the market of the relevant Valuation Obligation whether
the Outstanding Principal Balance of the relevant Valuation
Obligation shall include or exclude accrued but unpaid interest
and, if applicable, the amount thereof; or
(c) if Credit Linked Condition 11 applies, the Calculation Agent
shall determine, based on the then current market practice in the
market of the relevant Undeliverable Obligation or Hedge Disruption
Obligation (as applicable), whether such Quotations shall include
or exclude accrued but unpaid interest.
"Adjusted Credit Outstanding Nominal Amount" has the meaning
given to that term in Credit Linked Condition 5.
"Aggregate Outstanding Amount" has the meaning given to that
term in Credit Linked Condition 5.
"Affiliate" means in relation to any entity (the "First
Entity"), any entity controlled, directly or indirectly, by the
First Entity, any entity that controls, directly or indirectly, the
First Entity or any entity directly or indirectly under common
control with the First Entity. For these purposes "control" means
ownership of a majority of the voting power of an entity.
"Asset" means each obligation, equity, amount of cash, security,
fee (including any "early-bird" or other consent fee), right and/or
other asset, whether tangible or otherwise and whether issued,
incurred, paid or provided by the Reference Entity or a third party
(or any value which was realised or capable of being realised in
circumstances where the right and/or other asset no longer
exists).
"Asset Market Value" means the market value of an Asset, as the
Calculation Agent shall determine by reference to an appropriate
specialist valuation or in accordance with the methodology
determined by the Credit Derivatives Determinations Committee.
"Asset Package" means, in respect of an Asset Package Credit
Event, all of the Assets in the proportion received or retained by
a Relevant Holder in connection with such relevant Asset Package
Credit Event (which may include the Prior Deliverable Obligation or
Package Observable Bond, as the case may be). If the Relevant
Holder is offered a choice of Assets or a choice of combinations of
Assets, the Asset Package will be the Largest Asset Package. If the
Relevant Holder is offered, receives and retains nothing, the Asset
Package shall be deemed to be zero.
"Asset Package Credit Event" means:
(a) if "Financial Reference Entity Terms" and "Governmental
Intervention" are specified as applicable in the relevant Pricing
Supplement:
(i) a Governmental Intervention; or
(ii) a Restructuring in respect of the Reference Obligation, if
"Restructuring" is specified as applicable in the relevant Pricing
Supplement and such Restructuring does not constitute a
Governmental Intervention; and
(b) if the Reference Entity is a Sovereign and "Restructuring"
is specified as applicable in the relevant Pricing Supplement, a
Restructuring,
in each case, whether or not such event is specified as the
applicable Credit Event in the Credit Event Notice or the DC Credit
Event Announcement.
"Asset Transfer Notice" has the meaning given to that term in
Credit Linked Condition 4.
"Auction" shall have the meaning as shall be set forth in the
relevant Transaction Auction Settlement Terms.
"Auction Cancellation Date" shall have the meaning as shall be
set forth in the relevant Transaction Auction Settlement Terms.
"Auction Covered Transaction" shall have the meaning as shall be
set forth in the relevant Transaction Auction Settlement Terms.
"Auction Final Price" shall have the meaning as shall be set
forth in the relevant Transaction Auction Settlement Terms.
"Auction Final Price Determination Date" shall have the meaning
as shall be set forth in the relevant Transaction Auction
Settlement Terms.
"Auction Settlement Date" shall mean the date that is the number
of Business Days as shall be specified in the relevant Transaction
Auction Settlement Terms (or, if a number of Business Days is not
so specified, five Business Days) immediately following the Auction
Final Price Determination Date.
"Auction Settlement Notice" has the meaning given to that term
in Credit Linked Condition 2.
"Bankruptcy" means the Reference Entity:
(a) is dissolved (other than pursuant to a consolidation, amalgamation or merger);
(b) becomes insolvent or is unable to pay its debts or fails or
admits in writing in a judicial, regulatory or administrative
proceeding or filing its inability generally to pay its debts as
they become due;
(c) makes a general assignment, arrangement, scheme or
composition with or for the benefit of its creditors generally, or
such a general assignment, arrangement, scheme or composition
becomes effective;
(d) institutes or has instituted against it a proceeding seeking
a judgment of insolvency or bankruptcy or any other similar relief
under any bankruptcy or insolvency law or other law affecting
creditors' rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition (i)
results in a judgment of insolvency or bankruptcy or the entry of
an order for relief or the making of an order for its winding-up or
liquidation or (ii) is not dismissed, discharged, stayed or
restrained in each case within thirty (30) calendar days of the
institution or presentation thereof or before the Scheduled
Maturity Date, whichever is earlier;
(e) has a resolution passed for its winding-up or liquidation
(other than pursuant to a consolidation, amalgamation or
merger);
(f) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or
substantially all its assets;
(g) has a secured party take possession of all or substantially
all its assets or has a distress, execution, attachment,
sequestration or other legal process levied, enforced or sued on or
against all or substantially all its assets and such secured party
maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within thirty (30)
calendar days thereafter or before the Scheduled Maturity Date,
whichever is earlier; or
(h) causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has any analogous
effect to any of the events specified in clauses (a) to (g).
"Basket Credit Linked Notes" means Credit Linked Notes indicated
as such in the relevant Pricing Supplement, where the Issuer
purchases credit protection from the Noteholders in respect of a
basket of Reference Entities.
"Calculation Agent City Business Day" means a day on which
commercial banks and foreign exchange markets are generally open to
settle payments in the Calculation Agent City specified in the
relevant Pricing Supplement.
"Calculation Agent Fallback Settlement Determination Date" has
the meaning given to that term in Credit Linked Condition 2.
"Cash Settlement Notice" has the meaning given to that term in
Credit Linked Condition 3.
"Conditionally Transferable Obligation" means a Deliverable
Obligation or Valuation Obligation, as applicable, that is either
Transferable, in the case of Bonds, or capable of being assigned or
novated to all Modified Eligible Transferees without the consent of
any person being required, in the case of any Deliverable
Obligation or Valuation Obligation other than Bonds, in each case
as of each such date the Calculation Agent determines appropriate
for purposes of the Hedging Arrangements or, if none at the
relevant time, both the relevant PSN Effective Date and the
relevant Delivery Date or the date of delivery of the Valuation
Obligation Notification, as applicable, provided, however, that a
Deliverable Obligation or Valuation Obligation other than Bonds
will be a Conditionally Transferable Obligation notwithstanding
that consent of the Reference Entity or the guarantor, if any, of a
Deliverable Obligation or Valuation Obligation other than Bonds (or
the consent of the relevant obligor if the Reference Entity is
guaranteeing such Deliverable Obligation or Valuation Obligation)
or any agent is required for such novation, assignment or transfer
so long as the terms of such Deliverable Obligation or Valuation
Obligation provide that such consent may not be unreasonably
withheld or delayed. Any requirement that notification of novation,
assignment or transfer of a Deliverable Obligation or Valuation
Obligation be provided to a trustee, fiscal agent, administrative
agent, clearing agent or paying agent for a Deliverable Obligation
or Valuation Obligation shall not be considered to be a requirement
for consent for purposes of this definition of "Conditionally
Transferable Obligation".
"Conforming Reference Obligation" means a Reference Obligation
which is a Deliverable Obligation determined in accordance with
paragraph (a) below of the definition of Deliverable Obligation
below.
"Credit Derivatives Auction Settlement Terms" means any Credit
Derivatives Auction Settlement Terms published by ISDA, a form of
which will be published by ISDA on its website at www.isda.org (or
any successor website thereto) from time to time and may be amended
from time to time.
"Credit Derivatives Determinations Committee" (and each a
"Credit Derivatives Determinations Committee") means each committee
established pursuant to the DC Rules for purposes of reaching
certain DC Resolutions in connection with credit derivative
transactions.
"Credit Event" means the occurrence of any one or more of the
Credit Events specified in the relevant Pricing Supplement which
may include Bankruptcy, Failure to Pay, Obligation Acceleration,
Obligation Default, Repudiation/Moratorium, Restructuring or
Governmental Intervention.
If an occurrence would otherwise constitute a Credit Event, such
occurrence will constitute a Credit Event whether or not such
occurrence arises directly or indirectly from, or is subject to a
defence based upon:
(a) any lack or alleged lack of authority or capacity of the
Reference Entity to enter into any Obligation or, as applicable, an
Underlying Obligor to enter into any Underlying Obligation;
(b) any actual or alleged unenforceability, illegality,
impossibility or invalidity with respect to any Obligation or, as
applicable, any Underlying Obligation, however described;
(c) any applicable law, order, regulation, decree or notice,
however described, or the promulgation of, or any change in, the
interpretation by any court, tribunal, regulatory authority or
similar administrative or judicial body with competent or apparent
jurisdiction of any applicable law, order, regulation, decree or
notice, however described; or
(d) the imposition of, or any change in, any exchange controls,
capital restrictions or any other similar restrictions imposed by
any monetary or other authority, however described.
"Credit Event Amount" means, following the occurrence of a
Credit Event Determination Date in respect of any Reference Entity
(i) the amount specified as such in the relevant Pricing Supplement
or (ii) an amount (which may be zero but may never be less than
zero) calculated by the Calculation Agent in accordance with the
following formula:
Where:
"RENA" is each Note's pro rate share of the Reference Entity
Notional Amount in respect of the affected Reference Entity;
"FP" is the Final Price or the Auction Final Price, as
applicable, in respect of the affected Reference Entity (which, in
either case, may never be greater than 100 per cent.);
"UC" is Unwind Costs; and
"E" is the Expenses, if any, and if Credit Linked Condition
5(a)(i)(y) applies.
Expressed in words, this is (1) the product of each Note's pro
rate share of the Reference Entity Notional Amount in respect of
the affected Reference Entity and the Final Price or Auction Final
Price, as applicable, in respect of the affected Reference Entity
(which, in either case, may never be greater than 100 per cent.)
(the "Recovery Value") minus (2) the Unwind Costs minus (3) if
Credit Linked Condition 5(a)(1)(y) applies, Expenses, if any. Any
Credit Event Amount will be rounded to the nearest sub-unit of the
Specified Currency (half a sub-unit being rounded upwards).
"Credit Event Backstop Date" means:
(a) for purposes of any event that constitutes a Credit Event (or with respect to a Repudiation/Moratorium, if applicable, the event described in paragraph (b) of the definition of Repudiation/Moratorium), as determined by DC Resolution, the date that is 60 calendar days prior to the Credit Event Resolution Request Date; or
(b) otherwise, the date that is sixty (60) calendar days prior to the earlier of:
(i) if the Notice Delivery Date occurs during the Notice
Delivery Period, the Notice Delivery Date; and
(ii) if the Notice Delivery Date occurs during the Post
Dismissal Additional Period, the Credit Event Resolution Request
Date.
The Credit Event Backstop Date shall not be subject to
adjustment in accordance with any Business Day Convention.
"Credit Event Determination Date" means, with respect to a
Credit Event with respect to which:
(a) Auction Settlement is the applicable Settlement Method:
(i) subject to paragraph (a)(ii) of this definition, the Notice
Delivery Date if the Notice Delivery Date occurs during either the
Notice Delivery Period or the Post Dismissal Additional Period,
provided that neither (A) a DC Credit Event Announcement has
occurred nor (B) a DC No Credit Event Announcement has occurred, in
each case, with respect to the Credit Event specified in the Credit
Event Notice; or
(ii) notwithstanding paragraph (a)(i) of this definition, the
Credit Event Resolution Request Date, if a DC Credit Event
Announcement has occurred, the Credit Event Resolution Request Date
has occurred on or prior to the last day of the Notice Delivery
Period (including prior to the Trade Date) and either:
(A)
(1) the Credit Event is not an M(M)R Restructuring; and
(2) the Trade Date occurs on or prior to a DC Announcement Coverage Cut-off Date; or
(B)
(1) the Credit Event is an M(M)R Restructuring; and
(2) a Credit Event Notice is delivered and is effective on or
prior to the fifth Business Day following the Exercise Cut-off
Date,
provided that no Credit Event Notice specifying an M(M)R
Restructuring as the only Credit Event has previously been
delivered (I) unless the M(M)R Restructuring specified in such
Credit Event Notice is also the subject of the DC Credit Event
Question resulting in the occurrence of the Credit Event Resolution
Request Date or (II) unless the Calculation Agent otherwise
determines this is consistent with the Hedging Arrangements or, if
none at the relevant time, (x) unless, and to the extent that, the
Partial Redemption Amount specified in any such Credit Event Notice
was less than the relevant Reference Entity Notional Amount or (y)
unless the Deliverable Obligations set out on the Final List
applicable to the Transaction Auction Settlement Terms are
identical to the Permissible Deliverable Obligations, or
(b) if paragraph (a) of this definition does not apply, the
Non-Standard Credit Event Determination Date,
provided further that no Credit Event Determination Date will
occur, and any Credit Event Determination Date previously
determined with respect to an event shall be deemed not to have
occurred, if, or to the extent that, prior to the Auction Final
Price Determination Date, a Valuation Date, the relevant Credit
Settlement Date, the Credit Event Redemption Date, the relevant
Credit Event Payment Date or the Maturity Date, as applicable, a DC
No Credit Event Announcement Date occurs with respect to the
relevant event.
If, in accordance with the provisions above, (i) following the
determination of a Credit Event Determination Date, such Credit
Event Determination Date is deemed (A) to have occurred on a date
that is different from the date that was originally determined to
be the Credit Event Determination Date or (B) not to have occurred
or (ii) a Credit Event Determination Date is deemed to have
occurred prior to one or more preceding Interest Payment Dates, the
Calculation Agent will determine (1) such adjustment(s) to these
Credit Linked Conditions (including any adjustment to payment
amounts) as may be required to reflect (I) such deemed date of
occurrence or (II) such deemed non-occurrence of such Credit Event
Determination Date and (2) the effective date of such
adjustment(s). For the avoidance of doubt, no accruals of interest
shall be taken into account when calculating any adjustment to
payment amounts.
"Credit Event Notice" means a notice from the Calculation Agent
to the Issuer (which the Calculation Agent has the right but not
the obligation to deliver) that describes a Credit Event that
occurred on or after the Credit Event Backstop Date and on or prior
to the Extension Date.
Any Credit Event Notice that describes a Credit Event that
occurred after the Scheduled Maturity Date must relate to the
relevant Potential Failure to Pay, in the case of a Grace Period
Extension Date, or the relevant Potential Repudiation/Moratorium,
in the case of a Repudiation/Moratorium Evaluation Date.
A Credit Event Notice must contain a description in reasonable
detail of the facts relevant to the determination that a Credit
Event has occurred. The Credit Event that is the subject of the
Credit Event Notice need not be continuing on the date the Credit
Event Notice is effective. A Credit Event Notice shall be subject
to the requirements regarding notices set out in Credit Linked
Condition 16.
"Credit Event Payment Date" means, subject as provided in Credit
Linked Condition 12, in relation to any Credit Event Amount:
(a) the day falling the number of Business Days specified in the
relevant Pricing Supplement (or, if a number of Business Days is
not so specified, five Business Days) following the calculation of
the relevant Final Price or Auction Final Price, as applicable;
or
(b) where Credit Event Maturity Settlement is specified to be
applicable in the relevant Pricing Supplement, the Maturity
Date.
"Credit Event Portion" means, following the occurrence of a
Credit Event Determination Date in respect of any Reference Entity,
a nominal amount of Notes equal to each Note's pro rata share of
the Reference Entity Notional Amount in respect of such Reference
Entity. The Credit Event Portion of a Single Reference Entity
Credit Linked Note will be equal to 100 per cent. of the nominal
amount of such Single Reference Entity Credit Linked Note.
"Credit Event Redemption Amount" means, unless otherwise
specified in the relevant Pricing Supplement, an amount calculated
by the Calculation Agent equal to:
Expressed in words, this is (1) the product of each Note's pro
rata share of the Reference Entity Notional Amount and the Final
Price or Auction Final Price, as applicable (which, in either case,
may never be greater than 100 per cent), minus (2) the Unwind
Costs, minus (3) if Credit Linked Condition 2(a)(ii) applies,
Expenses, if any.
Where:
"RENA" is each Note's pro rata share of the Reference Entity
Notional Amount;
"FP" is the Final Price or the Auction Final Price, as
applicable (which, in either case, may never be greater than 100
per cent.);
"UC" is Unwind Costs; and
"E" is the Expenses, if any and if Credit Linked Condition
2(a)(ii) applies,
provided that, in no event shall the Credit Event Redemption
Amount be less than zero. The Credit Event Redemption Amount will
be rounded to the nearest sub-unit of the Specified Currency (half
a sub-unit being rounded upwards).
"Credit Event Redemption Date" means, subject to Credit Linked
Condition 12:
(a) subject to paragraph (b) below, the day falling five
Business Days, or such other number of Business Days specified in
the relevant Pricing Supplement, after (i) the calculation of the
Final Price or (ii) the Auction Settlement Date, as applicable, in
each case in respect of the Reference Entity in respect of which
the relevant Credit Event Determination Date has occurred; or
(b) where Credit Event Maturity Settlement is specified to be
applicable in the relevant Pricing Supplement, if later than the
date otherwise determined pursuant to paragraph (a), the Scheduled
Maturity Date.
"Credit Event Resolution Request Date" means, with respect to a
DC Credit Event Question, the date, as publicly announced by the DC
Secretary, that the relevant Credit Derivatives Determinations
Committee Resolves to be the date on which the DC Credit Event
Question was effective and on which the relevant Credit Derivatives
Determinations Committee was in possession of Publicly Available
Information with respect to such DC Credit Event Question.
"Credit Settlement Currency" means the currency specified as
such in the relevant Pricing Supplement, or if no currency is
specified in the relevant Pricing Supplement, the Specified
Currency of the Credit Linked Notes.
"Credit Settlement Date" means the last day of the longest
Physical Settlement Period following the relevant PSN Cut-off Date
(the "Scheduled Credit Settlement Date") provided that if a Hedge
Disruption Event has occurred and is continuing on the second
Business Day immediately preceding the Scheduled Credit Settlement
Date, the Credit Settlement Date shall be the second Business Day
following the date on which no Hedge Disruption Event subsists or
such earlier date (if any) on which the Calculation Agent
determines that in its opinion such Hedge Disruption Event is
unlikely to cease.
"Currency Amount" means, with respect to (a) a Deliverable
Obligation specified in a Notice of Physical Settlement that is
denominated in a currency other than the Credit Settlement
Currency, an amount converted to the Credit Settlement Currency
using a conversion rate determined by reference to the Currency
Rate and (b) a Replacement Deliverable Obligation specified in a
Physical Settlement Amendment Notice, an amount converted to the
Credit Settlement Currency (or, if applicable, back into the Credit
Settlement Currency) using a conversion rate determined by
reference to the Currency Rate, if any, and each Revised Currency
Rate used to convert each Replaced Deliverable Obligation
Outstanding Amount specified in each Physical Settlement Amendment
Notice with respect to that portion of the relevant Credit Linked
Notes into the currency of denomination of the relevant Replacement
Deliverable Obligation.
"Currency Rate" means, with respect to (a) a Deliverable
Obligation specified in the Notice of Physical Settlement or any
Physical Settlement Amendment Notice, as applicable, the rate of
conversion between the Credit Settlement Currency and the currency
in which the Outstanding Amount of such Deliverable Obligation is
denominated that is either (i) determined by reference to the
Currency Rate Source as at the Next Currency Fixing Time or (ii) if
such rate is not available at such time, determined by the
Calculation Agent and (b) a Replacement Deliverable Obligation
specified in a Physical Settlement Amendment Notice, the Revised
Currency Rate.
"Currency Rate Source" means the mid-point rate of conversion
published by WM/Reuters at 4:00 p.m. (London time), or any
successor rate source approved by the relevant Credit Derivatives
Determinations Committee or, if no such successor rate source is
approved by the relevant Credit Derivatives Determinations
Committee where relevant, any successor rate source selected by the
Calculation Agent.
"Cut-off Date" has the meaning given to that term in Credit
Linked Condition 4.
"DC Announcement Coverage Cut-off Date" means, with respect to a
DC Credit Event Announcement, the Auction Final Price Determination
Date, the Auction Cancellation Date, or the date that is fourteen
calendar days following the No Auction Announcement Date, if any,
as applicable.
"DC Credit Event Announcement" means, with respect to the
Reference Entity, a public announcement by the DC Secretary that
the relevant Credit Derivatives Determinations Committee has
Resolved that an event that constitutes a Credit Event has occurred
on or after the Credit Event Backstop Date and on or prior to the
Extension Date, provided that if the Credit Event occurred after
the Scheduled Maturity Date, the DC Credit Event Announcement must
relate to the relevant Potential Failure to Pay, in the case of a
Grace Period Extension Date, or the relevant Potential
Repudiation/Moratorium, in the case of a Repudiation/Moratorium
Evaluation Date.
"DC Credit Event Meeting Announcement" means, with respect to
the Reference Entity, a public announcement by the DC Secretary
that a Credit Derivatives Determinations Committee will be convened
to Resolve the matters described in a DC Credit Event Question.
"DC Credit Event Question" means a notice to the DC Secretary
requesting that a Credit Derivatives Determinations Committee be
convened to Resolve whether an event that constitutes a Credit
Event has occurred.
"DC Credit Event Question Dismissal" means, with respect to the
Reference Entity, a public announcement by the DC Secretary that
the relevant Credit Derivatives Determinations Committee has
Resolved not to determine the matters described in a DC Credit
Event Question.
"DC Determination Cut-off Date" has the meaning given to that
term in Credit Linked Condition 9.
"DC Determination Postponed Date" has the meaning given to that
term in Credit Linked Condition 9.
"DC No Credit Event Announcement" means, with respect to the
Reference Entity, a public announcement by the DC Secretary that
the relevant Credit Derivatives Determinations Committee has
Resolved that an event that is the subject of a DC Credit Event
Question does not constitute a Credit Event.
"DC Party" has the meaning given to that term in the DC
Rules.
"DC Resolution" has the meaning given to that term in the DC
Rules.
"DC Rules" means the Credit Derivatives Determinations
Committees Rules, as published by ISDA on its website at
www.isda.org (or any successor website thereto) from time to time
and as amended from time to time in accordance with the terms
thereof.
"DC Secretary" has the meaning given to that term in the DC
Rules.
"Default Requirement" means the amount specified as such in the
relevant Pricing Supplement or its equivalent in the relevant
Obligation Currency or, if no such amount is specified in the
relevant Pricing Supplement, USD10,000,000, or its equivalent as
calculated by the Calculation Agent in the relevant Obligation
Currency, in either case, as of the occurrence of the relevant
Credit Event.
"Deliver" means to deliver, novate, transfer (including, in the
case of a Guarantee, transfer of the benefit of the Guarantee),
assign or sell, as appropriate, in the manner customary for the
settlement of the applicable Deliverable Obligations (which shall
include executing all necessary documentation and taking any other
necessary actions), in order to convey all right, title (or, with
respect to Deliverable Obligations where only equitable title is
customarily conveyed, all equitable title) and interest in the
Entitlement to the relevant Noteholder free and clear of any and
all liens, charges, claims or encumbrances (excluding any liens
routinely imposed on all securities in a relevant clearance system,
but including without limitation any counterclaim, defence (other
than a counterclaim or defence based on the factors set out in (a)
to (d) in the definition of "Credit Event" above) or right of
set-off by or of the Reference Entity or any applicable Underlying
Obligor) provided that (i) if all or a portion of the Entitlement
consists of Direct Loan Participations, "Deliver" means to create
(or procure the creation of) a participation in favour of the
relevant Noteholder and (ii) if a Deliverable Obligation is a
Guarantee, "Deliver" means to Deliver both the Underlying
Obligation and the Guarantee, provided further that if the
Guarantee has a Fixed Cap, "Deliver" means to Deliver the
Underlying Obligation, the Guarantee and all claims to any amounts
which are subject to such Fixed Cap. "Delivery" and "Delivered"
will be construed accordingly. In the case of a Loan, Delivery
shall be effected using documentation substantially in the form of
the documentation customarily used in the relevant market for
Delivery of such Loan at that time.
If Asset Package Delivery applies, (i) Delivery of a Prior
Deliverable Obligation or a Package Observable Bond specified in
the Notice of Physical Settlement or Physical Settlement Amendment
Notice, as applicable, may be satisfied by Delivery of the related
Asset Package, and such Asset Package shall be treated as having
the same currency, Outstanding Principal Balance or Due and Payable
Amount, as applicable, as the Prior Deliverable Obligation or
Package Observable Bond to which it corresponds had immediately
prior to the Asset Package Credit Event, (ii) the preceding
paragraph above shall be deemed to apply to each Asset in the Asset
Package provided that if any such Asset is not a Bond, it shall be
treated as if it were a Loan for these purposes, (iii) if the Asset
Package is zero, the Outstanding Amount of the Prior Deliverable
Obligation or Package Observable Bond shall be deemed to have been
Delivered in full three Business Days following the date on which
the Issuer has notified the Noteholders in accordance with Credit
Linked Condition 4 or Credit Linked Condition 5(a)(ii), as
applicable, of the detailed description of the Asset Package that
it intends to Deliver, (iv) the Issuer may satisfy its obligation
to make Delivery of the Prior Deliverable Obligation or Package
Observable Bond in part by Delivery of each Asset in the Asset
Package in the correct proportion and (v) if the relevant Asset is
a Non-Transferable Instrument or Non-Financial Instrument, the
Asset shall be deemed to be an amount of cash equal to the Asset
Market Value and the term Asset Package shall be construed
accordingly.
"Deliverable Obligation" means:
(a) any obligation of the Reference Entity (either directly or
as provider of a Relevant Guarantee) determined pursuant to the
method described in "(i) Method for Determining Deliverable
Obligations" below;
(b) the Reference Obligation;
(c) solely in relation to a Restructuring Credit Event
applicable to a Reference Entity which is a Sovereign, and unless
Asset Package Delivery is applicable, any Sovereign Restructured
Deliverable Obligation;
(d) if Asset Package Delivery is applicable, (i) if Financial
Reference Entity Terms is specified as applicable in the relevant
Pricing Supplement, any Prior Deliverable Obligation, or (ii) if
the Reference Entity is a Sovereign, any Package Observable Bond;
and
(e) any obligation of the Reference Entity (either directly or
as provider of a Relevant Guarantee) received by the Issuer and/or
any of its Affiliates in relation to the settlement of any credit
derivative Hedging Arrangements in connection with the relevant
Credit Event,
in each case, (i) other than in the case of paragraph (e) above,
unless it is an Excluded Deliverable Obligation and (ii) provided
that the obligation has an Outstanding Principal Balance or Due and
Payable Amount that is greater than zero (determined for purposes
of paragraph (d) above, immediately prior to the relevant Asset
Package Credit Event).
(i) Method for Determining Deliverable Obligations. For the
purposes of this definition of "Deliverable Obligation", the term
"Deliverable Obligation" may be defined as each obligation of the
Reference Entity described by the Deliverable Obligation Category
specified in the relevant Pricing Supplement, and, subject to
paragraph (ii) (Interpretation of Provisions) below, having each
of, the Deliverable Obligation Characteristics, if any, specified
in the relevant Pricing Supplement, in each case, as of each such
date the Calculation Agent determines relevant for purposes of the
Hedging Arrangements or, if none at the relevant time, both the PSN
Effective Date and the Delivery Date (unless otherwise specified).
The following terms shall have the following meanings:
(A) "Deliverable Obligation Category" means one of Payment,
Borrowed Money, Reference Obligation Only, Bond, Loan, or Bond or
Loan (each as defined in the definition of "Obligation" below,
except that, for the purpose of determining Deliverable
Obligations, the definition of "Reference Obligation Only" shall be
amended to state that no Deliverable Obligation Characteristics
shall be applicable to Reference Obligation Only).
(B) "Deliverable Obligation Characteristics" means any one or
more of Not Subordinated, Specified Currency, Not Sovereign Lender,
Not Domestic Currency, Not Domestic Law, Listed, Not Domestic
Issuance (each as defined in the definition of "Obligation" below),
Assignable Loan, Consent Required Loan, Direct Loan Participation,
Transferable, Maximum Maturity, Accelerated or Matured and Not
Bearer;
(1) "Assignable Loan" means a Loan that is capable of being
assigned or novated to, at a minimum, commercial banks or financial
institutions (irrespective of their jurisdiction of organisation)
that are not then a lender or a member of the relevant lending
syndicate, without the consent of the relevant Reference Entity or
the guarantor, if any, of such Loan (or the consent of the
applicable borrower if the Reference Entity is guaranteeing such
Loan) or any agent;
(2) "Consent Required Loan" means a Loan that is capable of
being assigned or novated with the consent of the Reference Entity
or the guarantor, if any, of such Loan (or the consent of the
relevant borrower if the Reference Entity is guaranteeing such
loan) or any agent;
(3) "Direct Loan Participation" means a Loan in respect of
which, pursuant to a participation agreement, the Issuer is capable
of creating, or procuring the creation of, a contractual right in
favour of each Noteholder that provides each Noteholder with
recourse to the participation seller for a specified share in any
payments due under the relevant Loan which are received by such
participation seller, any such agreement to be entered into between
each Noteholder and either (A) the Issuer (to the extent that the
Issuer is then a lender or a member of the relevant lending
syndicate), or (B) a Qualifying Participation Seller (if any) (to
the extent such Qualifying Participation Seller is then a lender or
a member of the relevant lending syndicate);
(4) "Transferable" means an obligation that is transferable to
institutional investors without any contractual, statutory or
regulatory restriction, provided that none of the following shall
be considered contractual, statutory or regulatory
restrictions:
I contractual, statutory or regulatory restrictions that provide
for eligibility for resale pursuant to Rule 144A or Regulation S
promulgated under the United States Securities Act of 1933, as
amended (and any contractual, statutory or regulatory restrictions
promulgated under the laws of any jurisdiction having a similar
effect in relation to the eligibility for resale of an
obligation);
II restrictions on permitted investments such as statutory or
regulatory investment restrictions on insurance companies and
pension funds; or
III restrictions in respect of blocked periods on or around
payment dates or voting periods;
(5) "Maximum Maturity" means an obligation that has a remaining
maturity of not greater than the period specified in the relevant
Pricing Supplement (or if no such period is specified, thirty
years);
(6) "Accelerated or Matured" means an obligation under which the
principal amount owed, whether by reason of maturity, acceleration,
termination or otherwise, is due and payable in full in accordance
with the terms of such obligation, or would have been but for, and
without regard to, any limitation imposed under any applicable
insolvency laws; and
(7) "Not Bearer" means any obligation that is not a bearer
instrument unless interests with respect to such bearer instrument
are cleared via Euroclear, Clearstream International or any other
internationally recognised clearing system.
(ii) Interpretation of Provisions
(A) If either of the Obligation Characteristics "Listed" or "Not
Domestic Issuance" is specified in the relevant Pricing Supplement,
the relevant Pricing Supplement shall be construed as though the
relevant Obligation Characteristic had been specified as an
Obligation Characteristic only with respect to Bonds.
(B) If (i) any of the Deliverable Obligation Characteristics
"Listed", "Not Domestic Issuance" or "Not Bearer" is specified in
the relevant Pricing Supplement, the relevant Pricing Supplement
shall be construed as though such Deliverable Obligation
Characteristic had been specified as a Deliverable Obligation
Characteristic only with respect to Bonds; (ii) the Deliverable
Obligation Characteristic "Transferable" is specified in the
relevant Pricing Supplement, the relevant Pricing Supplement shall
be construed as though such Deliverable Obligation Characteristic
had been specified as a Deliverable Obligation Characteristic only
with respect to Deliverable Obligations that are not Loans; or
(iii) any of the Deliverable Obligation Characteristics "Assignable
Loan", "Consent Required Loan" or "Direct Loan Participation" is
specified in the relevant Pricing Supplement, the relevant Pricing
Supplement shall be construed as though such Deliverable Obligation
Characteristic had been specified as a Deliverable Obligation
Characteristic only with respect to Loans.
(C) If more than one of "Assignable Loan", "Consent Required
Loan" and "Direct Loan Participation" are specified as Deliverable
Obligation Characteristics in the relevant Pricing Supplement, the
Deliverable Obligations may include any Loan that satisfies any one
of such Deliverable Obligation Characteristics specified and need
not satisfy all such Deliverable Obligation Characteristics.
(D) If an Obligation or a Deliverable Obligation is a Relevant
Guarantee, the following will apply:
(1) for purposes of the application of the Obligation Category
or the Deliverable Obligation Category, the Relevant Guarantee
shall be deemed to satisfy the same category or categories as those
that describe the Underlying Obligation;
(2) for purposes of the application of the Obligation
Characteristics or the Deliverable Obligation Characteristics, both
the Relevant Guarantee and the Underlying Obligation must satisfy
on the relevant date or dates each of the applicable Obligation
Characteristics or the Deliverable Obligation Characteristics, if
any, specified in the relevant Pricing Supplement from the
following list: "Not Subordinated", "Specified Currency", "Not
Sovereign Lender", "Not Domestic Currency" and "Not Domestic
Law";
(3) for purposes of the application of the Obligation
Characteristics or the Deliverable Obligation Characteristics, only
the Underlying Obligation must satisfy on the relevant date or
dates each of the applicable Obligation Characteristics or the
Deliverable Obligation Characteristics, if any, specified in the
relevant Pricing Supplement from the following list: "Listed", "Not
Domestic Issuance", "Assignable Loan", "Consent Required Loan",
"Direct Loan Participation", "Transferable", "Maximum Maturity",
"Accelerated" or "Matured" and "Not Bearer"; and
(4) for purposes of the application of the Obligation
Characteristics or the Deliverable Obligation Characteristics to an
Underlying Obligation, references to the Reference Entity shall be
deemed to refer to the Underlying Obligor.
(E) For purposes of the application of the Deliverable
Obligation Characteristic "Maximum Maturity", remaining maturity
shall be determined on the basis of the terms of the Deliverable
Obligation in effect at the time of making such determination and,
in the case of a Deliverable Obligation that is due and payable,
the remaining maturity shall be zero.
(F) If "Financial Reference Entity Terms" and "Governmental
Intervention" are specified as applicable in the relevant Pricing
Supplement, if an obligation would otherwise satisfy a particular
Obligation Characteristic or Deliverable Obligation Characteristic,
the existence of any terms in the relevant obligation in effect at
the time of making the determination which permit the Reference
Entity's obligations to be altered, discharged, released or
suspended in circumstances which would constitute a Governmental
Intervention, shall not cause such obligation to fail to satisfy
such Obligation Characteristic or Deliverable Obligation
Characteristic.
(G) For purposes of determining the applicability of Deliverable
Obligation Characteristics and the requirements specified in the
paragraphs commencing "If "Mod R"..." and "If "Mod Mod R"..." in
Credit Linked Condition 4 or Credit Linked Condition 5(a)(ii), as
applicable, to a Prior Deliverable Obligation or a Package
Observable Bond, any such determination shall be made by reference
to the terms of the relevant obligation in effect immediately prior
to the Asset Package Credit Event.
(H) If "Subordinated European Insurance Terms" is specified as
applicable in the relevant Pricing Supplement, if an obligation
would otherwise satisfy the "Maximum Maturity" Deliverable
Obligation Characteristic, the existence of any Solvency Capital
Provisions in such obligation shall not cause it to fail to satisfy
such Deliverable Obligation Characteristic.
For the avoidance of doubt the provisions of this paragraph (ii)
apply in respect of the definitions of Obligation and Deliverable
Obligation as the context admits.
"Deliverable Obligation Terms" has the meaning set forth in the
relevant Credit Derivatives Auction Settlement Terms.
"Delivery Agent" has the meaning give to that term in Credit
Linked Condition 4.
"Delivery Date" means, with respect to a Deliverable Obligation
or an Asset Package, the date such Deliverable Obligation is
Delivered (or deemed to be Delivered pursuant to the definition of
"Deliver" above).
"Domestic Currency" means the currency specified as such in the
relevant Pricing Supplement and any successor currency thereto (or
if no such currency is specified, the lawful currency and any
successor currency of (a) the Reference Entity, if the Reference
Entity is a Sovereign, or (b) the jurisdiction in which the
Reference Entity is organised, if the Reference Entity is not a
Sovereign).
"Domestic Law" means each of the laws of (a) the Reference
Entity, if such Reference Entity is a Sovereign, or (b) the
jurisdiction in which the Reference Entity is organised, if such
Reference Entity is not a Sovereign.
"Downstream Affiliate" means an entity whose outstanding Voting
Shares were, at the date of issuance of the Qualifying Guarantee,
more than fifty per cent.-owned, directly or indirectly, by the
Reference Entity. As used herein, "Voting Shares" means the shares
or other interests that have the power to elect the board of
directors or similar governing body of an entity.
"Due and Payable Amount" means the amount that is due and
payable by the Reference Entity under the obligation whether by
reason of maturity, acceleration, termination or otherwise
(excluding sums in respect of default interest, indemnities, tax
gross-ups and other similar amounts) less all or any portion of
such amount which, pursuant to the terms of the obligation (a) is
subject to any Prohibited Action, or (b) may otherwise be reduced
as a result of the effluxion of time or the occurrence or
non-occurrence of an event or circumstance (other than by way of
(i) payment or (ii) a Permitted Contingency), in each case,
determined in accordance with the terms of the obligation in effect
on either (A) the relevant PSN Effective Date (or if the terms of
the obligation are amended after such date but on or prior to the
Delivery Date, the Delivery Date), or (B) the relevant Valuation
Date, as applicable.
"Eligible Information" means information which is publicly
available or which can be made public without violating any law,
agreement, understanding or other restriction regarding the
confidentiality of such information.
"Eligible Transferee" means:
(a) any:
(i) bank or other financial institution;
(ii) insurance or reinsurance company;
(iii) mutual fund, unit trust or similar collective investment
vehicle (other than an entity described in sub-paragraph (c)
below); and
(iv) registered or licensed broker or dealer (other than a
natural person or proprietorship),
provided, however, in each case that such entity has total
assets of at least US$ 500 million;
(b) an Affiliate of an entity specified in sub-paragraph (a);
(c) each of a corporation, partnership, proprietorship,
organisation, trust or other entity:
(i) that is an investment vehicle (including, without
limitation, any hedge fund, issuer of collateralised debt
obligations, commercial paper conduit or other special purpose
vehicle) that (A) has total assets of at least US$ 100 million or
(B) is one of a group of investment vehicles under common control
or management having, in aggregate, total assets of at least US$
100 million; or
(ii) that has total assets of at least US$ 500 million; or
(iii) the obligations of which under an agreement, contract or
transaction are guaranteed or otherwise supported by a letter of
credit or keepwell, support, or other agreement by an entity
described in sub-paragraphs (a), (b), (c)(i) or (d); or
(d) any Sovereign; or
(e) any entity or organization established by treaty or other
arrangement between two or more Sovereigns including, without
limiting the foregoing, the International Monetary Fund, European
Central Bank, International Bank for Reconstruction and Development
and European Bank for Reconstruction and Development.
All references in this definition to US$ include equivalent
amounts in other currencies in each case as determined by the
Calculation Agent.
"Entitlement" means following the occurrence of a Credit Event
Determination Date in respect of a Reference Entity and in respect
of the related Credit Event Portion of a Note, Deliverable
Obligations, as selected by the Calculation Agent, with:
(a) in the case of Deliverable Obligations that are Borrowed
Money, an Outstanding Principal Balance; or
(b) in the case of Deliverable Obligations that are not Borrowed
Money, a Due and Payable Amount,
(or, in the case of either (a) or (b), the equivalent Currency
Amount of any such amount), in an aggregate amount as of the
relevant Delivery Date equal to the relevant Credit Event Portion
(the "Initial Deliverable Obligation"); less
(i) if Unwind Costs are specified as applying in the relevant
Pricing Supplement, Deliverable Obligations with a market value
determined by the Calculation Agent on the Business Day selected by
the Calculation Agent falling during the period from and including
the Credit Event Determination Date to and including the Delivery
Date (the "Market Value Determination Date") equal to Unwind Costs;
and
(ii) to the extent that the Issuer in its sole and absolute
discretion determines that it is not satisfied that any Expenses
have been or will be paid in full by the relevant Noteholder on or
prior to the relevant Credit Settlement Date, an amount of
Deliverable Obligations with a market value determined by the
Calculation Agent at the time of calculation of the Entitlement in
aggregate at least equal to such Expenses.
"Excluded Deliverable Obligation" means:
(a) any obligation of a Reference Entity specified as such or of
a type described in the relevant Pricing Supplement;
(b) any principal only component of a Bond from which some or
all of the interest components have been stripped; and
(c) if Asset Package Delivery is applicable, any obligation
issued or incurred on or after the date of the relevant Asset
Package Credit Event.
"Excluded Obligation" means:
(a) any obligation of a Reference Entity specified as such or of
a type described in the relevant Pricing Supplement;
(b) if "Financial Reference Entity Terms" is specified as
applicable in the relevant Pricing Supplement and (i) the relevant
Reference Obligation or Prior Reference Obligation, as applicable,
is a Senior Obligation, or (ii) there is no Reference Obligation or
Prior Reference Obligation, then for purposes of determining
whether a Governmental Intervention or Restructuring has occurred,
any Subordinated Obligation; and
(c) if "Financial Reference Entity Terms" is specified as
applicable in the relevant Pricing Supplement and the relevant
Reference Obligation or Prior Reference Obligation, as applicable,
is a Subordinated Obligation, then for purposes of determining
whether a Governmental Intervention or Restructuring has occurred,
any Further Subordinated Obligation.
"Excluded Valuation Obligation" means:
(a) any obligation of a Reference Entity specified as such or of
a type described in the relevant Pricing Supplement;
(b) any principal only component of a Bond from which some or
all of the interest components have been stripped; and
(c) if Asset Package Delivery is applicable, any obligation
issued or incurred on or after the date of the relevant Asset
Package Credit Event.
"Exercise Cut-off Date" means either:
(a) with respect to an M(M)R Restructuring and any Note (x) to
which paragraph (a) of the definition of Credit Event Determination
Date above applies or (y) to which Credit Linked Condition 2(a)(ii)
or Credit Linked Condition 5(a)(i)(y) applies:
(i) if the DC Secretary publishes a Final List applicable to the
Transaction Auction Settlement Terms and/or Parallel Auction
Settlement Terms, the date that is five Relevant City Business Days
following the date on which such Final List is published; or
(ii) otherwise, the date that is fourteen calendar days
following the relevant No Auction Announcement Date; or
(b) with respect to a Credit Event where paragraph (a) of the
definition of Credit Event Determination Date does not apply,
unless paragraph (a)(y) above applies, the relevant Non-Standard
Exercise Cut-off Date,
or, in each case, such other date as the relevant Credit
Derivatives Determinations Committee Resolves.
"Expenses" means all costs, taxes, duties and/or expenses
including stamp duty, stamp duty reserve tax and/or other costs,
duties or taxes arising from the Delivery or attempted Delivery of
the Entitlement in respect of a Note and any related receipt of or
attempt to receive the Deliverable Obligations that comprise or
would or may comprise the Entitlement, as applicable, by the Issuer
and/or its Affiliates, as applicable, under any Hedging
Arrangements.
"Extension Date" means the latest of:
(a) the Scheduled Maturity Date;
(b) the Grace Period Extension Date if (i) "Failure to Pay" and
"Grace Period Extension" are specified as applying in the relevant
Pricing Supplement, and (ii) the Potential Failure to Pay with
respect to the relevant Failure to Pay occurs on or prior to the
Scheduled Maturity Date; and
(c) the Repudiation/Moratorium Evaluation Date (if any) if
"Repudiation/Moratorium" is specified as applicable in the relevant
Pricing Supplement, as applicable.
"Failure to Pay" means after the expiration of any applicable
Grace Period (after the satisfaction of any conditions precedent to
the commencement of such Grace Period), the failure by the
Reference Entity to make, when and where due, any payments in an
aggregate amount of not less than the Payment Requirement under one
or more Obligations in accordance with the terms of such
Obligations at the time of such failure provided that, if an
occurrence that would constitute a Failure to Pay (a) is a result
of a redenomination that occurs as a result of action taken by a
Governmental Authority which is of general application in the
jurisdiction of such Governmental Authority and (b) a freely
available market rate of conversion existed at the time of the
redenomination, then such occurrence will be deemed not to
constitute a Failure to Pay unless the redenomination itself
constituted a reduction in the rate or amount of interest,
principal or premium payable (as determined by reference to such
freely available market rate of conversion) at the time of such
redenomination.
"Fallback Settlement Method" means Cash Settlement. For the
avoidance of doubt, the Fallback Settlement only applies in respect
of Credit Linked Notes for which the Settlement Method is Auction
Settlement.
"Final List" has the meaning given in the DC Rules.
"Final Price" means:
(a) if there is more than one Valuation Obligation, the weighted
average of the prices of each such Valuation Obligation, each
expressed as a percentage of its Outstanding Principal Balance or
Due and Payable Amount, as applicable; or
(b) otherwise, the price of the relevant Valuation Obligation,
expressed as a percentage of its Outstanding Principal Balance or
Due and Payable Amount, as applicable,
in either case determined in accordance with the Valuation
Method specified in the relevant Pricing Supplement or, where
applicable, Credit Linked Condition 13.
Notwithstanding the foregoing and anything to the contrary
herein (including, without limitation, that the Settlement Method
is not Physical Settlement), if Asset Package Delivery is
applicable and a Prior Deliverable Obligation or a Package
Observable Bond is specified in the Valuation Obligation
Notification, (i) the related Asset Package may be treated as the
Valuation Obligation in lieu of such Prior Deliverable Obligation
or Package Observable Bond, and such Asset Package shall be treated
as having the same currency, Outstanding Principal Balance or Due
and Payable Amount, as applicable, as the Prior Deliverable
Obligation or Package Observable Bond to which it corresponds had
immediately prior to the Asset Package Credit Event, (ii) if such
Asset Package is zero, its price shall be deemed to be zero per
cent. on the relevant Valuation Date and (iii) if the Calculation
Agent determines that a price cannot reasonably determined in
accordance with the Valuation Method, then the price of the Asset
Package will be calculated by the Calculation Agent as equal to the
fair market value of the Asset Package, expressed as a percentage
of its Outstanding Principal Balance or Due and Payable
Amount, as applicable.
The Calculation Agent shall make available for inspection by
Noteholders on request (i) each Quotation for a Valuation Date that
it receives in connection with the calculation of the Final Price
and (ii) a written computation showing its calculation of the Final
Price.
"Fixed Cap" means, with respect to a Guarantee, a specified
numerical limit or cap on the liability of the Reference Entity in
respect of some or all payments due under the Underlying
Obligation, provided that a Fixed Cap shall exclude a limit or cap
determined by reference to a formula with one or more variable
inputs (and for these purposes, the outstanding principal or other
amounts payable pursuant to the Underlying Obligation shall not be
considered to be variable inputs).
"Full Quotation" means, in accordance with the Quotation Method
each firm quotation obtained from a Quotation Dealer at the
Valuation Time, to the extent reasonably practicable, for an amount
of the Valuation Obligation with an Outstanding Principal Balance
or Due and Payable Amount equal to the Quotation Amount.
"Fully Transferable Obligation" means a Deliverable Obligation
or Valuation Obligation, as applicable, that is either
Transferable, in the case of Bonds, or capable of being assigned or
novated to all Eligible Transferees without the consent of any
person being required in the case of any Deliverable Obligation or
Valuation Obligation other than Bonds, in each case, as of each
such date as the Calculation Agent determines relevant for purposes
of the Hedging Arrangements or, if none at the relevant time, both
the relevant PSN Effective Date and the relevant Delivery Date or
the date of delivery of the Valuation Obligation Notification, as
applicable. Any requirement that notification of novation,
assignment or transfer of a Deliverable Obligation or Valuation
Obligation be provided to a trustee, fiscal agent, administrative
agent, clearing agent or paying agent for a Deliverable Obligation
or Valuation Obligation shall not be considered as a requirement
for consent for purposes of this definition of "Fully Transferable
Obligation".
"Further Subordinated Obligation" means, in respect of a
Reference Entity, if the relevant Reference Obligation or Prior
Reference Obligation, as applicable, is a Subordinated Obligation,
any obligation which is Subordinated thereto.
"Governmental Authority" means:
(a) any de facto or de jure government (or any agency,
instrumentality, ministry or department thereof);
(b) any court, tribunal, administrative or other governmental,
inter-governmental or supranational body;
(c) any authority or any other entity (private or public) either
designated as a resolution authority or charged with the regulation
or supervision of the financial markets (including a central bank)
of the Reference Entity or some or all of its obligations; or
(d) any other authority which is analogous to any of the
entities specified in paragraphs (a) to (c) above.
"Governmental Intervention" means that, with respect to one or
more Obligations and in relation to an aggregate amount of not less
than the Default Requirement, any one or more of the following
events occurs as a result of action taken or an announcement made
by a Governmental Authority pursuant to, or by means of, a
restructuring and resolution law or regulation (or any other
similar law or regulation), in each case, applicable to the
Reference Entity in a form which is binding, irrespective of
whether such event is expressly provided for under the terms of
such Obligation:
(a) any event which would affect creditors' rights so as to cause:
(i) a reduction in the rate or amount of interest payable or the
amount of scheduled interest accruals (including by way of
redenomination);
(ii) a reduction in the amount of principal or premium payable
at redemption (including by way of redenomination);
(iii) a postponement or other deferral of a date or dates for
either (I) the payment or accrual of interest, or (II) the payment
of principal or premium; or
(iv) a change in the ranking in priority of payment of any
Obligation, causing the Subordination of such Obligation to any
other Obligation;
(b) an expropriation, transfer or other event which mandatorily
changes the beneficial holder of the Obligation;
(c) a mandatory cancellation, conversion or exchange; or
(d) any event which has an analogous effect to any of the events
specified in paragraphs (a) to (c).
For purposes of this definition of Governmental Intervention,
the term Obligation shall be deemed to include Underlying
Obligations for which the Reference Entity is acting as provider of
a Guarantee.
"Grace Period" means:
(a) subject to paragraphs (b) and (c) below, the applicable
grace period with respect to payments under and in accordance with
the terms of the relevant Obligation in effect as of the date as of
which such Obligation is issued or incurred;
(b) if "Grace Period Extension" is specified as applying in the
relevant Pricing Supplement, a Potential Failure to Pay has
occurred on or prior to the Scheduled Maturity Date and the
applicable grace period cannot, by its terms, expire on or prior to
the Scheduled Maturity Date, the Grace Period will be deemed to be
the lesser of such grace period and the period specified as such in
the relevant Pricing Supplement or, if no period is specified in
the relevant Pricing Supplement, thirty (30) calendar days; and
(c) if, as of the date as of which an Obligation is issued or
incurred, no grace period with respect to payments or a grace
period with respect to payments of less than three Grace Period
Business Days is applicable under the terms of such Obligation, a
Grace Period of three Grace Period Business Days shall be deemed to
apply to such Obligation; provided that, unless Grace Period
Extension is specified as applying in the relevant Pricing
Supplement, such deemed Grace Period shall expire no later than the
Scheduled Maturity Date.
"Grace Period Business Day" means a day on which commercial
banks and foreign exchange markets are generally open to settle
payments in the place or places and on the days specified for that
purpose in the relevant Obligation and if a place or places are not
so specified (a) if the Obligation Currency is the euro, a day on
which the TARGET2 System is open, or (b) otherwise, a day on which
commercial banks and foreign exchange markets are generally open to
settle payments in the principal financial city in the jurisdiction
of the Obligation Currency.
"Grace Period Extension Date" means, if:
(a) "Grace Period Extension" is specified as applying in the
relevant Pricing Supplement; and
(b) a Potential Failure to Pay occurs on or prior to the Scheduled Maturity Date,
the date falling the number of days in the Grace Period after
the date of such Potential Failure to Pay. If "Grace Period
Extension" is not specified as applicable in the relevant Pricing
Supplement, Grace Period Extension shall not apply.
"Guarantee" means a Relevant Guarantee or a guarantee which is
the Reference Obligation.
"Hedging Arrangements" means any Representative Auction-Settled
Transaction (the "Hedging Representative Auction-Settled
Transaction") that is to be entered into by the Issuer and/or any
of its Affiliates or agents pursuant to the Transaction Auction
Settlement Terms (if any) relating to any relevant Credit Event
(the "Hedging Transaction Auction Settlement Terms") in order that
the Issuer may satisfy any of its physical settlement obligations
under the Credit Linked Notes, and (without duplication) any
underlying or related transaction(s), swap(s), asset(s), financing
or other arrangement(s) or trading position(s) the Issuer and/or
any of its Affiliates or agents may enter into or hold from time to
time (including, if applicable, on a portfolio basis) to hedge
directly or indirectly and whether in whole or in part the credit
or other price risk or funding of the Issuer issuing and performing
its obligations with respect to the Credit Linked Notes.
"Hedging Auction" means the "Auction" as such term shall be
defined in the relevant Hedging Transaction Auction Settlement
Terms.
"Hedging Auction Final Price" shall have the meaning as shall be
set forth in the relevant Hedging Transaction Auction Settlement
Terms.
"Hedge Disruption Event" means in the opinion of the Calculation
Agent any event as a result of which the Issuer and/or any of its
Affiliates has not received the relevant Deliverable Obligations
under the terms of the Hedging Arrangements (if any).
"Hedge Disruption Obligation" means a Deliverable Obligation
included in the Entitlement which, on the Credit Settlement Date
for such Deliverable Obligation, the Calculation Agent determines
cannot be Delivered as a result of a Hedge Disruption Event.
"Interest Credit Outstanding Nominal Amount" has the meaning
given to that term in Credit Linked Condition 5.
"Intervening Period" means such period of time as any person
other than the relevant Noteholder shall continue to be registered
as the legal owner of any securities or other obligations
comprising the Entitlement.
"ISDA" means the International Swaps and Derivatives
Association, Inc.
"Largest Asset Package" means, in respect of a Prior Deliverable
Obligation or a Package Observable Bond, as the case may be, the
package of Assets for which the greatest amount of principal has
been or will be exchanged or converted (including by way of
amendment), as determined by the Calculation Agent by reference to
Eligible Information. If this cannot be determined, the Largest
Asset Package will be the package of Assets with the highest
immediately realizable value, determined by the Calculation Agent
in accordance with the methodology, if any, determined by the
relevant Credit Derivatives Determinations Committee or, if none,
as determined by the Calculation Agent in its sole and absolute
discretion by reference to such source(s) as it determines
appropriate.
"Latest Maturity Restructured Bond or Loan" has the meaning
given to that term in the definition of "Restructuring Maturity
Limitation Date".
"Limitation Date" means the first of 20 March, 20 June, 20
September or 20 December in any year to occur on or immediately
following the date that is one of the following numbers of years
after the Restructuring Date: 2.5 years (the "2.5-year Limitation
Date"), 5 years, 7.5 years, 10 years (the "10-year Limitation
Date"), 12.5 years, 15 years, or 20 years, as applicable.
Limitation Dates shall not be subject to adjustment in accordance
with any Business Day Convention.
"M(M)R Restructuring" means a Restructuring Credit Event in
respect of which either Mod R or Mod Mod R is specified as
applicable in the relevant Pricing Supplement.
"Market Value" means, with respect to the Valuation Obligation
on a Valuation Date:
(a) if more than three Full Quotations are obtained, the
arithmetic mean of such Full Quotations, disregarding the Full
Quotations having the highest and lowest values (and, if more than
one such Full Quotations have the same highest value or lowest
value, then one of such highest or lowest Full Quotations shall be
disregarded);
(b) if exactly three Full Quotations are obtained, the Full
Quotation remaining after disregarding the highest and lowest Full
Quotations (and, if more than one such Full Quotations have the
same highest value or lowest value, then one of such highest or
lowest Full Quotations shall be disregarded);
(c) if exactly two Full Quotations are obtained, the arithmetic
mean of such Full Quotations;
(d) if fewer than two Full Quotations and a Weighted Average
Quotation is obtained, such Weighted Average Quotation;
(e) if fewer than two Full Quotations are obtained and no
Weighted Average Quotation is obtained, subject as provided in the
definition of Quotation, an amount the Calculation Agent shall
determine on the next Business Day on which two or more Full
Quotations or a Weighted Average Quotation is obtained; and
(f) if two or more Full Quotations or a Weighted Average
Quotation are not obtained on or prior to the tenth Business Day
following the applicable Valuation Date the Market Value shall be
any Full Quotation obtained from a Quotation Dealer at the
Valuation Time on such tenth Business Day, or if no Full Quotation
is obtained, the weighted average of any firm quotations for the
Valuation Obligation obtained from Quotation Dealers at the
Valuation Time on such tenth Business Day with respect to the
aggregate portion of the Quotation Amount for which such quotations
were obtained and a quotation deemed to be zero for the balance of
the Quotation Amount for which firm quotations were not obtained on
such day.
"Maturity Date" has the meaning given to it in the relevant
Pricing Supplement.
"Minimum Quotation Amount" means the amount specified as such in
the relevant Pricing Supplement (or its equivalent in the relevant
Obligation Currency) or, if no amount is so specified, the lower of
(a) USD1,000,000 (or its equivalent in the relevant Obligation
Currency) and (b) the Quotation Amount.
"Modified Eligible Transferee" means any bank, financial
institution or other entity which is regularly engaged in or
established for the purpose of making, purchasing or investing in
loans, securities and other financial assets.
"Modified Restructuring Maturity Limitation Date" means, with
respect to a Deliverable Obligation or Valuation Obligation, as
applicable, the Limitation Date occurring on or immediately
following the Scheduled Maturity Date. Subject to the foregoing, if
the Scheduled Maturity Date is later than the 10 year Limitation
Date, the Modified Restructuring Maturity Limitation Date will be
the Scheduled Maturity Date.
"Movement Option" means, with respect to an M(M)R Restructuring
for which a No Auction Announcement Date has occurred pursuant to
paragraph (b) or (c)(ii) of the definition of No Auction
Announcement Date, the option of the Issuer in its sole and
absolute discretion to apply to the Credit Linked Notes, for
purposes of settlement, the Parallel Auction Settlement Terms, if
any, for purposes of which the Permissible Deliverable Obligations
are more limited than the Deliverable Obligations that could apply
in respect of the Reference Transaction (provided that if more than
one such set of Parallel Auction Settlement Terms are published,
the Parallel Auction Settlement Terms specifying the greatest
number of such Permissible Deliverable Obligations shall apply). If
no Notice to Exercise Movement Option is delivered by the Issuer on
or prior to the Movement Option Cut-off Date, the Credit Linked
Notes will be settled in accordance with the Fallback Settlement
Method. If a Notice to Exercise Movement Option is delivered by the
Issuer on or prior to the Movement Option Cut-off Date, such event
will be notified to Noteholders in accordance with Condition 14
(Notices). For the avoidance of doubt any failure to provide such a
notice to Noteholders will not constitute an Event of Default under
the Notes and will not affect the validity of any of the foregoing
provisions.
"Movement Option Cut-off Date" means the date that is one
Relevant City Business Day following the Exercise Cut-off Date, or
such other date as the relevant Credit Derivatives Determinations
Committee has Resolved.
"Next Currency Fixing Time" means 4:00 p.m. (London time) on the
London Business Day immediately following the date on which the
Notice of Physical Settlement or relevant Physical Settlement
Amendment Notice or relevant Partial Cash Settlement Notice, as
applicable, is effective. For the purposes of determining the Next
Currency Fixing Time, "London Business Day" means a day on which
banks and foreign exchange markets are generally open to settle
payments in London.
"No Auction Announcement Date" means, with respect to a Credit
Event, the date on which the DC Secretary first publicly announces
that:
(a) no Transaction Auction Settlement Terms and, if applicable,
no Parallel Auction Settlement Terms will be published;
(b) following the occurrence of an M(M)R Restructuring no
Transaction Auction Settlement Terms will be published, but
Parallel Auction Settlement Terms will be published; or
(c) the relevant Credit Derivatives Determinations Committee has
Resolved that no Auction will be held following a prior public
announcement by the DC Secretary to the contrary, in circumstances
where either:
(i) no Parallel Auction will be held; or
(ii) one or more Parallel Auctions will be held.
"Non-Conforming Reference Obligation" means a Reference
Obligation which is not a Conforming Reference Obligation.
"Non-Conforming Substitute Reference Obligation" means an
obligation which would be a Deliverable Obligation determined in
accordance with paragraph (a) of the definition of Deliverable
Obligation above on the Substitution Date but for one or more of
the same reasons which resulted in the Reference Obligation
constituting a Non-Conforming Reference Obligation on the date it
was issued or incurred and/or immediately prior to the Substitution
Event Date (as applicable).
"Non-Financial Instrument" means any Asset which is not of the
type typically traded in, or suitable for being traded in,
financial markets.
"Non-Standard Credit Event Determination Date" means with
respect to a Credit Event:
(a) subject to paragraph (b) of this definition, the Notice
Delivery Date, if the Notice Delivery Date occurs during either the
Notice Delivery Period or the Post Dismissal Additional Period,
provided that neither (i) a DC Credit Event Announcement has
occurred nor (ii) a DC No Credit Event Announcement has occurred,
in each case, with respect to the Credit Event specified in the
Credit Event Notice; or
(b) notwithstanding paragraph (a) of this definition, if a DC
Credit Event Announcement has occurred and the Credit Event
Resolution Request Date has occurred on or prior to the last day of
the Notice Delivery Period (including prior to the Trade Date)
either:
(i) the Credit Event Resolution Request Date, if either:
(A)
(1) "Auction Settlement" is not the applicable Settlement Method;
(2) the relevant Credit Event is not an M(M)R Restructuring; and
(3) the Trade Date occurs on or prior to the date of the DC Credit Event Announcement; or
(B)
(1) the relevant Credit Event is an M(M)R Restructuring; and
(2) a Credit Event Notice is delivered and is effective on or
prior to the fifth Business Day following the Non-Standard Exercise
Cut-off Date, or
(ii) the first date on which a Credit Event Notice is delivered
and is effective during either the Notice Delivery Period or the
period from and including the date of the DC Credit Event
Announcement to and including the fifth Business Day following the
date that is fourteen calendar days thereafter (provided, in each
case, that the relevant Credit Event Resolution Request Date
occurred on or prior to the end of the last day of the Notice
Delivery Period (including prior to the Trade Date)), if
either:
(A)
(1) "Auction Settlement" is not the applicable Settlement Method;
(2) the relevant Credit Event is not an M(M)R Restructuring; and
(3) the Trade Date occurs following the date of the related DC
Credit Event Announcement and on or prior to a DC Announcement
Coverage Cut-off Date; or
(B) the Calculation Agent determines this is otherwise
consistent with the Hedging Arrangements (if any at the relevant
time),
provided that no Credit Event Notice specifying an M(M)R
Restructuring as the only Credit Event has previously been
delivered (I) unless the M(M)R Restructuring specified in such
Credit Event Notice is also the subject of the DC Credit Event
Question resulting in the occurrence of the Credit Event Resolution
Request Date or (II) unless the Calculation Agent determines this
is otherwise consistent with the Hedging Arrangements or, if none
at the relevant time, (x) unless, and to the extent that, the
Partial Redemption Amount specified in any such Credit Event Notice
was less than the relevant Reference Entity Notional Amount or (y)
unless the Deliverable Obligations set out on the Final List
applicable to the Transaction Auction Settlement Terms are
identical to the Permissible Deliverable Obligations.
"Non-Standard Exercise Cut-off Date" means, with respect to a
Credit Event to which paragraph (a) of the definition of Credit
Event Determination Date does not apply:
(a) if such Credit Event is not an M(M)R Restructuring, either:
(i) the Relevant City Business Day prior to the Auction Final
Price Determination Date, if any;
(ii) the Relevant City Business Day prior to the Auction Cancellation Date, if any; or
(iii) the date that is fourteen calendar days following the No
Auction Announcement Date, if any, as applicable; or
(b) if such Credit Event is an M(M)R Restructuring and:
(i) the DC Secretary publishes a Final List applicable to the
Transaction Auction Settlement Terms and/or Parallel Auction
Settlement Terms, the date that is five Relevant City Business Days
following the date on which such Final List is published; or
(ii) otherwise, the date that is fourteen calendar days
following the relevant No Auction Announcement Date.
"Non-Standard Reference Obligation" means, in respect of the
Reference Entity, the Original Non-Standard Reference Obligation or
if a Substitute Reference Obligation has been determined, the
Substitute Reference Obligation.
"Non-Transferable Instrument" means any Asset which is not
capable of being transferred to institutional investors, excluding
due to market conditions.
"Notice Delivery Date" means the first date on which both an
effective Credit Event Notice and, unless "Notice of Publicly
Available Information" is specified as not applicable in the
relevant Pricing Supplement, an effective Notice of Publicly
Available Information, have been delivered by the Calculation
Agent.
"Notice Delivery Period" means the period from and including the
Trade Date to and including the fifth Business Day following the
date that is fourteen (14) calendar days after the Extension
Date.
"Notice of Physical Settlement" has the meaning given to that
term in Credit Linked Condition 4 or Credit Linked Condition
5(a)(ii), as applicable.
"Notice of Publicly Available Information" means a notice from
the Calculation Agent to the Issuer (which the Calculation Agent
has the right but not the obligation to deliver) that cites
Publicly Available Information confirming the occurrence of the
Credit Event or Potential Repudiation/Moratorium, as applicable,
described in the Credit Event Notice or Repudiation/Moratorium
Extension Notice. The notice given must contain a copy or
description in reasonable detail, of the relevant Publicly
Available Information. If "Notice of Publicly Available
Information" is specified as applicable in the relevant Pricing
Supplement and a Credit Event Notice or Repudiation/Moratorium
Extension Notice, as applicable, contains Publicly Available
Information, such Credit Event Notice or Repudiation/Moratorium
Extension Notice will also be deemed to be a Notice of Publicly
Available Information. A Notice of Publicly Available Information
shall be subject to the requirements regarding notices in Credit
Linked Condition 16.
"Notice to Exercise Movement Option" means, with respect to
Notes for which (a) M(M)R Restructuring is applicable and (b) the
Fallback Settlement Method would otherwise be applicable pursuant
to the Auction Settlement provisions, a notice from the Issuer to
the Calculation Agent that (i) specifies the Parallel Auction
Settlement Terms applicable in accordance with the definition of
Movement Option and (ii) is effective on or prior to the Movement
Option Cut-off Date.
"Number of Valuation Business Days" means:
(a) if Fixed Valuation Date is specified as applicable in the
relevant Pricing Supplement, the number of Business Days specified
therein (or, if the number of Business Days is not specified, five
Business Days); or
(b) otherwise, the number of Business Days selected by the Issuer.
"Obligation" means:
(a) any obligation of the Reference Entity (either directly or
as provider of a Relevant Guarantee) determined pursuant to the
method described in "Method for Determining Obligations" below);
and
(b) the Reference Obligation,
in each case unless it is an Excluded Obligation.
"Method for Determining Obligations". For the purposes of
paragraph (a) of this definition of "Obligation", the term
"Obligation" may be defined as the obligation of each Reference
Entity described by the Obligation Category specified in the
relevant Pricing Supplement, and having each of the Obligation
Characteristics (if any) specified in the relevant Pricing
Supplement, in each case, immediately prior to the Credit Event
which is the subject of either the Credit Event Notice or the DC
Credit Event Question resulting in the occurrence of the Credit
Event Resolution Request Date, as applicable. The following terms
shall have the following meanings:
(i) "Obligation Category" means Payment, Borrowed Money,
Reference Obligation Only, Bond, Loan, or Bond or Loan, only one of
which shall be specified in the relevant Pricing Supplement,
where:
(a) "Payment" means any obligation (whether present or future,
contingent or otherwise) for the payment or repayment of money,
including, without limitation, Borrowed Money;
(b) "Borrowed Money" means any obligation (excluding an
obligation under a revolving credit arrangement for which there are
no outstanding unpaid drawings in respect of principal) for the
payment or repayment of borrowed money (which term shall include,
without limitation, deposits and reimbursement obligations arising
from drawings pursuant to letters of credit);
(c) "Reference Obligation Only" means any obligation that is a
Reference Obligation and no Obligation Characteristics shall be
applicable to Reference Obligation Only;
(d) "Bond" means any obligation of a type included in the
"Borrowed Money" Obligation Category that is in the form of, or
represented by, a bond, note (other than notes delivered pursuant
to Loans), certificated debt security or other debt security and
shall not include any other type of Borrowed Money;
(e) "Loan" means any obligation of a type included in the
"Borrowed Money" Obligation Category that is documented by a term
loan agreement, revolving loan agreement or other similar credit
agreement and shall not include any other type of Borrowed Money;
and
(f) "Bond or Loan" means any obligation that is either a Bond or a Loan.
(ii) "Obligation Characteristics" means any one or more of Not
Subordinated, Specified Currency, Not Sovereign Lender, Not
Domestic Currency, Not Domestic Law, Listed and Not Domestic
Issuance specified in the relevant Pricing Supplement, where:
(a) "Not Subordinated" means an obligation that is not
Subordinated to (1) the Reference Obligation or, (2) the Prior
Reference Obligation, if applicable;
(b) "Subordination" means, with respect to an obligation (the
"Second Obligation") and another obligation of the Reference Entity
to which such obligation is being compared (the "First
Obligation"), a contractual, trust or other similar arrangement
providing that (I) upon the liquidation, dissolution,
reorganisation or winding-up of the Reference Entity, claims of the
holders of the First Obligation are required to be satisfied prior
to the claims of the holders of the Second Obligation or (II) the
holders of the Second Obligation will not be entitled to receive or
retain principal payments in respect of their claims against the
Reference Entity at any time that the Reference Entity is in
payment arrears or is otherwise in default under the First
Obligation. "Subordinated" will be construed accordingly. For
purposes of determining whether Subordination exists or whether an
obligation is Subordinated with respect to another obligation to
which it is being compared, (x) the existence of preferred
creditors arising by operation of law or of collateral, credit
support or other credit enhancement or security arrangements shall
not be taken into account, except that, notwithstanding the
foregoing, priorities arising by operation of law shall be taken
into account where the Reference Entity is a Sovereign and (y) in
the case of the Reference Obligation or the Prior Reference
Obligation, as applicable, the ranking in priority of payment shall
be determined as of the date as of which it was issued or incurred
(or in circumstances where the Reference Obligation or a Prior
Reference Obligation is the Standard Reference Obligation and
"Standard Reference Obligation" is applicable, then the priority of
payment of the Reference Obligation or the Prior Reference
Obligation, as applicable, shall be determined as of the date of
selection) and, in each case, shall not reflect
any change to such ranking in priority of payment after such
date; and
(c) "Prior Reference Obligation" means, in circumstances where
there is no Reference Obligation applicable to the relevant Notes,
(I) the Reference Obligation most recently applicable thereto, if
any, and otherwise, (II) the obligation specified in the relevant
Pricing Supplement as the Reference Obligation, if any, if such
Reference Obligation was redeemed on or prior to the Trade Date and
otherwise, (III) any unsubordinated Borrowed Money obligation of
the Reference Entity;
(d) "Specified Currency" means an obligation that is payable in
the currency or currencies specified as such in the relevant
Pricing Supplement (or, if Specified Currency is specified in the
relevant Pricing Supplement and no currency is so specified, any
Standard Specified Currency) provided that if the euro is a
Specified Currency, "Specified Currency" shall also include an
obligation that was previously payable in the euro, regardless of
any redenomination thereafter if such redenomination occurred as a
result of action taken by a Governmental Authority of a Member
State of the European Union which is of general application in the
jurisdiction of such Governmental Authority;
(e) "Not Sovereign Lender" means any obligation that is not
primarily owed to (A) a Sovereign or (B) any entity or organization
established by treaty or other arrangement between two or more
Sovereigns including, without limiting the foregoing, the
International Monetary Fund, European Central Bank, International
Bank for Reconstruction and Development and European Bank for
Reconstruction and Development, which shall include, without
limitation, obligations generally referred to as "Paris Club
debt";
(f) "Not Domestic Currency" means any obligation that is payable
in any currency other than applicable Domestic Currency provided
that a Standard Specified Currency shall not constitute the
Domestic Currency;
(g) "Not Domestic Law" means any obligation that is not governed
by applicable Domestic Law, provided that the laws of England and
the laws of the State of New York shall not constitute a Domestic
Law;
(h) "Listed" means an obligation that is quoted, listed or
ordinarily purchased and sold on an exchange; and
(i) "Not Domestic Issuance" means any obligation other than an
obligation that was issued (or reissued, as the case may be) or
intended to be offered for sale primarily in the domestic market of
the Reference Entity. Any obligation that is registered or, as a
result of some other action having been taken for such purpose, is
qualified for sale outside the domestic market of the Reference
Entity (regardless of whether such obligation is also registered or
qualified for sale within the domestic market of the Reference
Entity) shall be deemed not to be issued (or reissued, as the case
may be), or intended to be offered for sale primarily in the
domestic market of the Reference Entity.
"Obligation Acceleration" means one or more Obligations in an
aggregate amount of not less than the Default Requirement have
become due and payable before they would otherwise have been due
and payable as a result of, or on the basis of, the occurrence of a
default, event or default or other similar condition or event
(however described), other than a failure to make any required
payment, in respect of the Reference Entity under one or more
Obligations.
"Obligation Currency" means the currency or currencies in which
the Obligation is denominated.
"Obligation Default" means one or more Obligations in an
aggregate amount of not less than the Default Requirement have
become capable of being declared due and payable before they would
otherwise have been due and payable as a result of, or on the basis
of, the occurrence of a default, event of default, or other similar
condition or event (however described), other than a failure to
make any required payment, in respect of the Reference Entity under
one or more Obligations.
"Original Non-Standard Reference Obligation" means the
obligation of the Reference Entity (either directly or as provider
of a guarantee) which is specified as the Reference Obligation in
respect of such Reference Entity in the relevant Pricing Supplement
(if any is so specified) provided that if an obligation is not an
obligation of the Reference Entity, such obligation will not
constitute a valid Original Non-Standard Reference Obligation for
purposes of the relevant Notes (other than for the purposes of
determining the Seniority Level and for the "Not Subordinated"
Obligation Characteristic or "Not Subordinated" Deliverable
Obligation Characteristic) unless the relevant Notes are Reference
Obligation Only Notes.
"Outstanding Amount" (a) in the case of a Deliverable
Obligation, has the meaning given to that term in Credit Linked
Condition 4 or Credit Linked Condition 5(a)(ii), as applicable, or
(b) in the case of a Valuation Obligation, means the Quotation
Amount specified in the relevant Valuation Obligation
Notification.
"Original Notional Amount" has the meaning given to it in the
relevant Pricing Supplement, subject to adjustment as provided in
these Credit Linked Conditions.
"Outstanding Principal Balance" means the outstanding principal
balance of an obligation which will be calculated as follows:
(a) first, by determining, in respect of the obligation, the
amount of the Reference Entity's principal payment obligations and,
where applicable in accordance with the definition of Accrued
Interest above, the Reference Entity's accrued but unpaid interest
payment obligations (which, in the case of a Guarantee will be the
lower of (i) the Outstanding Principal Balance (including accrued
but unpaid interest, where applicable) of the Underlying Obligation
(determined as if references to the Reference Entity were
references to the Underlying Obligor) and (ii) the amount of the
Fixed Cap, if any);
(b) second, by subtracting all or any portion of such amount
which, pursuant to the terms of the obligation, (i) is subject to
any Prohibited Action, or (ii) may otherwise be reduced as a result
of the effluxion of time or the occurrence or non-occurrence of an
event or circumstance (other than by way of (A) payment or (B) a
Permitted Contingency) (the amount determined in accordance with
paragraph (a) above less any amounts subtracted in accordance with
this paragraph (b), the "Non--Contingent Amount"); and
(c) third, by determining the Quantum of the Claim, which shall
then constitute the Outstanding Principal Balance,
in each case, determined:
(i) unless otherwise specified, in accordance with the terms of
the obligation in effect on either (A) the relevant PSN Effective
Date (or if the terms of the obligation are amended after such date
but on or prior to the Delivery Date, the Delivery Date), or (B)
the relevant Valuation Date; and
(ii) with respect to the Quantum of the Claim only, in
accordance with any applicable laws (insofar as such laws reduce or
discount the size of the claim to reflect the original issue price
or accrued value of the obligation).
"Package Observable Bond" means, in respect of a Reference
Entity which is a Sovereign, any obligation (a) which is identified
as such and published by ISDA on its website at www.isda.org from
time to time (or any successor website thereto) or by a third party
designated by ISDA on its website from time to time and (b) which
fell within paragraphs (a) or (b) of the definition of Deliverable
Obligation (above) or, as applicable, Valuation Obligation (below),
in each case, immediately preceding the date on which the relevant
Asset Package Credit Event was legally effective.
"Parallel Auction" means "Auction" as such term shall be defined
in the relevant Parallel Auction Settlement Terms.
"Parallel Auction Cancellation Date" means "Auction Cancellation
Date" as such term shall be defined in the relevant Parallel
Auction Settlement Terms.
"Parallel Auction Settlement Terms" means, following the
occurrence of an M(M)R Restructuring, any Credit Derivatives
Auction Settlement Terms published by ISDA with respect to such
M(M)R Restructuring, and for which (i) the Deliverable Obligation
Terms are the same as the Reference Transaction and (ii) the
Reference Transaction would not be an Auction Covered Transaction
provided that if no such Credit Derivatives Auction Settlement
Terms are published, the Calculation Agent may select the
applicable Credit Derivatives Auction Settlement Terms.
"Parallel Notice of Physical Settlement Date" means "Notice of
Physical Settlement Date" as defined in the relevant Parallel
Auction Settlement Terms.
"Payment Requirement" means the amount specified as such in the
relevant Pricing Supplement or its equivalent in the relevant
Obligation Currency or, if no such amount is specified in the
relevant Pricing Supplement, USD1,000,000, or its equivalent as
calculated by the Calculation Agent in the relevant Obligation
Currency, in either case, as of the occurrence of the relevant
Failure to Pay or Potential Failure to Pay, as applicable.
"Permissible Deliverable Obligations" has the meaning set forth
in the relevant Credit Derivatives Auction Settlement Terms, being
either all or the portion of the Deliverable Obligations included
in the Final List pursuant to the Deliverable Obligation Terms
applicable to the relevant Auction.
"Permitted Contingency" means, with respect to an obligation,
any reduction to the Reference Entity's payment obligations:
(a) as a result of the application of:
(i) any provisions allowing a transfer, pursuant to which
another party may assume all of the payment obligations of the
Reference Entity;
(ii) provisions implementing the Subordination of the obligation;
(iii) provisions allowing for a Permitted Transfer in the case
of a Qualifying Guarantee (or provisions allowing for the release
of the Reference Entity from its payment obligations in the case of
any other Guarantee);
(iv) if "Subordinated European Insurance Terms" are specified as
applicable in the relevant Pricing Supplement, any Solvency Capital
Provisions; or
(v) if "Financial Reference Entity Terms" are specified as
applicable in the relevant Pricing Supplement, provisions which
permit the Reference Entity's obligations to be altered,
discharged, released or suspended in circumstances which would
constitute a Governmental Intervention; or
(b) which is within the control of the holders of the obligation
or a third party acting on their behalf (such as an agent or
trustee) in exercising their rights under or in respect of such
obligation.
"Permitted Transfer" means, with respect to a Qualifying
Guarantee, a transfer to and the assumption by any single
transferee of such Qualifying Guarantee (including by way of
cancellation and execution of a new guarantee) on the same or
substantially the same terms, in circumstances where there is also
a transfer of all (or substantially all) of the assets of the
Reference Entity to the same single transferee.
"Physical Settlement Amendment Notice" has the meaning given to
that term in Credit Linked Condition 4 or Credit Linked Condition
5(a)(ii), as applicable.
"Physical Settlement Period" means, subject to Credit Linked
Condition 12, the number of Business Days specified as such in the
relevant Pricing Supplement or, if a number of Business Days is not
so specified, then, with respect to a Deliverable Obligation
comprising the Entitlement, the longest number of Business Days for
settlement in accordance with the current market practice of such
Deliverable Obligation, as determined by the Calculation Agent
provided that if the Issuer has notified the Noteholders in
accordance with Credit Linked Condition 4 or Credit Linked
Condition 5(a)(ii) that it will Deliver an Asset Package in lieu of
a Prior Deliverable Obligation or a Package Observable Bond, the
Physical Settlement Period shall be 35 Business Days.
"Post Dismissal Additional Period" means the period from and
including the date of the DC Credit Event Question Dismissal to and
including the date that is five Business Days following the
fourteenth calendar day thereafter (provided that the relevant
Credit Event Resolution Request Date occurred on or prior to the
end of the last day of the Notice Delivery Period (including prior
to the Trade Date)).
"Postponed Cut-off Date" has the meaning given to that term in
Credit Linked Condition 10.
"Postponed Maturity Date" has the meaning given to that term in
Credit Linked Condition 10.
"Potential Credit Event" means a Potential Failure to Pay (if
Failure to Pay is an applicable Credit Event in respect of the
Reference Entity), a Potential Repudiation/Moratorium (if
Repudiation/Moratorium is an applicable Credit Event in respect of
the Reference Entity) or if a Credit Event Resolution Request Date
has occurred and the relevant Credit Derivatives Determinations
Committee has not made its determination, such event will be deemed
to be a Potential Credit Event. A Credit Derivatives Determinations
Committee and the Calculation Agent may each determine whether a
Potential Failure to Pay or a Potential Repudiation/Moratorium has
occurred.
"Potential Failure to Pay" means the failure by the Reference
Entity to make, when and where due, any payments in an aggregate
amount of not less than the Payment Requirement under one or more
Obligations, in accordance with the terms of such Obligations at
the time of such failure, without regard to any grace period or any
conditions precedent to the commencement of any grace period
applicable to such Obligations.
"Potential Repudiation/Moratorium" means the occurrence of an
event described in paragraph (a) of the definition of
Repudiation/Moratorium.
"Prior Deliverable Obligation" means:
(a) if a Governmental Intervention has occurred (whether or not
such event is specified as the applicable Credit Event in the
Credit Event Notice or the DC Credit Event Announcement), any
obligation of the Reference Entity which (i) existed immediately
prior to such Governmental Intervention, (ii) was the subject of
such Governmental Intervention and (iii) fell within paragraphs (a)
or (b) of the definition of Deliverable Obligation above or, as
applicable, Valuation Obligation below, in each case, immediately
preceding the date on which such Governmental Intervention was
legally effective; or
(b) if a Restructuring which does not constitute a Governmental
Intervention has occurred in respect of the Reference Obligation
(whether or not such event is specified as the applicable Credit
Event in the Credit Event Notice or the DC Credit Event
Announcement), such Reference Obligation, if any.
"Private-side Loan" means a Loan in respect of which the
documentation governing its terms is not publicly available or
capable of being made public without violating a law, agreement,
understanding or other restriction regarding the confidentiality of
such information.
"Prohibited Action" means any counterclaim, defence (other than
a counterclaim or defence based on the factors set forth in (a) to
(d) of the definition of Credit Event above) or right of set-off by
or of the Reference Entity or any applicable Underlying
Obligor.
"PSN Cut-off Date" means, following the occurrence of a Credit
Event Determination Date in respect of a Reference Entity and
subject, where applicable, to Credit Linked Condition 12, the later
of:
(a) the later of:
(i) the thirtieth calendar day after the Credit Event Determination Date; and
(ii) the tenth calendar day after either the date of the
relevant DC Credit Event Announcement or of the relevant DC Credit
Event Question Dismissal, if any (or, if the relevant Credit Event
is an M(M)R Restructuring, the tenth calendar day after the
Non-Standard Exercise Cut-off Date),
provided that in the case of paragraph (ii) above, the relevant
Credit Event Resolution Request Date, if any, occurred on or prior
to the date described in paragraph (i) above; and
(b) the fifth Business Day after the date on which the Notice of
Physical Settlement is required to be delivered under the relevant
Hedging Representative Auction-Settled Transaction (if any).
"PSN Effective Date" means the date on which an effective Notice
of Physical Settlement or Physical Settlement Amendment Notice, as
the case may be, is delivered by the Issuer in accordance with
Credit Linked Condition 4 or Credit Linked Condition 5(a)(ii).
"Public Source" means each source of Publicly Available
Information specified as such in the relevant Pricing Supplement
(or if no such source is specified in the relevant Pricing
Supplement, each of Bloomberg, Reuters, Dow Jones Newswires, The
Wall Street Journal, The New York Times, Nihon Keizai Shimbun,
Asahi Shimbun, Yomiuri Shimbun, Financial Times, La Tribune, Les
Echos, The Australian Financial Review and Debtwire (and successor
publications), the main source(s) of business news in the country
in which the Reference Entity is organised and any other
internationally recognised published or electronically displayed
news sources).
"Publicly Available Information" means information that
reasonably confirms any of the facts relevant to the determination
that the Credit Event or a Potential Repudiation/Moratorium, as
applicable, described in a Credit Event Notice or
Repudiation/Moratorium Extension Notice have occurred and
which:
(a) has been published in or on not less than the Specified
Number of Public Sources (regardless of whether the reader or user
thereof pays a fee to obtain such information);
(b) is information received from or published by (i) the
Reference Entity (or, if the Reference Entity is a Sovereign, any
agency, instrumentality, ministry, department or other authority
thereof acting in a governmental capacity (including, without
limiting the foregoing, the central bank) of such Sovereign) or
(ii) a trustee, fiscal agent, administrative agent, clearing agent,
paying agent, facility agent or agent bank for an Obligation;
or
(c) is information contained in any order, decree, notice,
petition or filing, however described, of or filed with a court,
tribunal, exchange, regulatory authority or similar administrative,
regulatory or judicial body;
provided that where any information of the type described in
paragraphs (b) or (c) above is not publicly available, it can only
constitute Publicly Available Information if it can be made public
without violating any law, agreement, understanding or other
restriction regarding the confidentiality of such information.
In relation to any information of the type described in
paragraphs (b) or (c) above, the Calculation Agent may assume that
such information has been disclosed to it without violating any
law, agreement, understanding or other restriction regarding the
confidentiality of such information and that the entity disclosing
such information has not taken any action or entered into any
agreement or understanding with the Reference Entity or any
Affiliate of the Reference Entity that would be breached by, or
would prevent, the disclosure of such information to the party
receiving such information.
(d) Without limitation, Publicly Available Information need not state:
(i) in relation to the definition of "Downstream Affiliate", the
percentage of Voting Shares owned by the Reference Entity; and
(ii) that the relevant occurrence:
(A) has met the Payment Requirement or Default Requirement;
(B) is the result of exceeding any applicable Grace Period; or
(C) has met the subjective criteria specified in certain Credit Events.
In relation to a Repudiation/Moratorium Credit Event, Publicly
Available Information must relate to the events described in
paragraphs (a) and (b) of the definition of Repudiation/Moratorium
below.
"Qualifying Affiliate Guarantee" means a Qualifying Guarantee
provided by the Reference Entity in respect of an Underlying
Obligation of a Downstream Affiliate of the Reference Entity.
"Qualifying Guarantee" means a guarantee evidenced by a written
instrument (which may include a statute or regulation), pursuant to
which the Reference Entity irrevocably agrees, undertakes or is
otherwise obliged to pay all amounts of principal and interest
(except for amounts which are not covered due to the existence of a
Fixed Cap) due under an Underlying Obligation for which the
Underlying Obligor is the obligor, by guarantee of payment and not
by guarantee of collection (or, in either case, any legal
arrangement which is equivalent thereto in form under the relevant
governing law).
A Qualifying Guarantee shall not include any guarantee:
(a) which is structured as a surety bond, financial guarantee
insurance policy or letter of credit (or any legal arrangement
which is equivalent thereto in form); or
(b) pursuant to the terms applicable thereto, the principal
payment obligations of the Reference Entity can be discharged,
released, reduced, assigned or otherwise altered as a result of the
occurrence or non-occurrence of an event or circumstance, in each
case, other than:
(i) by payment;
(ii) by way of Permitted Transfer;
(iii) by operation of law;
(iv) due to the existence of a Fixed Cap; or
(v) due to:
(A) provisions permitting or anticipating a Governmental
Intervention, if "Financial Reference Entity Terms" is specified as
applicable in the relevant Pricing Supplement; or
(B) any Solvency Capital Provisions, if "Subordinated European
Insurance Terms" is specified as applicable in the relevant Pricing
Supplement.
If the guarantee or Underlying Obligation contains provisions
relating to the discharge, release, reduction, assignment or other
alteration of the principal payment obligations of the Reference
Entity and such provisions have ceased to apply or are suspended at
the time of the relevant determination, in accordance with the
terms of such guarantee or Underlying Obligation, due to or
following the occurrence of (I) a non-payment in respect of the
guarantee or the Underlying Obligation, or (II) an event of the
type described in the definition of Bankruptcy above in respect of
the Reference Entity or the Underlying Obligor, then it shall be
deemed for these purposes that such cessation or suspension is
permanent, notwithstanding the terms of the guarantee or Underlying
Obligation.
In order for a guarantee to constitute a Qualifying
Guarantee:
I. the benefit of such guarantee must be capable of being
Delivered together with the Delivery of the Underlying Obligation;
and
II. if a guarantee contains a Fixed Cap, all claims to any
amounts which are subject to such Fixed Cap must be capable of
being Delivered together with the Delivery of such guarantee.
"Qualifying Participation Seller" means any participation seller
that meets the requirements specified in the relevant Pricing
Supplement. If no such requirements are specified, there shall be
no Qualifying Participation Seller.
"Quantum of the Claim" means the lowest amount of the claim
which could be validly asserted against the Reference Entity in
respect of the Non-Contingent Amount if the obligation had become
redeemable, been accelerated, terminated or had otherwise become
due and payable at the time of the relevant determination, provided
that the Quantum of the Claim cannot exceed the Non-Contingent
Amount.
"Quotation" means each Full Quotation and the Weighted Average
Quotation obtained and expressed as a percentage of the Outstanding
Principal Balance or Due and Payable Amount, as applicable, with
respect to a Valuation Date in the manner that follows:
The Calculation Agent shall attempt to obtain Full Quotations
with respect to each Valuation Date from five or more Quotation
Dealers. If the Calculation Agent is unable to obtain two or more
such Full Quotations on the same Business Day within three Business
Days of a Valuation Date, then on the next following Business Day
(and, if necessary, on each Business Day thereafter until the tenth
Business Day following the relevant Valuation Date) the Calculation
Agent shall attempt to obtain Full Quotations from five or more
Quotation Dealers and, if two or more Full Quotations are not
available, a Weighted Average Quotation. If the Calculation Agent
is unable to obtain two or more Full Quotations or a Weighted
Average Quotation on the same Business Day on or prior to the tenth
Business Day following the applicable Valuation Date the Quotations
shall be deemed to be any Full Quotation obtained from a Quotation
Dealer at the Valuation Time on such tenth Business Day, or if no
Full Quotation is obtained, the weighted average of any firm
quotations for the Valuation Obligation obtained from Quotation
Dealers at the Valuation Time on such tenth Business Day with
respect to the aggregate portion of the Quotation Amount for which
such quotations were obtained and a quotation deemed to be zero for
the balance of the Quotation Amount for which firm quotations were
not obtained on such day.
"Quotation Amount" means:
(a) the amount specified as such in the relevant Pricing
Supplement (which may be specified by reference to an amount in a
currency or by reference to a Representative Amount); or
(b) if no amount is specified in the relevant Pricing
Supplement, as specified in the Valuation Obligation
Notification,
or, in each case, its equivalent in the relevant Obligation
Currency converted by the Calculation Agent by reference to
exchange rates in effect at the time that the relevant Quotation is
being obtained.
"Quotation Dealer" means a dealer in obligations of the type of
Obligation(s) for which Quotations are to be obtained including
each Quotation Dealer specified in the relevant Pricing Supplement.
If no Quotation Dealers are specified in the relevant Pricing
Supplement, the Calculation Agent shall select the Quotation
Dealers. Upon a Quotation Dealer no longer being in existence (with
no successors), or not being an active dealer in the obligations of
the type for which Quotations are to be obtained, the Calculation
Agent may substitute any other Quotation Dealer(s) for such
Quotation Dealer(s).
"Quotation Method" means the applicable Quotation Method
specified in the relevant Pricing Supplement by reference to one of
the following terms:
(a) "Bid" means that only bid quotations shall be requested from Quotation Dealers;
(b) "Offer" means that only offer quotations shall be requested
from Quotation Dealers; or
(c) "Mid-market" means that bid and offer quotations shall be
requested from Quotation Dealers and shall be averaged for purposes
of determining a relevant Quotation Dealer's quotation.
If a Quotation Method is not specified in the relevant Pricing
Supplement, Bid shall apply.
"Reference Entity" means the entity specified as such in the
relevant Pricing Supplement. Any Successor to the Reference Entity
either (a) identified pursuant to the definition of "Successor" on
or following the Trade Date or (b) identified pursuant to a DC
Resolution in respect of a Successor Resolution Request Date and
publicly announced by the DC Secretary on or following the Trade
Date shall, in each case, with effect from the Succession Date, be
the Reference Entity for the purposes of the relevant Series.
"Reference Entity Notional Amount", in respect of a Reference
Entity, means the amount specified as such in the relevant Pricing
Supplement (or, if no such amount is so specified, the Aggregate
Principal Amount of the Notes as of the Issue Date divided by the
number of Reference Entities), subject to adjustment as provided in
"Successor" and pursuant to Credit Linked Condition 14 and as
otherwise provided in these Credit Linked Conditions.
"Reference Obligation" means the Standard Reference Obligation,
if any, unless:
(a) "Standard Reference Obligation" is specified as not
applicable in the relevant Pricing Supplement, in which case the
Reference Obligation will be the Non-Standard Reference Obligation,
if any; or
(b) (i) "Standard Reference Obligation" is specified as
applicable in the relevant Pricing Supplement (or no election is
specified in the relevant Pricing Supplement), (ii) there is no
Standard Reference Obligation and (iii) a Non-Standard Reference
Obligation is specified in the relevant Pricing Supplement, in
which case the Reference Obligation will be (A) the Non-Standard
Reference Obligation to but excluding the first date of publication
of the Standard Reference Obligation and (B) the Standard Reference
Obligation from such date onwards, provided that the Standard
Reference Obligation that is published would have been eligible to
be selected as a Substitute Reference Obligation.
If the Standard Reference Obligation is removed from the SRO
List, such obligation shall cease to be the Reference Obligation
(other than for purposes of the "Not Subordinated" Obligation
Characteristic or "Not Subordinated" Deliverable Obligation
Characteristic or Valuation Obligation Characteristics, as
applicable) and there shall be no Reference Obligation unless and
until such obligation is subsequently replaced on the SRO List, in
which case, the new Standard Reference Obligation in respect of the
Reference Entity shall constitute the Reference Obligation.
"Reference Obligation Only Notes" means any Notes in respect of
which (a) "Reference Obligation Only" is specified as the
Obligation Category, the Deliverable Obligation Category and (as
applicable) Valuation Obligation Category in the relevant Pricing
Supplement and (b) "Standard Reference Obligation" is specified as
not applicable in the relevant Pricing Supplement.
"Reference Transaction" means a hypothetical credit derivative
transaction:
(a) for which the Deliverable Obligation Terms, the Reference
Obligation, the Reference Entity and (as applicable) the provisions
for determining the Valuation Obligation(s) are (i) the same as in
respect of the Credit Linked Notes (if Deliverable Obligation
Terms, Reference Obligation and Valuation Obligation terms are
specified in the relevant Pricing Supplement) or (ii) if and to the
extent Deliverable Obligation Terms and/or a Reference Obligation
and/or (as applicable) the Valuation Obligation terms are not
specified, the Deliverable Obligation Terms, Reference Obligation
and provisions for determining Valuation Obligation(s) determined
by the Calculation Agent to be appropriate in respect of a credit
derivative transaction linked to the relevant Reference Entity;
(b) with a scheduled termination date matching the Scheduled
Maturity Date of the Credit Linked Notes; and
(c) otherwise having such other characteristics as the
Calculation Agent may determine appropriate by reference to,
without limitation, the Issuer's hedging arrangements (if any at
the relevant time) and/or any credit derivative elections made in
relation to the Credit Linked Notes (if applicable disregarding
that the Settlement Method is Cash Settlement or Physical
Settlement, in each case for the purposes of the Transaction
Auction Settlement Terms and Parallel Auction Settlement
Terms).
"Relevant City Business Day" has the meaning given in the DC
Rules.
"Relevant Guarantee" means a Qualifying Affiliate Guarantee or,
if "All Guarantees" is specified as applicable in the relevant
Pricing Supplement, a Qualifying Guarantee.
"Relevant Holder" means a holder of the latest Prior Deliverable
Obligation or Package Observable Bond, as the case may be, with an
Outstanding Principal Balance or Due and Payable Amount, as
applicable, immediately prior to the relevant Asset Package Credit
Event, equal to the Outstanding Amount specified in respect of such
Prior Deliverable Obligation or Package Observable Bond in the
Notice of Physical Settlement or Physical Settlement Amendment
Notice or Valuation Obligation Notification, as applicable.
"Relevant Obligations" means the Obligations of the Reference
Entity which fall within the Obligation Category "Bond or Loan" and
which are outstanding immediately prior to the Succession Date (or,
if there is a Steps Plan, immediately prior to the legally
effective date of the first succession), provided that:
(a) any Bonds or Loans outstanding between the Reference Entity
and any of its Affiliates, or held by the Reference Entity, shall
be excluded;
(b) if there is a Steps Plan, the Calculation Agent shall, for
purposes of the determination required to be made under paragraph
(a) of the definition of Successor below, make the appropriate
adjustments required to take account of any Obligations of the
Reference Entity which fall within the Obligation Category "Bond or
Loan" that are issued, incurred, redeemed, repurchased or cancelled
from and including the legally effective date of the first
succession to and including the Succession Date;
(c) if "Financial Reference Entity Terms" is specified as
applicable in the relevant Pricing Supplement and (i) the Reference
Obligation or Prior Reference Obligation, as applicable, is a
Senior Obligation, or (ii) there is no Reference Obligation or
Prior Reference Obligation, the Relevant Obligations shall only
include the Senior Obligations of the Reference Entity which fall
within the Obligation Category "Bond or Loan"; and
(d) if "Financial Reference Entity Terms" is specified as
applicable in the relevant Pricing Supplement, and the Reference
Obligation or Prior Reference Obligation, as applicable, is a
Subordinated Obligation, Relevant Obligations shall exclude Senior
Obligations and any Further Subordinated Obligations of the
Reference Entity which fall within the Obligation Category "Bond or
Loan", provided that if no such Relevant Obligations exist,
"Relevant Obligations" shall only include the Senior Obligations of
the Reference Entity which fall within the Obligation Category
"Bond or Loan".
"Replaced Deliverable Obligation Outstanding Amount" has the
meaning given to that term in Credit Linked Condition 4 or Credit
Linked Condition 5(a)(ii), as applicable.
"Replacement Deliverable Obligation" has the meaning given to
that term in Credit Linked Condition 4 or Credit Linked Condition
5(a)(ii), as applicable.
"Representative Amount" means an amount that is representative
for a single transaction in the relevant market and at the relevant
time, which amount will be determined by the Calculation Agent.
"Representative Auction-Settled Transaction" shall have the
meaning as shall be set forth in the relevant Transaction Auction
Settlement Terms.
"Repudiation/Moratorium" means the occurrence of both of the
following events:
(a) an authorised officer of the Reference Entity or a Governmental Authority:
(i) disaffirms, disclaims, repudiates or rejects, in whole or in
part, or challenges the validity of, one or more Obligations in an
aggregate amount of not less than the Default Requirement; or
(ii) declares or imposes a moratorium, standstill, roll-over or
deferral, whether de facto or de jure, with respect to one or more
Obligations in an aggregate amount of not less than the Default
Requirement; and
(b) a Failure to Pay, determined without regard to the Payment
Requirement, or a Restructuring, determined without regard to the
Default Requirement, with respect to any such Obligation occurs on
or prior to the Repudiation/Moratorium Evaluation Date.
"Repudiation/Moratorium Evaluation Date" means, if a Potential
Repudiation/Moratorium occurs on or prior to the Scheduled Maturity
Date (i) if the Obligations to which such Potential
Repudiation/Moratorium relates include Bonds, the date that is the
later of (A) the date that is sixty (60) days after the date of
such Potential Repudiation/Moratorium and (B) the first payment
date under any such Bond after the date of such Potential
Repudiation/Moratorium (or, if later, the expiration date of any
applicable Grace Period in respect of such payment date) and (ii)
if the Obligations to which such Potential Repudiation/Moratorium
relates do not include Bonds, the date that is sixty (60) days
after the date of such Potential Repudiation/Moratorium provided
that, in either case, the Repudiation/Moratorium Evaluation Date
shall occur no later than the Scheduled Maturity Date unless the
Repudiation/Moratorium Extension Condition is satisfied.
"Repudiation/Moratorium Extension Condition" will be
satisfied:
(a) if the DC Secretary publicly announces, pursuant to a valid
request that was delivered and effectively received on or prior to
the date that is fourteen (14) calendar days after the Scheduled
Maturity Date that the relevant Credit Derivatives Determinations
Committee has Resolved that an event that constitutes a Potential
Repudiation/Moratorium has occurred with respect to an Obligation
of the Reference Entity and that such event occurred on or prior to
the Scheduled Maturity Date; or
(b) otherwise, by the delivery by the Calculation Agent to the
Issuer of a Repudiation/Moratorium Extension Notice and, unless
"Notice of Publicly Available Information" is specified as not
applicable in the relevant Pricing Supplement, a Notice of Publicly
Available Information that are each effective on or prior to the
Scheduled Maturity Date or, if Credit Linked Condition 10(y)
applies, the Postponed Cut-off Date.
In all cases, the Repudiation/Moratorium Extension Condition
will be deemed not to have been satisfied, or not capable of being
satisfied, if, or to the extent that, the DC Secretary publicly
announces that the relevant Credit Derivatives Determinations
Committee has Resolved that either (A) an event does not constitute
a Potential Repudiation/Moratorium with respect to an Obligation of
the Reference Entity, or (B) an event that constitutes a Potential
Repudiation/Moratorium has occurred with respect to an Obligation
of the Reference Entity but that such event occurred after the
Scheduled Maturity Date.
"Repudiation/Moratorium Extension Notice" means a notice from
the Calculation Agent to the Issuer (which the Calculation Agent
has the right but not the obligation to deliver) that describes a
Potential Repudiation/Moratorium that occurred on or prior to the
Scheduled Maturity Date. A Repudiation/Moratorium Extension Notice
must contain a description in reasonable detail of the facts
relevant to the determination that a Potential
Repudiation/Moratorium has occurred and indicate the date of the
occurrence. The Potential Repudiation/Moratorium that is the
subject of the Repudiation/Moratorium Extension Notice need not be
continuing on the date the Repudiation/Moratorium Extension Notice
is effective.
"Resolve" has the meaning set out in the DC Rules, and
"Resolved" and "Resolves" shall be construed accordingly.
"Restructured Bond or Loan" means an Obligation which is a Bond
or Loan and in respect of which the relevant Restructuring has
occurred.
"Restructuring" means, with respect to one or more Obligations
and in relation to an aggregate amount of not less than the Default
Requirement, any one or more of the following events occurs in a
form that binds all holders of such Obligation, is agreed between
the Reference Entity or a Governmental Authority and a sufficient
number of holders of such Obligation to bind all the holders of the
Obligation or is announced (or otherwise decreed) by the Reference
Entity or a Governmental Authority in a form that binds all holders
of such Obligation (including, in each case, in respect of Bonds
only, by way of an exchange), and such event is not expressly
provided for under the terms of such Obligation in effect as of the
later of the Credit Event Backstop Date applicable to the relevant
Credit Linked Notes and the date as of which such Obligation is
issued or incurred:
(a) a reduction in the rate or amount of interest payable or the
amount of scheduled interest accruals (including by way of
redenomination);
(b) a reduction in the amount of principal or premium payable at
redemption (including by way of redenomination);
(c) a postponement or other deferral of a date or dates for
either (i) the payment or accrual of interest, or (ii) the payment
of principal or premium;
(d) a change in the ranking in priority of payment of any
Obligation, causing the Subordination of such Obligation to any
other Obligation; or
(e) any change in the currency of any payment of interest,
principal or premium to any currency other than the lawful currency
of Canada, Japan, Switzerland, the United Kingdom and the United
States of America and the euro and any successor currency to any of
the aforementioned currencies (which in the case of the euro, shall
mean the currency which succeeds to and replaces the euro in
whole).
Notwithstanding the above provisions, none of the following
shall constitute a Restructuring:
(i) the payment in euro of interest, principal or premium in
relation to an Obligation denominated in a currency of a Member
State of the European Union that adopts or has adopted the single
currency in accordance with the Treaty establishing the European
Community, as amended by the Treaty on European Union;
(ii) the redenomination from euros into another currency, if (A)
the redenomination occurs as a result of action taken by a
Governmental Authority of a Member State of the European Union
which is of general application in the jurisdiction of such
Governmental Authority and (B) a freely available market rate of
conversion between euros and such other currency existed at the
time of such redenomination and there is no reduction in the rate
or amount of interest, principal or premium payable, as determined
by reference to such freely available market rate of
conversion;
(iii) the occurrence of, agreement to or announcement of any of
the events described in (a) to (e) above due to an administrative
adjustment, accounting adjustment or tax adjustment or other
technical adjustment occurring in the ordinary course of business;
and
(iv) the occurrence of, agreement to or announcement of any of
the events described in (a) to (e) above in circumstances where
such event does not directly or indirectly result from a
deterioration in the creditworthiness or financial condition of the
Reference Entity, provided that in respect of paragraph (e) above
only, no such deterioration in the creditworthiness or financial
condition of the Reference Entity is required where the
redenomination is from euros into another currency and occurs as a
result of action taken by a Governmental Authority of a Member
State of the European Union which is of general application in the
jurisdiction of such Governmental Authority.
For purposes of this definition of Restructuring and Credit
Linked Condition 15, the term Obligation shall be deemed to include
Underlying Obligations for which the Reference Entity is acting as
provider of a Guarantee. In the case of a Guarantee and an
Underlying Obligation, references to the Reference Entity in the
definition of Restructuring and the definition of Subordination
shall be deemed to refer to the Underlying Obligor and the
references to the Reference Entity in paragraphs (i) to (iv) of
this definition of Restructuring shall continue to be deemed to
refer to the Reference Entity.
If an exchange has occurred, the determination as to whether one
of the events described under paragraphs (a) to (e) above has
occurred will be based on a comparison of the terms of the Bond
immediately prior to such exchange and the terms of the resulting
obligations immediately following such exchange.
"Restructuring Date" means the date on which a Restructuring is
legally effective in accordance with the terms of the documentation
governing such Restructuring.
"Restructuring Maturity Limitation Date" means with respect to a
Deliverable Obligation or Valuation Obligation, as applicable, the
Limitation Date occurring on or immediately following the Scheduled
Maturity Date. Notwithstanding the foregoing, if the final maturity
date of the Restructured Bond or Loan with the latest final
maturity date of any Restructured Bond or Loan occurs prior to the
2.5-year Limitation Date (such Restructured Bond or Loan, a "Latest
Maturity Restructured Bond or Loan") and the Scheduled Maturity
Date occurs prior to the final maturity date of such Latest
Maturity Restructured Bond or Loan, then the Restructuring Maturity
Limitation Date will be the final maturity date of such Latest
Maturity Restructured Bond or Loan.
"Revised Currency Rate" means, with respect to a Replacement
Deliverable Obligation specified in a Physical Settlement Amendment
Notice, the rate of conversion between the currency in which the
Replaced Deliverable Obligation Outstanding Amount is denominated
and the currency in which the Outstanding Amount of such
Replacement Deliverable Obligation is denominated that is
determined either (a) by reference to the Currency Rate Source as
at the Next Currency Fixing Time or (b) if such rate is not
available at such time, by the Calculation Agent.
"Scheduled Maturity Date" has the meaning given to it in the
relevant Pricing Supplement.
"Seniority Level" means, with respect to an obligation of the
Reference Entity:
(a) "Senior Level" or "Subordinated Level" as specified in the
relevant Pricing Supplement, or
(b) if no such seniority level is specified in the relevant
Pricing Supplement, "Senior Level" if the Original Non-Standard
Reference Obligation is a Senior Obligation or "Subordinated Level"
if the Original Non-Standard Reference Obligation is a Subordinated
Obligation, failing which "Senior Level".
"Senior Obligation" means any obligation which is not
Subordinated to any unsubordinated Borrowed Money obligation of the
relevant Reference Entity.
"Settlement Method" means, subject as provided herein, if (a)
Auction Settlement is specified as the applicable Settlement Method
in the relevant Pricing Supplement, Auction Settlement (b) Physical
Settlement is specified as the applicable Settlement Method in the
relevant Pricing Supplement, Physical Settlement, or (c) Cash
Settlement is specified as the applicable Settlement Method in the
relevant Pricing Supplement, Cash Settlement.
"Settlement Notice" has the meaning given to that term in Credit
Linked Condition 5.
"Shortfall Amount" has the meaning given to that term in Credit
Linked Condition 5.
"Single Reference Entity Credit Linked Notes" means Credit
Linked Notes indicated as such in the relevant Pricing Supplement,
where the Issuer purchases credit protection from the Noteholders
in respect of only one Reference Entity.
"Solvency Capital Provisions" means any terms in an obligation
which permit the Reference Entity's payment obligations thereunder
to be deferred, suspended, cancelled, converted, reduced or
otherwise varied and which are necessary in order for the
obligation to constitute capital resources of a particular
tier.
"Sovereign" means any state, political subdivision or
government, or any agency, instrumentality, ministry, department or
other authority acting in a governmental capacity (including
without limiting the foregoing, the central bank) thereof.
"Sovereign Restructured Deliverable Obligation" means an
Obligation of a Reference Entity which is a Sovereign (either
directly or as provider of a Relevant Guarantee) (a) in respect of
which a Restructuring that is the subject of the relevant Credit
Event Notice or DC Credit Event Announcement has occurred and (b)
which fell within paragraph (a) of the definition of Deliverable
Obligation above immediately preceding the date on which such
Restructuring is legally effective in accordance with the terms of
the documentation governing such Restructuring.
"Sovereign Restructured Valuation Obligation" means an
Obligation of a Reference Entity which is a Sovereign (either
directly or as provider of a Relevant Guarantee) (a) in respect of
which a Restructuring that is the subject of the relevant Credit
Event Notice or DC Credit Event Announcement has occurred and (b)
which fell within paragraph (a) of the definition of Valuation
Obligation below immediately preceding the date on which such
Restructuring is legally effective in accordance with the terms of
the documentation governing such Restructuring.
"Sovereign Succession Event" means, with respect to a Reference
Entity that is a Sovereign, an annexation, unification, secession,
partition, dissolution, consolidation, reconstitution or, other
similar event.
"Specified Number" means the number of Public Source(s)
specified in the relevant Pricing Supplement, or if no such number
is specified in the relevant Pricing Supplement, two.
"SRO List" means the list of Standard Reference Obligations as
published by ISDA on its website at www.isda.org from time to time
(or any successor website thereto) or by a third party designated
by ISDA on its website from time to time.
"Standard Reference Obligation" means the obligation of the
Reference Entity with the relevant Seniority Level which is
specified from time to time on the SRO List.
"Standard Specified Currency" means each of the lawful
currencies of Canada, Japan, Switzerland, France, Germany, the
United Kingdom and the United States of America and the euro and
any successor currency to any of the aforementioned currencies
(which in the case of the euro, shall mean the currency which
succeeds to and replaces the euro in whole).
"Steps Plan" means a plan evidenced by Eligible Information
contemplating that there will be a series of successions to some or
all of the Relevant Obligations of the Reference Entity, by one or
more entities.
"Subordinated Obligation" means any obligation which is
Subordinated to any unsubordinated Borrowed Money obligation of the
relevant Reference Entity or which would be so Subordinated if any
unsubordinated Borrowed Money obligation of that Reference Entity
existed.
"Substitute Reference Obligation" means, with respect to a
Non-Standard Reference Obligation to which a Substitution Event has
occurred, the obligation that will replace the Non-Standard
Reference Obligation, determined by the Calculation Agent as
follows:
(a) The Calculation Agent shall identify the Substitute
Reference Obligation in accordance with paragraphs (c), (d) and (e)
below to replace the Non-Standard Reference Obligation; provided
that the Calculation Agent will not identify an obligation as the
Substitute Reference Obligation if, at the time of the
determination, such obligation has already been rejected as the
Substitute Reference Obligation by the relevant Credit Derivatives
Determinations Committee and such obligation has not changed
materially since the date of the relevant DC Resolution.
(b) If any of the events set forth under paragraphs (a) or
(b)(ii) of the definition of Substitution Event have occurred with
respect to the Non-Standard Reference Obligation, the Non-Standard
Reference Obligation will cease to be the Reference Obligation
(other than for purposes of the "Not Subordinated" Obligation
Characteristic or "Not Subordinated" Deliverable Obligation
Characteristic and paragraph (c)(ii)). If the event set forth in
paragraph (b)(i) of the definition of Substitution Event below has
occurred with respect to the Non-Standard Reference Obligation and
no Substitute Reference Obligation is available, the Non-Standard
Reference Obligation will continue to be the Reference Obligation
until the Substitute Reference Obligation is identified or, if
earlier, until any of the events set forth under paragraphs (a) or
(b)(ii) of the definition of Substitution Event below occur with
respect to such Non-Standard Reference Obligation.
(c) The Substitute Reference Obligation shall be an obligation
that on the Substitution Date:
(i) is a Borrowed Money obligation of the Reference Entity
(either directly or as provider of a guarantee);
(ii) satisfies the Not Subordinated Deliverable Obligation
Characteristic as of the date it was issued or incurred (without
reflecting any change to the priority of payment after such date)
and on the Substitution Date; and
(iii) (A) if the Non-Standard Reference Obligation was a
Conforming Reference Obligation when issued or incurred and
immediately prior to the Substitution Event Date:
I. is a Deliverable Obligation (other than a Loan) determined in
accordance with paragraph (a) of the definition of Deliverable
Obligation above; or if no such obligation is available,
II. is a Loan (other than a Private-side Loan) which constitutes
a Deliverable Obligation determined in accordance with paragraph
(a) of the definition of Deliverable Obligation above;
(B) if the Non-Standard Reference Obligation was a Bond (or any
other Borrowed Money obligation other than a Loan) which was a
Non-Conforming Reference Obligation when issued or incurred and/or
immediately prior to the Substitution Event Date:
I. is a Non-Conforming Substitute Reference Obligation (other
than a Loan); or if no such obligation is available,
II. is a Deliverable Obligation (other than a Loan) determined
in accordance with paragraph (a) of the definition of Deliverable
Obligation above; or if no such obligation is available,
III. is a Non-Conforming Substitute Reference Obligation which
is a Loan (other than a Private-side Loan); or if no such
obligation is available,
IV. is a Loan (other than a Private-side Loan) which constitutes
a Deliverable Obligation determined in accordance with paragraph
(a) of the definition of Deliverable Obligation above; or
(C) if the Non-Standard Reference Obligation was a Loan which
was a Non-Conforming Reference Obligation when incurred and/or
immediately prior to the Substitution Event Date:
I. is a Non-Conforming Substitute Reference Obligation which is
a Loan (other than a Private-side Loan); or if no such obligation
is available,
II. is a Non-Conforming Substitute Reference Obligation (other
than a Loan); or if no such obligation is available,
III. is a Deliverable Obligation (other than a Loan) determined
in accordance with paragraph (a) of the definition of Deliverable
Obligation above; or if no such obligation is available,
IV. is a Loan (other than a Private-side Loan) which constitutes
a Deliverable Obligation determined in accordance with paragraph
(a) of the definition of Deliverable Obligation above.
(d) If more than one potential Substitute Reference Obligation
is identified pursuant to the process described in paragraph (c)
above, the Substitute Reference Obligation will be the potential
Substitute Reference Obligation that most closely preserves the
economic equivalent of the delivery and payment obligations of the
Issuer under the Notes as determined by the Calculation Agent. The
Calculation Agent will notify the Noteholders in accordance with
Condition 14 (Notices) of the Substitute Reference Obligation as
soon as reasonably practicable after it has been identified in
accordance with paragraph (c) above and the Substitute Reference
Obligation shall replace the Non-Standard Reference Obligation. For
the avoidance of doubt any failure to provide such a notice to the
Noteholders will not constitute an Event of Default under the Notes
and will not affect the validity of any of the foregoing
provisions.
(e) If a Substitution Event has occurred with respect to the
Non-Standard Reference Obligation and the Calculation Agent
determines that no Substitute Reference Obligation is available for
the Non-Standard Reference Obligation then, subject to paragraph
(a) above and notwithstanding the fact that the Non-Standard
Reference Obligation may have ceased to be the Reference Obligation
in accordance with paragraph (b) above, the Calculation Agent shall
continue to attempt to identify the Substitute Reference
Obligation.
(f) For the avoidance of doubt, no Substitute Reference
Obligation shall be determined in respect of any Credit Linked
Notes that are Reference Obligation Only Notes.
"Substitution Date" means, with respect to a Substitute
Reference Obligation, the date on which the Calculation Agent
notifies the Issuer of the Substitute Reference Obligation that it
has identified in accordance with the definition of Substitute
Reference Obligation above.
"Substitution Event" means, with respect to the Non-Standard
Reference Obligation:
(a) the Non-Standard Reference Obligation is redeemed in whole; or
(b) provided that the Credit Linked Notes to which the
Non-Standard Reference Obligation relates are not Reference
Obligation Only Notes:
(i) the aggregate amounts due under the Non-Standard Reference
Obligation have been reduced by redemption or otherwise below USD
10,000,000 (or its equivalent in the relevant Obligation Currency,
as determined by the Calculation Agent); or
(ii) for any reason, other than due to the existence or
occurrence of a Credit Event, the Non-Standard Reference Obligation
is no longer an obligation of the Reference Entity (either directly
or as provider of a guarantee).
For purposes of identification of the Non-Standard Reference
Obligation, any change in the Non-Standard Reference Obligation's
CUSIP or ISIN number or other similar identifier will not, in and
of itself, constitute a Substitution Event. If an event described
in paragraphs (a) or (b)(i) above has occurred on or prior to the
Trade Date, then a Substitution Event shall be deemed to have
occurred pursuant to paragraphs (a) or (b)(i) above as the case may
be, on the Trade Date.
"Substitution Event Date" means, with respect to the Reference
Obligation, the date of the occurrence of the relevant Substitution
Event.
"Succession Date" means the legally effective date of an event
in which one or more entities succeed to some or all of the
Relevant Obligations of the Reference Entity; provided that if at
such time, there is a Steps Plan, the Succession Date will be the
legally effective date of the final succession in respect of such
Steps Plan, or if earlier (i) the date on which a determination
pursuant to paragraph (a) of the definition of Successor below
would not be affected by any further related successions in respect
of such Steps Plan, or (ii) the occurrence of a Credit Event
Determination Date in respect of the Reference Entity or any entity
which would constitute a Successor.
"Successor" means:
(a) subject to paragraph (b) below, the entity or entities, if
any, determined as follows:
(i) subject to paragraph (vii), if one entity succeeds, either
directly or indirectly, as a provider of a Relevant Guarantee, to
seventy-five per cent. or more of the Relevant Obligations of the
Reference Entity, that entity will be the sole Successor;
(ii) if only one entity succeeds directly as a provider of a
Relevant Guarantee, to more than twenty-five per cent. (but less
than seventy-five per cent.) of the Relevant Obligations of the
Reference Entity, and not more than twenty-five per cent. of the
Relevant Obligations of the Reference Entity remain with the
Reference Entity, the entity that succeeds to more than twenty-five
per cent. of the Relevant Obligations will be the sole
Successor;
(iii) if more than one entity each succeeds directly as a
provider of a Relevant Guarantee, to more than twenty-five per
cent. of the Relevant Obligations of the Reference Entity, and not
more than twenty-five per cent. of the Relevant Obligations of the
Reference Entity remain with the Reference Entity, the entities
that succeed to more than twenty-five per cent. of the Relevant
Obligations will each be a Successor and the Base Conditions and/or
the relevant Pricing Supplement will be adjusted as provided
below;
(iv) if one or more entity each succeed directly as a provider
of a Relevant Guarantee, to more than twenty-five per cent. of the
Relevant Obligations of the Reference Entity, and more than
twenty-five per cent. of the Relevant Obligations of the Reference
Entity remain with the Reference Entity, each such entity and the
Reference Entity will each be a Successor and the Base Conditions
and/or the relevant Pricing Supplement will be adjusted as provided
below;
(v) if one or more entities succeed directly as a provider of a
Relevant Guarantee, to a portion of the Relevant Obligations of the
Reference Entity, but no entity succeeds to more than twenty-five
per cent. of the Relevant Obligations of the Reference Entity and
the Reference Entity continues to exist, there will be no Successor
and the Reference Entity will not be changed in any way as a result
of such succession;
(vi) if one or more entities succeed, either directly or
indirectly, as a provider of a Relevant Guarantee, to a portion of
the Relevant Obligations of the Reference Entity, but no entity
succeeds to more than twenty-five per cent. of the Relevant
Obligations of the Reference Entity and the Reference Entity ceases
to exist, the entity which succeeds to the greatest percentage of
Relevant Obligations will be the Successor (provided that if two or
more entities succeed to an equal percentage of Relevant
Obligations, each such entity will be a Successor and the Base
Conditions and/or the relevant Pricing Supplement will be adjusted
as provided below); and
(vii) in respect of a Reference Entity which is not a Sovereign,
if one entity assumes all of the obligations (including at least
one Relevant Obligation) of the Reference Entity, and at the time
of the determination either (A) the Reference Entity has ceased to
exist, or (B) the Reference Entity is in the process of being
dissolved (howsoever described) and the Reference Entity has not
issued or incurred any Borrowed Money obligation at any time since
the legally effective date of the assumption, such entity (the
"Universal Successor") will be the sole Successor; and
(b) An entity may only be a Successor if:
(i) either (A) the related Succession Date occurs on or after
the Successor Backstop Date, or (B) such entity is a Universal
Successor in respect of which the Succession Date occurred on or
after 1 January 2014;
(ii) the Reference Entity had at least one Relevant Obligation
outstanding immediately prior to the Succession Date and such
entity succeeds to all or part of at least one Relevant Obligation
of the Reference Entity; and
(iii) where the Reference Entity is a Sovereign, such entity
succeeded to the Relevant Obligations by way of a Sovereign
Succession Event.
The Calculation Agent will be responsible for determining, as
soon as reasonably practicable after delivery of a Successor Notice
and with effect from the Succession Date, any Successor or
Successors under paragraph (a) above, Provided That the Calculation
Agent will not make any such determination if, at the time of
determination, the DC Secretary has publicly announced that the
relevant Credit Derivatives Determinations Committee has Resolved
that there is no Successor based on the relevant succession to
Relevant Obligations.
The Calculation Agent may, if it determines appropriate, select
an alternative Transaction Type for any Successor to a Reference
Entity and adjust such of the Base Conditions and/or the relevant
Pricing Supplement as it determines appropriate to reflect such new
Transaction Type and determine the effective date of any such
change and adjustment. The Calculation Agent shall be deemed to be
acting in a commercially reasonable manner if any such Transaction
Type and adjustment reflects any adjustment to any credit
derivative transaction(s) related to or underlying the Credit
Linked Notes incorporating the provisions of the 2014 ISDA Credit
Derivatives Definitions (the "2014 Definitions"). Upon the
Calculation Agent making such adjustment, the Issuer shall give
notice as soon as practicable to Noteholders in accordance with
Condition 14 (Notices) stating the new Transaction Type and the
adjustment to the Base Conditions and/or the relevant Pricing
Supplement (if any). For the avoidance of doubt any failure to
provide such a notice to Noteholders will not constitute an Event
of Default under the Notes and will not affect the validity of any
of the foregoing provisions.
The Calculation Agent will make all calculations and
determinations required to be made under this definition of
Successor on the basis of Eligible Information and will, as soon as
practicable after such calculation or determination, make such
calculation or determination available for inspection by
Noteholders at the specified office of the Principal Paying Agent.
In calculating the percentages used to determine whether an entity
qualifies as a Successor under paragraph (a) above, if there is a
Steps Plan, the Calculation Agent shall consider all related
successions in respect of such Steps Plan in aggregate as if
forming part of a single succession.
Where pursuant to paragraph (a)(iii), (a)(iv) or (a)(vi) or (b)
above, more than one Successor has been identified, the Calculation
Agent shall adjust such of the Base Conditions and/or the relevant
Pricing Supplement as it shall determine to be appropriate
(including, without limitation, the Reference Entity Notional
Amount and (if applicable) the Transaction Type) to reflect that
the Reference Entity has been succeeded by more than one Successor
and shall determine the effective date of that adjustment. The
Calculation Agent shall be deemed to be acting in a commercially
reasonable manner if it adjusts such of the Base Conditions and/or
the relevant Pricing Supplement in such a manner as to reflect the
adjustment to and/or division of any credit derivative
transaction(s) related to or underlying the Credit Linked Notes
under the provisions of the 2014 Definitions.
Upon the Calculation Agent making such adjustment, the Issuer
shall give notice as soon as practicable to Noteholders in
accordance with Condition 14 (Notices) stating the adjustment to
the Base Conditions and/or the relevant Pricing Supplement and
giving brief details of the relevant Successor event. For the
avoidance of doubt any failure to provide such a notice to
Noteholders will not constitute an Event of Default under the Notes
and will not affect the validity of any of the foregoing
provisions.
If two or more entities (each, a "Joint Potential Successor")
jointly succeed to a Relevant Obligation (the "Joint Relevant
Obligation") either directly or as a provider of a Relevant
Guarantee, then (i) if the Joint Relevant Obligation was a direct
obligation of the Reference Entity, it shall be treated as having
been succeeded to by the Joint Potential Successor (or Joint
Potential Successors, in equal parts) which succeeded to such Joint
Relevant Obligation as direct obligor or obligors, or (ii) if the
Joint Relevant Obligation was a Relevant Guarantee, it shall be
treated as having been succeeded to by the Joint Potential
Successor (or Joint Potential Successors, in equal parts) which
succeeded to such Joint Relevant Obligation as guarantor or
guarantors, if any, or otherwise by each Joint Potential Successor
in equal parts.
For the purposes of this definition of "Successor", "succeed"
means, with respect to the Reference Entity and its Relevant
Obligations, that an entity other than the Reference Entity (i)
assumes or becomes liable for such Relevant Obligations whether by
operation of law or pursuant to any agreement (including, with
respect to a Reference Entity that is a Sovereign, any protocol,
treaty, convention, accord, concord, entente, pact or other
agreement), or (ii) issues Bonds or incurs Loans (the "Exchange
Bonds or Loans") that are exchanged for Relevant Obligations, and
in either case the Reference Entity is not thereafter a direct
obligor or a provider of a Relevant Guarantee with respect to such
Relevant Obligations or such Exchange Bonds or Loans, as
applicable. For purposes of this definition of "Successor",
"succeeded" and "succession" shall be construed accordingly. In the
case of an exchange offer, the determinations required pursuant to
paragraph (a) of this definition of "Successor" shall be made on
the basis of the outstanding principal balance of Relevant
Obligations exchanged and not on the basis of the outstanding
principal balance of the Exchange Bonds or Loans.
Notwithstanding the provisions above and sub-paragraph (b) of
the definition of Reference Entity, where a Reference Entity is
determined as a Successor to another Reference Entity pursuant to
the above provisions, then it will be deemed to be a Reference
Entity only once hereunder, and from and including the date of such
determination the Reference Entity Notional Amount with respect to
such Reference Entity will be the sum of the Reference Entity
Notional Amounts that would otherwise be applicable to it.
"Successor Backstop Date" means for purposes of any Successor
determination determined by DC Resolution, the date that is ninety
calendar days prior to the Successor Resolution Request Date
otherwise, the date that is ninety calendar days prior to the
earlier of (i) the date on which the Successor Notice is effective
and (ii) in circumstances where (A) a Successor Resolution Request
Date has occurred, (B) the relevant Credit Derivatives
Determinations Committee has Resolved not to make a Successor
determination and (C) the Successor Notice is delivered not more
than fourteen calendar days after the day on which the DC Secretary
publicly announces that the relevant Credit Derivatives
Determinations Committee has Resolved not to make a Successor
determination, the Successor Resolution Request Date. The Successor
Backstop Date shall not be subject to adjustment in accordance with
any Business Day Convention.
"Successor Notice" means an irrevocable notice from the
Calculation Agent to the Issuer that describes a succession (or, in
relation to a Reference Entity that is a Sovereign, a Sovereign
Succession Event) in respect of which a Succession Date has
occurred and pursuant to which one or more Successors to the
Reference Entity can be determined.
A Successor Notice must contain a description in reasonable
detail of the facts relevant to the determination to be made
pursuant to paragraph (a) of the definition of Successor above.
"Successor Resolution Request Date" means, with respect to a
notice to the DC Secretary requesting that a Credit Derivatives
Determinations Committee be convened to Resolve one or more
Successors to the Reference Entity, the date, as publicly announced
by the DC Secretary, that the relevant Credit Derivatives
Determinations Committee Resolves to be the date on which such
notice is effective.
"Trade Date" means the date specified as such in the relevant
Pricing Supplement.
"Transaction Auction Settlement Terms" means the Credit
Derivatives Auction Settlement Terms selected by the Calculation
Agent in accordance with this provision. In relation to a Credit
Event (and as set out in the definition of Credit Derivatives
Auction Settlement Terms), ISDA may publish one or more form(s) of
Credit Derivatives Auction Settlement Terms on its website at
www.isda.org (or any successor website thereto) and may amend such
forms from time to time. Each such form of Credit Derivatives
Auction Settlement Terms shall set out, inter alia, definitions of
"Auction", "Auction Cancellation Date", "Auction Covered
Transaction" and "Auction Final Price Determination Date" in
relation to the relevant Credit Event. The Transaction Auction
Settlement Terms for purposes of the Credit Linked Notes shall be
the relevant form of Credit Derivatives Auction Settlement Terms
for which the Reference Transaction would be an Auction Covered
Transaction (as such term will be set out in the relevant Credit
Derivatives Auction Settlement Terms). The Reference Transaction
(as set out in the definition thereof) is a hypothetical credit
derivative transaction included in these Credit Linked Conditions
principally for the purpose of selecting the Credit Derivatives
Auction Settlement Terms appropriate to the Credit Linked
Notes.
"Transaction Type" is as specified in the relevant Pricing
Supplement, subject to adjustment as provided in "Successor".
"Undeliverable Obligation" means a Deliverable Obligation
included in the Entitlement which, on the Credit Settlement Date
for such Deliverable Obligation, the Calculation Agent determines
for any reason (including without limitation, failure of the
relevant clearance system or due to any law, regulation, court
order, contractual restrictions, statutory restrictions or market
conditions or the non-receipt of any requisite consents with
respect to the Delivery of Loans or non-delivery of an Asset
Transfer Notice or any relevant information by a holder) it is
impossible or illegal or impractical to Deliver on the Credit
Settlement Date.
"Underlying Obligation" means, with respect to a guarantee, the
obligation which is the subject of the guarantee.
"Underlying Obligor" means with respect to an Underlying
Obligation, the issuer in the case of a Bond, the borrower in the
case of a Loan, or the principal obligor in the case of any other
Underlying Obligation.
"Unwind Costs" means:
(a) the amount specified in the relevant Pricing Supplement; or
(b) if "Standard Unwind Costs" are specified in the relevant
Pricing Supplement, an amount determined by the Calculation Agent
equal to the aggregate sum of (without duplication) all costs
(including loss of funding), fees, charges, expenses, tax and
duties incurred by the Issuer and/or any of its Affiliates in
connection with the redemption or credit settlement of the Credit
Linked Notes and the related termination, liquidation, transfer,
settlement or re-establishment (whether in whole or in part) of any
Hedging Arrangements, such amount to be apportioned pro rata
amongst each nominal amount of Notes equal to the Calculation
Amount; or
(c) if "Zero Unwind Costs" are specified in the relevant Pricing Supplement, zero.
"Valuation Date" means if "Single Valuation Date" is specified
in the relevant Pricing Supplement and subject to Credit Linked
Condition 12, the date that is the Number of Valuation Business
Days following the Credit Event Determination Date or, if any and
as applicable, the Calculation Agent Fallback Settlement
Determination Date, the Auction Cancellation Date or the relevant
No Auction Announcement Date and if "Multiple Valuation Dates" is
specified in the relevant Pricing Supplement, each of the following
dates:
(a) subject to Credit Linked Condition 12, the date that is the
Number of Valuation Business Days following the Credit Event
Determination Date or, if any and as applicable, the Calculation
Agent Fallback Settlement Determination Date, the Auction
Cancellation Date, or the relevant No Auction Announcement Date;
and
(b) each successive date that is the Number of Valuation
Business Days after the date on which the Calculation Agent obtains
a Market Value with respect to the immediately preceding Valuation
Date.
When "Multiple Valuation Dates" is specified in the relevant
Pricing Supplement, the total number of Valuation Dates shall be
equal to the number of Valuation Dates specified in the relevant
Pricing Supplement (or, if the number of Valuation Dates is not so
specified, five Valuation Dates).
If neither Single Valuation Date nor Multiple Valuation Dates is
specified in the relevant Pricing Supplement, Single Valuation Date
shall apply.
"Valuation Method":
(a) The following Valuation Methods may be specified in the
relevant Pricing Supplement with only one Valuation Date:
(i) "Market" means the Market Value determined by the
Calculation Agent with respect to the Valuation Date; or
(ii) "Highest" means the highest Quotation obtained by the
Calculation Agent with respect to the Valuation Date.
(b) If no such Valuation Method is specified in the relevant
Pricing Supplement, the Valuation Method shall be Highest.
(c) The following Valuation Methods may be specified in the
relevant Pricing Supplement with more than one Valuation Date:
(i) "Average Market" means the unweighted arithmetic mean of the
Market Values determined by the Calculation Agent with respect to
each Valuation Date; or
(ii) "Highest" means the highest Quotation obtained by the
Calculation Agent with respect to any Valuation Date; or
(iii) "Average Highest" means the unweighted arithmetic mean of
the highest Quotations obtained by the Calculation Agent with
respect to each Valuation Date.
(d) If no such Valuation Method is specified in the relevant
Pricing Supplement, the Valuation Method shall be Average
Highest.
Notwithstanding paragraphs (a) to (d) above, if Quotations
include Weighted Average Quotations or fewer than two Full
Quotations, the Calculation Agent may at its option determine that
the Valuation Method shall be Market or Average Market, as the case
may be.
Where applicable, the relevant Pricing Supplement may specify an
alternative Valuation Method which shall be applicable in respect
of the relevant Credit Linked Notes.
"Valuation Obligation" means:
(a) any obligation of the Reference Entity (either directly or
as provider of a Relevant Guarantee) determined pursuant to the
method described in "(A) Method for Determining Valuation
Obligations" below;
(b) the Reference Obligation;
(c) solely in relation to a Restructuring Credit Event
applicable to a Reference Entity which is a Sovereign, and unless
Asset Package Delivery is applicable, any Sovereign Restructured
Valuation Obligation; and
(d) if Asset Package Delivery is applicable, (i) if Financial
Reference Entity Terms is specified as applicable in the relevant
Pricing Supplement, any Prior Deliverable Obligation, or (ii) if
the Reference Entity is a Sovereign, any Package Observable
Bond,
in each case, as selected by the Issuer in its sole and absolute
discretion and notified to the Calculation Agent (a "Valuation
Obligation Notification") on or prior to the Valuation Date and (i)
unless it is an Excluded Valuation Obligation and (ii) provided
that the obligation has an Outstanding Principal Balance or Due and
Payable Amount that is greater than zero (determined for purposes
of paragraph (d) above, immediately prior to the relevant Asset
Package Credit Event).
(i) Method for Determining Valuation Obligations. For the
purposes of this definition of "Valuation Obligation", the term
"Valuation Obligation" may be defined as each obligation of the
Reference Entity described by the Valuation Obligation Category
specified in the relevant Pricing Supplement, and, subject to
paragraph (ii) (Interpretation of Provisions) below, having each
of, the Valuation Obligation Characteristics, if any, specified in
the relevant Pricing Supplement, in each case, as of each such date
the Issuer determines relevant for purposes of the Hedging
Arrangements or, if none at the relevant time, the date of delivery
of the Valuation Obligation Notification. The following terms shall
have the following meanings:
(A) "Valuation Obligation Category" means one of Payment,
Borrowed Money, Reference Obligation Only, Bond, Loan, or Bond or
Loan (each as defined in the definition of "Obligation" above,
except that, for the purpose of determining Valuation Obligations,
the definition of "Reference Obligation Only" shall be amended to
state that no Valuation Obligation Characteristics shall be
applicable to Reference Obligation Only).
(B) "Valuation Obligation Characteristics" means any one or more
of Not Subordinated, Specified Currency, Not Sovereign Lender, Not
Domestic Currency, Not Domestic Law, Listed, Not Domestic Issuance
(each as defined in the definition of "Obligation" above),
Assignable Loan, Consent Required Loan, Direct Loan Participation,
Transferable, Maximum Maturity, Accelerated or Matured and Not
Bearer;
(1) "Assignable Loan" means a Loan that is capable of being
assigned or novated to, at a minimum, commercial banks or financial
institutions (irrespective of their jurisdiction of organisation)
that are not then a lender or a member of the relevant lending
syndicate, without the consent of the relevant Reference Entity or
the guarantor, if any, of such Loan (or the consent of the
applicable borrower if the Reference Entity is guaranteeing such
Loan) or any agent;
(2) "Consent Required Loan" means a Loan that is capable of
being assigned or novated with the consent of the Reference Entity
or the guarantor, if any, of such Loan (or the consent of the
relevant borrower if the Reference Entity is guaranteeing such
loan) or any agent;
(3) "Direct Loan Participation" means a Loan in respect of
which, pursuant to a participation agreement, the Issuer is capable
of creating, or procuring the creation of, a contractual right in
favour of each Noteholder that provides each Noteholder with
recourse to the participation seller for a specified share in any
payments due under the relevant Loan which are received by such
participation seller, any such agreement to be entered into between
each Noteholder and either (A) the Issuer (to the extent that the
Issuer is then a lender or a member of the relevant lending
syndicate), or (B) a Qualifying Participation Seller (if any) (to
the extent such Qualifying Participation Seller is then a lender or
a member of the relevant lending syndicate);
(4) "Transferable" means an obligation that is transferable to
institutional investors without any contractual, statutory or
regulatory restriction, provided that none of the following shall
be considered contractual, statutory or regulatory
restrictions:
I contractual, statutory or regulatory restrictions that provide
for eligibility for resale pursuant to Rule 144A or Regulation S
promulgated under the United States Securities Act of 1933, as
amended (and any contractual, statutory or regulatory restrictions
promulgated under the laws of any jurisdiction having a similar
effect in relation to the eligibility for resale of an
obligation);
II restrictions on permitted investments such as statutory or
regulatory investment restrictions on insurance companies and
pension funds; or
III restrictions in respect of blocked periods on or around
payment dates or voting periods;
(5) "Maximum Maturity" means an obligation that has a remaining
maturity of not greater than the period specified in the relevant
Pricing Supplement (or if no such period is specified, thirty
years);
(6) "Accelerated or Matured" means an obligation under which the
principal amount owed, whether by reason of maturity, acceleration,
termination or otherwise, is due and payable in full in accordance
with the terms of such obligation, or would have been but for, and
without regard to, any limitation imposed under any applicable
insolvency laws; and
(7) "Not Bearer" means any obligation that is not a bearer
instrument unless interests with respect to such bearer instrument
are cleared via Euroclear, Clearstream International or any other
internationally recognised clearing system.
(ii) Interpretation of Provisions
(A) If (i) any of the Valuation Obligation Characteristics
"Listed", "Not Domestic Issuance" or "Not Bearer" is specified in
the relevant Pricing Supplement, the relevant Pricing Supplement
shall be construed as though such Valuation Obligation
Characteristic had been specified as a Valuation Obligation
Characteristic only with respect to Bonds; (ii) the Valuation
Obligation Characteristic "Transferable" is specified in the
relevant Pricing Supplement, the relevant Pricing Supplement shall
be construed as though such Valuation Obligation Characteristic had
been specified as a Valuation Obligation Characteristic only with
respect to Valuation Obligations that are not Loans; or (iii) any
of the Valuation Obligation Characteristics "Assignable Loan",
"Consent Required Loan" or "Direct Loan Participation" is specified
in the relevant Pricing Supplement, the relevant Pricing Supplement
shall be construed as though such Valuation Obligation
Characteristic had been specified as a Valuation Obligation
Characteristic only with respect to Loans.
(B) If more than one of "Assignable Loan", "Consent Required
Loan" and "Direct Loan Participation" are specified as Valuation
Obligation Characteristics in the relevant Pricing Supplement, the
Valuation Obligations may include any Loan that satisfies any one
of such Valuation Obligation Characteristics specified and need not
satisfy all such Valuation Obligation Characteristics.
(C) If a Valuation Obligation is a Relevant Guarantee, the following will apply:
(1) for purposes of the application of the Valuation Obligation
Category, the Relevant Guarantee shall be deemed to satisfy the
same category or categories as those that describe the Underlying
Obligation;
(2) for purposes of the application of the Valuation Obligation
Characteristics, both the Relevant Guarantee and the Underlying
Obligation must satisfy on the relevant date or dates each of the
applicable Valuation Obligation Characteristics, if any, specified
in the relevant Pricing Supplement from the following list: "Not
Subordinated", "Specified Currency", "Not Sovereign Lender", "Not
Domestic Currency" and "Not Domestic Law";
(3) for purposes of the application of the Valuation Obligation
Characteristics, only the Underlying Obligation must satisfy on the
relevant date or dates each of the applicable Valuation Obligation
Characteristics, if any, specified in the relevant Pricing
Supplement from the following list: "Listed", "Not Domestic
Issuance", "Assignable Loan", "Consent Required Loan", "Direct Loan
Participation", "Transferable", "Maximum Maturity", "Accelerated"
or "Matured" and "Not Bearer"; and
(4) for purposes of the application of the Valuation Obligation
Characteristics to an Underlying Obligation, references to the
Reference Entity shall be deemed to refer to the Underlying
Obligor.
(D) For purposes of the application of the Valuation Obligation
Characteristic "Maximum Maturity", remaining maturity shall be
determined on the basis of the terms of the Valuation Obligation in
effect at the time of making such determination and, in the case of
a Valuation Obligation that is due and payable, the remaining
maturity shall be zero.
(E) If "Financial Reference Entity Terms" and "Governmental
Intervention" are specified as applicable in the relevant Pricing
Supplement, if an obligation would otherwise satisfy a particular
Valuation Obligation Characteristic, the existence of any terms in
the relevant obligation in effect at the time of making the
determination which permit the Reference Entity's obligations to be
altered, discharged, released or suspended in circumstances which
would constitute a Governmental Intervention, shall not cause such
obligation to fail to satisfy such Valuation Obligation
Characteristic.
(F) For purposes of determining the applicability of Valuation
Obligation Characteristics and the requirements specified in the
paragraphs commencing "If "Mod R"..." and "If "Mod Mod R"..." below
to a Prior Deliverable Obligation or a Package Observable Bond, any
such determination shall be made by reference to the terms of the
relevant obligation in effect immediately prior to the Asset
Package Credit Event.
(G) If "Subordinated European Insurance Terms" is specified as
applicable in the relevant Pricing Supplement, if an obligation
would otherwise satisfy the "Maximum Maturity" Valuation Obligation
Characteristic, the existence of any Solvency Capital Provisions in
such obligation shall not cause it to fail to satisfy such
Valuation Obligation Characteristic.
If "Mod R" is specified as applicable in the relevant Pricing
Supplement and Restructuring is the only Credit Event specified in
a Credit Event Notice, then unless the Valuation Obligation is a
Prior Deliverable Obligation and Asset Package Delivery applies due
to a Governmental Intervention, a Valuation Obligation may be
specified in a Valuation Obligation Notification only if it (i) is
a Fully Transferable Obligation and (ii) has a final maturity date
not later than the applicable Restructuring Maturity Limitation
Date, in each case, as of each such date as the Calculation Agent
determines relevant for purposes of the Hedging Arrangements or, if
none at the relevant time, the date of delivery of the Valuation
Obligation Notification.
If "Mod Mod R" is specified as applicable in the relevant
Pricing Supplement and Restructuring is the only Credit Event
specified in a Credit Event Notice, then unless the Valuation
Obligation is a Prior Deliverable Obligation and Asset Package
Delivery applies due to a Governmental Intervention, a Valuation
Obligation may be specified in a Valuation Obligation Notification
only if it (i) is a Conditionally Transferable Obligation and (ii)
has a final maturity date not later than the applicable Modified
Restructuring Maturity Limitation Date, in each case, as of each
such date as the Calculation Agent determines relevant for purposes
of the Hedging Arrangements or, if none at the relevant time, the
date of delivery of the Valuation Obligation Notification. For the
purposes of this paragraph only and notwithstanding the foregoing,
in the case of a Restructured Bond or Loan with a final maturity
date on or prior to the 10-year Limitation Date, the final maturity
date of such Bond or Loan shall be deemed to be the earlier of such
final maturity date or the final maturity date of such Bond or Loan
immediately prior to the relevant Restructuring.
For the purposes of making a determination pursuant to the two
prior paragraphs or the definition of Restructuring Maturity
Limitation Date, the final maturity date shall, subject as provided
in the prior paragraph, be determined on the basis of the terms of
the Valuation Obligation in effect at the time of making such
determination and, in the case of a Valuation Obligation that is
due and payable, the final maturity date shall be deemed to be the
date on which such determination is made.
Asset Package Delivery will apply if an Asset Package Credit
Event occurs, unless (i) such Asset Package Credit Event occurs
prior to the Credit Event Backstop Date determined in respect of
the Credit Event specified in the Credit Event Notice or DC Credit
Event Announcement applicable to the Credit Event Determination
Date, or (ii) if the Reference Entity is a Sovereign, no Package
Observable Bond exists immediately prior to such Asset Package
Credit Event. Notwithstanding the foregoing, if Sovereign No Asset
Package Delivery is specified as applicable in the relevant Pricing
Supplement, it shall be deemed that no Package Observable Bond
exists with respect to a Reference Entity that is a Sovereign (even
if such a Package Observable Bond has been published by ISDA) and
accordingly, Asset Package Delivery shall not apply thereto.
The Valuation Obligation Notification shall describe the
selected Valuation Obligation(s) in reasonable detail and shall
specify the relevant title(s) or designation(s), maturity date(s)
and coupon rate(s) and, unless the Quotation Amount is specified in
the relevant Pricing Supplement, the applicable Quotation Amount in
respect of each such Valuation Obligation (Provided That the
aggregate of the Quotation Amounts in respect of the Valuation
Obligations shall not exceed the relevant Reference Entity Notional
Amount). The Issuer may at any time after delivering a Valuation
Obligation Notification but prior to the Valuation Time on the
Valuation Date deliver a further Valuation Obligation Notification
which shall replace all prior Valuation Obligation Notifications in
relation to any additional or replacement Valuation Obligation(s)
specified therein.
For the avoidance of doubt the Issuer shall be entitled to
select any Valuation Obligations for the purposes of calculating
the Final Price irrespective of their market value and, provided
that (in the case of a Valuation Obligation selected pursuant to
sub-paragraph (a) above) the selected obligation satisfies the
applicable Valuation Obligation Category and Valuation Obligation
Characteristics on the relevant date, such obligation(s) may
constitute the Valuation Obligation(s) for the purposes hereof
notwithstanding that this is not the case subsequent to such
date.
"Valuation Time" means the time specified as such in the
relevant Pricing Supplement or, if no time is so specified, 11.00
a.m. in the principal trading market for the Valuation
Obligation.
"Weighted Average Quotation" means in accordance with the
Quotation Method, the weighted average of firm quotations obtained
from Quotation Dealers at the Valuation Time, to the extent
reasonably practicable, each for an amount of the Valuation
Obligation with an Outstanding Principal Balance or Due and Payable
Amount, as applicable, of as large a size as available but less
than the Quotation Amount (but, of a size at least equal to the
Minimum Quotation Amount) that in aggregate are approximately equal
to the Quotation Amount.
14. Credit Event Notice after Restructuring Credit Event
Notwithstanding anything to the contrary in these Credit Linked
Conditions, upon the occurrence of an M(M)R Restructuring:
(a) The Calculation Agent may deliver multiple Credit Event
Notices in respect of such M(M)R Restructuring, each such Credit
Event Notice setting forth an amount of the relevant Reference
Entity Notional Amount to which such Restructuring Credit Event
applies (the "Partial Redemption Amount") that may be less than
such Reference Entity Notional Amount immediately prior to the
delivery of such Credit Event Notice. In such circumstances the
Credit Linked Conditions and related provisions shall be deemed to
apply to the Partial Redemption Amount only and each such Credit
Linked Note shall be redeemed in part (such redeemed part being
equal to the Partial Redemption Amount).
(b) For the avoidance of doubt (A) the nominal amount of each
Credit Linked Note not so redeemed in part shall remain
outstanding, the Reference Entity Notional Amount shall be reduced
by the Partial Redemption Amount and interest shall accrue in
respect of each Credit Linked Note as provided in Condition 3
(Interest on Fixed Rate Notes) or Condition 4 (Interest on Floating
Rate Notes), and Credit Linked Condition 5(b), as applicable,
(adjusted in such manner as the Calculation Agent determines to be
appropriate), (B) the Credit Linked Conditions and related
provisions shall apply to such Credit Linked Note in the event that
subsequent Credit Event Notices are delivered in respect of the
Reference Entity that was the subject of the Restructuring Credit
Event and (C) if, following a Restructuring Credit Event, different
Credit Event Determination Dates have been determined with respect
to different portions of amounts payable or deliverable to
Noteholders under the relevant Series, the Calculation Agent will
(x) determine such adjustment(s) to the Base Conditions as may be
required to achieve as far as practicable the same economic effect
as if each such portion was a separate series or otherwise reflect
or account for the effect of the above provisions of this Credit
Linked Condition 14 and (y) the effective date of such
adjustment(s).
(c) If the provisions of this Credit Linked Condition 14 apply
in respect of the Credit Linked Notes, on redemption of part of
each such Credit Linked Note the relevant Credit Linked Note or, if
the Credit Linked Notes are represented by a Global Note, such
Global Note, shall be endorsed to reflect such part redemption.
15. Provisions relating to Multiple Holder Obligation
Unless this Credit Linked Condition 15 is specified as not
applicable in the relevant Pricing Supplement, then,
notwithstanding anything to the contrary in the definition of
Restructuring and related provisions, the occurrence of, agreement
to, or announcement of, any of the events described in
sub-paragraphs (a) to (e) of the definition of "Restructuring"
shall not be a Restructuring unless the Obligation in respect of
any such events is a Multiple Holder Obligation.
"Multiple Holder Obligation" means an Obligation that (i) at the
time of the event which constitutes a Restructuring Credit Event is
held by more than three holders that are not Affiliates of each
other and (ii) with respect to which a percentage of holders
(determined pursuant to the terms of the Obligation as in effect on
the date of such event) at least equal to sixty-six and two-thirds
is required to consent to the event which constitutes a
Restructuring Credit Event, provided that any Obligation that is a
Bond shall be deemed to satisfy the requirement in paragraph
(ii).
16. Calculation Agent, Calculation Agent Notices and Timings
(a) Whenever any state of affairs, circumstance, event or other
matter falls to be determined, considered or otherwise decided
upon, or any discretion is required to be exercised, by the
Calculation Agent or any other person (including where a matter is
to be decided by reference to the Calculation Agent's or such other
person's opinion), unless otherwise stated, that matter shall be
determined, considered or otherwise decided upon, or that
discretion shall be exercised, (i) where by the Calculation Agent,
acting in good faith and in a commercially reasonable manner or
(ii) where by such other person acting in its sole and absolute
discretion and in each case shall in the absence of manifest error)
be final and binding on the Issuer, the Trustee and the
Noteholders. Whenever the Calculation Agent is required to make any
determination it may, inter alia, decide issues of construction and
legal interpretation. Any delay, deferral or forbearance by the
Calculation Agent in the performance or exercise of any of its
obligations or its discretion under the Notes including, without
limitation, the giving of any notice by it to any person, shall not
affect the validity or binding nature of any later performance or
exercise of such obligation or discretion. Neither the Calculation
Agent nor the Issuer shall be liable for any loss, liability, cost,
claim, action, demand or expense (including without limitation, all
costs, charges and expenses paid or incurred in disputing or
defending any of the foregoing) arising out of or in relation to or
in connection with the Calculation Agent's appointment or the
exercise of its functions (including, without limitation, any such
delay, deferral or forbearance), except in the case of the
Calculation Agent such as may result from its own wilful default,
negligence or bad faith or that of its officers or agents.
(b) Any notice to be delivered by the Calculation Agent to the
Issuer pursuant to these Credit Linked Conditions may be given in
writing (including by facsimile and/or email) and/or by telephone.
Any such notice will be effective when given, regardless of the
form in which it is delivered. A notice given by telephone will be
deemed to have been delivered at the time the telephone
conversation takes place. If the notice is delivered by telephone,
a written confirmation will be executed and delivered confirming
the substance of that notice within one Calculation Agent City
Business Day of that notice. Failure to provide that written
confirmation will not affect the effectiveness of that telephonic
notice.
(c) Any notice to be delivered by the Issuer to the Calculation
Agent pursuant to these Credit Linked Conditions may be given in
writing (including by facsimile and/or email) and/or by telephone.
Any such notice will be effective when given, regardless of the
form in which it is delivered. A notice given by telephone will be
deemed to have been delivered at the time the telephone
conversation takes place. If the notice is delivered by telephone,
a written confirmation will be executed and delivered confirming
the substance of that notice within one Calculation Agent City
Business Day of that notice. Failure to provide that written
confirmation will not affect the effectiveness of that telephonic
notice.
(d) For the purposes of determining the day on which an event
occurs for purposes of these Credit Linked Conditions, the
Calculation Agent will determine the demarcation of days by
reference to Greenwich Mean Time (or, if the Reference Entity has a
material connection to Japan for these purposes, Tokyo time)
irrespective of the time zone in which such event occurred. Any
event occurring at midnight shall be deemed to have occurred
immediately prior to midnight.
(e) In addition, if a payment is not made by the Reference
Entity on its due date or, as the case may be, on the final day of
the relevant Grace Period, then such failure to make a payment
shall be deemed to have occurred on such day prior to midnight
Greenwich Mean Time (or, if the Reference Entity has a material
connection to Japan for these purposes, Tokyo time), irrespective
of the time zone of its place of payment.
17. Amendment of Credit Linked Conditions
(a) The Calculation Agent may from time to time amend any
provision of these Credit Linked Conditions (i) to incorporate
and/or reflect further or alternative documents or protocols from
time to time published by ISDA with respect to the settlement of
credit derivative transactions and/or the operation or application
of determinations by Credit Derivatives Determinations Committees,
including without limitation, in relation to settlement, credit
events and successors and/or (ii) in any manner which the
Calculation Agent determines in a commercially reasonable manner is
necessary or desirable to reflect or account for market practice
for credit derivative transactions and/or reflect or account for a
Hedge Disruption Event.
(b) The Trustee shall consent, without the consent of the
Noteholders or the Couponholders, to any such amendments upon
receipt from the Issuer of a certificate, signed by a Director of
the Issuer, stating that the amendments proposed by the Calculation
Agent are necessary to reflect or account for market practice for
credit derivative transactions and/or reflect or account for a
Hedge Disruption Event, provided that the Trustee shall not be
obliged to agree to any such amendments which, in the sole opinion
of the Trustee, either: (x) increase or modify the duties and/or
obligations of the Trustee; or (y) remove, modify or adversely
affect any rights, powers or protections of the Trustee.
(c) Any amendment made in accordance with this Credit Linked
Condition 17 shall be notified to the Noteholders in accordance
with Condition 14 (Notices). Any failure to provide notice of any
such amendment to Noteholders will not constitute an Event of
Default under the Notes and will not affect the validity of any of
the foregoing provisions.
18. Early redemption of Reference Obligation Only Notes following a Substitution Event
If the Notes are Reference Obligation Only Notes relating to a
single Reference Entity and the event set out in paragraph (a) of
the definition of Substitution Event above occurs with respect to
the Reference Obligation, then:
(a) interest (if any) shall cease to accrue on the Credit Linked
Notes from and including the Interest Payment Date immediately
preceding the relevant Substitution Event Date or, if no Interest
Payment Date has occurred, no interest will accrue on the Credit
Linked Notes; and
(b) each Credit Linked Note will be redeemed by the Issuer at
its relevant Reference Obligation Only Early Termination Amount
specified in, or determined in the manner specified in, the
relevant Pricing Supplement on the Maturity Date, which for the
purposes of this Credit Linked Condition 18 shall be the day
falling five Business Days following the relevant Substitution
Event Date.
19. DC Resolution Adjustment Events
If following the publication of a DC Resolution (the "Prior DC
Resolution"), a further DC Resolution (the relevant "Further DC
Resolution") is published the effect of which would be to reverse
all or part of the Prior DC Resolution or if any DC Resolution
would reverse any determination made by the Calculation Agent
and/or the occurrence of a Credit Event Determination Date,
notwithstanding any other provisions of these Credit Linked
Conditions the Calculation Agent may, in its sole and absolute
discretion, make any adjustment(s) that the Calculation Agent
determines is necessary or desirable to the Conditions or these
Credit Linked Conditions to reflect the publication of such Further
DC Resolution or DC Resolution, including, without limitation, as a
result of the impact or effect of such Further DC Resolution or DC
Resolution on the Hedging Arrangements (if any at the relevant
time).
20. Payments
Condition 8(d) (Payments - General Provisions) shall be amended
by including the following sentence as the last sentence
therein:
"Notwithstanding anything contained in these Conditions, if any
relevant Condition requires any amounts in relation to a Note to be
rounded as part of any calculations or determinations, then in the
case of Notes which are for the time being represented by a Global
Note, such calculation or determination shall be carried out in
relation to the aggregate principal amount of the Notes so
represented. Any rounding shall be carried out to the result
thereof and the rounding shall not be carried out in relation to
any calculations or determinations made on a pro rata or per Note
basis.".
21. Modification and Substitution
Condition 15 (Modification of Terms, Waiver and Substitution)
shall be amended by inserting "; or" after the reference to
"Couponholders" in the last line of sub paragraph (b)(iii) and
inserting thereafter the following as a new sub paragraph
(b)(iv):
"(iv) any modification of the Notes of a Series after the Issue
Date required in connection with the listing of such Notes on any
stock exchange.".
ANNEX TO CREDIT LINKED CONDITIONS
FORM OF ASSET TRANSFER NOTICE
[Aggregate Principal Amount of Tranche] Credit Linked Notes (the
"Notes") due [--] linked to [name of Reference Entity]
When completed, this Asset Transfer Notice should be delivered
(i) if the Notes are represented by a Global Note, to Euroclear or
Clearstream, Luxembourg, in such manner is acceptable to them with
a hardcopy to the Registrar (if the Notes are Registered Notes),
the Principal Paying Agent, the Issuer and any Delivery Agent
("Global Note Notice") or (ii) if the Notes are represented by a
definitive Note, in writing along with the relevant Notes** to the
Registrar (if the Notes are Registered Notes) or any Paying Agent
(if the Notes are Bearer Notes) with a hardcopy to the Principal
Paying Agent, the Issuer and any Delivery Agent ("Definitive Note
Notice").
[To: Euroclear Bank SA/N.V. or: Clearstream, Luxembourg
as operator of the Euroclear 67 Boulevard Grande-Duchesse
System
Boulevard du Roi Albert Charlotte
II, no 1
B-1210 Brussels Luxembourg-Ville
Belgium L-1010 Luxembourg]
[To: HSBC Bank plc (the "ICSD or: [HSBC Bank plc (the
Registrar")] "Paying Agent")]
8 Canada Square 8 Canada Square
London London
E14 5HQ E14 5HQ
Tel: [--] Tel: [--]
Fax: [--] Fax: [--]
Attention: [--] Attention: [--]
or:
[--]]
Copy: HSBC Bank Middle East Limited (the "Issuer")
[HSBC Bank plc, ["ICSD Registrar"]/["Principal Paying
Agent"]
Tel: [--]
Fax: [--]
Attention: [--]
Copy: [--] (the "Delivery Agent")
[--]
Tel: [--]
Fax: [--]
Attention: [--]]
** The Registrar or Paying Agent with whom any definitive Notes
are deposited will not in any circumstances be liable to the
depositing Noteholder or any other person for any loss or damage
arising from any act, default or omission of such Registrar or
Paying Agent in relation to the said definitive Notes or any of
them. Notwithstanding the deposit of any Notes with the Registrar
or Paying Agent, the Registrar or Paying Agent, as applicable, acts
solely as an agent of the Issuer and/or the Trustee and will not
assume any obligation or responsibility towards or relationship of
agency or trust for or with any of the owners or holders of the
Notes, Receipts, Coupons or Talons or any other third party.
Expressions defined in the Conditions of the Notes (the
"Conditions") shall bear the same meanings herein. Failure to
properly complete and deliver this Asset Transfer Notice as
provided in the Conditions may result in this Asset Transfer Notice
being treated as null and void.
Reference is made to the [Notice of Physical Settlement
Notice][Physical Settlement Amendment Notice]* of [insert date of
notice] and the Entitlement to be delivered pursuant to the
Physical Settlement of [the Notes in part][the Notes]*.
2. Name(s) and Address(es) of [Accountholder/Noteholder]
[insert details]
3. Request and confirmation
I/We*, the [Accountholder(3) /Noteholder(4) ] specified in 1
above, being the holder of [--] in aggregate nominal amount of the
Note(s), hereby:
(i) request that the Issuer delivers the Entitlement(s) to which
I am/we are* entitled in relation to such Note(s), all in
accordance with the Conditions; and,
(ii) confirm that I/we* have requested [Euroclear/Clearstream,
Luxembourg][other relevant clearing system]* to block my/our*
account.
4. [Instructions to [Euroclear][Clearstream, Luxembourg]*]3
[The Entitlement to be delivered comprises Deliverable
Obligations that are deliverable through [Euroclear/Clearstream,
Luxembourg]* and I/we* hereby irrevocably authorise and instruct
[Euroclear][Clearstream, Luxembourg][other relevant clearing
system]* to deliver the Entitlement to the following account:
At: [--]
Swift: [--]
ABA: [--]
Beneficiary: [--]
Swift: [--]
Account Number: [--]
[The Entitlement to be delivered comprises Deliverable
Obligations that are not deliverable through
[Euroclear/Clearstream, Luxembourg]* and I/we* hereby irrevocably
authorise and instruct the Issuer to deliver such Deliverable
Obligations in accordance with the following instructions, subject
to my/our* production to the Issuer's satisfaction in its sole and
absolute discretion of all necessary consents or authorisations
(including but not limited to those requested or required by any
applicable designee) with respect thereto as requested by the
Issuer:
[insert alternative delivery instructions]]
5. Name and address of person from whom details may be obtained
for the delivery of the Entitlement
[insert details]
6. [Notes Account at relevant Clearing System]3
My/Our* Notes accounts with [insert name of relevant Clearing
System, if applicable] is:
[Euroclear/Clearstream, Luxembourg]*
No:
Name:
I/We* hereby irrevocably authorise [Euroclear/Clearstream,
Luxembourg]* to debit the Notes referred to above from the account
referred to above on or before the Credit Settlement Date if the
Delivery of the relevant Entitlement represents the final
settlement due in respect of the Notes.]
7. Expenses
I/We* hereby irrevocably undertake to pay all Expenses in
respect of the Entitlement [and irrevocably authorise
Euroclear/Clearstream, Luxembourg* to debit my/our* specified
account at Euroclear/Clearstream, Luxembourg* in respect thereof
and to pay such Expenses].
8. Noteholders [Euroclear/Clearstream, Luxembourg]* account for
payment of any cash amount payable in accordance with the
Conditions
I/We* hereby instruct that any cash amount payable to me/us* in
accordance with the Conditions shall be credited to the
[Euroclear/Clearstream, Luxembourg]* account referred to below:
Account:
No:
Name:
[Name and address of bank or institution at which such account
is held:
[insert details]](4)
9. Authorisation of production in proceedings
I/We* hereby authorise the production of this Asset Transfer
Notice in any administrative or legal proceedings instituted in
connection with the Note(s) to which this Asset Transfer Notice
relates.
10. Governing law and jurisdiction
This Asset Transfer Notice and any non-contractual obligations
arising out of or in connection herewith shall be governed by and
construed in accordance with English law. The courts of England and
Wales shall have exclusive jurisdiction to hear and decide any
suit, action or proceedings, and to settle any disputes or any
non-contractual obligation which may arise out of or in connection
with this Asset Transfer Notice or the Note(s) and, for these
purposes, each of the Noteholder and the Issuer irrevocably submits
to the jurisdiction of the courts of England.
Date
PRO FORMA PRICING SUPPLEMENT
PRICING SUPPLEMENT
Pricing Supplement dated [ ]
Series No.: [ ]
Tranche No.: [ ]
HSBC Bank Middle East Limited
U.S.$ 7,000,000,000 Debt Issuance Programme
Issue of
[Aggregate Principal Amount of Tranche]
[Title of Notes]
[MiFID II PRODUCT GOVERNANCE/PROFESSIONAL INVESTORS AND ECPs
ONLY TARGET MARKET - Solely for the purposes of [the/each]
manufacturer's product approval process, the target market
assessment in respect of the Notes has led to the conclusion that:
(i) the target market for the Notes is eligible counterparties and
professional clients only, each as defined in Directive 2014/65/EU
(as amended, "MiFID II"); and (ii) all channels for distribution of
the Notes to eligible counterparties and professional clients are
appropriate. Any person subsequently offering, selling or
recommending the Notes (a "distributor") should take into
consideration the manufacturer['s/s'] target market assessment;
however, a distributor subject to MiFID II is responsible for
undertaking its own target market assessment in respect of the
Notes (by either adopting or refining the manufacturer['s/s']
target market assessment) and determining appropriate distribution
channels.]
[PROHIBITION OF SALES TO EEA RETAIL INVESTORS - The Notes are
not intended to be offered, sold or otherwise made available to and
should not be offered, sold or otherwise made available to any
retail investor in the European Economic Area ("EEA"). For these
purposes, a retail investor means a person who is one (or more) of:
(i) a retail client as defined in point (11) of [Directive
2014/65/EU (as amended, "MiFID II")][MiFID II]; (ii) a customer
within the meaning of Directive 2002/92/EC (as amended) ("IMD"),
where that customer would not qualify as a professional client as
defined in point (10) of Article 4(1) of MiFID II; or (iii) not a
qualified investor as defined in Directive 2003/71/EC (as amended,
the "Prospectus Directive"). Consequently, no key information
document required by Regulation (EU) No 1286/2014 (as amended, the
"PRIIPs Regulation") for offering or selling the Notes or otherwise
making them available to retail investors in the EEA has been
prepared and therefore offering or selling the Notes or otherwise
making them available to any retail investor in the EEA may be
unlawful under the PRIIPs Regulation.]
PART A - CONTRACTUAL TERMS
This document constitutes the Pricing Supplement relating to the
issue of the Tranche of Notes described herein. Terms used herein
shall be deemed to be defined as such for the purposes of the
Conditions (the "Conditions") set forth in the Information
Memorandum dated 12 July 2018 in relation to the above Programme
(the "Information Memorandum") [and the supplement[s] thereto dated
[--] ]. This document constitutes the Pricing Supplement in respect
of the Notes described herein for the purpose of the Information
Memorandum and must be read in conjunction with such Information
Memorandum. Full information on the Issuer and the offer of the
Notes is only available on the basis of the combination of this
Pricing Supplement and the Information Memorandum.
The following alternative language applies if the first tranche
of an issue which is being increased was issued under a Prospectus
with an earlier date.
Terms used herein shall be deemed to be defined as such for the
purposes of the Conditions (the "Conditions") set forth in the
[prospectus / information memorandum] dated [--] [and the
supplemental prospectus dated [--]] and incorporated by reference
into the Information Memorandum dated 12 July 2018 in relation to
the above Programme (the "Information Memorandum") and which are
applicable to the Notes. Full information on the Issuer and the
offer of the Notes is only available on the basis of the
combination of this Pricing Supplement and the Information
Memorandum.
[Include whichever of the following apply or specify as "Not
Applicable". Note that the numbering should remain as set out
below, even if "Not Applicable" is indicated for individual
paragraphs or sub-paragraphs. Italics denote guidance for
completing the Pricing Supplement.]
1. (i) Issuer: HSBC Bank Middle East Limited
(ii) Arranger(s): HSBC Bank plc
2. (i) Series number: [--]
(ii) Tranche number: [--]
[(If fungible with an existing Series, details
of that Series, including the date on which
the Notes become fungible).]
3. Specified Currency or Currencies:
(i) of denomination: [--]
(ii) of payment [--]
4. Aggregate Principal Amount of Notes admitted to [--]
trading:
[(i)] Series: [--]
[(ii) Tranche [--]]
5. (i) Issue Price: [--] per cent. of the Aggregate Principal Amount [plus
accrued interest from [interest payment
date] (In the case of fungible issues only, if
applicable)]
(i) Commission payable: [[--] per cent./None]
(ii) Selling concession: [[--] per cent./None]
6. (i) Denomination(s): [[USD][EUR][--]] [[specify currency] [specify amount]]
[and integral multiples of [USD] [EUR]
[specify amount] thereafter] [(Note: Minimum denomination
to be at least EUR 100,000 or equivalent)]
(Condition 1(f))
(ii) Calculation Amount: [--]
7. (i) Issue Date: [--]
(ii) Interest Commencement Date: [specify/Issue Date/Not Applicable]
8. Maturity Date: [Specify date or (for Floating Rate Notes) Interest
Payment Date falling in or nearest to
the relevant month and year.]
(Condition 6(a))
[If Index-Linked provisions apply please add: or, if
later, the [fifth/specify] Business Day
following the [Valuation Date/specify] [adjusted in
accordance with [specify] [Business Day
Convention and any applicable Business Centre(s)] for the
definition of "Business Day"]]
[Option: to use for 2014 Credit-Linked Notes: [[insert date] (the "Scheduled Maturity Date"), subject
as provided in the Credit Linked Conditions
[and to adjustment in accordance with the [insert]
Business Day Convention].]
[For Basket Credit Linked Notes:
The later of:
(a) the day falling [five] [specify] Business Days
following (i) the calculation of the Final
Price or (ii) the Auction Final Price Determination Date
(or, if later, the related Auction
Settlement Date) in respect of each Reference Entity for
which a Credit Event Determination
Date has occurred; and
(b) [insert date] (the "Scheduled Maturity Date"),
subject as provided in the Credit Linked
Conditions [and to adjustment in accordance with the
[insert] Business Day Convention].] end
of Option for such Credit-Linked Notes]
9. Interest basis: [[--] per cent Fixed Rate]
(Conditions 3 to 5)
[Option: For Currency-Linked Notes, also add
[The Notes are Currency-Linked Notes:
(i) Specified Currency: [--]
(ii) Specified Currency Jurisdiction: [--]
(iii) [First] Reference Currency: [--]
(iv) [First] Reference Jurisdiction: [--]
(v) [Second] Reference Currency: [--]
(vi) [Second] Reference Currency Jurisdiction [--]]
- end of Option for Currency-Linked Notes]
[[Specify reference rate] +/- [--] per cent. Floating
Rate]
[Variable Coupon Amount Notes]
[Zero Coupon Notes]
[Index-Linked Notes]
[other (specify)]
(further particulars specified below)
10. Redemption basis: [Redemption at par]
(Condition 6)
[Option: For Currency-Linked Notes, also add
[The Notes are Currency-Linked Notes:
(i) Specified Currency: [--]
(ii) Specified Currency Jurisdiction: [--]
(iii) [First] Reference Currency: [--]
(iv) [First] Reference Jurisdiction: [--]
(v) [Second] Reference Currency: [--]
(vi) [Second] Reference Currency: Jurisdiction [--]]
end of Option for Currency-Linked Notes
[Equity/Index-Linked Redemption]
[Currency-Linked Redemption]
[Credit-Linked Redemption]
[Dual Currency]
[Partly Paid]
[Instalment]
[other (specify)]
11. Change of interest or redemption basis: [specify details of any probision for convertibility of
Notes to another interest or redemption
payment basis] [Not Applicable]
12. Put/Call options: [Condition 6[(c)][(d)] will apply as specified below]
[Not Applicable]
13. (i) Status of the Notes: (Condition 2) [Not Subordinated Notes/Subordinated Notes]
(ii) Date [Board] approval for issuance of [--] [and [--]; respectively]] (N.B. only relevant where
Notes obtained: Board (or similar) authorisation
is required for the particular tranche of Notes)] [Not
Applicable]
14. Additional U.S. federal income tax considerations: [Not applicable/give details] [The Notes are [not]
Section 871(m) Notes for the purpose of
Section 871(m).] The [Dividend Withholding] [Issuer
Withholding] approach shall apply to the
Notes. For further information, see "Taxation - United
States Taxation - Withholding on Dividend
Equivalent Payments" in the Information Memorandum. [The
following dividend equivalent amounts
are to be treated as being reinvested during the term of
the Notes, less a withholding on
such amounts at a rate of [ ] per cent. (as of the Issue
Date), which shall be treated for
U.S. federal income tax purposes as having been withheld
from payments due to the holders
of the Notes: [ ]]. Additional information regarding the
application of Section 871(m) to
the Notes will be available from the Issuer. Investors
should submit any requests for additional
information to the Issuer via their custodians.]
15. Method of distribution: [Syndicated/Non-syndicated]
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
16. Fixed Rate Note provisions: [Applicable/Not Applicable]
(Condition 3) [(If not applicable, delete the remaining sub-paragraphs
of this paragraph)]
(i) Rate(s) of Interest: [--] per cent. per annum [payable
[annually/semi-annually/quarterly/monthly/other
(specify)]
in arrear]
(ii) Interest Payment Date(s): [dd/mm, dd/mm, dd/mm and dd/mm] in each year from (and
including) the first Interest Payment
Date to (and including) [the Scheduled Maturity
Date]/[the Interest Payment Date falling on
[--] [adjusted in accordance with [specify] [Business Day
Convention and any applicable Business
Centre(s)] for the definition of "Business Day"]] / [not
adjusted]
[Option: for 2014 Credit-Linked Notes add:
[dd/mm, dd/mm, dd/mm and dd/mm] in each year from (and
including) the first Interest Payment
Date to (and including) the Scheduled Maturity Date, in
each case subject as provided in the
Credit Linked Conditions [and adjusted in accordance with
[specify] [Business Day Convention
and any applicable Business Centre(s)] for the definition
of "Business Day"]] / [not adjusted].
end of Option for such Credit-Linked Notes]
(iii) First Interest Payment Date: [--] [Option: for 2014 Credit-Linked Notes add: subject
as provided in the Credit Linked Conditions.
end of Option for such Credit-Linked Notes]
(iv) Fixed Coupon Amount(s): [[--] per Calculation Amount] [An amount per Calculation
Amount equal to the product of:
(i) the Calculation Amount
(ii) the Rate of Interest; and
(iii) the Day Count Fraction]
(v) Day Count Fraction: [--] [30/360/Actual/Actual (ICMA/ISDA)/ Actual/365
(Fixed) /other (specify)]
(vi) [Determination Date: [--] in each year (insert regular interest payment dates,
ignoring issue date or maturity
date in the case of a long or short first or last coupon,
N.B. only relevant where Day Count
Fraction is Actual/Actual(ICMA).)]
(vii) [Other terms relating to the method of [Not Applicable / give details] (Consider if day count
calculating interest for Fixed Rate Notes:] fraction, particularly for Euro denominated
issues, should be on an Actual/Actual basis)
17. Floating Rate Note Provisions: [Applicable /Not Applicable]
(Condition 4) (If not applicable, delete the remaining sub-paragraphs
of this paragraph)
(i) [Specified Period(s): [Not Applicable / [--] months]]
(ii) Interest Payment Dates: [dd/mm, dd/mm, dd/mm and dd/mm] in each year from (and
including) the first Interest Payment
Date to (and including) [the Scheduled Maturity
Date]/[the Interest Payment Date falling on
[--][adjusted in accordance with [specify] [Business Day
Convention and any applicable Business
Centre(s)] for the definition of "Business Day"]] / [not
adjusted]
(iii) Reference Rate: [--]
[Option: for 2014 Credit-Linked Notes add:
[20 March, June, September and December] in each year,
from (and including) [--] to (and including)
the Scheduled Maturity Date, in each case subject as
provided in the Credit Linked Conditions
and to adjustment in accordance with the [specify
Business Day Convention]. end of Option
for such Credit-Linked Notes]
(iv) First Interest Payment Date: [--] [Option: for 2014 Credit-Linked Notes add: subject
as provided in the Credit Linked Conditions.
end of Option for such Credit-Linked Notes]
(v) Business Day Convention: [FRN Convention/Floating Rate Convention/Eurodollar
Convention/Following Business Day Convention/Modified
Following Business Day Convention/Preceding Business Day
Convention/other (give details)]
(vi) Business Centre(s): [Not Applicable/give details] [Option: to use for 2014
Credit-Linked Notes: See also the Schedule
hereto. end of the Option for such Credit-Linked Notes]
(vii) Screen Rate Determination: [Applicable / Not Applicable]
(1) Relevant Screen Page: [--]
(2) Relevant Time: [--]
(3) Interest Determination Date: [--]
(4) Relevant Financial Centre: [As per the Conditions] [--]
(5) Reference Banks: [As per the Conditions] [--] [Not Applicable]
(6) Relevant Number of Quotations: [As per the Conditions] [--] [Not Applicable]
(7) Leading Banks: [As per the Conditions] [--] [Not Applicable]
(8) ISDA Determination for [Applicable] [Not Applicable]
Fallback provisions:
(A) Floating Rate [--]
Option:
(B) Designated [--]
Maturity:
(C) Reset Date: [--]
(viii) Alternative Reference Rate: [Applicable] [Not Applicable]
(1) Alternative Pre-nominated None
Index
(ix) ISDA Determination [Applicable / Not Applicable]
(1) Floating Rate Option [--]
(2) Designated Maturity [--]
(3) Reset Date [--]
(x) Interest Determination Date(s): [--]
(xi) Linear Interpolation: [Not Applicable]/[Applicable - the Rate of Interest for
the Interest Period ending on the
Interest Payment Date falling in [ ] shall be calculated
using Linear Interpolation]
[Option: for 2014 Credit-Linked Notes add:
[Not Applicable]/[Applicable - the Rate of Interest for
the Interest Period ending on the
Interest Payment Date falling in [ ] [and] [the First
Additional Libor Period] shall be calculated
using Linear Interpolation. end of Option for such
Credit-Linked Notes]
(xii) Margin(s): [[+/-] [--] per cent. per annum]
(xiii) Day Count Fraction: [--]
(xiv) Relevant Time: [--]
(xv) Minimum Rate of Interest: [--] per cent. per annum
(xvi) Maximum Rate of Interest: [--] per cent. per annum
(xvii) Rounding provisions, denominator and [--]
any other terms relating to the method of
calculating
interest on Floating Rate Notes, if different
from those set out in the Conditions:
18. Zero Coupon Note provisions: [Applicable/Not Applicable]
(Condition 5) (If not applicable, delete the remaining sub-paragraphs
of this paragraph).
(i) Amortisation Yield: [--] per cent. per annum
(ii) Rate of interest on overdue amounts: [--]
(iii) Redemption formula: [--]
19. Dual Currency Note provisions: [Applicable/Not Applicable]
(If not applicable, delete the remaining sub-paragraphs
of this paragraph)
(i) Specified Currencies: [--]
(ii) Exchange rate(s): [give details]
(iii) Provisions applicable where calculation [Need to include a description of market disruption or
by reference to Exchange Rate impossible or settlement disruption events and adjustment
impracticable: provisions.]
20. Variable Coupon Amount Note /Index-Linked [Applicable/Not Applicable]
Note/Equity-Linked Note/Cash Equity Notes/other (If not applicable, delete the remaining sub-paragraphs
variable-linked interest Note provisions: of this paragraph)
(i) Index/formula/other variable: [give or annex details - if appropriate, cross-refer to
the definition of Valuation Date in
paragraph 33 below]
(ii) Calculation Agent responsible for HSBC Bank plc, 8 Canada Square, London E14 5HQ
calculating the interest due:
(iii) Provisions for determining interest [--]
where calculated by reference to index and/or
formula
and/or other variable:
(iv) Provisions for determining interest where [--][See Condition 20 and paragraph 33 below] [If
calculation by reference to index and/or Condition 20 and paragraph 33 do not apply,
formula need to include a description of market disruption or
and/or other variable is impossible or settlement disruption events and adjustment
impracticable or otherwise disrupted: provisions and the definition of Valuation Date]
(v) Interest or calculation period(s): [--]
(vi) Interest Payment Dates: [--]
(vii) Business Day Convention: [Following Business Day Convention/Modified Following
Business Day Convention/Preceding Business
Day Convention/other (give details)]
(viii) Business Centre(s) [--]
(ix) Minimum Rate/Amount of Interest: [--] per cent. per annum
(x) Maximum Rate/Amount of Interest: [--] per cent. per annum
(xi) Day Count Fraction: [--]
(xii) Valuation Date: [Not Applicable / specify]
[Option 1 - for Notes generally - PROVISIONS RELATING TO REDEMPTION
21. Issuer's optional redemption (Call): [Applicable/Not Applicable]
(Condition 6(c)) (If not applicable, delete the remaining sub-paragraphs
of this paragraph.)
(i) Redemption amount (Call): [specify - if not par, also specify details of any
formula] per Calculation Amount
(ii) Series redeemable in part: [specify - otherwise redemption will only be permitted of
entire Series] per Calculation Amount
(iii) Call option date(s): [specify]
(iv) Call option period: [As per Condition 6(c) / specify]
22. Noteholder's optional redemption (Put): [Applicable/Not Applicable]
(Condition 6(d)) (If not applicable, delete the remaining sub-paragraphs
of this paragraph)
(i) Redemption amount (Put): [specify - if not par, also specify details of any
formula] per Calculation Amount
(ii) Put option date(s): [specify]
(iii) Put option period: [As per Condition 6(d)/ specify]
23. Final redemption amount of each Note: [specify - if not par, also specify details of any
formula] per Calculation Amount
(Condition 6(a))
24. Final redemption amount of each Note in cases where [Not Applicable/[--] per Calculation Amount]
the Final redemption amount is linked
to an index, a formula or other variable:
(Condition 6(h))
(i) Index/formula/other variable: [give or annex details]
(ii) Calculation Agent responsible for HSBC Bank plc, 8 Canada Square, London E14 5HQ
calculating the final redemption amount:
(iii) Provisions for determining final [For Currency-Linked or Equity-Linked Notes: See
redemption amount where calculated by Condition 20 and paragraph 33 below]][If
reference to Condition 20 and paragraph 33 do not apply, need to
an index and/or formula and/or other variable: include a description of market disruption
or settlement disruption events and adjustment
provisions]
(iv) Determination Date(s): [--]
(v) Provisions for determining final [--]
redemption amount where calculation by
reference to index
and/or formula and/or other variable is
impossible or impracticable or otherwise
disrupted:
(vi) Payment Date: [--]
(vii) Minimum final redemption amount: [--]
(viii) Maximum final redemption amount: [--]
25. Instalment Notes: [specify]
(Condition 6(a)) (If not applicable, delete the remaining sub-paragraphs
of this paragraph)
(i) Instalment Amounts: [--]
(ii) Dates for payment of Instalments: [--]
26. Early redemption amount: Yes
(i) Early redemption amount (upon redemption [At par]/[--] per Calculation Amount]/[In the event of
for taxation reasons, force majeure, early redemption for taxation reasons,
illegality a force majeure event, illegality or following an event
or following an Event of Default) of default, the aggregate amount payable
by the Issuer in respect of principal and interest on the
Notes upon such early redemption
shall be the amount which the Calculation Agent in its
absolute discretion and in good faith
determines to be the fair market value of the Notes
immediately prior to the date on which
such early redemption occurs, reduced as so determined by
the Calculation Agent to account
fully for any reasonable expenses and costs to the Issuer
of unwinding any underlying and/or
related hedging and funding arrangements.] / [specify
other]
(Conditions 6(b), 6(i) and 10)
(ii) Other redemption provisions: [specify]
(Condition 6(h))
end of Option 1 - for Notes generally]
[Option 2 for Currency-Linked Notes: PROVISIONS RELATING TO REDEMPTION
20. Issuer's optional redemption (Call): [Applicable/Not Applicable]
(Condition 6(c)) (If not applicable, delete the remaining sub-paragraphs
of this paragraph.)
(i) Redemption amount (Call): [specify - if not par, also specify details of any
formula] per Calculation Amount
(ii) Series redeemable in part: [specify - otherwise redemption will only be permitted of
entire Series] per Calculation Amount
(iii) Call option date(s): [specify]
(iv) Call option period: [As per Condition (c) / specify]
21. Noteholder's optional redemption (Put): [Applicable/Not Applicable]
(Condition 6(d)) (If not applicable, delete the remaining sub-paragraphs
of this paragraph)
(i) Redemption amount (Put): [specify - if not par, also specify details of any
formula] per Calculation Amount
(ii) Put option date(s): [specify]
(iii) Put option period: [As per Condition (d) / specify]
22. Final redemption amount of each Note: [specify - if not par, also specify details of any
formula] per Calculation Amount
(Condition 6(a))
23. Final redemption amount of each Note in cases where [Not Applicable/Applicable]
the Final redemption amount is linked
to an index, a formula or other variable:
(Condition 6(h))
(i) Index/Formula/other variable: The [Specified Currency/First Reference Currency]
Exchange Rate and the [Specified Currency/Second
Reference Currency] Exchange Rate
(ii) Calculation Agent responsible for HSBC Bank plc, 8 Canada Square, London E14 5HQ
calculating the final redemption amount:
(iii) Provisions for determining final
redemption amount where calculated by
reference to
index and/or formula and/or other variable:
[Option 2(A): where Currency-Linked Notes are linked to one exchange rate
[If, in the determination of the Calculation Agent, the
final [Specified Currency/Reference
Currency] Exchange Rate is less than or equal to [specify
rate], then each Note will redeem
on the Maturity Date at [par] [--]
If, in the determination of the Calculation Agent, the
Final [Specified Currency/Reference
Currency] Exchange Rate is greater than [specify rate],
then each Note will redeem on the
Maturity Date at an amount determined on the Fixing Date
by the Calculation Agent in accordance
with the following formula:
[Denomination x [specify number] - ([specify number] x
(Final [Specified Currency/Reference
Currency] Exchange Rate / [specify number]))],]
provided, however, that the final redemption amount shall
never be less than zero.
For the purposes hereof:
"Fixing Date" means [specify date], or, if the [Maturity
Date] is not a Currency Business
Day in each Reference Currency Jurisdiction, the next
following day which is a Currency Business
Day in each Reference Currency Jurisdiction, as
determined by the Calculation Agent.
"Final [Specified Currency/Reference Currency] Exchange
Rate" means the [Specified Currency/Reference
Currency] exchange rate (expressed as a number of
[Reference Currency] per [Specified Currency]
1.00) as observed by HSBC Bank plc as Calculation Agent
on [specify Page] at [specify time]
([London] time) on the Fixing Date, as determined by the
Calculation Agent;
"[Specified Currency/Reference Currency] Exchange Rate"
means the [Specified Currency/Reference
Currency] exchange rate (expressed as a number of
[Reference Currency] per [Specified Currency]
1.00) as observed by HSBC Bank plc as Calculation Agent
on [specify page] at [specify time]
([London] time) on the Fixing Date as determined by the
Calculation Agent acting in good faith.]
end of Option 1(A)]
[Option 2(B) where Currency-Linked Notes are linked to two exchange rates
Unless previously redeemed, or purchased and cancelled in
accordance with the Conditions,
the final redemption amount payable by the Issuer in
respect of each Note on the Maturity
Date shall be an amount in [Specified Currency]
determined on the Fixing Date by the Calculation
Agent in accordance with the following formula:
[Denomination + [specify percentage] per cent. x Max (0,
[Second Reference Currency Performance
as defined below], [First Reference Currency Performance
as defined below)]]
where:
"Fixing Date" means [specify date], or, if the [Maturity
Date] is not a Currency Business
Day in each Reference Currency Jurisdiction, the next
following day which is a Currency Business
Day in each Reference Currency Jurisdiction, as
determined by the Calculation Agent.
"Final EUR/[Second Reference Currency] Exchange Rate"
means the EUR/[Second Reference Currency]
exchange rate (expressed as a number of [Second Reference
Currency] per EUR 1.00), as observed
by HSBC Bank plc as Calculation Agent on [specify page]
at [specify time] ([London] time)
on the Fixing Date;
"Final EUR/[First Reference Currency] Exchange Rate"
means the EUR/[First Reference Currency]
exchange rate (expressed as a number of [First Reference
Currency] per EUR 1.00), as observed
by HSBC Bank plc as Calculation Agent on [specify page]
at [specify time] ([London] time)
on the Fixing Date;
"Final EUR/USD Exchange Rate" means the EUR/USD exchange
rate (expressed as a number of USD
per EUR 1.00), as observed by HSBC Bank plc as
Calculation Agent on [specify page] at [specify
time] ([London] time) on the Fixing Date;
"Final USD/[Second Reference Currency] Exchange Rate"
means the USD/[Second Reference Currency]
exchange rate (expressed as an amount of [Second
Reference Currency] per USD 1.00) as determined
by HSBC Bank plc as Calculation Agent by dividing the
Final USD/[Second Reference Currency]
Exchange Rate by the Final EUR/USD Exchange Rate;
"Final USD/[First Reference Currency] Exchange Rate"
means the USD/[First Reference Currency]
exchange rate (expressed as an amount of [First Reference
Currency] per USD 1.00) as determined
by HSBC Bank plc as Calculation Agent by dividing the
Final EUR/[First Reference Currency]
Exchange Rate by the Final EUR/USD Exchange Rate;
"Initial USD/[Second Reference Currency] Exchange Rate"
means [Second Reference Currency]
[specify amount] per USD 1.00;
"Initial USD/[First Reference Currency] Exchange Rate"
means [First Reference Currency] [specify
amount] per USD 1.00;
"[Second Reference Currency]" means the lawful currency
of [specify jurisdiction];
"[Second Reference Currency Performance]" means an amount
determined by the Calculation Agent
in accordance with the following formula:
[(Initial USD/[Second Reference Currency] Exchange Rate -
Final USD/[Second Reference Currency]
Exchange Rate)/Final USD/[Second Reference Currency]
Exchange Rate.]
"[First Reference Currency]" means the lawful currency of
[specify jurisdiction]; and
"[First Reference Currency Performance]" means an amount
determined by the Calculation Agent
in accordance with the following formula:
[(Initial USD/[First Reference Currency Performance]
Exchange Rate - Final USD/[First Reference
Currency Performance] Exchange Rate/Final USD/[First
Reference Currency Performance] Exchange
Rate.] end of Option 1(A)]
(iv) Determination Date(s): The Fixing Date
(v) Provisions for determining final If any relevant exchange rate is not displayed on any of
redemption amount where calculation by the specified Reuters Screen at the
reference to formula specified time on the Fixing Date, the Calculation Agent
and/or other variable is impossible or will determine the relevant exchange
impracticable or otherwise disrupted: rate in its sole and absolute discretion, acting in good
faith.
(vi) Payment Date The Maturity Date
(vii) Minimum final redemption amount Redemption at par
(viii) Maximum final redemption amount: Not Applicable
24. Instalment Note Provisions
Instalment Notes: [Applicable / Not Applicable]
(Condition 6(a)) [(If not applicable, delete the remaining sub-paragraphs
of this paragraph.)]
(i) Instalment Amounts: The Notes shall be redeemed in [specify number]
instalments, each payable on an Instalment
Payment Date as defined in (ii) below. The Instalment
Amount payable on an Instalment Payment
Date in respect of each Note shall be the sum of:
(a) an amount in [Reference Currency] determined by the
Calculation Agent in accordance with
the following formula:
(Denomination/[specify number equal to number
of Observation Periods] x Conversion Strike
x (n/N); and
(b) an amount in USD determined by the Calculation Agent
in accordance with the following
formula:
Denomination/[specify number] x (1 - (n/N)).
For these purposes:
"Conversion Strike" means [specify rate, as a number of
Units of Reference Currency per 1
Unit of Specified Currency];
"Knock-Out Barrier" means [specify rate, as a number of
Units of Reference Currency per 1
Unit of Specified Currency];
"n" means, in respect of an Observation Period, the total
number of Relevant Observation Windows
during such Observation Period;
"N" means, in respect of an Observation Period, the total
number of Observation Windows during
such Observation Period;
"Observation Period" means (a) in respect of Instalment
Payment Date 1 the period from and
including [specify time] on [specify date] to but
excluding [specify time] on [specify date]
("Observation Period 1"), (b) in respect of Instalment
Payment Date 2 the period from and
including [specify time] on [specify date] to but
excluding [specify time] on [specify date]
("Observation Period 2"), (c) in respect of Instalment
Payment Date 3 the period from and
including [specify time] on [specify date] to but
excluding [specify time] on [specify date]
("Observation Period 3"), and (d) in respect of
Instalment Payment Date 4 the period from
and including [specify time] on [specify date] to but
excluding [specify time] on [specify
date] ("Observation Period 4");
"Observation Window" means the following periods:
[specify];
"Relevant Observation Window" means an Observation Window
during which the [Specified Currency/Reference
Currency] Exchange Rate is greater than the Knock-Out
Barrier at all times during such Observation
Window, as determined by the Calculation Agent;
"Spot Market" means the global spot foreign exchange
market which, for these purposes, shall
be treated as being open continuously from [5.00 a.m.
Sydney time] on a Monday in any week
to [5.00 p.m. New York time] on the Friday of such week;
and
"[Specified Currency/Reference Currency] Exchange Rate"
means the spot exchange rate for [Specified
Currency/Reference Currency] (expressed as a number of
[Reference Currency] per [Specified
Currency] 1.00) prevailing in the Spot Market as
determined by the Calculation Agent.
(ii) Dates for payment of Instalments: [Specify date] ("Instalment Payment Date 1"), [specify
date] ("Instalment Payment Date 2"),
[specify date] ("Instalment Payment Date 3") and [specify
date] ("Instalment Payment Date
4"), together with Instalment Payment Date 1, Instalment
Payment Date 2 and Instalment Payment
Date 3, the "Instalment Payment Dates" and each an
"Instalment Payment Date").
25. Early redemption amount: Yes
Early redemption amount (upon redemption for [In the event of early redemption for taxation reasons, a
taxation reasons, force majeure, illegality or force majeure event, illegality
following an Event of Default): or following an event of default, the aggregate amount
(Conditions 6(b), 6(i) or 10) payable by the Issuer in respect of
principal and interest on the Notes upon such early
redemption shall be the amount which the
Calculation Agent in its absolute discretion and in good
faith determines to be the fair market
value of the Notes immediately prior to the date on which
such early redemption occurs, reduced
as so determined by the Calculation Agent to account
fully for any reasonable expenses and
costs to the Issuer of unwinding any underlying and/or
related hedging and funding arrangements.]
/ [specify other]
end of Option 2 for Currency-Linked Notes]
[Option 3 for Credit-Linked Notes: PROVISIONS RELATING TO REDEMPTION
20. Issuer's optional redemption (Call): Not Applicable.
(Condition 6(c))
21. Noteholder's optional redemption (Put): Not Applicable
(Condition 6(d))
22. Final redemption amount of each Note: [Option: for 2014 Credit-Linked Notes add:
(Condition 6(a)) [[--] per Calculation Amount] [Each Note's pro rata share
of the Aggregate Principal Amount]
[As per Credit Linked Condition 5 (Include for Basket
Credit Linked Notes)] [specify - if
not par, also specify details of any formula] end of
Option for such Credit-Linked Notes]
23. Final redemption amount of each Note in cases where Not Applicable
the final redemption amount is other
variable linked:
24. Instalment Notes: [Not Applicable]
(Condition 6(a)) [Option: for Basket Credit Linked Notes:
See Credit Linked Condition 5(a)(i). end of Option for
such Credit-Linked Notes]
25. Early redemption amount: Yes
(i) Early redemption amount (upon [In the event of early redemption for taxation reasons, a
redemption for taxation reasons, force majeure event, illegality
force majeure, illegality or following an event of default, the aggregate amount
or following an Event of Default) payable by the Issuer in respect of
(Condition 6(b), 6(i) and principal and interest on the Notes upon such early
Condition 10): redemption shall be the amount which the
Calculation Agent in its absolute discretion and in good
faith determines to be the fair market
value of the Notes immediately prior to the date on which
such early redemption occurs, reduced
as so determined by the Calculation Agent to account
fully for any reasonable expenses and
costs to the Issuer of unwinding any underlying and/or
related hedging and funding arrangements.]
/ [specify other]
[Option: for 2014 Credit-Linked Notes add:
26. Credit Linked Redemption:
(i) Additional Terms and Conditions relating Applicable
to Credit-Linked Notes (2014 ISDA Credit
Derivatives
Definitions Version):
(ii) Type of Credit Linked Notes: [Single Reference Entity Credit Linked Notes][Basket
Linked Credit Linked Notes [where Credit
Event Maturity Settlement applies]
(iii) Unwind Costs: [Applicable: [Standard Unwind Costs][Zero Unwind
Costs][specify]][Not Applicable]
(iv) Settlement Method: Cash Settlement
[Alternative options for Single Reference Entity Credit
Linked Notes:
[Auction Settlement][Physical Settlement] end of
alternative options of such Credit Linked
Notes]
[Alternative option for Basket Credit Linked Notes:
[Auction Settlement] end of alternative options of such
Credit Linked Notes]
(v) Basket Credit Linked Terms: [Applicable][Not Applicable]
[If applicable, insert:
Partial Physical Settlement: Not Applicable
Credit Event Amount: An amount equal to the Credit Event
Redemption Amount as set out in the
Credit Linked Conditions, for the purposes of which: (i)
a Credit Event Determination Date
will be deemed to have occurred with respect to all
Reference Entities on the same date as
the Credit Event Determination Date which had occurred in
respect of the affected Reference
Entity; (ii) Expenses shall be calculated as if Condition
2(a)(ii) had applied in respect
of each Reference Entity [If Auction Settlement applies,
insert: and (iii) the applicable
Settlement Method in respect of a Reference Entity which
is not the affected Reference Entity
will be deemed to have been Cash Settlement]
Original Notional Amount: [specify]
(vi) Trade Date: [specify]
(vii) Calculation Agent City: [specify]
(viii) Reference Entity(ies): [specify][See the Schedule hereto]
(ix) Transaction Type: [Not Applicable][specify][See the Schedule hereto]
[If a Transaction Type and Standard Terms applies,
insert:
The "Standard Terms" in respect of a Reference Entity
will be the standard terms set out in
the Credit Derivatives Physical Settlement Matrix dated
[insert date] as published by ISDA
on its website at www.isda.org, in relation to the
Transaction Type for such Reference Entity]
(x) Reference Entity Notional Amount: [specify in respect of each Reference Entity][See the
Schedule hereto]
(xi) Reference Obligation(s): [Applicable][Not Applicable]
[Senior Level/Subordinated Level]
Standard Reference Obligation: [Applicable][Not Applicable] (Note: Standard Reference
Obligation is Not Applicable to any
Notes that are Standard Reference Obligation Only Notes)
[If Standard Reference Obligation is Applicable, insert:
[Senior Level][Subordinated Level]]
Non-Standard Reference Obligation: [If Reference Obligation is Not Applicable, insert:
Primary Obligor: [specify]
Guarantor: [specify]
Maturity: [specify]
Coupon:[specify]
CUSIP/ISIN: [specify] (Note, only include if Standard
Reference Obligation does not apply
or Standard Reference Obligation applies but one has not
yet been published and an Initial
Non-Standard Reference Obligation is required until
publication)]
(xii) All Guarantees: [Applicable][Not Applicable][As per the Standard Terms]
(xiii) Credit Events: [As per the Standard Terms]
[Bankruptcy]
[Failure to Pay]
[Grace Period Extension] [Applicable][Not Applicable]
[If applicable: Grace Period: [specify][As set out in the
Credit Linked Conditions]
[Obligation Default]
[Obligation Acceleration]
[Repudiation/Moratorium]
[Restructuring]
[Provisions relating to Restructuring Credit Event: [Mod
R/Mod Mod R] applicable]]
[Provisions relating to Multiple Holder Obligation:
Credit Linked Condition 15: [Not Applicable]]
[Governmental Intervention]
Default Requirement: [specify] [As set out in Credit Linked Condition 13]
Payment Requirement: [specify] [As set out in Credit Linked Condition 13]
(xiv) Financial Reference Entity Terms: [Applicable][Not Applicable][As per the Standard Terms]
(xv) Subordinated European Insurance Terms: [Applicable][Not Applicable][As per the Standard Terms]
(xvi) Credit Event Determination Date: Notice of Publicly Available Information:
[Applicable][Not Applicable]
[If Applicable:
Public Source(s): [specify] [As set out in Credit Linked
Condition 13]
Specified Number: [specify] [As set out in Credit Linked
Condition 13]]
(xvii) Obligation(s):
Obligation Category: [As per the Standard Terms]
[Payment] [Borrowed Money] [Reference Obligation Only]
[Bond] [Loan] [Bond or Loan]
(select one only)
Obligation Characteristics: [As per the Standard Terms]
[Not Subordinated] [Specified Currency: [specify
currency/Standard Specified Currency] [Not
Sovereign Lender] [Not Domestic Currency: Domestic
Currency means [specify currency]] [Not
Domestic Law] [Listed] [Not Domestic Issuance]
(select all of which apply)
(xviii) Excluded Obligation(s): [specify] [Not Applicable]
(xix) Accrual of Interest upon Credit Event: [Not Applicable ] [Applicable - Credit Event
Determination Date (Note - not an option for
Basket Credit Linked Notes)] [Applicable - Scheduled
Maturity Date]
(xx) Reference Obligation Only Termination [specify][Not Applicable] (Only applicable for Reference
Amount: Obligation Only Notes)
Terms relating to Cash Settlement
(xxi) Credit Event Redemption Amount: [specify][As set out in Credit Linked Condition 13][Not
Applicable]
(xxii) Credit Event Redemption Date: [As set out in Credit Linked Condition
13][specify][[specify] Business Days][Not Applicable]
(xxiii) Valuation Date: [Applicable][Not Applicable]
[Single Valuation Date:
Fixed Valuation Date: [Applicable] [Not Applicable]
[If applicable: [specify] Business Days]]]
[Multiple Valuation Dates:
Fixed Valuation Date: [Applicable] [Not Applicable]
[If applicable: [specify] Business Days; and each
[specify] Business Days thereafter; Number
of Valuation Dates: [specify]]]]
(xxiv) Valuation Time: [specify][ As set out in Credit Linked Condition 13]
(xxv) Quotation Method: [Bid][Offer][Mid-market][ As set out in Credit Linked
Condition 13] [Not Applicable]
(xxvi) Quotation Amount: [specify][Representative Amount][ As set out in Credit
Linked Condition 13] [Not Applicable]
(xxvii) Minimum Quotation Amount: [specify] [As set out in Credit Linked Condition 13] [Not
Applicable]
(xxviii) Quotation Dealers: [ABN Amro Bank NV
Barclays Bank PLC
BNP Paribas
Citibank, N.A., London Branch
Commerzbank AG
Credit Suisse Securities (Europe) Limited
Deutsche Bank AG, London Branch
Goldman Sachs International
HSBC Bank plc
The Hongkong and Shanghai Banking Corporation Limited
HSBC Bank Middle East Limited
HSBC Bank USA, National Association
J.P. Morgan Securities LLC
Merrill Lynch International
Morgan Stanley & Co. International plc
Société Générale
The Royal Bank of Scotland plc
UBS AG]
[specify other] [As set out in Credit Linked Condition
13] [Not Applicable]
(xxix) Accrued Interest: [Include Accrued Interest][Exclude Accrued Interest] [As
set out in Credit Linked Condition
13] [Not Applicable]
(xxx) Valuation Method: [Market][Highest]
[Average Market][Highest][Average Highest]
(xxxi) Valuation Obligations:
Valuation Obligation Category: [The Deliverable Obligation Category under the Standard
Terms]
[Payment] [Borrowed Money] [Reference Obligation Only]
[Bond] [Loan] [Bond or Loan][Not Applicable]
(select one only)
Valuation Obligation [The Deliverable Obligation Characteristics under the
Characteristics: Standard Terms]
[Not Subordinated][Specified Currency: [specify
currency/Standard Specified Currency] [Not
Sovereign Lender] [Not Domestic Currency: Domestic
Currency means [specify currency]] [Not
Domestic Law] [Not Domestic Issuance] [Assignable Loan]
[Consent Required Loan] [Direct Loan
Participation] [Transferable] [Listed] [specify]]
[Maximum Maturity: [ ] years] [Accelerated
or Matured] [Not Bearer][Not Applicable]
(select all of which apply)
(xxxii) Excluded Valuation Obligation(s): [specify][Not Applicable]
(xxxiii) Credit Event Maturity Settlement: [Applicable] [Not Applicable] (Note - this cannot apply
for physical settlement Notes)
Terms relating to Physical Delivery
(complete if Physical Delivery is the
Settlement Method and as required for
Substitute/Auction/Reference
Transaction/Valuation Obligation purposes and
elections)
(xxxiv) Physical Settlement Period: [[specify] Business Days][Not Applicable]
(xxxv) Accrued Interest on Entitlement: [Include Accrued Interest] [As set out in Credit Linked
Condition 13] [Not Applicable]
(xxxvi) Credit Settlement Currency: [specify] [As set out in Credit Linked Condition 13] [Not
Applicable]
(xxxvii) Deliverable Obligations:
Deliverable Obligation Category: [As per the Standard Terms]
[Payment] [Borrowed Money] [Reference Obligation Only]
[Bond] [Loan] [Bond or Loan][Not Applicable]
(select one only)
Deliverable Obligation [As per the Standard Terms]
Characteristics: [Not Subordinated][Specified Currency: [specify
currency/Standard Specified Currency] [Not
Sovereign Lender] [Not Domestic Currency: Domestic
Currency means [specify currency]] [Not
Domestic Law] [Not Domestic Issuance] [Assignable Loan]
[Consent Required Loan] [Direct Loan
Participation] [Transferable] [Listed] [specify]]
[Maximum Maturity: [ ] years] [Accelerated
or Matured] [Not Bearer][Not Applicable]
(select all of which apply)
(xxxviii) Excluded Deliverable Obligation(s): [specify] [Not Applicable]
(xxxix) Indicative Quotations: [Applicable][Not Applicable]
(xl) Valuation Time: [specify][As set out in the Credit Linked Conditions]
[Not Applicable]
(xli) Delivery provisions for Entitlement if [specify] [Not Applicable]
different from Credit Linked Conditions:
(xlii) Qualifying Participation Seller: [insert] [Not Applicable]
(xliii) Sovereign No Asset Package Delivery: [Applicable][Not Applicable]
end of Option for such Credit-Linked Notes]
end of Option 3 for Credit-Linked Notes]
[Option 4 for Equity/Index-Linked Notes: PROVISIONS RELATING TO REDEMPTION
20. Issuer's optional redemption (Call): [Applicable/Not Applicable]
(Condition 6(c))
(i) Redemption amount (Call): [--] per Calculation Amount [specify - if not par, also
specify details of any formula]
(ii) Series redeemable in part: [--] per Calculation Amount [specify - otherwise
redemption will only be permitted of entire
Series]
(iii) Call option date(s)/Call option period: [specify]
21. Noteholder's optional redemption (Put): [Yes/No]
(Condition 6(d))
(i) Redemption amount (Put): [--] per Calculation Amount [specify - if not par, also
specify details of any formula]
(ii) Put option date(s)/Put option Period: [specify]
22. Final redemption amount of each Note: [--] per Calculation Amount [specify - if not par, also
specify details of any formula]
(Condition 6(b))
23. Final redemption amount of each Note in [--] per Calculation Amount
cases where the Final redemption amount is
Equity-Linked/
Index-Linked or other variable-linked:
(Condition 6(h))
(i) Index/Formula/other variable: [give or annex details]
(ii) Calculation Agent responsible for HSBC Bank plc, 8 Canada Square, London E14 5HQ
calculating the final redemption amount:
(iii) Provisions for determining Final [--]
redemption amount where calculated by
reference to
equity/index and/or formula and/or other
variable;
(iv) Determination Date(s): [--]
(v) Provisions for determining final [--]
redemption amount where calculation by
reference to Equity/Index
and/or Formula and/or other variable is
impossible or impracticable or otherwise
disrupted:
(vi) Payment Date [--]
(vii) Minimum final redemption amount [--]
(viii) Maximum final redemption amount: [--]
24. Instalment Notes: [specify]
(Condition 6(a))
(i) Instalment Amounts: [--]
(ii) Dates for payment of Instalments: [--]
25. Early redemption amount: Yes
(i) Early redemption amount (upon [In the event of early redemption for taxation reasons, a
redemption for taxation reasons, force majeure event, illegality
force majeure, illegality or following an event of default, the aggregate amount
or following an Event of Default: payable by the Issuer in respect of
(Conditions 6(b), 6(i) or 10) principal and interest on the Notes upon such early
redemption shall be the amount which the
Calculation Agent in its absolute discretion and in good
faith determines to be the fair market
value of the Notes immediately prior to the date on which
such early redemption occurs, reduced
as so determined by the Calculation Agent to account
fully for any reasonable expenses and
costs to the Issuer of unwinding any underlying and/or
related hedging and funding arrangements.]
/ [specify other]
(ii) Other redemption provisions [specify; if not par, also specify any formula]
(Condition 6(h)):
end of Option 4 for Equity/Index-Linked Notes]
GENERAL PROVISIONS APPLICABLE TO THE NOTES
[26.][28.] Form of Notes:
(Condition 1(a))
(xliv) Form of Notes: [Bearer/Registered]
[27.][29.] If issued in bearer form:
(xlv) Initially represented by a Temporary [specify] [Notes may only be represented initially by a
Global Note or Permanent Global Note: Permanent Global Note if this Pricing
Supplement specify that TEFRA C rules apply]
(xlvi) Temporary Global Note exchangeable for Yes [specify]
Permanent Global Note and/or Definitive Notes
and/or Registered Notes:
(Condition 1(a))
(xlvii) Permanent Global Note exchangeable at [Yes/No]
the option of the bearer for Definitive Notes
and/or Registered Notes:
(xlviii) Coupons to be attached to Definitive [Yes/No/Not Applicable] [N.B. this will need to be
Notes: considered even if Permanent Global Notes
are not exchangeable at the bearer's option into
Definitive Notes because of exchangeability
upon "melt down" of clearing systems - see provisions
contained in Permanent Global Note]
(xlix) Talons for future Coupons to be [Yes/No/Not Applicable]
attached to Definitive Notes: [N.B. the above comment also applies here]
(l)
(a) Definitive Notes to be [Yes/No]
security printed: [N.B. the above comment also applies here]
(b) If the answer to (a) is yes, [Yes/No/Not Applicable]
whether steel engraved plates will
be used:
(li) Definitive Notes to be in ICMA or [Yes/No]
successor's format: [N.B. the above comment also applies here]
(lii) Issuer or Noteholder to pay costs of [Issuer/Noteholder/Not Applicable]
security printing:
[28.][30.] Exchange Date for exchange of Temporary Global [specify]
Note:
[29.][31.] Payments:
(Condition 8)
(liii) Method of payment: [specify if other than by cheque or transfer to a
designated account]
(liv) Relevant Financial Centre Day: [specify any additional places]
(lv) Interest Adjustment: [Applicable/Not Applicable]
[30.][32.] Partly Paid Notes: [Yes/No]
(Condition 1)
If yes, specify number, amounts and dates for, [specify]
and method of, payment of instalments of
subscription
monies and any further additional provisions
(including forfeiture dates in respect of late
payments of partly paid instalments)
[31.][33.] Redenomination:
(Condition 9)
(lvi) Redenomination: [Applicable/Not Applicable]
(lvii) Exchange: [Applicable/Not Applicable]
[32.][34.] Other terms: [Not Applicable/specify/ See Annex]
[(When adding any other terms consideration should be
given as to whether such terms constitute
"significant new factors" and consequently trigger the
need for a supplement to the Prospectus
under Article 16 of the Prospectus Directive).]
[The Notes are [Currency-Linked Notes/Credit-Linked
Notes/Interest-Rate Linked Notes/Equity-Linked
Notes/Index-Linked Notes/Cash Equity Notes].]
[Option 1: for Currency-Linked Notes, add:
The following provisions apply to Currency-Linked Notes
in addition to the General Provisions
(as defined in the Information Memorandum): "Additional
Terms and Conditions relating to Currency-Linked
Notes" and "Product Description relating to
Currency-Linked Notes" end of Option 1 for
Currency-Linked
Notes]
[Option 2: for Credit-Linked Notes, add:
[Option: for 2014 Credit-Linked Notes add:
The following provisions apply to Credit-Linked Notes in
addition to the General Provisions
(as defined in the Information Memorandum): "Additional
Terms and Conditions relating to Credit-Linked
Notes (2014 ISDA Credit Derivatives Definitions
Version)", the applicable section of the "Product
Description relating to Credit-Linked Notes" [and the
Schedule to the Pricing Supplement]
end of Option for such Credit-Linked Notes]
[Option 3: for Interest Rate-Linked Notes, add:
The following provisions apply to Interest Rate-Linked
Notes in addition to the General Provisions
(as defined in the Information Memorandum): "Additional
Terms and Conditions relating to Interest
Rate-Linked Notes" and "Product Description relating to
Interest Rate-Linked Notes" end of
Option 3 for Interest Rate-Linked Notes]
[Option 4: for Equity/Index-Linked Notes, add:
The following provisions apply to Equity/Index-Linked
Notes in addition to the General Provisions
(as defined in the Information Memorandum): "Additional
Terms and Conditions relating to Equity-Linked
Notes, Cash Equity Notes and Index-Linked Notes" and
"Product Description relating to Equity-Linked
Notes, Cash Equity Notes and Index-Linked Notes" end of
Option 4 for Equity/Index-Linked Notes]
[33.][35.] Valuation Date: [--]
[34.][36.] Price Source Disruption: [Applicable/Not Applicable]
- Dealer Poll: [Applicable/Not Applicable]
- FX Cut-off Date: [--] [Condition 20(D) (Price Source Disruption) applies]
- Number of days for the purpose [3] [ ]
of postponing Related Payment
Dates pursuant to Condition
20(D):
- Unscheduled Holiday: [The number of Relevant Currency Business Days for the
purpose of the definition of Unscheduled
Holiday in Condition 20(E) (Definitions) is [--] [and the
number of calendar days for the
purposes of the Deferral Period is [--] [as per 20(E)
(Definitions)]]
- Relevant Rate: [Screen Rate] [Relevant Screen Rate] [--]
- Relevant Currency Business Day: Relevant Rate: Relevant Currency
Business Day:
[--] [--]
------------------
[--] [--]
------------------
DISTRIBUTION
[35.][37.] (i) If syndicated, names [, addresses and [Not Applicable/HSBC Bank plc/other - give names]
underwriting commitments] of Relevant [Give addresses and underwriting commitments]
Dealer/Lead Manager:
[Option: for Credit-Linked Notes, use: Not Applicable]
(ii) If syndicated, names [, addresses and [Not Applicable/other - give name]
underwriting commitments] of other [Give addresses and underwriting commitments]
Dealers/Managers
(if any):
[Option: for Credit-Linked Notes, use: Not Applicable]
[(Include names and address of entities agreeing to
underwrite the issue on a firm commitment
basis and names and addresses of the entities agreeing to
place the issue without a firm commitment
or on a "best efforts" basis if such entities are not the
same as the Managers.)]
(iii) Date of Subscription Agreement: [--] [Details of time period during which the offer will
be open and description of the application
process]
[Option: for Credit-Linked Notes, use: Not Applicable]
(iv) Stabilisation Manager (if any): [Not Applicable/give name]
[Option: for Credit-Linked Notes, use: Not Applicable]
[36.][38.] If non-syndicated, name [and address] of [Not Applicable/give name [and address]]
Relevant Dealer:
[37.][39.] Selling restrictions: [TEFRA not applicable]
[38.][40.] If non-syndicated, name [and address] of [Applicable/Not Applicable]
Relevant Dealer:
[39.][41.] Total commission and concession: [--] per cent. of the Aggregate Principal Amount
[40.][42.] Other: [specify any modifications of, or additions to, selling
restrictions contained in Dealer Agreement]
[41.][43.] Stabilisation: [Not Applicable / In connection with the issue of any
Tranche of Notes, the Dealer or Dealers
(if any) named as Stabilisation Manager(s) (or persons
acting on behalf of any Stabilisation
Manager(s)) in the relevant Pricing Supplement may
over-allot Notes or effect transactions
with a view to supporting the market price of the Notes
at a level higher than that which
might otherwise prevail. However, there is no assurance
that the Stabilisation Manager(s)
(or persons acting on behalf of a Stabilisation Manager)
will undertake stabilisation action.
Any stabilisation action may begin on or after the date
on which adequate public disclosure
of the terms of the offer of the relevant Tranche of
Notes is made and, if begun, may be ended
at any time, but it must end no later than the earlier of
30 days after the issue date of
the relevant Tranche of Notes and 60 days after the date
of the allotment of the relevant
Tranche of Notes. Any stabilisation or over-allotment
must be conducted by the relevant Stabilisation
Manager(s) (or person(s) acting on behalf of any
Stabilisation Manager(s)) in accordance with
all applicable laws and rules.]
[Option: For Currency-Linked Notes add: PROVISIONS RELATING TO CURRENCY-LINKED NOTES]
42. Currency Business Day: means, in relation to any Reference Currency, a day on
which commercial banks effect delivery
of the relevant currency in the foreign exchange market
in the related Reference Currency
Jurisdiction.
43. Settlement Business Day: Means a day on which commercial banks effect delivery of
the Settlement Currency in the foreign
exchange market.
44. FX Disruption: [Applicable/Not Applicable]
(Condition 20A)
45. Non-deliverability of Specified Currency: [Applicable/Not Applicable]
(Condition 20B)
(i) Alternative Payment Currency: [--]
(ii) Relevant Screen Page: [--]
46. Screen Rate Unavailability: [Applicable/Not Applicable]
(Condition 20C)
(i) Screen Rate Fall-Back specified: [Yes/No]
(ii) Screen Rate [Specify screen and page and cross-refer to relevant
paragraphs(s) of the Pricing Supplement
where these are referred to]
(iii) Details of Screen Rate Fall--Back: [Not Applicable / Specify details]
end of Option for Currency-Linked Notes]
[Option: For Equity/Index-Linked Notes add: PROVISIONS RELATING TO EQUITY-LINKED NOTES, CASH
EQUITY NOTES AND INDEX-LINKED NOTES]
47. Security Delivery (for Equity-Linked Notes only): Condition 20(b) [applies/does not apply]
48. Provisions for Cash Equity Notes and Equity-Linked
Notes:
(i) Securities: [--]
[The Securities are Depositary Receipts]
[Units in a Fund, where "Fund" means a share or notional
unit of the Fund (as defined in the
Fund Documents), the price of which is denominated in
[--]. [The Units represent undivided
ownership interests in the portfolio of investments held
by the Fund][delete if not applicable],
"Unit" means [--] and "Underlying Index" means [--].
Condition 20 shall apply to the Notes
as if references therein to "Underlying Company" were
references to the "Fund" and as if references
therein to "Security" were references to "Unit".
(ii) Underlying Company(ies): [--] [and with respect to the Underlying Securities [ ]]
[The Fund]
(iii) Exchange(s): [--] [where the underlying Fund is unlisted, disclosure
to be added as to whether the underling
Fund is a UCITS or an AIF]
(iv) Related Exchange(s): [--] [All Exchanges]
(v) Initial Price: [--] [The definition in Condition 20(a) applies]
(vi) Strike Date: [--]
(vii) Final Price: [--][The definition in Condition 20(a) applies]
(viii) Reference Price: [--][The definition in Condition 20(a) applies]
(ix) Securities Transfer Amount: [--]
(for Equity-Linked Notes only)
(x) Settlement Date: [--]
(for Equity-Linked Notes only)
(xi) Settlement Disruption Event: Condition 20(b)(iii) [applies/does not apply]
(for Equity-Linked Notes only)
Disruption Period (if other than [--]
as specified in Condition
20(b)(iii)):
(xii) Delivery Disruption Event: Condition 20(b)(iv) [applies/does not apply]
(for Equity-Linked Notes only)
(xiii) Potential Adjustment Event: Condition 20(g)(i) [applies/does not apply]
Extraordinary Dividend (if other [--]
than as specified in the
definition in Condition 20(a))
additional Potential Adjustment [--]
Event (for purposes of paragraph
(viii) of the definition
thereof)
(xiv) Extraordinary Event: Condition 20(g)(ii) [applies/does not apply]
(xv) Conversion: Condition 20(g)(iii) [applies/does not apply]
(for Notes relating to Government
Bonds and debt securities only)
(xvi) Correction of prices: Condition 20(g)(iv) [applies/does not apply]
(xvii) Additional Disruption Event [The following Additional Disruption Events apply:
[Change in Law, Hedging Disruption, Increased
Cost of Hedging] [other - give details]] [Not Applicable]
49. Additional provisions for Equity-Linked Notes: [--]
50. Provisions for Index-Linked Notes:
(i) Index(ices): [--] [The Index/Each of [specify relevant indices in a
basket][--] is a Multiple Exchange
Index]
(ii) Index Sponsor: [--] [The definition in Condition 20(a) applies]
(iii) Exchange(s): [--]
(iv) Related Exchange(s): [--] [All Exchanges]
(v) Initial Index Level: [--] [The definition in Condition 20(a) applies]
(vi) Strike Date: [--]
(vii) Final Price: [--][The definition in Condition 20(a) applies]
(viii) Reference Price: [--][The definition in Condition 20(a) applies]
(ix) Adjustments to Indices: Condition 20(f) [applies/does not apply]
(x) Additional Disruption Event: [The following Additional Disruption Events apply:
[Change in Law, Hedging Disruption, Increased
Cost of Hedging] [Other - give details]] [Not Applicable]
51. For Equity-Linked and Credit-Linked Notes: US Federal Income Tax Considerations
52. Valuation Date(s): [--]. [If, pursuant to Condition 20(e) such date is
postponed to [the Limit Valuation Date/
other (specify)], and either, such date is not a
Scheduled Trading Day or is a Disrupted Day,
such date shall nevertheless be deemed to be the
Valuation Date and the [Final Price/Final
Index Level] shall be the [price/level] determined by the
Calculation Agent in its sole discretion.]
(i) Specified Maximum Number of Disrupted Days: [--] [Not applicable] [The definition in Condition 20(a)
applies]
(ii) Number of local banking days for the purpose of [3] [--]
postponing Disrupted Day Related Payment
Dates pursuant to Condition 20(e):
53. Valuation Time: [--] [The definition in Condition 20(a) applies]
54. Averaging Dates: [Yes/No. If yes, specify dates]
(i) Details relating to how final redemption [--]
amount will be calculated where the Notes
relate
to a basket of Indices or Securities:
(ii) Averaging Date Market Disruption: [Omission/Postponement/Modified Postponement/Not
Applicable/other (specify)]
55. Other terms or special conditions relating to [specify]
Index-Linked Notes, Cash Equity Notes or
Equity-Linked Notes:
(i) Knock-in Event: [Applicable to [specify relevant payment or delivery]]
Knock-in Event: [--] is [greater than/greater than or equal to/less
than/less than or equal to] the Knock-in
Price/ Knock-in Level
Knock-in Period Beginning Date (if [--]
other than as specified in the
definition thereof in Condition
20(d)):
Knock-in Period Ending Date (if [--]
other than as specified in the
definition thereof in Condition
20(d)):
Knock-in Price/ Knock-in Level: [--]
Knock-in Valuation Time (if other [--]
than as specified in the
definition thereof in Condition
20(d)):
(ii) Knock-out Event: [Applicable to [specify relevant payment or delivery]]
Knock-out Event: [--] is [greater than/greater than or equal to/less
than/less than or equal to] the Knock-out
Price/Knock-out Level
Knock-out Period Beginning Date [--]
(if other than as specified in the
definition thereof in Condition
20(d)):
Knock-out Period Ending Date (if [--]
other than as specified in the
definition thereof in Condition
20(d)):
Knock-out Price/ Knock-out Level: [--]
Knock-out Valuation Time (if other [--]
than as specified in the
definition thereof in Condition
20(d));
(iii) Automatic Early Redemption: Condition 20(c) [applies/does not apply]
Automatic Early Redemption Event: [--] is [greater than/greater than or equal to/less
than/less than or equal to] the Automatic
Early Redemption [Price/Level/Rate] as of [the/any]
Automatic Early Redemption Valuation Date]
Automatic Early Redemption [--]
Valuation Date(s):
Automatic Early Redemption [--]
[Level/Price/Rate]:
Automatic Early Redemption [--] [Subject to adjustment in accordance with [specify
Date(s): relevant Business Day Convention]]
Automatic Early Redemption Amount: [--]
Accrued interest payable on [No, interest does not accrue]/ [Yes] [specify]
Automatic Early Redemption Date:
BENCHMARKS
56. [Option 1: if administrator of Reference Rate is
registered as a benchmark administrator in
the EU: [specify benchmark] is provided by [administrator
legal name] appears in the register
of administrators and benchmarks established and
maintained by ESMA pursuant to article 36
of the Benchmarks Regulation.]
[Option 2a: if administrator of Reference rate is NOT
registered as a benchmark administrator
in the EU: [specify benchmark] is provided by
[administrator legal name] does not appear in
the register of administrators and benchmarks established
and maintained by ESMA pursuant
to article 36 of the Benchmarks Regulation.]
[Option 2b: add further if administrator is not
registered as a benchmark administrator in
the EU due to a transitional exemption: As far as the
Issuer is aware, the transitional provisions
in Article 51 of the Benchmarks Regulation apply, such
that [administrator legal name] is
not currently required to obtain
authorisation/registration (or, if located outside the
European
Union, recognition, endorsement or equivalence).]]
[Option 3: if neither of Options 1 or 2: Not Applicable]
[LISTING AND ADMISSION TO TRADING APPLICATION
This Pricing Supplement, together with the Information Memorandum, comprise the listing particulars
required to list and have admitted to trading the issue of Notes described herein on the Official
List of Euronext Dublin and Euronext Dublin's Global Exchange Market pursuant to the Debt
Issuance Programme of HSBC Bank Middle East Limited.]
RESPONSIBILITY
The Issuer accepts responsibility for the information contained in this Pricing Supplement.
CONFIRMED
HSBC BANK MIDDLE EAST LIMITED
By:
.........................................................
...............
Authorised Signatory
Date:
.........................................................
............
By:......................................................
...................
Authorised Signatory
Date:
.........................................................
............
PART B - OTHER TERMS
1. LISTING
(i) Listing: Application [will be/has been] made to admit the Notes to
listing on the Official List of
Euronext Dublin [on or around the Issue Date/[insert
date]]. No assurance can be given as
to whether or not, or when, such application will be
granted] [Not applicable]
(ii) Admission to trading: [Application [will be/has been] made for the Notes to be
admitted to trading on the Global
Exchange Market with effect from the Issue Date/[insert
date]]. No assurance can be given
as to whether or not, or when, such application will be
granted]
(iii) Estimated total cost of admission to [--]
trading:
2. RATINGS
Ratings: The long term senior debt rating of HSBC Bank Middle East
Limited has been rated:
Fitch: AA-
Moody's: A3
[The Notes have not specifically been rated.]/[The Notes
have been assigned a rating of [--]
by [--].]
Each of Fitch and Moody's is established in the EEA and
registered under Regulation (EU) No
1060/2009, as amended (the "CRA Regulation").
[For these purposes, ["Moody's" means Moody's Investor
Services Limited] [and] ["Fitch" means
Fitch Ratings Limited].]
3. [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE [ISSUE/OFFER]
Need to include a description of any interest, including conflicting ones, that is material
to the issue/offer, detailing the persons involved and the nature of the interest. May be
satisfied by the inclusion of the following statement:
"Save as discussed in ["Subscription and Sale"], so far as the Issuer is aware, no person
involved in the offer of the Notes has an interest material to the offer."]
4. [REASONS FOR THE OFFER ESTIMATED NET PROCEEDS AND TOTAL EXPENSES
[(i) Reasons for the offer [--]
(See ["Use of Proceeds"] wording in the Information
Memorandum - If reasons for offer different
from making profit and/or hedging certain risks will need
to include those reasons here.)]
[(ii)] Estimated net proceeds; [--](If proceeds are intended for more than one use will
need to split out and present in
order of priority. If proceeds insufficient to fund all
proposed uses state amount and sources
of other funding.)
[(iii) Estimated total expenses: [Include breakdown of expenses]]
5. Fixed rate Notes only - YIELD
(iv) Indication of yield: [Calculated as [include details of method of calculation
in summary form] on the Issue Date]
[As set out above, the] [The] yield is calculated at the
Issue Date on the basis of the Issue
Price. It is not an indication of future yield.
6. [PERFORMANCE OF THE UNDERLYING
Consider including details of where past and future performance and volatility of the underlying
[exchange rate/currency/index/formula/other variable] can be obtained.
Where the underlying is a security, consider including (i) the name of the issuer of the security,
and (ii) the ISIN number or other such security identification code.
Where the underlying is an index, consider including the name of the index and if the index
is not composed by the Issuer consider including details of where the information about the
index can be obtained. Also consider including appropriate index disclaimers. Where the underlying
is not an index, consider including equivalent information.
Where the underlying is an interest rate, consider including a description of the interest
rate.
Where the underlying does not fall within the categories specified above, consider whether
to include equivalent information.
The Issuer [intends to provide post-issuance information [specify what information will be
reported and where it can be obtained]] [does not intend to provide post-issuance information]]
7. [Dual Currency Notes only - PERFORMANCE OF EXCHANGE RATE(S)]
Need to include details of where past and future performance and volatility of the relevant
rate(s) can be obtained.]
OPERATIONAL INFORMATION
8. ISIN Code: [--]
9. Common Code: [--]
10. CFI: [Not Applicable]/[--]
11. FISN: [Not Applicable]/[--]
12. Other identifier / code: [--]
13. Any clearing system(s) other than Euroclear and [None/specify]
Clearstream, Luxembourg and the relevant
identification number(s):
14. Delivery: Delivery [against/free of] payment
15. Settlement procedures: [Eurobond/Medium Term Note/other - specify]
16. CMU Lodging and Paying Agent: [Not Applicable] / [specify]
17. CMU Registrar: [None/specify]
18. Additional Paying Agent(s) (if any): [None/specify]
19. Calculation Agent: HSBC Bank plc, 8 Canada Square, London E14 5HQ
Calculation Agent to make calculations? [Yes/No]
if not, identify calculation agent: [N.B. Calculation agent appointment letter required]
20. Renminbi Calculation Agent: [Not Applicable] / [specify]
21. Notices: [Condition 14 applies/specify any other means of
(Condition 14) effecting communication]
22. City in which specified office of [As per Condition 12] / [specify]
Registrar to be maintained:
(Condition 12)
23. Prohibition of Sales to EEA Retail Investors: [Applicable]/[Not Applicable]
24. Other relevant Terms and Conditions: [--]
[Option: for Credit-Linked Notes add:]
25. Other Terms: [--]
[OPTION: TO USE FOR 2014 CREDIT-LINKED NOTES:
SCHEDULE
Reference Reference Entity
Entity Reference Obligation [Seniority [Transaction Type Notional Amount [Business Centre(s)
---------- ---------------------------- --------------- ------------------ --------------------- --------------------
[ ] Standard Reference [Senior Level] [ ]] [Aggregate Principal [ ]]
Obligation:[Applicable][Not [Subordinated Amount]
Applicable] Level]]
[If Standard Reference
Obligation does not apply,
or if Standard Reference
Obligation applies
but has not yet been
published and an initial
Non-Standard Reference
Obligation is required
until publication, insert:
Primary Obligor: [specify]
Guarantor: [specify]
Maturity: [specify]
Coupon: [specify]
CUSIP/ISIN: [specify]]
end of Option for Credit-Linked Notes]
FORMS OF NOTES; SUMMARY OF PROVISIONS RELATING TO THE NOTES
WHILE IN GLOBAL FORM
Notes may, subject to all applicable legal and regulatory
requirements, be issued in Tranches or Series comprising either
Notes in bearer form ("Bearer Notes") or Notes in registered form
("Registered Notes"), as specified in the relevant Pricing
Supplement.
Registered Notes
In the case of Registered Notes, the relevant Pricing Supplement
may specify that the Notes will be issued in global form (Global
Registered Notes as defined below) held in specified clearing
systems, as described below, or in definitive form (Definitive
Registered Notes as defined below).
Global Registered Notes
If Notes are to be issued in the form of Global Registered
Notes, the Issuer will deliver a Global Registered Note (as such
term is defined below), subject to the Agency Agreement (as defined
herein) in accordance with their respective terms and as specified
in the relevant Pricing Supplement.
Global Registered Notes
In the case of a Tranche of Registered Notes offered and sold
solely outside the United States (as defined in Regulation S) in
reliance on Regulation S, such Tranche of Registered Notes may be
represented by a Global Registered Note without interest coupons (a
"Global Registered Note"), which will be deposited on or about the
closing date (the "Closing Date") for the relevant Tranche with a
common depositary for Euroclear and/or Clearstream, Luxembourg and
registered in the name of a nominee for such common depositary or,
as the case may be, with a sub--custodian for the CMU. Interests in
any Global Registered Note will be exchangeable (in circumstances
described below under "Exchange and Transfer of Global Registered
Notes for Definitive Registered Notes") for Definitive Registered
Notes ("Definitive Registered Notes") in the relevant form
scheduled to the Trust Deed.
Owner of Global Registered Notes and Payments
Subject to certain provisions of the Trust Deed relating to
directions, sanctions and consents of Holders of Registered Notes
and to meetings of Holders of Notes, so long as one or more of the
Clearing Systems or the nominee of their common depositary or
sub--custodian (as the case may be) is the registered owner or
holder of a Global Registered Note, that Clearing System or such
nominee or sub--custodian, as the case may be, will be considered
the sole owner or holder of the Notes represented by such Global
Registered Note for all purposes under the Agency Agreement, the
Trust Deed and the Notes. Payments of principal, interest and
additional amounts, if any, pursuant to Condition 7, on Global
Registered Notes will be made to one or more of the Clearing
Systems, such nominee or sub--custodian, as the case may be, as the
registered holder thereof. None of the Issuer, the Trustee, the
relevant Registrar, or any Paying Agent or any affiliate of any of
the above or any person by whom any of the above is controlled for
the purposes of the Securities Act will have any responsibility or
liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests in Global
Registered Notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests. Each such
payment in respect of a Global Registered Note will be made to the
person shown as the registered owner or holder in the Register at
the close of business (in the relevant clearing system) on the
Clearing System Business Day before the due date for such payment
(the "Record Date") where "General Clearing System Business Day"
means a day on which each clearing system for which the Global
Registered Note is being held is open for business.
CMU
If a Global Registered Note is lodged with the CMU, the
person(s) for whose account(s) interests in such Global Registered
Note are credited as being held in the CMU in accordance with the
CMU Rules as notified by the CMU to the CMU Lodging and Paying
Agent in a relevant CMU Instrument Position Report or any other
relevant notification by the CMU (which notification, in either
case, shall be conclusive evidence of the records of the CMU save
in the case of manifest error) shall be the only person(s) entitled
(in the case of Registered Notes, directed or deemed by the CMU as
entitled) to receive payments in respect of Notes represented by
such Global Registered Note and the Issuer will be discharged by
payment to, or to the order of, such person(s) for whose account(s)
interests in such Global Registered Note are credited as being held
in the CMU in respect of each amount so paid. Each of the persons
shown in the records of the CMU, as the beneficial holder of a
particular nominal amount of Notes represented by such Global
Registered Note must look solely to the CMU Lodging and Paying
Agent for his share of each payment so made by the Issuer in
respect of such Global Registered Note.
Exchange and Transfer of Global Registered Notes for Definitive
Registered Notes
Beneficial interests in a Global Registered Note will be
exchangeable, in whole but not in part, for Definitive Registered
Notes: (i) if the relevant Clearing System(s) is/are closed for
business for a continuous period of 14 days (other than by reason
of legal holidays) or announces an intention permanently to cease
business; or (ii) if an Enforcement Event occurs as set out in
Condition 10 (Enforcement); or (iii) if so specified in the
relevant Pricing Supplement, if the holder of the relevant Global
Registered Note requests that such interest be exchanged for
Definitive Registered Notes; or (iv) at the option of the Issuer,
if the Issuer, any Paying Agent or the relevant Registrar, by
reason of any change in, or amendment to, the laws of the DIFC or
the UAE, is or will be required to make any deduction or
withholding from any payment under the Notes which would not be
required if such Notes were in definitive form.
In such circumstances, (a) the relevant Registrar will be
required to notify all Holders of interests in the relevant Global
Registered Notes registered in the name of Euroclear, Clearstream,
Luxembourg or the nominee of their common depositary or the
sub--custodian of the CMU, as the case may be, of the availability
of Definitive Registered Notes and (b) the Issuer will, at the cost
of the Issuer, cause sufficient Definitive Registered Notes, as the
case may be, to be executed and delivered to the relevant Registrar
for completion, authentication and dispatch to the relevant
Holders. A person having an interest in the relevant Global
Registered Note must provide the relevant Registrar with a written
order containing instructions and such other information as the
Issuer and the relevant Registrar may require to complete, execute
and deliver the relevant Definitive Registered Note.
The option for Global Registered Notes to be exchangeable for
Definitive Registered Notes by giving notice should not be
applicable in respect of Notes not having the minimum
denomination(s) and integral multiples set out in the relevant
Pricing Supplement.
Bearer Notes
Bearer Notes will be issued in accordance with the provisions of
United States Treasury Regulations 1.163--5(c)(1)(ii) and
1.163--5(c)(2)(i)(D) ("TEFRA D"), unless the relevant Pricing
Supplement provides that such Notes will be issued in accordance
with the provisions of United States Treasury Regulations
1.163--5(c)(1)(ii) and 1.163--5(c)(2)(i)(C) ("TEFRA C"). Bearer
Notes issued in accordance with TEFRA D will be represented upon
issue by a temporary global note in bearer form without interest
coupons (a "Temporary Global Note"). Bearer Notes issued in
accordance with TEFRA C will be represented upon issue by a
permanent global note in bearer form without interest coupons (a
"Permanent Global Note") or by a Temporary Global Note. Each
Temporary Global Note and Permanent Global Note will be deposited
on or about the issue date for the relevant Tranche with a common
depository, depositories or sub--custodians (as the case may be)
for the relevant Clearing System(s). Beneficial interests in a
Temporary Global Note issued in accordance with TEFRA C will be
exchangeable at any time and without any requirement for
certification for Bearer Notes in definitive form ("Definitive
Bearer Notes"), in accordance with the terms of such Temporary
Global Note and as specified in the relevant Pricing Supplement.
Interests in a Temporary Global Note issued in accordance with
TEFRA D will be exchangeable either for Definitive Bearer Notes or
for interests in a Permanent Global Note, on or after the date
which is 40 days after the date on which such Temporary Global Note
is issued and upon certification as to non--U.S. beneficial
ownership thereof or otherwise as required by U.S. Treasury
Regulations, in accordance with the terms of such Temporary Global
Note and as specified in the relevant Pricing Supplement.
Interests in any Permanent Global Note will be exchangeable, in
whole but not in part, for Definitive Bearer Notes, against
presentation and (in the case of final exchange) surrender of such
Permanent Global Note at the specified office from time to time of
the Principal Paying Agent or, as the case may be, the CMU Lodging
and Paying Agent (i) if the relevant Clearing System(s) or any
other clearing system by which the Notes have been accepted for
clearing is closed for business for a continuous period of 14 days
(other than by reason of legal holidays) or announces an intention
to cease business permanently, (ii) if an Enforcement Event occurs
as set out in Condition 10, (iii) if so specified in the relevant
Pricing Supplement, upon the bearer's request or (iv) if the Issuer
or any Paying Agent, by reason of any change in, or amendment to,
the laws of the DIFC or the UAE, is or will be required to make any
deduction or withholding from any payment under the Notes which
would not be required if such Notes were in definitive form.
Definitive Bearer Notes will, if interest--bearing and if so
specified in the relevant Pricing Supplement, have interest coupons
("Coupons") and, if applicable, a talon for further Coupons
attached. All Definitive Bearer Notes will, if the principal
thereof is repayable by instalments, have endorsed thereon a grid
for recording the payment of principal.
Payments in respect of Bearer Notes
All payments, if any, in respect of Bearer Notes when
represented by a Temporary Global Note or a Permanent Global Note
will be made against presentation and surrender or, as the case may
be, presentation of the relevant Temporary Global Note or Permanent
Global Note at the specified office of any of the Paying Agents. A
record of each payment so made in respect of Notes when represented
by a Permanent Global Note will be endorsed on the relevant
schedule to such Permanent Global Note by or on behalf of the
Principal Paying Agent or, as the case may be, the CMU Lodging and
Paying Agent, which endorsement will be prima facie evidence that
such payment has been made.
The records of the relevant clearing systems which reflect the
amount of Noteholders' interests in the Notes shall be conclusive
evidence of the nominal amount of Notes represented by the Global
Notes.
If any date on which a payment of interest is due on the Notes
of a Series issued in accordance with TEFRA D occurs while any of
the Notes of that Series are represented by a Temporary Global
Note, the relevant interest payment will be made on such Temporary
Global Note only to the extent that certification has been received
by the relevant Clearing System(s) as to the beneficial ownership
thereof, as required by U.S. Treasury Regulations, in accordance
with the terms of such Temporary Global Note.
Notices
Euroclear and Clearstream, Luxembourg
(i) So long as any Bearer Notes are represented by a Temporary
Global Note or a Permanent Global Note and cleared through
Euroclear, Clearstream, Luxembourg, notices to holders of such
Bearer Notes may be given by delivery of the relevant notice to
Euroclear, Clearstream, Luxembourg or any other clearing system (an
"Alternative Clearing System") for communication by them to
entitled accountholders in substitution for publication as required
by the Conditions, and (ii) so long as any Global Registered Note
is held on behalf of Euroclear, Clearstream, Luxembourg or an
Alternative Clearing System, notices to holders of Notes
represented by a beneficial interest in such Global Registered Note
may be given by delivery of the relevant notice to Euroclear,
Clearstream, Luxembourg or, as the case may be, such Alternative
Clearing System, except that in the case of (i) and (ii) above, so
long as any Notes are listed on any stock exchange, notices will
also be published as required by the rules and regulations of such
stock exchange.
CMU
(i) So long as any Bearer Notes are represented by a Temporary
Global Note or a Permanent Global Note and lodged with CMU, notices
to holders of such Bearer Notes may be given by delivery of the
relevant notice to CMU for communication to entitled accountholders
in substitution for publication as required by the Conditions, and
(ii) so long as any Global Registered Note is lodged with a
sub--custodian for the CMU, notices to the holders of Notes
represented by a beneficial interest in such Global Registered Note
may be given by delivery of the relevant notice to the persons
shown in a CMU Instrument Position Report issued by the CMU on the
second business day preceding the date of despatch of such notice
as holding interests in the relevant Global Registered Note, except
that in the case of (i) and (ii) above, so long as any Notes are
listed on any stock exchange, notices will also be published as
required by the rules and regulations of such stock exchange.
Meetings
The provisions for meetings of Holders of Notes scheduled to the
Trust Deed provide that, where all the Notes of the relevant Series
are held by one person, the quorum in respect of the relevant
meeting will be one person present (being, in the case of an
individual, present in person or, being, in the case of a
corporation, present by a representative) holding all the
outstanding Notes of the relevant Series or holding voting
certificates or being a proxy in respect of such Notes.
Purchase and Cancellation
Cancellation of any Note surrendered for cancellation following
its purchase will be effected by reduction in the principal amount
of the relevant Temporary Global Note, Permanent Global Note or, as
the case may be, Global Registered Note and, in the case of a
Global Registered Note, will be recorded in the Register by the
relevant Registrar.
Issuer's Option to Redeem in Part
No drawing of Bearer Notes or redemption pro rata of Registered
Notes will be required under Condition 6(c) in the event that the
Issuer exercises any option to redeem such Notes in part while all
such Notes which are outstanding are represented by a Temporary
Global Note, Permanent Global Note or, as the case may be, Global
Registered Note. In such event, the standard procedures of the
relevant Clearing System(s) or, as the case may be, the Alternative
Clearing System shall operate to determine which interests in such
Global Notes are to be subject to such option. In relation to
Bearer Notes, such partial redemption is to be reflected in the
records of the relevant Clearing System(s) as either a pool factor
or a reduction in nominal amount, at their discretion.
Early Redemption at the option of the Holder - Provisions
relating to Registered Notes held in Clearing Systems
Condition 6(d) allows for early redemption of Notes at the
option of the Holder of such Notes if so specified in the relevant
Pricing Supplement. Such option is exercisable by the Holder of the
relevant Notes by depositing such Notes, together with a notice of
exercise of such option (an "Option Notice"), duly completed and
signed in accordance with Condition 6(d), at the specified office
of any Paying Agent (in the case of Bearer Notes, outside the
United States). In respect of any Registered Notes of the relevant
Series of which a nominee for a common depositary for Euroclear and
Clearstream, Luxembourg is the registered Holder, or, as the case
may be, a sub--custodian for the CMU is the registered Holder, such
Option Notice will be deemed to have been duly completed and signed
by the Holder of the relevant Notes if it has been completed and
signed by or on behalf of a person in respect of whom notification
has been given by the relevant Clearing System(s) to the relevant
Registrar that such person is a person who is shown in the records
of such Clearing System(s) as having relevant Registered Notes of a
specified principal amount standing to the credit of its account
with that the Clearing System(s) or delivered from its account with
such Clearing System(s) for the purpose of exercising such
option.
CLEARING AND SETTLEMENT
Custodial and depositary links have been established with the
Clearing Systems to facilitate the initial issuance of Notes and
cross--market transfers of Notes between investors associated with
secondary market trading. Transfers within a Clearing System will
be in accordance with the usual rules and operating procedures of
the relevant system.
Euroclear and Clearstream, Luxembourg
Euroclear and Clearstream, Luxembourg each holds securities for
participating organisations and facilitates the clearance and
settlement of securities transactions between their respective
participants through electronic book--entry changes in accounts of
such participants. Euroclear and Clearstream, Luxembourg provide to
their respective participants, among other things, services for
safekeeping, administration, clearance and settlement of
internationally--traded securities and securities lending and
borrowing. Euroclear and Clearstream, Luxembourg participants are
financial institutions throughout the world, including
underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organisations.
Indirect access to Euroclear or Clearstream, Luxembourg is also
available to others, such as banks, brokers, dealers and trust
companies which clear through or maintain a custodial relationship
with a Euroclear or Clearstream, Luxembourg participant, either
directly or indirectly.
Distributions of principal and interest with respect to
book--entry interests in the Notes held through Euroclear and
Clearstream, Luxembourg will be credited, to the extent received by
the Principal Paying Agent, to the cash accounts of Euroclear or
Clearstream, Luxembourg participants in accordance with the
relevant system's rules and procedures.
CMU
The CMU Service is a central depositary service provided by the
Central Moneymarkets Unit of the HKMA for the safe custody and
electronic trading between the members of this service ("CMU
Members") of capital markets instruments ("CMU Instruments") which
are specified in the CMU Service Reference Manual as capable of
being held within the CMU Service.
The CMU Service is only available for CMU Instruments issued by
a CMU Member or by a person for whom a CMU Member acts as agent for
the purposes of lodging instruments issued by such persons.
Membership of the CMU Service is open to all members of the Hong
Kong Capital Markets Association and "authorised institutions"
under the Banking Ordinance (Cap. 155) of Hong Kong.
Compared to clearing services provided by Euroclear and
Clearstream, Luxembourg, the standard custody and clearing service
provided by the CMU Service is limited. In particular (and unlike
the European clearing systems), the HKMA does not as part of this
service provide any facilities for the dissemination to the
relevant CMU Members of payments (of interest or principal) under,
or notices pursuant to the notice provisions of, CMU Instruments.
Instead, the HKMA advises the CMU Lodging Agent (or a designated
paying agent) of the identities of the CMU Members to whose
accounts payments in respect of the relevant CMU Instruments are
credited, whereupon the CMU Lodging Agent (or the designated paying
agent) will make the necessary payments of interest or principal or
send notices directly to the relevant CMU Members.
Similarly, the HKMA will not obtain certificates of non--U.S.
beneficial ownership from CMU Members or provide any such
certificates on behalf of CMU Members. The CMU Lodging Agent will
collect such certificates from the relevant CMU Members identified
from an instrument position report obtained by request from the
HKMA for this purpose.
An investor holding an interest through an account with either
Euroclear or Clearstream, Luxembourg in any Notes held in the CMU
Service will hold that interest through the respective accounts
which Euroclear and Clearstream, Luxembourg each have with the CMU
Service.
Secondary Market Trading in relation to Global Registered
Notes
Trading between Euroclear and/or Clearstream, Luxembourg
participants: Secondary market sales of book--entry interests in
the Notes held through Euroclear or Clearstream, Luxembourg to
purchasers of book--entry interests in the Notes through Euroclear
or Clearstream, Luxembourg will be conducted in accordance with the
normal rules and operating procedures of Euroclear and Clearstream,
Luxembourg and will be settled using the procedures applicable to
conventional eurobonds.
PRODUCT DESCRIPTIONS
PRODUCT DESCRIPTION RELATING TO CURRENCY--LINKED NOTES
Notes issued pursuant to the Programme may include
Currency--Linked Notes, being Notes in relation to which the
interest rate and/or the final redemption amount payable at
maturity is dependent on the performance of a particular underlying
currency or group of currencies specified in the Pricing Supplement
(each a "Currency Related Variable"). Generally, if the underlying
currency in question appreciates in relation to the currency to
which it is being compared, the interest rate and/or redemption
amount will increase accordingly.
Details of the underlying currency or group of currencies and
the page(s) of Bloomberg, the Reuters Service and/or other source
where information about such underlying currency or group of
currencies can be obtained will be specified in the relevant
Pricing Supplement.
There follows a description of certain types of Currency--Linked
Notes that may be issued under the Programme. In addition to these
Notes, the Issuer may issue Currency--Linked Notes under the
Programme which combine elements of any of the Notes described
below or are linked to a currency in a manner other than described
below, details of which will be provided in the relevant Pricing
Supplement.
Capital protected Notes
Auto--callable Notes: Notes which are to be mandatorily redeemed
prior to their maturity date if a specified trigger event relating
to a Currency--Related Variable occurs after or during a specified
period or on a specified date, as specified in the Pricing
Supplement.
Growth Notes: Notes under which the redemption amount payable to
the Noteholder at maturity is calculated as the sum of the
aggregate face amount of the Notes plus an amount equal to the
product of the aggregate face amount of the Notes and a multiplier
or participation rate specified in the Pricing Supplement and any
increase in the level or value of the Currency--Related Variable
(such amount not being subject to a maximum amount payable to the
Noteholder ("No Fixed Cap")).
Capped Growth Notes: Notes under which the redemption amount
payable to the Noteholder at maturity is calculated as the sum of
the aggregate face amount of the Notes plus an amount equal to the
product of the aggregate face amount of the Notes and a multiplier
or participation rate specified in the Pricing Supplement and any
increase in the level or value of the Currency--Related Variable
(such amount being subject to a maximum amount payable to the
Noteholder set on the issue date and expressed as a predefined
percentage of the aggregate face amount of the Notes (a "Fixed
Cap")).
Average Growth Notes: Notes under which the redemption amount
payable to the Noteholder at maturity is calculated by reference to
the average level of the Currency--Related Variable on a number of
specified dates occurring on or after the issue date to but
excluding the maturity date, as specified in the Pricing
Supplement.
Basket Growth Notes: Notes under which the redemption amount
payable to the Noteholder on maturity is calculated as the sum of
the aggregate face amount of the Notes plus an amount equal to the
product of the aggregate face amount of the Notes and a multiplier
or participation rate specified in the Pricing Supplement and the
difference in the level or value of the Currency--Related
Variable(s) relating to a basket of currencies.
Basket Digital Notes: Notes in relation to which, if there is an
increase in the level or value of the Currency--Related Variable(s)
relating to a basket of currencies, the interest payable is a fixed
amount.
Basket Digital Plus Notes: Notes in relation to which, if there
is an increase in the level or value of the Currency--Related
Variable(s) relating to a basket of currencies, the interest
payable is a fixed amount plus an amount equal to the product of
the aggregate face amount of the Notes and a multiplier or
participation rate specified in the Pricing Supplement and the
increase in the level or value of the Currency--Related Variable(s)
relating to a basket of currencies.
Best of Growth Notes: Notes in relation to which, if there is an
increase in the level or value of the Currency--Related Variable(s)
relating to a basket of currencies, the interest payable to the
Noteholder is a variable amount equal to the product of the
aggregate face amount of the Notes and the increase in the level or
value of the best performing Currency--Related Variable(s) relating
to a basket of currencies specified in the Pricing Supplement.
Multi Digital Notes: Notes in relation to which, if each
Currency--Related Variable relating to each of the currencies in
the basket reaches a predefined level or value, the interest
payable is a fixed amount.
Barrier Growth Notes: Notes under which the redemption amount
payable to the Noteholder at maturity is calculated as the sum of
the aggregate face amount of the Notes plus an amount equal to the
product of the aggregate face amount of the Notes and a multiplier
or participation rate specified in the Pricing Supplement and any
increase in the level or value of the Currency--Related Variable
provided, however, that the level or value of the Currency--Related
Variable is less than a predefined level or value at all times
("Performance Cap") at any time during the term of the Notes. If
the level or value of the Currency--Related Variable is equal to or
higher than a predefined level or value at any time, the redemption
amount payable to the Noteholder at maturity will be an amount
equal to the aggregate face amount of the Notes and, in such
circumstances, if so specified in the relevant Pricing Supplement,
a fixed amount of interest will be payable to the Noteholder. If
the Pricing Supplement so specify, the predefined level or value
may be varied on a specified date or dates or during specified
periods throughout the term of the Notes.
Digital Notes: Notes in relation to which, if the
Currency--Related Variable at maturity reaches a predefined level
or value, the interest payable is a fixed amount.
Range Accrual Notes: Notes in relation to which the interest
payable (calculated by reference to a formula in the Pricing
Supplement) only accrues for each day during a period that a
specified Currency--Related Variable remains within a specified
range (which may vary during the term of the Notes), as specified
in the Pricing Supplement.
Range Binary Notes: Notes in relation to which, if the
Currency--Related Variable remains within a specified range, the
interest payable is a specified variable amount (calculated by
reference to a formula in the Pricing Supplement).
Wedding Cake Range Binary Notes: Notes in relation to which, if
the Currency--Related Variable remains within one of a number of
specified ranges specified in the Pricing Supplement, the interest
payable is a specified variable amount (calculated by reference to
a formula in the Pricing Supplement) relating to the relevant
range.
Cliquet Range Binary Notes: Notes in relation to which, if the
Currency--Related Variable remains within a specified range that
resets on specified dates based on the level of the
Currency--Related Variable on such dates, the interest payable is a
specified variable amount (calculated by reference to a formula in
the Pricing Supplement).
Touch Rebate Notes: Notes in relation to which, if the
Currency--Related Variable reaches one or a number of predefined
levels or values at any time, or is above one or a number of
predefined levels or values on any specified date, the redemption
amount payable at maturity is a specified variable amount
(calculated by reference to a formula in the Pricing
Supplement).
Second Chance Notes: Notes in relation to which, if the level or
value of the Currency--Related Variable remains, at all times,
within a predefined initial range, or if the level or value of the
Currency--Related Variable does not remain within such predefined
initial range but remains, at all times, within a broader
predefined range, the redemption amount payable at maturity is a
specified variable amount (calculated by reference to a formula in
the Pricing Supplement).
Target Redemption Notes: Notes in relation to which, the
interest payable is determined by reference to the level or value
of the Currency--Related Variable provided, however, that the
maximum cumulative amount of interest payable over the term of the
Notes is specified on the issue date (the "Lifetime Cap") and the
Issuer may redeem the Notes at par on the first payment date on
which the cumulative interest up to and including such payment date
would exceed the Lifetime Cap (taking into account the interest
relating to such payment date), which interest will then be reduced
so that Noteholders receive, over the life of the Notes, an
aggregate of interest equal to the Lifetime Cap.
Recovery Best Coupon Notes: Notes in relation to which, if the
level or value of the Currency--Related Variable is higher than
predefined levels or values on specified dates, the interest
payable in relation to such specified dates is a fixed amount. If
the level or value of the Currency--Related Variable is not higher
than the relevant predefined levels or values on any of the
specified dates the interest which would otherwise have been
payable in respect of such payment date shall not be paid on such
payment date but shall be deferred to the next payment date in
respect of which the level or value of the Currency--Related
Variable is higher than the relevant predefined level or value.
Knock--out Straddle Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated as the sum of the aggregate face amount of the Notes
plus an amount equal to the product of the aggregate face amount of
the Notes and a multiplier or participation rate specified in the
Pricing Supplement and any increase or decrease in the level or
value of the Currency--Related Variable during the term of the
Note, provided, however, that if such level or value is less than a
specified level or value ("Performance Floor") or greater than a
specified level or value ("Performance Cap") at any time during the
term of the Note, the Note shall be redeemed at par.
Non--capital protected Notes
Airbag: Notes in relation to which the redemption amount payable
to the Noteholder at maturity is calculated as either (i) the
product of the aggregate face amount of the Notes and any increase
or decrease in the level or value of the Currency--Related Variable
during the term of the Note expressed as a percentage of the
initial level or value of the Currency--Related Variable provided
that the amount payable at maturity is no less than a specified
amount, or (ii) the product of the aggregate face amount of the
Notes and (A) if there is an increase in the level or value of the
Currency--Related Variable during the term of the Notes, the
product of a multiplier or participation rate specified in the
Pricing Supplement and such level or value expressed as a
percentage of the initial level or value of the Currency--Related
Variable, or (B) if there is a decrease in the level or value of
the Currency--Related Variable during the term of the Notes, such
level or value expressed as a percentage of the initial level or
value of the Currency--Related Variable. No interest is payable in
respect of such Notes.
Leverage Airbag Plus Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated as the product of the aggregate face amount of the Notes
and (A) if there is an increase in the level or value of the
Currency--Related Variable during the term of the Notes, the
product of a multiplier or participation rate specified in the
Pricing Supplement and such level or value expressed as a
percentage of the initial level or value of the Currency--Related
Variable, (B) if there is a decrease in the level or value of the
Currency--Related Variable during the term of the Notes but the
level or value of the FX Related Vehicle at maturity is greater
than a specified level or value (the "Performance Floor"), 100 per
cent., or (C) if there is a decrease in the level or value of the
Currency--Related Variable during the term of the Notes, the level
or value of the Currency--Related Variable has fallen below the
Performance Floor at any time during the term of the Notes and the
level or value of the Currency--Related Variable at maturity is
less than the initial level or value of the Currency--Related
Variable, such level or value at maturity expressed as a percentage
of the initial level or value of the Currency--Related Variable. No
interest is paid in respect of such Notes.
Booster Notes: Notes in relation to which the redemption amount
payable to the Noteholder at maturity is calculated as either (i)
if there is an increase in the level or value of the
Currency--Related Variable during the term of the Notes, the sum of
(1) the aggregate face amount of the Notes and (2) the product of
the aggregate face amount of the Notes and (3) the product of a
multiplier or participation rate specified in the Pricing
Supplement and (4) such level or value expressed as a percentage of
the initial level or value of the Currency--Related Variable, (such
percentage being subject to a predefined maximum percentage (a
"Performance Cap")), (ii) if the final level or value of the
Currency--Related Variable at maturity is less than the initial
level or value of the Currency--Related Variable but higher than a
predefined level or value specified in the Pricing Supplement, the
sum of (1) the aggregate face amount of the Notes and (2) the
product of the aggregate face amount of the Notes and (3) the
predefined level or value specified in the Pricing Supplement, or
(iii) if the final level or value of the Currency--Related Variable
at maturity is less than the initial level or value of the
Currency--Related Variable and such level or value is also less
than a predefined level or value specified in the Pricing
Supplement, the product of (1) the aggregate face amount of the
Notes and (3) the final level or value of the Currency--Related
Variable.
Dual Currency Notes: Notes in relation to which the interest
payable is a fixed amount and, if the Currency--Related Variable is
higher than a predefined level or value at maturity, the redemption
amount payable to the Noteholder at maturity is calculated by
reference to a formula specified in the Pricing Supplement applied
to the aggregate principal amount of the Notes. Investors normally
receive the final redemption amount at Maturity in one currency
(either the original currency in which the Notes are denominated,
or the alternative currency of the Currency--Related Variable).
Payment of Interest shall be subject to further specifications in
the formula specified in the Pricing Supplement.
Triple Currency Notes: Notes in relation to which the interest
payable is a fixed amount and if at least one of the two
Currency--Related Variables is higher than a predefined level or
value at maturity, the redemption amount payable to the Noteholder
at maturity is calculated by reference to a formula specified in
the Pricing Supplement applied to the aggregate principal amount of
the Notes. Investors normally receive payment at maturity in one of
the three currencies (either the original currency in which the
Notes are denominated or one of the two alternative currencies of
the Currency--Related Variable). Payment of interest may be subject
to further specifications in the formula specified in the Pricing
Supplement.
Early Redemption Accrual Notes: Notes which are to be
mandatorily redeemed prior to their maturity date if a specified
trigger event relating to a Currency--Related Variable occurs after
or during a specified period or on a specified date, as specified
in the Pricing Supplement. The face amount of the Notes will be
converted into an alternative currency every day and accrues until
the trigger event date, so that the redemption amount payable to
the Noteholder will be in the alternative currency for the accrued
face amount and/or in the original denomination currency for the
residual face amount.
Reverse Convertible Notes: Notes in relation to which the
interest payable is a fixed amount. If the final level or value of
Currency--Related Variable at maturity is higher than the initial
level or value of the Currency--Related Variable, the redemption
amount payable to the Noteholder at maturity is the aggregate
principal amount of the Notes, whereas, if the final level or value
of Currency--Related Variable is equal to or lower than the initial
level or value of the Currency--Related Variable, the redemption
amount payable to the Noteholder at maturity is calculated by
reference to a formula specified in the Pricing Supplement applied
to the aggregate principal amount of the Notes (such amount being
less than the aggregate principal amount of the Notes).
Tracker Notes: Notes in relation to which the redemption amount
payable to the Noteholder at maturity is calculated as either (i)
the product of the aggregate face amount of the Notes and, if there
is an increase in the level or value of the Currency--Related
Variable during the term of the Notes, such level or value
expressed as a percentage of the initial level or value of the
Currency--Related Variable, or (ii) the product of the aggregate
face amount of the Notes and, if there is a decrease in the level
or value of the Currency--Related Variable during the term of the
Notes, such level or value expressed as a percentage of the initial
level or value of the Currency--Related Variable. No interest is
payable in respect of such Notes.
Leverage Tracker Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated as either (i) the product of the aggregate face amount
of the Notes and, if there is an increase in the level or value of
the Currency--Related Variable during the term of the Notes, the
product of a multiplier or participation rate specified in the
Pricing Supplement and such level or value expressed as a
percentage of the initial level or value of the Currency--Related
Variable, or (ii) the product of the aggregate face amount of the
Notes and, if there is a decrease in the level or value of the
Currency--Related Variable during the term of the Notes, such level
or value expressed as a percentage of the initial level or value of
the Currency--Related Variable. No interest is payable in respect
of such Notes.
PRODUCT DESCRIPTION RELATING TO INTEREST RATE--LINKED NOTES
Notes issued pursuant to the Programme may include Interest
Rate--Linked Notes, being Notes in relation to which the interest
payable thereon (if any) and/or the redemption amount thereof is
determined by reference to levels of, or movements in, specified
interest rates or other interest rate dependent variables, as
applicable (each, an "Interest-Related Variable"). Such Notes may
be Fixed Rate Notes, Floating Rate Notes, Variable Coupon Amount
Notes or Zero Coupon Notes, as specified in the relevant Pricing
Supplement. In the case of Variable Coupon Amount Notes, details of
the dates on which interest shall be payable and the method of
calculation of the interest payable on each such date will be set
out in the relevant Pricing Supplement.
Interest--Related Variables may consist of interest rates for
specified periods, such as London inter--bank offered rates "LIBOR"
for deposits in specified currencies or "EURIBOR" for deposits in
euro, or constant maturity swap ("CMS") or remaining maturity swap
("RMS") rates, or other interest--based factors, as specified in
the relevant Pricing Supplement. Details of the Interest--Related
Variable(s) applicable to any particular Series or Tranche of Notes
and an indication of where information about the past and the
future performance of the Interest--Related Variable and other
information relating thereto will be specified in the relevant
Pricing Supplement.
There follows a description of certain types of Interest
Rate--Linked Notes that may be issued under the Programme. In
addition to these types of Notes, the Issuer may issue Interest
Rate--Linked Notes under the Programme which combine elements of
any of the Interest Rate--Linked Notes described below or are
linked to Interest--Related Variables in a manner other than
described below, details of which will be provided in the relevant
Pricing Supplement.
Early Redemption features for Interest Rate--Linked Notes:
Callable Notes: Notes which may be redeemed prior to their
specified maturity date at the option of the Issuer, which option
may be exercised periodically or on dates specified in the Pricing
Supplement.
Puttable Notes: Notes which may be redeemed at the option of the
Noteholder prior to the maturity date if a specified trigger event
relating to an Interest--Related Variable occurs during a specified
period or on a specified date, as specified in the Pricing
Supplement.
Target Redemption Notes: Notes, the terms of which provide as
follows: (i) the minimum and maximum interest payable to a
Noteholder over the term of the Notes are set on the issue date and
expressed as pre--determined percentages of the notional amount of
the Notes ("Lifetime Floor" and "Lifetime Cap", respectively), (ii)
the final interest payment is increased so that, if the cumulative
total interest payments (taking into account the amount of such
final interest payment) would not otherwise reach the Lifetime
Floor, Noteholders receive over the life of the Notes cumulative
interest payments equal to the Lifetime Floor and (iii) the Notes
will be mandatorily redeemed at par on the first interest payment
date on which the cumulative total interest payments up to and
including such payment date would exceed the Lifetime Cap taking
into account the interest payments scheduled to be made on such
date, which interest payments will then be reduced so that
Noteholders receive over the life of the Notes aggregate interest
payments equal to the Lifetime Cap.
Trigger Redemption Notes: Notes which are not Callable Notes and
which are to be mandatorily redeemed prior to their maturity date
if a specified trigger event in relation to a Interest--Related
Variable occurs during a specified period or on a specified date,
as specified in the Pricing Supplement.
Payment features for Interest Rate--Linked Notes:
Coupon Notes: Notes in relation to which the interest payable to
the Noteholder is subject to the performance of the
Interest--Related Variable.
Zero Coupon Notes: Notes in relation to which no interest is
payable to the Noteholder until the earlier of the scheduled
maturity or early redemption.
Deferred Coupon Notes: Notes in relation to which the interest
in relation to a given payment date may be deferred until the
earlier of the scheduled maturity or early redemption on conditions
specified in the Pricing Supplement.
Interest--Related Variable discontinuity features for Interest
Rate--Linked Notes:
Digital Notes: Notes in relation to which, if the
Interest--Related Variable at maturity reaches a predefined level
or value, the interest payable is a fixed amount.
Barrier Notes: Notes under which the interest and/or the
redemption amount payable to the Noteholder at maturity are
determined by reference to the performance of the Interest--Related
Variable depending on the level or value of the Interest--Related
Variable attaining or falling below predefined levels or values. If
the Pricing Supplement so specify, the predefined level or value
may be varied on a specified date or dates or during specified
periods throughout the term of the Notes. The predefined levels or
values may consist of any of the following:
Up and Out: If the level or value of the Interest--Related
Variable is higher than a predefined level or value at a specified
date or during a specified period the interest and/or redemption
amount payable to the Noteholder ceases to be linked to the
performance of the Interest--Related Variable as specified in the
relevant Pricing Supplement.
Up and In: If the level or value of the Interest--Related
Variable is higher than a predefined level or value at a specified
date or during a specified period the interest and/or redemption
amount payable to the Noteholder become linked to the performance
of the Interest--Related Variable as specified in the relevant
Pricing Supplement.
Down and Out: If the level or value of the Interest--Related
Variable is lower than a predefined level or value at a specified
date or during a specified period the interest and/or redemption
amount payable to the Noteholder cease to be linked to the
performance of the Interest--Related Variable as specified in the
relevant Pricing Supplement.
Down and In: If the level or value of the Interest--Related
Variable is lower than a predefined level or value at a specified
date or during a specified period the interest and/or redemption
amount payable to the Noteholder become linked to the performance
of the Interest--Related Variable as specified in the relevant
Pricing Supplement.
The specified date or dates, or specified periods, for the
observation of the level or value of the Interest--Related Variable
against the relevant predefined level or value may include any of
the following or maybe as otherwise specified in the Pricing
Supplement:
American: the level or value of the Interest--Related Variable
is observed continuously during a specified period.
Bermudan: the level or value of the Interest--Related Variable
is observed during a period which consists of a number of specified
dates.
Discrete: the level or value of the Interest--Related Variable
is observed daily at a specified time on specified dates.
European: the level or value of the Interest--Related Variable
is observed at maturity.
Parisian: the level or value of the Interest--Related Variable
is observed on the occurrence of a specified event.
Switchable Notes: Notes paying a fixed coupon. After a
predetermined period, the Issuer may, at its sole option, switch
irrevocably from a fixed coupon to a floating coupon on each
predefined switch date.
Window: the level or value of the Interest--Related Variable is
only observed during a fixed period.
Interest--Related Variable path dependent features for Interest
Rate--Linked Notes:
Range Accrual Notes: Notes in relation to which the interest
only accrues for each day during a period that a specified
Interest--Related Variable remains within a specified range (which
may vary during the term of the Notes), as specified in the Pricing
Supplement.
Average Growth Notes: Notes under which the redemption amount
payable to the Noteholder at maturity is calculated by reference to
the average level or value of the Interest--Related Variable on a
number of specified dates occurring on or after the issue date to
but excluding the maturity date, as specified in the Pricing
Supplement.
Snow Notes: Notes in relation to which a fixed interest rate is
set for the initial interest period and then leveraged thereafter
whereby the interest rate for any given period is determined by
reference to (i) the rate used to calculate the interest for the
preceding period and applying to it a pre--specified rate and (ii)
a Interest--Related Variable, as set out in the Pricing Supplement
(subject to minimum interest rate of 0 per cent.).
Ratchet Notes: Notes in relation to which a fixed rate is used
to calculate the interest for the initial period (the "initial
rate") and leveraged thereafter whereby the subsequent rate for any
given period used to calculate the interest is determined by
reference to (A) the rate applicable for the preceding period and
applying to it a pre--specified rate and (B) an Interest--Related
Variable (subject to a minimum interest rate of 0 per cent.), until
a specified date on which the rate used to calculate the interest
is reset to the initial rate and the rate leverage process
recommences.
Serial Notes: Notes in relation to which rate used to calculate
the interest is determined by reference to (i) any one of the
minimum, the maximum or the average level or value of the specified
Interest--Related Variable over a certain period of time and (ii) a
rate specified in the Pricing Supplement.
Snowball: Callable Notes in relation to which the fixed rate
used to calculate the interest is set for the initial period and
then leveraged thereafter whereby the rate for any given period is
calculated using the rate for the preceding period and applying to
it a pre--specified rate which increases each year and subtracting
the level or value of the specified Interest--Related Variable
(subject to minimum interest rate of 0 per cent.).
Bearish Snowball: Callable Notes in relation to which the rate
used to calculate the fixed interest is set for the initial period
and then leveraged thereafter whereby the rate for any given period
is calculated using the rate for the preceding period and adding to
it the product of a multiple of the Interest--Related Variable
minus a pre--specified rate (which increases each year) (subject to
a minimum interest rate of 0 per cent. and a pre--specified maximum
interest rate).
Resettable Snowball: Callable Notes in relation to which (i) the
rate used to calculated the fixed interest payment is set for the
initial period (the "initial interest rate") and leveraged
thereafter whereby the subsequent interest rate for any given
interest period is calculated using the interest rate for the
preceding period and applying to it a pre--specified rate which
increases each year and subtracting the specified Interest--Related
Variable (subject to a minimum rate of 0 per cent.) until a
specified date on which the interest is reset to the initial rate
and the rate leverage process recommences, and (ii) the Issuer has
a right to redeem the Notes earlier than the maturity date if a
trigger event relating to a specified Interest--Related Variable
occurs and is existing on a specified early redemption date during
the term of the Notes.
Recovery Note: Callable Notes in relation to which the fixed
rate used to calculate the interest is set for the initial period
and then leveraged thereafter whereby the rate for any given period
is calculated using the rate for the preceding period and adding to
it the product of a multiple of the specified Interest--Related
Variable minus a pre--specified rate (which increases each year)
(subject to a minimum interest rate of 0 per cent. and a
pre--specified rate maximum).
Seesaw Note: Callable Notes in relation to which the method of
calculating interest changes during the life of the Notes as
follows. The fixed rate used to calculate the interest is set for
the initial period and is then leveraged thereafter whereby the
rate for any given period is calculated using the rate for the
preceding period and applying to it a multiple of a pre--specified
rate or rates less the specified Interest--Related Variable. The
rate used to calculate the interest will then revert to the
original rate or another fixed rate for a specified number of
periods. Thereafter, the rate used to calculate the interest for
any given period is calculated using the rate for the preceding
period and applying to it a multiple of the specified
Interest--Related Variable less a pre--specified rate or rates. The
rate applicable to any period may be subject to minimum and maximum
rate limits.
SnowBlade Note: Target Accrual Redemption Notes which are not
Callable Notes in relation to which a fixed rate is set for the
initial period and then leveraged thereafter whereby the rate for
any given subsequent period is calculated using the rate for the
preceding period and applying to it a pre--specified rate which
increases each year and subtracting the specified Interest--Related
Variable (subject to a minimum interest rate of 0 per cent.).
Coupon features for Interest Rate--Linked Notes:
Capped Fixed Coupon: Notes in relation to which the rate used to
calculate the interest is less than or equal to a specified fixed
rate.
Floored Fixed Coupon: Notes in relation to which the rate used
to calculate the interest is greater than or equal to a specified
fixed rate.
Capped Spread Coupon: Notes in relation to which the rate used
to calculate the interest is (i) determined by reference to a
Interest--Related Variable being the difference between two
specified interest rates and (ii) is less than or equal to a
specified rate.
Floored Spread Coupon: Notes in relation to which the rate used
to calculate the interest is (i) determined by reference to the
difference between two interest rates and (ii) is greater than or
equal to a specified rate.
Capped Global Coupon: Notes in relation to which (i) the
interest payable is determined by reference to an Interest--Related
Variable, and (ii) the cumulative interest paid up to a given
payment date (including the interest payable in respect of such
payment date) is less than or equal to an amount specified in the
Pricing Supplement for such payment date. If such cumulative amount
is greater than the amount specified in the Pricing Supplement the
interest payable on the relevant payment date shall be reduced to
ensure such cumulative amount is equal to the amount specified in
the Pricing Supplement for such payment date.
Floored Global Coupon: Notes in relation to which (i) the
interest payable is determined by reference to an Interest--Related
Variable, and (ii) the cumulative interest paid up to a given
payment dates (including the interest payable in respect of such
payment date) is greater than or equal to an amount specified in
the Pricing Supplement for such payment date. If such cumulative
amount is less than the amount specified in the Pricing Supplement
the interest payable on the relevant payment date shall be
increased to ensure such cumulative amount is equal to the amount
specified in the Pricing Supplement for such payment date.
Interest Rate Reset features relating to Interest Rate--Linked
Notes
Interest--in--arrear: Notes in relation to which the interest is
determined by reference to an Interest--Related Variable which is
determined at the end of a given period.
Interest--in--advance: Notes in relation to which the interest
is determined by reference to an Interest--Related Variable which
is determined prior to the commencement of a given period.
Underlyings relating to Interest Rate--Linked Notes
Callable step--down Floaters: Callable Notes which are Floating
Rate Notes and in relation to which (i) the rate used to calculate
the interest is set at a fixed margin above the specified
Interest--Related Variable but the total of which is capped at a
specified fixed rate and (ii) the interest is only payable if the
specified Interest--Related Variable remains below a certain
pre--specified level.
Callable Inverse Floaters: Callable Notes in relation to which a
fixed rate used to calculate the interest is set for an initial
period, after which the rate for any given period is calculated by
subtracting from a pre--specified fixed rate a multiple of the
specified Interest--Related Variable (subject to a minimum interest
rate of 0 per cent.).
Constant Maturity Swap ("CMS") Fixed Spread Callable Range
Accrual Notes: Notes in relation to which the interest is greater
than or equal to a specified fixed rate Callable Notes in relation
to which a fixed rate is set for the initial period and then for
subsequent periods the fixed rate only accrues for each day during
that period if specified constant maturity swap spread (a "CMS
Spread") remains above a pre--specified trigger level or lower
barrier.
VariCap Note: Notes which are not Callable Notes, in relation to
which the interest rate calculated in relation to any period is a
CMS rate plus a spread, but subject to a minimum rate and a
variable maximum interest rate (the "Cap"). The Cap is calculated
by reference to a multiple of the specified CMS Spread, which
multiple may or may not increase over time, as specified in the
relevant Pricing Supplement.
Callable Range Accrual Notes: Range Accrual Notes which are
Callable Notes.
Trigger Redemption Range Accrual Notes: Range Accrual Notes
which are Trigger Redemption Notes.
Auto--puttable Callable Range Accrual Notes: Range Accrual Notes
which are Callable Notes and Auto--puttable Notes.
Fixed Callable Range Accrual Notes: Range Accrual Notes which
are Callable Notes and which bear interest at a fixed rate.
Floating Callable Range Accrual Notes: Range Accrual Notes which
are Callable Notes and which accrue interest at a floating interest
rate.
Forms of Target Accrual Redemption Notes
Target Accrual Redemption Notes (TARNs) (Bullish): Target
Accrual Redemption Notes under which a fixed interest rate is set
for the initial interest period and then for subsequent interest
periods the interest rate is calculated using a fixed rate and
subtracting therefrom a multiplier of the level of a specified
Interest--Related Variable (subject to a minimum interest rate of 0
per cent.).
Bearish TARN: Target Accrual Redemption Notes in relation to
which the interest rate is calculated by applying a fixed
multiplier to the level of a specified Interest--Related Variable
and subtracting a specified fixed rate which increases each year
(subject to a minimum interest rate of 0 per cent.).
BONUS TARN: Target Accrual Redemption Notes in relation to which
the interest rate is calculated using an initial fixed rate during
the first interest period, then a higher fixed rate minus a
multiplier time a specified Interest--Related Variable during
subsequent periods and an additional bonus payment (expressed as a
percentage of the notional amount of the Notes and increasing
annually throughout the term of the Notes) is made to Noteholders
on the redemption date.
SnowRange Notes: Notes which are Callable Notes and in relation
to which (i) interest only accrues for each day (a "Qualifying
Day") during a period that a specified Interest--Related Variable
remains within a specified range (which may vary during the term of
the Notes), as specified in the Pricing Supplement, (ii) the
interest rate is set for the initial interest period and then
leveraged thereafter whereby the interest rate for any given
interest period is calculated using the interest rate for the
preceding period and applying to it a multiplier (calculated from
the number of Qualifying Days in the current period divided by the
actual number of days in the current period). (The SnowRange Note
is a variation of the CRAN.)
Accumulator Leverage Inverse Floater Note: Floating Rate Notes
in relation to which (i) the amount of interest payable to the
Noteholder over the term of the Notes is known from the issue date
and expressed as a percentage of the notional amount (the "Lifetime
Cap") but the timing of interest payments and the maturity date is
not known, (ii) the final interest payment is adjusted at maturity
so that the sum of all interest payments (including such adjusted
payment) equals the Lifetime Cap (iii) the Notes are automatically
redeemed at par on an interest payment date if the sum of the
interest payments (prior to the adjustment of such interest
payment) would otherwise exceed the Lifetime Cap.
BladeRanger Notes: Target Accrual Redemption Notes under which
interest only accrues for each day (a "Qualifying Day") during a
period that a specified Interest--Related Variable remains within a
specified range (which may vary during the term of the Notes), as
specified in the Pricing Supplement, (ii) the interest rate is set
for the initial interest period and then leveraged thereafter
whereby the interest rate for any given interest period is
calculated using the interest rate for the preceding period and
applying to it a multiplier (calculated from the number of
Qualifying Days in the current period divided by the actual number
of days in the current period).
Resettable SnowRange: SnowRange Notes which are Callable Notes
and in relation to which, on a specified date, the interest payable
is reset to the initial interest rate applicable to the first
interest period and the interest rate leverage process
recommences.
Bearish SnowRange: Callable Notes in relation to which (i) the
interest only accrues for each day (a "Qualifying Day") over a
period that a specified Interest--Related Variable remains above a
pre--specified level which may be increased annually, as specified
in the Pricing Supplement and (ii) the interest rate is set for the
initial interest period and then leveraged thereafter whereby the
interest rate for any given interest period is calculated using the
interest rate for the preceding period and applying to it a
multiplier (calculated from the number of Qualifying Days in the
current period divided by the actual number of days in the current
period).
Front--End SnowRange: SnowRange Notes which are Callable Notes
in relation to which the Issuer is entitled to exercise its right
to redeem early if the specified Interest--Related Variable remains
within the pre--specified range during the first year of the term
of the Notes.
Range Accrual Notes: Notes in relation to which the interest is
a variable amount (calculated by reference to a formula in the
Pricing Supplement) and only accrues for each day during a period
that a specified Interest--Related Variable remains within a
specified range (which may vary during the term of the Notes), as
specified in the Pricing Supplement.
Dual Range Accrual Notes: A dual range accrual note is a range
accrual note that accrues interest for each day where the two
observed reference indices are within their respective range while
a lower coupon or no interest is accrued for each day where the
indices fall outside of the range. The range for the observed
reference indices (mostly observed daily) might vary over the life
of the security. The most common structure is linked to the spread
of two Constant Maturity Swaps and an interbank rate.
Constant Maturity Swap ("CMS") linked Notes and Remaining
Maturity Swap ("RMS") linked Notes
Deferred digital: Notes which are not Callable Notes and in
relation to which (i) the timing of the interest rate payment is
conditional on the specified Interest--Related Variable and (ii) if
the specified Interest--Related Variable remains below a certain
trigger level or barrier, the interest rate payable is a fixed
amount and if the specified Interest--Related Variable reaches the
trigger level or barrier, the interest rate payable is compounded
over the term of the Notes and payment is deferred until
maturity.
Remaining--Maturity--Swap CRAN: Callable Notes in relation to
which interest only accrues for each day over a certain period of
time that the specified underlying Remaining--Maturity--Swap (RMS)
rate remains below a certain pre--specified trigger level or upper
barrier.
RMS Wings Note: Callable Notes in relation to which there is a
certain fixed minimum interest rate which only accrues for each day
over a certain period of time that the specified Interest--Related
Variable is either (i) below a certain pre--specified trigger level
or (ii) above a certain higher pre--specified trigger level.
CMS SnowRange: Callable Notes in relation to which (i) interest
only accrues for each day (a "Qualifying Day") over a certain
period of time that a specified CMS rate remains within a
pre--specified range which may increase annually and (ii) the
interest rate is set for the initial interest period and then
leveraged thereafter whereby the interest rate for any given
interest period is calculated using the interest rate for the
preceding period and applying to it a multiplier (calculated from
the number of Qualifying Days in the current period divided by the
actual number of days in the current period).
Bearish CMS: Target Accrual Redemption Notes in relation to
which a fixed interest rate is set for the initial interest period
and then for subsequent interest periods it is calculated by
subtracting a fixed multiplier which increases each year from a
specified CMS rate (subject to a minimum interest rate of 0 per
cent.).
CMS Recovery Note: Callable Notes in relation to which a fixed
interest rate is set for the initial interest period and then
leveraged thereafter whereby the interest rate for any given
interest period is calculated using the interest rate for the
preceding period and adding to it the product of a multiple of a
specified CMS rate minus a pre--specified interest rate (which
increases each year) (subject to minimum interest rate of 0 per
cent. and a pre--specified maximum interest rate).
CMS TARN Note: Target Accrual Redemption Notes in relation to
which a fixed interest rate is set for the initial interest period
and then for subsequent interest periods the interest rate is
calculated using a fixed rate and subtracting the level of a
specified CMS rate (subject to a minimum interest rate of 0 per
cent.).
CMS Spread--linked Notes
(CMS) Fixed SCRAN: Callable Notes in relation to which a fixed
interest rate is set for the initial interest period and then for
subsequent interest periods the fixed interest rate only accrues
for each day over a certain period of time that a specified
constant maturity swap spread (a "CMS Spread") remains above a
pre--specified trigger level or lower barrier.
(CMS) Floating SCRAN: Callable Notes in relation to which a
fixed interest rate is set for the initial interest period and then
for subsequent interest periods a floating rate of interest only
accrues for each day over a certain period of time that a specified
CMS--Spread remains above a pre--specified trigger level or lower
barrier.
Wedding Cake Note: Notes which are not Callable Notes, in
relation to which the floating interest rate is comprised of three
different tiers of calculation and only accrues for each day that a
specified CMS Spread remains (a) above a pre--specified trigger
level, (b) remains within a pre--specified range and (c) remains
below a pre--specified trigger level, over a certain period of
time.
Floating SCRAN: Callable Notes in relation to which a fixed
interest rate is set for the initial interest period and then for
subsequent interest periods the interest only accrues for each day
over a certain period of time that the specified Interest--Related
Variable remains above a pre--specified trigger level or lower
barrier.
VariCap Note: Notes which are not Callable Notes, in relation to
which the interest calculated in relation to any period is a CMS
rate plus a spread, but subject to a minimum interest rate and a
variable maximum interest rate (the "Cap"). The Cap is calculated
by reference to a multiple of the specified CMS Spread, which
multiple may or may not increase over time, as specified in the
relevant Pricing Supplement.
CMS Steepener (Bearish): Callable Notes in relation to which the
interest rate is set at a fixed margin above a specified CMS rate
and is payable if such CMS rate remains above a pre--specified
trigger level (which increases throughout the term of the Notes)
but if the CMS rate falls below the trigger level, then the
interest rate payable is capped at a specified fixed amount.
Volatility--linked Notes
Serial Notes: Notes which are not Callable Notes and in relation
to which the interest rate is determined by any one of the minimum,
the maximum or the average level of the Specified Interest--
Related Variable over a certain period of time plus a
pre--specified rate.
Sliding Volatility Note: Notes which are not Callable Notes and
in relation to which the rate used to calculate the interest is set
at a multiple of the value of the change in a specified
Interest--Related Variable over a specified period.
Terminal Volatility Note: Notes which are Callable Notes and in
relation to which the rate used to calculate the interest rate for
any interest period is calculated by multiplying a specified fixed
rate by the absolute value of the difference between the specified
Interest--Related Variable at the start of one period and such
Interest--Related Variable at the end of the period.
PRODUCT DESCRIPTION RELATING TO CREDIT--LINKED NOTES
Credit-Linked Notes to which the "Additional Terms and
Conditions relating to Credit-Linked Notes (2014 ISDA Credit
Derivatives Definitions Version)" apply
Linked Notes, being Notes in relation to which the interest rate
and/or the amount payable and/or the value of the assets
deliverable on redemption reflect the performance of a reference
entity or reference obligation, or a portfolio of reference
entities or reference obligations and the credit-linked terms of
which include terms based on the 2014 ISDA Credit Derivatives
Definitions. These Credit-Linked Notes may be auction settled, with
cash settlement as the fallback settlement method, or physically
settled, as specified in more detail in the relevant Pricing
Supplement.
Credit-Linked Notes usually offer a higher yield than most basic
eurobonds with a similar credit rating.
Details of the reference entity or reference entities to which
Credit-Linked Notes relate and of the page(s) of Bloomberg, the
Reuters Service and/or other source(s) where information about such
reference entity or reference entities can be obtained will be
specified in the relevant Pricing Supplement.
PRODUCT DESCRIPTION RELATING TO EQUITY--LINKED NOTES, CASH
EQUITY LOANS AND INDEX--LINKED NOTES
Equity/Index--Linked Notes issued under the Programme may
include Notes of the following product categories:
(a) Equity--Linked Notes and Cash Equity Notes; and
(b) Index--Linked Notes.
The Issuer may issue Equity/Index--Linked Notes under the
Programme which combine elements of any of the Notes described
below, details of which will be provided in the relevant Pricing
Supplement.
References herein to an "Equity/Index-Related Variable" in
relation to any Note are to the underlying security, basket of
securities, index or indices to which such Note is linked.
Where Notes are linked to an underlying basket of securities or
indices, references herein to a "Component" are references to each
individual index or security within such basket of indices or
securities, as applicable.
(A) Equity--Linked Notes and Cash Equity Notes
Notes issued pursuant to the Programme may include
Equity--Linked Notes and Cash Equity Notes, being Notes in relation
to which the interest rate and/or the redemption amount payable at
maturity is linked to, or to the performance over a defined period
of, a security or basket of securities and may include details of
the security or basket of securities to which Equity--Linked Notes
or Cash Equity Notes are linked, the ISIN (international security
identification number) or other security identification code
thereof and the page(s) of Bloomberg, the Reuters Service and/or
other source where information about the past and the future
performance of such security or securities can be obtained will be
specified in the Pricing Supplement. Equity--Linked Notes and Cash
Equity Notes may include:
(a) Notes in relation to which the interest amount and/or the
redemption amount payable at maturity is linked to the performance
or percentage change in the share price of a single share in a
selected corporate entity (or other security), or the value of the
basket of shares in selected corporate entities (other such
securities) over a defined period by way of a formula specified in
the Pricing Supplement;
(b) Notes in relation to which the Noteholder has a right
(exercisable within a certain period or on a certain date) to
exchange the principal amount of the Notes for a specified quantity
of securities in one or more selected corporate entities (or other
securities); and/or
(c) Notes in relation to which the Issuer has a right
(exercisable within a certain period or on a certain date) to
exchange the principal amount of the Notes for an equivalent value
of securities in one or more selected corporate entities (or other
securities).
(B) Index--Linked Notes
Notes issued pursuant to the Programme may include Index--Linked
Notes, being Notes in relation to which the interest rate and/or
the redemption amount payable at maturity is linked to the
performance of one or more indices, by way of a specified formula
or in such other manner as shall be specified in the Pricing
Supplement. Such indices may include, without limitation, the Euro
STOXX(R) 50 Index (Bloomberg Code: SX5E), the Standard & Poor's
500(R) Index (Bloomberg Code: SPX), the Nasdaq 100 Index (Bloomberg
Code: NDX), the Nikkei 225(R) Index (Bloomberg Code: NKY), the
FTSE(TM) 100 Index (Bloomberg Code: UKX), the CAC40(R) Index
(Bloomberg Code: CAC), the SMI(R) Index (Bloomberg Code: SMI) or
the US CPI Urban Consumers NSA (Bloomberg Code: CPURNSA) or a
combination of these or any other published indices.
HSBC has developed indices that are algorithmic/managed
strategies, such indices include without limitation the following,
and the interest rate and/or the redemption amount payable at
maturity may be linked to any of them or a combination of them or
any other published indices:
Index Name Bloomberg Ticker
HSBC EUR DTP HSTPEU01
-----------------------------
HSBC USD Volatility Budgeted HSTPVB01
DTP 1
-----------------------------
HSBC USD Volatility Budgeted HSTPVB02
DTP 2
-----------------------------
HSBC USD Volatility Budgeted HSTPVB03
DTP 3
-----------------------------
HSBC USD Volatility Budgeted HSTPVB04
DTP 4
-----------------------------
HSBC EUR Uniform Volatility HSUNEU01
Budgeted
-----------------------------
HSBC GBP Uniform Volatility HSUNBP01
Budgeted
-----------------------------
HSBC USD Uniform Volatility HSUNUS01
Budgeted
-----------------------------
HSBC USD Uniform Basket HSUNBKU1
-----------------------------
HSBC METYS - VB Index HSMETYS1
-----------------------------
HSBC Global FX Carry Benchmark HSFAEC0U
- Excess Return
-----------------------------
HSBC Global FX Carry Index HSFATC1U
- Total Return
-----------------------------
HSBC Global FX Carry Index HSFAEC1U
- Excess Return
-----------------------------
HSBC Global FX Carry Index HSFAVC1U
- Volatility Target
-----------------------------
HSBC SGD NEER Long and Short HSFYESLU (Long) and HSFYESSU
Indices (Short)
-----------------------------
The Dynamic Term Premium (DTP) indices are rules--based
strategies that aims to generate returns by exploiting the 'term
premium' and aim to benefit from instances when term premium is
either positive or negative.
The HSBC Uniform Index Series is a rules--based strategy that
was developed with the aim of benefitting from moves in money
market futures in USD, GBP and EUR. Its underlying aims to
anticipates moves in money market futures and takes long or short
positions in these futures.
The HSBC METYS Index is a rules--based strategy that was
developed to benefit from moves in the difference between the 2
year and the 10 year US treasury yields. Its underlying strategy
aims to anticipate moves in the difference between the yields
implied by the 2 year US Treasury Future and the 10 year US
Treasury Future (this spread is referred to as '2s10s') and takes
long and short positions in these futures.
The HSBC Global FX Carry Benchmark is a rules-based strategy
that aims to generate returns by taking advantage of the interest
rate differential where this strategy involves investing in
high-yeilding currencies while borrowing in low yielding
currencies.
The HSBC Global FX Carry Index is a rules-based strategy that
aims to generate returns by taking advantage of the interest rate
differential where this strategy involves investing in
high-yeilding currencies while borrowing in low yielding
currencies. Currencies exhibiting high volatility are excluded from
the selection process.
The Volatility Target HSBC Global FX Carry Index is a
rules-based strategy that aims to generate returns by taking
advantage of the interest rate differential where this strategy
involves investing in high-yeilding currencies while borrowing in
low-yielding currencies. Currencies exhibiting high volatility are
excluded from the selection process and exposure to the strategy is
adjusted on a regular basis such that the realised volatility of
the strategy performance reaches a target level.
The HSBC SGD NEER Long and Short Indices are HSBC research-based
strategies that aim to generate returns from the SGD NEER (SGD
National Effective Exchange Rate) by taking a view on the economy
of Singapore. The SGD NEER is a monetary tool used by the Monetary
Authority of Singapore (MAS) to approximate SGD value against
currencies of Singapore's major trading partners. The SGD NEER
policy Basket is confidential and market participants interested in
SGD try to guess its composition The HSBC SGD NEER Strategies
involve going long (or short) a basket of currencies (containing 42
currencies) where weights are determined by HSBC Research to try to
replicate the SGD NEER Index. Weightings of the Basket are changed
independently by HSBC Research on a regular basis depending on
their view.
The name of the relevant (or each) relevant index and the
website of the relevant index sponsor page(s) of the Reuters
Service and/or other source where information about such index can
be obtained will be specified in the relevant Pricing
Supplement.
Principal Protected Notes
Callable Notes: Notes which may be redeemed prior to their
specified maturity date at the option of the Issuer, which option
may be exercised periodically or on specified dates, as described
in the Pricing Supplement.
Coupon Notes: Notes in relation to which (i) the interest
payable to the Noteholder is subject to the performance of the
Equity/Index--Related Variable, and (ii) the redemption amount
payable to the Noteholder is greater than or equal to the aggregate
face amount of the Notes.
Callable Coupon Notes: Notes in relation to which (i) the
interest payable to the Noteholder is subject to the performance of
the Equity/Index--Related Variable (which may be independent of any
condition relating to the redemption amount payable at maturity to
such Noteholders), and (ii) the Issuer may redeem the Notes prior
to their specified maturity date on dates specified in the Pricing
Supplement.
Growth Notes: Notes under which the redemption amount payable to
the Noteholder at maturity is calculated as the sum of (i) the
aggregate face amount of the Notes and (ii) an amount equal to the
product of (A) the aggregate face amount of the Notes, (B) a
multiplier or participation rate specified in the Pricing
Supplement and (C) any increase in the level or value of the
Equity/Index--Related Variable expressed as a percentage of the
initial level or value of the Equity Related Variable (such amount
not being subject to a maximum amount payable to the Noteholder
("No Fixed Cap")).
Capped Growth Notes: Notes under which the redemption amount
payable to the Noteholder at maturity is calculated as the sum of
(i) the aggregate face amount of the Notes plus (ii) an amount
equal to the products of (A) the aggregate face amount of the
Notes, (B) a multiplier or participation rate specified in the
Pricing Supplement and (C) any increase in the level or value of
the Equity/Index--Related Variable (such amount being subject to a
maximum amount payable to the Noteholder set on the issue date and
expressed as a predefined percentage of the aggregate face amount
of the Notes (a "Fixed Cap")).
Average Growth Notes: Notes under which the redemption amount
payable to the Noteholder at maturity is calculated by reference to
the average level or value of the Equity/Index--Related Variable on
a number of specified dates occurring on or after the issue date to
but excluding the maturity date, as specified in the Pricing
Supplement.
Smart Growth Notes: Notes under which the redemption amount
payable to the Noteholder on maturity is linked to the best
performance of the Components in a basket of equities or indices.
On certain dates specified in the Pricing Supplement the Component
that has the highest value or level expressed as a percentage of
the value or level of that Component on a date specified in the
Pricing Supplement, shall be removed from the basket. The
redemption amount payable on maturity is calculated as the sum of
(i) the aggregate face amount of the Notes plus (ii) an amount
equal to the product of (A) the aggregate face amount of the Notes,
(B) a multiplier or participation rate specified in the Pricing
Supplement and (C) an amount equal to the level or value of the
basket at maturity expressed as a percentage of the initial level
of such basket plus each of the returns on those Components removed
from the basket.
Accrual Notes: Notes in relation to which the accrual of
interest amount and the rate of such accrual is dependent upon the
performance of the Equity/Index--Related Variable, as specified in
the Pricing Supplement.
Range Accrual Notes: Notes in relation to which the interest is
a variable amount (calculated by reference to a formula in the
Pricing Supplement) and only accrues for each day during a period
that a specified Equity/Index--Related Variable remains within a
specified range (which may vary during the term of the Notes), as
specified in the Pricing Supplement.
Range Binary Notes: Notes in relation to which, if the
Equity/Index--Related Variable remains within a specified range,
the interest payable is a specified variable amount (calculated by
reference to a formula in the Pricing Supplement).
Wedding Cake Range Binary Notes: Notes in relation to which, if
the Equity/Index--Related Variable remains within one of a number
of ranges specified in the Pricing Supplement, the interest payable
is a specified variable amount (calculated by reference to a
formula in the Pricing Supplement) relating to the relevant
range.
Callable Floored Accrual Protected Notes: Notes in relation to
which (i) interest accrues as set out in the relevant Pricing
Supplement and is payable to the Noteholders for each day on which
if the level or value of each Component of the
Equity/Index--Related Variable is greater than levels or values
specified for such Components in the Pricing Supplement (ii) the
redemption amount payable to the Noteholder is equal to or greater
than the aggregate face amount of the Note and (i) the Issuer may
redeem the Notes prior to their scheduled maturity date on dates
specified in the Pricing Supplement.
Max Lookback Strike Growth Notes: Notes under which the
principal amount payable to the Noteholder at maturity is
calculated as the sum of (i) the aggregate face amount of the Notes
and (ii) an amount equal to the product of (A) the aggregate face
amount of the Notes, (B) a multiplier or participation rate
specified in the Pricing Supplement and (C) the highest increase in
the level or value attained by the Equity/Index--Related Variable
during a period specified in the Pricing Supplement, expressed as a
percentage of the initial level or value of such
Equity/Index--Related Variable (such amount not being subject to a
maximum amount payable to the Noteholder ("No Fixed Cap")).
Captain Notes: Notes under which the principal amount payable to
the Noteholder at maturity and/or the interest payable to the
Noteholder are determined by reference to the average level or
value of an Equity/Index--Related Variable in respect of which each
Component has a maximum level or value (a "Cap") specified in the
Pricing Supplement.
Captain Notes may include additional provisions, including the
following:
-- provisions under which, if the performance of the relevant
Equity/Index--Related Variable or Component thereof is positive
and/or exceeds a certain level or value, then for all future
observations the Cap is either replaced with a Cap at a new level
or the level or value of such Component for all future observations
is fixed at a new specified level or value;
-- provisions under which the negative performance of the
Equity/Index--Related Variable or Component thereof has a minimum
level or value (a "Floor") so that any negative performance beyond
the Floor is disregarded;
-- provisions under which, if the performance of the
Equity/Index--Related Variable is negative, then its level will be
deemed to be one of several pre--determined levels or values, each
a "digital floor", depending on where the performance falls within
certain specified ranges; and
-- provisions under which the final level or value of the
relevant Equity/Index--Related Variable or Component thereof is
replaced by its highest level or value observed on the previous
valuation dates under the Notes.
Binary Captain Notes: Notes under which the principal amount
payable to the Noteholder at maturity and/or the interest payable
to the Noteholder are determined by reference to the average level
or value of an Equity/Index--Related Variable in respect of which
each Component that has, on the relevant valuation date, a level or
value higher than its initial level or value shall have a
pre--determined level or value assigned to it for the purposes of
calculating such average level or value of the
Equity/Index--Related Variable.
Smart Average Notes: Notes under which the redemption amount
payable to the Noteholder at maturity is linked to the performance
of an Equity/Index--Related Variable having participations in
Components which may be adjusted by reference to the average
performance, such Components as specified in the Pricing
Supplement.
Rainbow Average Notes: Notes under which the redemption amount
payable to the Noteholder at maturity is linked to the performance
of an Equity/Index--Related Variable which has participations in
the performance of its Components which may be varied as specified
in the Pricing Supplement. On certain dates specified in the
Pricing Supplement the average performance of each Component since
the issue date will be determined and the participations for each
Component will be adjusted, so that the best performing Components
will have an increased participation and the worst performing
Components will have a decreased participation.
Growing Average Notes: Notes under which the redemption amount
payable to the Noteholder at maturity is calculated by reference to
the average level or value of the Equity/Index--Related Variable in
respect of certain periods specified in the Pricing Supplement
provided, however, that the average level or value for a given
period shall not be less than the highest average level or value
determined in respect of each preceding period.
Performance Spread Notes: Notes under which the interest payable
to the Noteholder is linked to the performance of an
Equity/Index--Related Variable, the level or value of which is
dependent on the difference in the performance of the best
performing Component and the worst performing Component during a
given period, provided, however, that the interest shall be no
greater than an amount specified in the Pricing Supplement. If
specified in the Pricing Supplement, the interest may be greater
than or equal to a minimum amount.
Target Redemption Notes: Notes in relation to which the interest
payable to the Noteholder is determined by reference to the level
or value of the Equity/Index--Related Variable provided, however,
that the maximum cumulative amount of interest payable over the
term of the Notes is specified on the issue date (the "Lifetime
Cap") and the Issuer may redeem the Notes at par on the first
interest payment date on which the cumulative interest up to and
including such interest payment date would exceed the Lifetime Cap
(taking into account the interest scheduled to be made on such
date), which interest amount will then be reduced so that
Certificate holders receive, over the life of the Notes, interest
in an aggregate amount equal to the Lifetime Cap.
Recovery Best Coupon Notes: Notes in relation to which, if the
level or value of the Equity/Index--Related Variable is higher than
predefined levels or values on specified dates, the interest
payable in relation to such specified dates is a fixed amount. If
the level or value of the Equity/Index--Related Variable is not
higher than the relevant predefined levels or values on any of the
specified dates the interest which would otherwise have been
payable in respect of such interest payment date shall not be paid
on such interest payment date but shall be deferred to the next
interest payment date in respect of which the level or value of the
Equity/Index--Related Variable is higher than the relevant
predefined level or value.
Non--Principal Protected Notes
Absolute Performance Auto Callable Notes: Notes in relation to
which the interest (if any) and/or the redemption amount payable is
linked to the performance of an Underlying, as determined by the
Calculation Agent. The performance of the Underlying on particular
dates may result in the redemption of the Absolute Performance Auto
Callable Notes prior to their scheduled maturity at an amount which
reflects the absolute performance of the Underlying. The
performance of the Underlying will also determine the redemption
amount of Absolute Performance Auto Callable Notes at their
scheduled maturity. Absolute Performance Auto Callable Notes will
be redeemed on their scheduled maturity at an amount which reflects
the absolute performance of the Final Index Level (as defined in
the relevant Pricing Supplement) in relation to the Initial Index
Level (as defined in the relevant Pricing Supplement), as
determined by the Calculation Agent. Accordingly, so long as no
Trigger Event has occurred investors may receive on redemption of
the Notes an amount in excess of their nominal amount even if the
performance of the Underlying has been negative. If a Trigger Event
has occurred, Absolute Performance Auto Callable Notes will be
redeemed in whole (but not in part) at an amount (which may be less
than their nominal amount) equal to the product of the nominal
amount multiplied by the percentage decrease in value of the
Underlying during the Observation Period (as defined in the
relevant Pricing Supplement) as determined by the Calculation
Agent. Absolute Performance Auto Callable Notes may or may not bear
interest.
Barrier Notes: Notes under which the interest and/or the
redemption amount payable to the Noteholder at maturity are
determined by reference to the performance of the
Equity/Index--Related Variable depending on the level or value of
the Equity/Index--Related Variable attaining or falling below
predefined levels or values. If the Pricing Supplement so specify,
the predefined level or value may be varied on a specified date or
dates or during specified periods throughout the term of the Notes.
The predefined levels or values may consist of any of the
following:
-- Up and Out: if the level or value of the
Equity/Index--Related Variable is higher than a predefined level or
value at a specified date or during a specified period the interest
and/or redemption amount payable to the Noteholder ceases to be
linked to the performance of the Equity/Index--Related Variable as
specified in the relevant Pricing Supplement.
-- Up and In: if the level or value of the Equity/Index--Related
Variable is higher than a predefined level or value at a specified
date or during a specified period the interest and/or redemption
amount payable to the Noteholder becomes linked to the performance
of the Equity/Index--Related Variable as specified in the relevant
Pricing Supplement.
-- Down and Out: if the level or value of the
Equity/Index--Related Variable is lower than a predefined level or
value at a specified date or during a specified period the interest
and/or redemption amount payable to the Noteholder cease to be
linked to the performance of the Equity/Index--Related Variable as
specified in the relevant Pricing Supplement.
-- Down and In: if the level or value of the
Equity/Index--Related Variable is lower than a predefined level or
value at a specified date or during a specified period the interest
and/or redemption amount payable to the Noteholder become linked to
the performance of the Equity/Index--Related Variable as specified
in the relevant Pricing Supplement.
The specified date or dates or specified periods for the
observation of the level or value of the Equity/Index--Related
Variable against the relevant predefined level or value may include
any of the following or may be as otherwise specified in the
Pricing Supplement:
-- American: the level or value of the Equity/Index--Related
Variable is observed continuously during a specified period.
-- Bermudan: the level or value of the Equity/Index--Related
Variable is observed during a period which consists of a number of
specified dates.
-- Discrete: the level or value of the Equity/Index--Related
Variable is observed daily at the closing of the
Equity/Index--Related Variable.
-- European: the level or value of the Equity/Index--Related
Variable is observed at maturity.
-- Parisian: the level or value of the Equity/Index--Related
Variable is observed on the occurrence of a specified event.
-- Window: the level or value of the Equity/Index--Related
Variable is only observed during a fixed period.
Cliquet Notes: Notes in relation to which the redemption amount
payable to the Noteholder at maturity is calculated by reference to
the performance of the Equity/Index--Related Variable in each of a
number of periods specified in the Pricing Supplement (each a
"Cliquet Period"). The redemption amount payable at maturity is
equal to the sum of the upside and/or downside in the level or
value of the Equity/Index--Related Variable during each Cliquet
Period. Variants of Cliquet Notes include:
-- Cliquet with local cap: the performance of the
Equity/Index--Related Variable in each Cliquet Period is limited on
the upside.
-- Cliquet with collar: the performance of the
Equity/Index--Related Variable in each Cliquet Period is limited on
both the upside and downside.
-- Digital Cliquet: the performance of the Equity/Index--Related
Variable in each Cliquet Period corresponds to a different
pre--determined amount according to whether the underlying rises or
falls in each Cliquet Period.
-- Cliquet with local individual cap: the performance of each
Component of the Equity/Index--Related Variable in each Cliquet
Period is limited on the upside.
-- Cliquet with local cap on best performances: only a specified
number of best performances are limited on the upside.
Double No Touch Notes: Notes in relation to which, provided the
level or value of the Equity/Index--Related Variable or the levels
of values of some or all of the Components of an
Equity/Index--Related Variable do not fall below predefined levels
or values or increase above predefined levels or values at any
time, an "enhanced return" (calculated by reference to a formula in
the Pricing Supplement) is payable to the Noteholders at
maturity.
Knock--out Straddle Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated as the sum of (i) the aggregate face amount of the Notes
and (ii) an amount equal to the product of (A) the aggregate face
amount of the Notes, (B) a multiplier or participation rate
specified in the Pricing Supplement and (C) any increase or
decrease in the level or value of the Equity/Index--Related
Variable during the term of the Note expressed as a percentage of
the initial level or value of the Equity/Index--Related Variable,
provided, however, that if such level or value is less than a
specified level or value ("Performance Floor") or greater than a
specified level or value ("Performance Cap") at any time during the
term of the Note, the Note shall be redeemed at par.
Airbag Notes: Notes in relation to which the redemption amount
payable to the Noteholder at maturity is calculated as either (i)
the product of the aggregate face amount of the Notes and any
increase or decrease in the level or value of the
Equity/Index--Related Variable during the term of the Note
expressed as a percentage of the initial level or value of the
Equity/Index--Related Variable provided that the amount payable at
maturity is no less than a specified amount, or (ii) the product of
the aggregate face amount of the Notes and (A) if there is an
increase in the level or value of the Equity/Index--Related
Variable during the term of the Notes, the product of a multiplier
or participation rate specified in the Pricing Supplement and such
level or value expressed as a percentage of the initial level or
value of the Equity/Index--Related Variable, or (B) if there is a
decrease in the level or value of the Equity/Index--Related
Variable during the term of the Notes, such level or value
expressed as a percentage of the initial level or value of the
Equity/Index--Related Variable. No interest payments are payable in
respect of such Notes.
Leverage Airbag Plus Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated as the product of the aggregate face amount of the Notes
and (A) if there is an increase in the level or value of the
Equity/Index--Related Variable during the term of the Notes, the
product of a multiplier or participation rate specified in the
Pricing Supplement and such level or value expressed as a
percentage of the initial level or value of the
Equity/Index--Related Variable, (B) if there is a decrease in the
level or value of the Equity/Index--Related Variable during the
term of the Notes but the level or value of the
Equity/Index--Related Vehicle at maturity is greater than a
specified level or value (the "Performance Floor"), 100 per cent.,
or (C) if there is a decrease in the level or value of the
Equity/Index--Related Variable during the term of the Notes, the
level or value of the Equity/Index--Related Variable has fallen
below the Performance Floor at any time during the term of the
Notes and the level or value of the Equity/Index--Related Variable
at maturity is less than the initial level or value of the
Equity/Index--Related Variable, such level or value at maturity
expressed as a percentage of the initial level or value of the
Equity/Index--Related Variable. No interest is paid in respect of
such Notes.
Reverse Airbag Plus Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated as the product of the aggregate face amount of the Notes
and (A) if there is a decrease in the level or value of the
Equity/Index--Related Variable during the term of the Notes, the
product of a multiplier or participation rate specified in the
Pricing Supplement and the absolute value of such decrease in the
level or value expressed as a percentage of the initial level or
value of the Equity/Index--Related Variable, (B) if there is an
increase in the level or value of the Equity/Index--Related
Variable during the term of the Notes but the level or value of the
Equity/Index--Related Vehicle at maturity is less than a specified
level or value (the "Performance Cap"), 100 per cent., or (C) if
there is an increase in the level or value of the
Equity/Index--Related Variable during the term of the Notes, the
level or value of the Equity/Index--Related Variable has risen
above the Performance Cap at any time during the term of the Notes
and the level or value of the Equity/Index--Related Variable at
maturity is higher than the initial level or value of the
Equity/Index--Related Variable, 100 per cent. minus such increase
in the level or value at maturity expressed as a percentage of the
initial level or value of the Equity/Index--Related Variable. No
interest is paid in respect of such Notes.
Booster Notes: Notes in relation to which the redemption amount
payable to the Noteholder at maturity is calculated as either (i)
if there is an increase in the level or value of the
Equity/Index--Related Variable during the term of the Notes, the
sum of (1) the aggregate face amount of the Notes and (2) the
product of the aggregate face amount of the Notes and (3) the
product of a multiplier or participation rate specified in the
Pricing Supplement and (4) such level or value expressed as a
percentage of the initial level or value of the
Equity/Index--Related Variable, (such percentage being subject to a
predefined maximum percentage (a "Performance Cap")), (ii) if the
final level or value of the Equity/Index--Related Variable at
maturity is less than the initial level or value of the
Equity/Index--Related Variable but higher than a predefined level
or value specified in the Pricing Supplement, the sum of (1) the
aggregate face amount of the Notes and (2) the product of the
aggregate face amount of the Notes and (3) the predefined level or
value specified in the Pricing Supplement, or (iii) if the final
level or value of the Equity/Index--Related Variable at maturity is
less than the initial level or value of the Equity/Index--Related
Variable and such level or value is also less than a predefined
level or value specified in the Pricing Supplement, the product of
(1) the aggregate face amount of the Notes and (3) the final level
or value of the Equity/Index--Related Variable.
Reverse Convertible Notes: Notes may include terms providing
that in certain circumstances linked to the price or performance of
a Reference Asset determined as specified in the relevant Pricing
Supplement, and, at the election of the Issuer, the Notes will be
redeemed by the Issuer delivering, or procuring delivery, to the
Noteholders of the relevant Securities or, as the case may be,
Securities comprising the relevant Basket. Such terms may also
provide that in such circumstances the Issuer may elect to redeem
the Notes on an alternative cash payment basis, in an amount (which
may be calculated on a formula basis) linked to such price or
performance. Reverse Convertible Notes may also include Notes, the
Pricing Supplement of which specify Additional Disruption Events in
respect of the unavailability of relevant Exchange Rates.
Callable Short DI Put Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated as either (i) if the level or value of the
Equity/Index--Related Variable has remained higher than a
predetermined level or value of the Equity/Index--Related Variable
during the term of the Notes, the sum of (1) the aggregate face
amount of the Notes and (2) the product of the aggregate face
amount of the Notes and (3) the product of a multiplier or
participation rate specified in the Pricing Supplement and (4) such
level or value expressed as a percentage of the initial level or
value of the Equity/Index--Related Variable, (such percentage being
subject to a predefined maximum percentage (a "Performance Cap")),
(ii) if the final level or value of the Equity/Index--Related
Variable at maturity is less than the initial level or value of the
Equity/Index--Related Variable but higher than a predefined level
or value specified in the Pricing Supplement, the aggregate face
amount of the Notes, or (iii) if the final level or value of the
Equity/Index--Related Variable at maturity is less than the initial
level or value of the Equity/Index--Related Variable and the level
or value of the Equity/Index--Related Variable has at any time been
less than a predefined level or value specified in the Pricing
Supplement, the product of (1) the aggregate face amount of the
Notes and (2) the final level or value of the Equity/Index--Related
Variable expressed as a percentage of the initial level or value of
the Equity/Index--Related Variable; provided, however, that on
dates specified in the Pricing Supplement, if the level or value of
the Equity/Index--Related Variable is higher than a predetermined
level or value specified in the Pricing Supplement, the Issuer may
redeem the Notes prior to the scheduled maturity at an amount equal
to the sum of (1) the aggregate face amount of the Notes and (2)
the product of the aggregate face amount and either (a) a
predetermined percentage or (b) the increase in the level or value
of the Equity/Index--Related Variable expressed as a percentage of
the initial level or value of the Equity/Index--Related
Variable.
Growth Notes: Notes under which the redemption amount payable to
the Noteholder at maturity is calculated as the sum of a
predetermined percentage of the aggregate face amount of the Notes
plus an amount equal to the product of the aggregate face amount of
the Notes and a multiplier or participation rate specified in the
Pricing Supplement and any increase in the level or value of the
Equity/Index--Related Variable (such amount not being subject to a
maximum amount payable to the Noteholder ("No Fixed Cap")).
Tracker (Market Access) Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated as either (i) if there is an increase in the level or
value of the Equity/Index--Related Variable during the term of the
Notes, the product of the aggregate face amount of the Notes and
such level or value expressed as a percentage of the initial level
or value of the Equity/Index--Related Variable, or (ii) if there is
a decrease in the level or value of the Equity/Index--Related
Variable during the term of the Notes, the product of the aggregate
face amount of the Notes and such level or value expressed as a
percentage of the initial level or value of the
Equity/Index--Related Variable. No interest is payable in respect
of such Notes.
Leverage Tracker Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated as either (i) if there is an increase in the level or
value of the Equity/Index--Related Variable during the term of the
Notes, the product of the aggregate face amount of the Notes and
the product of a multiplier or participation rate specified in the
Pricing Supplement and such level or value expressed as a
percentage of the initial level or value of the
Equity/Index--Related Variable, or (ii) if there is a decrease in
the level or value of the Equity/Index--Related Variable during the
term of the Notes, the product of the aggregate face amount of the
Notes and such level or value expressed as a percentage of the
initial level or value of the Equity/Index--Related Variable. No
interest is payable in respect of such Notes.
Callable Floored Accrual
Callable Floored Accrual Note: Notes in relation to which (i)
interest accrues on a daily basis and is payable to the Noteholders
for each day on which if the level or value of each Component of
the Equity/Index--Related Variable is greater than levels or values
specified for such Components in the Pricing Supplement and (ii)
may provide that the Issuer has the option to redeem the Notes
prior to their scheduled maturity date on specified dates, subject
to a minimum early redemption amount payable to the Noteholders as
specified in the Pricing Supplement.
Hybrid Notes
Inflation and Equity Notes: Notes in relation to which the
redemption amount payable to the Noteholder at maturity is
calculated by reference to the performance of one or more
non--Equity/Index--Related Variables together with an
Equity/Index--Related Variable and which may be subject to a
minimum redemption amount payable at maturity.
Underlying Variations
In relation to any of the Equity/Index Linked Notes described
above or any other Equity/Index Linked Notes incorporating, some or
none of the features described above, the following variations may
be applicable:
-- Worst of: Notes in relation to which the interest and/or
redemption amounts payable at maturity to the Noteholder are
calculated by reference to the performance of the worst performing
Component(s) of an Equity/Index--Related Variable.
-- Best of: Notes in relation to which the interest and/or
redemption amounts payable at maturity to the Noteholder are
calculated by reference to the performance of the best performing
Component(s) of an Equity/Index--Related Variable.
-- Rainbow: Notes in relation to which the interest and/or
redemption amounts payable at maturity to the Noteholder are
calculated by reference to the performance of Components of an
Equity/Index--Related Variable which has participations in the
performance of its Components which may be varied as specified in
the Pricing Supplement.
-- Basket: Notes in relation to which the interest and/or
redemption amounts payable at maturity to the Noteholder are
calculated by reference to the performance of an
Equity/Index--Related Variable consisting of a basket of equities
or indices.
-- Mono: Notes in relation to which the interest and/or
redemption amounts payable at maturity to the Noteholder are
calculated by reference to the performance of an
Equity/Index--Related Variable consisting of a single equity or
index.
-- Spread: Notes in relation to which the interest and/or
redemption amounts payable at maturity to the Noteholder are
calculated by reference to the difference between the performance
of two or more Components of an Equity/Index--Related Variable.
-- Himalaya: Notes in relation to which the interest and/or
redemption amounts payable at maturity to the Noteholder are
calculated by reference to the arithmetic mean of the best
performing Component or the several best performing Components of
the Equity/Index--Related Variable. Such best performing
Component(s) of the Equity/Index--Related Variable are then removed
from the Equity/Index--Related Variable.
USE OF PROCEEDS
Unless otherwise specified in the relevant Pricing Supplement,
the net proceeds of the issue of each Series of Notes issued by the
Issuer will be used in the conduct of the business of the
Issuer.
TAXATION
The following is a general description of certain tax
considerations relating to the Notes. It does not purport to be a
complete analysis of all tax considerations relating to the Notes.
Prospective purchasers of Notes should consult their own tax
advisers as to the consequences under the tax laws of the country
of which they are resident for tax purposes and the tax laws of the
DIFC and the UAE of acquiring, holding and disposing of Notes and
receiving payments of interest, principal and/or other amounts
under the Notes. This summary is based upon the laws as in effect
on the date of this Information Memorandum and is subject to any
change in law that may take effect after such date.
The proposed financial transactions tax ("FTT")
On 14 February 2013, the European Commission published a
proposal (the "Commission's Proposal") for a Directive for a common
FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy,
Austria, Portugal, Slovenia and Slovakia (the "participating Member
States"). However, Estonia has since stated that it will not
participate.
The Commission's Proposal has very broad scope and could, if
introduced, apply to certain dealings in the Notes (including
secondary market transactions) in certain circumstances. Primary
market transactions referred to in Article 5(c) of Regulation (EC)
No 1287/2006 are expected to be exempt.
Under the Commission's Proposal, the FTT could apply in certain
circumstances to persons both within and outside of the
participating Member States. Generally, it would apply to certain
dealings in the Notes where at least one party is a financial
institution, and at least one party is established in a
participating Member State. A financial institution may be, or be
deemed to be, "established" in a participating Member State in a
broad range of circumstances, including (a) by transacting with a
person established in a participating Member State or (b) where the
financial instrument which is subject to the dealings is issued in
a participating Member State.
The FTT proposal remains subject to negotiation between
participating Member States. It may therefore be altered prior to
any implementation, the timing of which remains unclear. Additional
EU Member States may decide to participate.
Prospective holders of the Notes are advised to seek their own
professional advice in relation to the FTT.
United Arab Emirates Taxation
The following summary of the anticipated tax treatment in the
UAE in relation to the payments on the Notes is based on the
taxation law and practice in force at the date of this Information
Memorandum and does not constitute legal or tax advice and
prospective investors should be aware that the relevant fiscal
rules and practice and their interpretation may change. Prospective
investors should consult their own professional advisers on the
implications of subscribing for, buying, holding, selling,
redeeming or disposing of Notes and the receipt of any payments
with respect to such Notes under the laws of the jurisdictions in
which they may be liable to taxation.
There is currently in force in the Emirates of Abu Dhabi and
Dubai legislation establishing a general corporate taxation regime
(the Abu Dhabi Income Tax Decree 1965 (as amended) and the Dubai
Income Tax Decree 1969 (as amended)). The regime is, however, not
enforced save in respect of companies active in the oil industry,
some related service industries and branches of foreign banks
operating in the UAE. It is not known whether the legislation will
or will not be enforced more generally or within other industry
sectors in the future. Under current legislation, there is no
requirement for withholding or deduction for or on account of UAE,
Abu Dhabi or Dubai taxation in respect of payments of interest and
principal to any holder of the Notes. In the event of such
imposition of any such withholding, the Issuer has undertaken to
gross--up any payments subject to certain limited exceptions.
The Constitution of the UAE specifically reserves to the UAE
government the right to raise taxes on a federal basis for the
purposes of funding its budget. It is not known whether this right
will be exercised in the future.
The UAE has entered into double taxation arrangements with
certain other countries but these are not extensive in number.
Dubai International Financial Centre
Pursuant to Article 14 of Law No. (9) of 2004 in respect of the
Dubai International Financial Centre (the "DIFC Law"), entities
licensed, registered or otherwise authorised to carry on financial
services in the Dubai International Financial Centre and their
employees shall be subject to a zero rate of tax for a period of 50
years from 13 September 2004. This zero rate of tax applies to
income, corporation and capital gains tax. In addition, this zero
rate of tax will also extend to repatriation of capital and to
transfers of assets or profits or salaries to any party outside the
Dubai International Financial Centre. Article 14 of the DIFC Law
also provides that it is possible to renew the 50 year period to a
similar period upon issuance of a resolution by the Ruler of Dubai.
As a result no payments by the Issuer under the Notes are subject
to any tax in the Dubai International Financial Centre, whether by
withholding or otherwise.
SUBSCRIPTION AND SALE
HSBC Bank plc has in a modified and restated dealer agreement
dated 12 July 2018 (the "Dealer Agreement") agreed with the Issuer
a basis upon which it may from time to time agree either as
principal or agent of the Issuer to subscribe for or purchase, to
underwrite or, as the case may be, to procure subscribers or
purchasers for Notes. When entering into any such agreement to
subscribe for or purchase, to underwrite, or, as the case may be,
to procure subscribers for or purchasers for any particular Series
of Notes, the Issuer and the relevant Dealer(s) will agree details
relating to the form of such Notes and the Conditions relating to
such Notes. The Dealer Agreement contains provisions for the Issuer
to appoint other dealers (together with the Dealer, the "Dealers")
from time to time either generally in respect of the Programme or
in relation to a particular Tranche of Notes.
The Arranger and its affiliates have engaged and may in the
future engage in investment banking and/or commercial banking
transactions with and perform services for the Issuer (and its
affiliates) in the ordinary course of business.
General
No action has been or will be taken in any country or
jurisdiction by the Issuer or the Dealers that would permit a
public offering of Notes, or possession or distribution of any
offering material in relation thereto, in any country or
jurisdiction where action for that purpose is required. Persons
into whose hands this Information Memorandum or any Pricing
Supplement comes are required by the Issuer and the Dealers to
comply with all applicable laws and regulations in each country or
jurisdiction in or from which they subscribe for, purchase, offer,
sell or deliver Notes or have in their possession or distribute
this Information Memorandum or any Pricing Supplement in all cases
at their own expense.
The Dealer Agreement provides that the Dealers shall not be
bound by any of the restrictions relating to any specific
jurisdiction (set out below) to the extent that such restrictions
shall, as a result of change(s) in, or change(s) in official
interpretation of, after the date hereof, applicable laws and
regulations, no longer be applicable but without prejudice to the
obligations of the Dealers described in the first paragraph under
the heading "General" above.
Selling restrictions may be supplemented or modified with the
agreement of the Issuer. Any such supplement or modification will
be set out in the relevant Pricing Supplement (in the case of a
supplement or modification relevant only to a particular Tranche of
Notes) or (in any other case) in a supplement to this Information
Memorandum.
United States of America
The Notes have not been and will not be registered under the
Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except
pursuant to an exemption from, or in a transaction not subject to
the registration requirements of the Securities Act. Terms used in
this paragraph have the meanings given to them by Regulation S.
The Bearer Notes are subject to U.S. tax law requirements and
may not be offered, sold or delivered within the United States or
its possessions or to a United States person, except in certain
transactions permitted by U.S. tax regulations. Terms used in this
paragraph have the meanings given to them by the Code and
regulations thereunder.
Each Dealer has agreed that, except as permitted by the Dealer
Agreement, (a) it will not offer, sell or deliver Notes, (i) as
part of their distribution at any time or (ii) otherwise until 40
days after the completion of the distribution of the Notes of a
Tranche, as certified to the Principal Paying Agent or the CMU
Lodging and Paying Agent (as the case may be) or the Issuer by such
Dealer (or, in the case of a sale of a Tranche of Notes to or
through more than one Dealer, by each of such Dealers as to the
Notes of such Tranche purchased by or through it, in which case the
Principal Paying Agent or the CMU Lodging and Paying Agent (as the
case may be) or the Issuer shall notify each such Dealer when all
such Dealers have so certified) within the United States or to, or
for the account or benefit of, U.S. persons, and (b) it will send
to each dealer to which it sells Notes during the periods referred
to in (a)(i) and (ii) above a confirmation or other notice setting
forth the restrictions on offers and sales of the Notes within the
United States or to, or for the account or benefit of, U.S.
persons.
In addition, until 40 days after the commencement of the
offering of Notes comprising any Tranche, any offer or sale of
Notes within the United States by any dealer (whether or not
participating in the offering) may violate the registration
requirements of the Securities Act.
European Economic Area
Prohibition of Sales to EEA Retail Investors
Unless the Pricing Supplement for each Tranche of Notes issued
under this Programme specifies the "Prohibition of Sales to EEA
Retail Investors" as "Not Applicable", each Dealer has represented
and agreed, and each further Dealer appointed under the Programme
will be required to represent and agree, that it has not offered,
sold or otherwise made available and will not offer, sell or
otherwise make available any Notes which are the subject of the
offering contemplated by this Information Memorandum as completed
by the Pricing Supplement (as applicable) in relation thereto to
any retail investor in the EEA. For the purposes of this
provision:
(a) the expression "retail investor" means a person who is one (or more) of the following:
(i) a retail client as defined in point (11) of MiFID II; or
(ii) a customer within the meaning of IMD where that customer
would not qualify as a professional client as defined in point (10)
of Article 4(1) of MiFID II; or
(iii) not a qualified investor as defined in the Prospectus Directive; and
(b) the expression an "offer" includes the communication in any
form and by any means of sufficient information on the terms of the
offer and the Notes to be offered so as to enable an investor to
decide to purchase or subscribe the Notes.
Public Offer Selling Restriction under the Prospectus
Directive
If the relevant Pricing Supplement in respect of any Notes
specifies the "Prohibition of Sales to EEA Retail Investors" as
"Not Applicable", in relation to each Member State of the EEA
(each, a "Relevant Member State"), with effect from and including
the date on which the Prospectus Directive is implemented in that
Relevant Member State (the "Relevant Implementation Date") an offer
of Notes which are the subject of the offering contemplated by this
Information Memorandum as completed by the relevant Pricing
Supplement in relation thereto to the public in that Relevant
Member State may not be made, except that with effect from and
including the Relevant Implementation Date, an offer of such Notes
to the public in that Relevant Member State may be made:
(a) Qualified investors: at any time to any legal entity which
is a qualified investor as defined in the Prospectus Directive;
(b) Fewer than 150 offerees: at any time to fewer than 150
natural or legal persons (other than qualified investors as defined
in the Prospectus Directive)), subject to obtaining the prior
consent of the relevant Dealer or Dealers nominated by the Issuer
for any such offer; or
(c) Other exempt offers: at any time in any other circumstances
falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Notes referred to in (a) to (c)
above shall require the Issuer or any Dealer to publish a
prospectus pursuant to Article 3 of the Prospectus Directive or
supplement a prospectus pursuant to Article 16 of the Prospectus
Directive.
For the purposes of this provision, the expression an "offer of
Notes to the public" in relation to any Notes in any Relevant
Member State means the communication in any form and by any means
of sufficient information on the terms of the offer and the Notes
to be offered so as to enable an investor to decide to purchase or
subscribe the Notes, as the same may be varied in that Member State
by any measure implementing the Prospectus Directive in that Member
State, the expression "Prospectus Directive" means Directive
2003/71/EC (as amended, including by Directive 2010/73/EU), and
includes any relevant implementing measure in each Relevant Member
State.
Qualified Investor Selling Restriction
The Notes have not and will not be offered with a minimum
denomination of less than EUR100,000 (or equivalent in another
currency) in any Member State of the EEA which has implemented the
Prospectus Directive (each, a "Relevant Member State"), except that
the Notes may be offered at any time to any legal entity which is a
qualified investor as defined in the Prospectus Directive.
For the purposes of this provision, the expression "Prospectus
Directive" means Directive 2003/71/EC (as amended, including by
Directive 2010/73/EU), and includes any relevant implementing
measure in the Relevant Member State.
Selling Restrictions Addressing Additional United Kingdom
Securities Laws
In relation to Notes having a maturity of less than one year,
Notes may not be offered or sold other than to persons:
(a) whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses; or
(b) who it is reasonable to expect will acquire, hold, manage or
dispose of investments (as principal or agent) for the purposes of
their businesses,
where the issue of the Notes would otherwise constitute a
contravention of Section 19 of the Financial Services and Markets
Act 2000 ("FSMA") by the Issuer.
An invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the FSMA) may only be
communicated or caused to be communicated in connection with the
issue or sale of Notes in circumstances in which section 21(1) of
the FSMA does not apply to the Issuer.
All applicable provisions of the FSMA with respect of anything
done in connection with the Notes in, from or otherwise involving
the United Kingdom have been and will be complied with.
Arab Republic of Egypt
Notes to be issued under the Programme have not been and will
not be offered, sold or publicly promoted or advertised by it in
Egypt other than in compliance with any laws applicable in Egypt
governing the issue, offering and sale of securities.
Dubai International Financial Centre
The Notes have not and may not be offered to any person in the
Dubai International Financial Centre unless such offer is:
(i) an "Exempt Offer" in accordance with the Markets Rules (MKT)
Module of the Dubai Financial Services Authority (the "DFSA")
rulebook; and
(ii) made only to persons who meet the Professional Client
criteria set out in Rule 2.3.3 of the DFSA Conduct of Business
Module of the DFSA rulebook.
Hong Kong
The Notes (except for Notes which are a "structured product" as
defined in the Securities and Futures Ordinance (Cap. 571) of Hong
Kong (the "SFO")) have not been offered or sold and will not be
offered or sold in Hong Kong, by means of any document, other than:
(i) to "professional investors" as defined in the SFO and any rules
made under the SFO; or (ii) in other circumstances which do not
result in the document being a "prospectus" as defined in the
Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.
32) of Hong Kong (the "C(WUMP)O") or which do not constitute an
offer to the public within the meaning of the C(WUMP)O.
No advertisement, invitation or document relating to the Notes,
which is directed at, or the contents of which are likely to be
accessed or read by, the public of Hong Kong (except if permitted
to do so under the securities laws of Hong Kong) may be issued or
held in the possession of the Issuer or any Dealer or any other
offeror nominated by the Issuer for the purpose of such issue of
Notes, whether in Hong Kong or elsewhere other than with respect to
Notes which are or are intended to be disposed of only to persons
outside Hong Kong or only to "professional investors" as defined in
the SFO and any rules made under the SFO.
Kingdom of Bahrain
The Notes have not been and may not be offered or sold except on
a private placement basis to persons in the Kingdom of Bahrain who
are "accredited investors".
For this purpose, an "accredited investor" means:
(a) an individual holding financial assets (either singly or
jointly with a spouse) of U.S.$1,000,000 or more;
(b) a company, partnership, trust or other commercial
undertaking which has financial assets available for investment of
not less than U.S.$1,000,000; or
(c) a government, supranational organisation, central bank or
other national monetary authority or a state organisation whose
main activity is to invest in financial instruments (such as a
state pension fund).
Kingdom of Saudi Arabia
No action has been or will be taken in the Kingdom of Saudi
Arabia that would permit a public offering of the Notes. Any
investor in the Kingdom of Saudi Arabia or who is a Saudi person (a
"Saudi Investor") who acquires any Notes pursuant to an offering
should note that the offer of Notes is a private placement under
Article 9 or Article 10 of the "Rules on the Offer of Securities
and Continuing Obligations" as issued by the board of the Saudi
Arabian Capital Market Authority (the "CMA") resolution number
3-123-2017 dated 27 December 2017 (the "KSA Regulations"), made
through an authorised person licensed to carry out arranging
activities by the CMA and following a notification to the CMA under
the KSA Regulations.
The Notes may thus not be advertised, offered or sold to any
person in the Kingdom of Saudi Arabia other than to "sophisticated
investors" under Article 9 of the KSA Regulations or by way of a
limited offer under Article 10 of the KSA Regulations. Each Dealer
represents and agrees, and each further Dealer appointed under the
Programme will be required to represent and agree, that any offer
of Notes by it to a Saudi Investor will be made in compliance with
Article 9 or Article 10 of the KSA Regulations.
Each offer of Notes shall not therefore constitute a "public
offer", an "exempt offer" or a "parallel market offer" pursuant to
the KSA Regulations, but is subject to the restrictions on
secondary market activity under Article 15 of the KSA Regulations.
Any Saudi Investor who has acquired Notes pursuant to a private
placement under Article 9 or Article 10 of the KSA Regulations may
not offer or sell those Notes to any person unless the offer or
sale is made through an authorised person appropriately licensed by
the CMA and: (a) the Notes are offered or sold to a Sophisticated
Investor (as defined in Article 9 of the KSA Regulations); (b) the
price to be paid for the Notes in any one transaction is equal to
or exceeds Saudi Riyals 1 million or an equivalent amount; or (c)
the offer of sale is otherwise in compliance with Article 15 of the
KSA Regulations.
In addition, unless the Issuer agrees otherwise in relation to a
Tranche of Notes, Notes may not be offered or sold to any person
registered as a qualified foreign investor ("QFI") under the CMA's
Rules for Qualified Foreign Financial Institutions Investment in
Listed Securities.
Lebanese Republic
The marketing, offering, distribution and sale of Notes in the
Lebanese Republic shall comply with all applicable laws and
regulations in the Lebanese Republic, in particular, those issued
by the Central Bank and the Capital Markets Authority.
Malaysia
This Information Memorandum has not been registered as a
prospectus with the Securities Commission of Malaysia under the
Capital Markets and Services Act 2007 of Malaysia (the "CMSA") and
accordingly, the Notes have not been and will not be offered or
sold, and no invitation to subscribe for or purchase the Notes has
been or will be made, directly or indirectly, nor may any document
or other material in connection therewith be distributed in
Malaysia, other than to persons falling within any one of the
categories of persons specified under Schedule 6 or Section
229(1)(b) and Schedule 7 or Section 230(1)(b) and Schedule 8 or
Section 257(3) of the CMSA, subject to any law, order, regulation
or official directive of the Central Bank of Malaysia, the
Securities Commission of Malaysia and/or any other regulatory
authority from time to time.
Residents of Malaysia may be required to obtain relevant
regulatory approvals including approval from the Controller of
Foreign Exchange to purchase the Notes. The onus is on the
Malaysian residents concerned to obtain such regulatory approvals
and none of the Dealers is responsible for any invitation, offer,
sale or purchase of the Notes as aforesaid without the necessary
approvals being in place.
People's Republic of China
The Notes have not and will not be offered or sold in the
People's Republic of China (excluding Hong Kong and Macau Special
Administrative Regions or Taiwan) ("PRC"). This Information
Memorandum or any information contained or incorporated by
reference herein does not constitute an offer to sell or the
solicitation of an offer to buy any securities in the PRC. This
Information Memorandum, any information contained herein or the
Notes have not been, and will not be, submitted to, approved by,
verified by or registered with any relevant governmental
authorities in the PRC and thus may not be supplied to the public
in the PRC or used in connection with any offer for the
subscription or sale of the Notes in the PRC.
The Notes may only be invested in by PRC investors that are
authorised to engage in the investment in the Notes of the type
being offered or sold. Investors are responsible for obtaining all
relevant governmental approvals, verifications, licences or
registrations (if any) from all relevant PRC governmental
authorities, including, but not limited to, the State
Administration of Foreign Exchange, the China Securities Regulatory
Commission, the China Banking Regulatory Commission, the China
Insurance Regulatory Commission and/or other relevant regulatory
bodies, and complying with all relevant PRC regulations, including,
but not limited to, any relevant foreign exchange regulations
and/or overseas investment regulations.
Republic of Indonesia
No registration statement with respect to this Information
Memorandum and any Pricing Supplement has been and no such
registration statement will be filed with the Financial Services
Authority (Otoritas Jasa Keuangan or OJK) of the Republic of
Indonesia. The Notes, therefore, shall not be offered or sold or be
the subject of an invitation for subscription or purchase, and this
Information Memorandum, any Pricing Supplement or any other
document or material in connection with the offer or sale, or
invitation for subscription or purchase, of the Notes, shall not be
circulated or distributed, whether directly or indirectly, in the
Republic of Indonesia or to Indonesian citizens, corporations or
residents, except in a manner that will not be considered as a
"public offer" under the prevailing law and regulations in the
Republic of Indonesia.
Singapore
This Information Memorandum has not been registered and will not
be registered as a prospectus with the Monetary Authority of
Singapore. The Notes may not be offered or sold, nor may the Notes
be the subject of an invitation for subscription or purchase,
whether directly or indirectly, nor may this document or any other
document or material in connection with the offer or sale, or
invitation for subscription or purchase of the Notes be circulated
or distributed, whether directly or indirectly, to any person in
Singapore other than (i) to an institutional investor (as defined
in Section 4A of the Securities and Futures Act (Chapter 289 of
Singapore) (the "SFA")) pursuant to Section 274 of the SFA, (ii) to
a relevant person (as defined in Section 275(2) of the SFA)
pursuant to Section 275(1) of the SFA, or any person pursuant to
Section 275(1A) of the SFA, and in accordance with the conditions
specified in Section 275 of the SFA or (iii) otherwise pursuant to,
and in accordance with the conditions of, any other applicable
provision of the SFA.
Where the Notes are subscribed or purchased under Section 275 of
the SFA by a relevant person which is:
(a) a corporation (which is not an accredited investor (as
defined in Section 4A of the SFA)) the sole business of which is to
hold investments and the entire share capital of which is owned by
one or more individuals, each of whom is an accredited investor;
or
(b) a trust (where the trustee is not an accredited investor)
whose sole purpose is to hold investments and each beneficiary of
the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that
corporation or the beneficiaries' rights and interest (howsoever
described) in that trust shall not be transferred within six months
after that corporation or that trust has acquired the Notes
pursuant to an offer made under Section 275 of the SFA except:
(1) to an institutional investor or to a relevant person as
defined in Section 275(2) of the SFA, or to any person arising from
an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of
the SFA;
(2) where no consideration is or will be given for the transfer;
(3) where the transfer is by operation of law;
(4) as specified in Section 276(7) of the SFA; or
(5) as specified in Regulation 32 of the Securities and Futures
(Offers of Investments) (Shares and Debentures) Regulations 2005 of
Singapore.
State of Kuwait
No Notes have been licensed for offering in the State of Kuwait
by the Kuwait Capital Markets Authority or any other relevant
Kuwaiti government agency. The Notes have not been and will not be
offered, sold, promoted or advertised by it in the State of Kuwait
other than in compliance with Law No. 7 of 2010 and the bylaws
thereto, as amended governing the issue, offering and sale of
securities. No private or public offering of the Notes is being
made in the State of Kuwait, and no agreement relating to the sale
of the Notes will be concluded in the State of Kuwait. No marketing
or solicitation or inducement activities are being used to offer or
market the Notes in the State of Kuwait.
State of Qatar (including Qatar Financial Centre)
The Notes have not and will not be offered, delivered or sold,
directly or indirectly, in the State of Qatar (including the Qatar
Financial Centre), except: (a) in compliance with all applicable
laws and regulations of the State of Qatar; and (b) through persons
or corporate entities authorised and licensed to provide investment
advice and/or engage in brokerage activity and/or trade in respect
of foreign securities in the State of Qatar. This Information
Memorandum has not been reviewed or approved by the Qatar Central
Bank, the Qatar Stock Exchange, the Qatar Financial Centre
Regulatory Authority or the Qatar Financial Markets Authority and
is only intended for specific recipients, in compliance with the
foregoing.
Sultanate of Oman
This Information Memorandum has not been filed with or
registered as a prospectus with the Capital Market Authority of the
Sultanate of Oman pursuant to Article 3 of the Capital Market Law
Sultani Decree 80/98, as amended ("Article 3"), will not be offered
or sold as an offer of securities in the Sultanate of Oman as
contemplated by the Oman Commercial Companies Law) or Article 3,
nor does it constitute a sukuk offering pursuant to the Sukuk
Regulation issued by the Capital Market Authority of Oman (CMA
Decision 3/2016). The Notes have not been and will not be offered,
sold or delivered, and no invitation to subscribe for or to
purchase the Notes has been or will be made, directly or
indirectly, nor may any document or other material in connection
therewith be distributed in the Sultanate of Oman to any person in
the Sultanate of Oman other than by an entity duly licensed by the
Capital Market Authority of Oman to market non-Omani securities in
the Sultanate of Oman and then only in accordance with all
applicable laws and regulations, including Article 139 of the
Executive Regulations of the Capital Markets Law (Decision No.
1/2009, as amended).
Switzerland
The Notes do not constitute participations in a collective
investment scheme within the meaning of the Swiss Federal Act on
Collective Investment Schemes of 23 June 2006 ("CISA"). Therefore,
the Notes are not subject to the approval of, or supervision by,
the Swiss Financial Market Supervisory Authority FINMA ("FINMA"),
and investors in the Notes will not benefit from protection under
the CISA or supervision by FINMA.
Neither this Information Memorandum nor any offering or
marketing material relating to the Notes constitute a prospectus
within the meaning of (i) Articles 652a or Article 1156 of the
Swiss Federal Code of Obligations, (ii) Article 5 CISA and its
implementing regulations or (iii) Article 21 of the Additional
Rules for the Listing of Derivatives of SIX Swiss Exchange.
However, the Issuer reserves the right to set forth all
information which is required to be disclosed in a simplified
prospectus pursuant to Article 5 CISA in a separate document
referred to as a "Pricing Supplement" and/or "Simplified
Prospectus" (the "Simplified Prospectus") for Notes distributed
(such term including any offering and advertising) to qualified
investors according to Article 10 Paras. 3 to 4 CISA ("Qualified
Investors") and/or investors other than Qualified Investors (the
"Non-Qualified Investors").
Except as described in this section, Notes constituting
structured products within the meaning of Article 5 CISA
("Structured Products") may not be distributed to Non-Qualified
Investors in or from Switzerland. They may only be distributed in
or from Switzerland to Qualified Investors.
Any Notes constituting Structured Products which are intended to
be distributed to Non-Qualified Investors in or from Switzerland
may only be offered or advertised in accordance with the provisions
of the CISA and its implementing regulations. In particular, the
CISA requires that a Simplified Prospectus complying with Article 5
CISA, its implementing regulations and the Swiss Banking Guidelines
on Informing Investors about Structured Products (as amended from
time to time) must be published. A provisional version of such
Simplified Prospectus including indicative information must be made
available free of charge to any interested person prior to
subscribing for the Notes or prior to concluding an agreement to
subscribe for the Notes. The definitive version must be made
available free of charge to any interested person on issue or on
concluding an agreement to subscribe for the Notes.
Notes constituting Structured Products which are not intended to
be distributed to Non-Qualified Investors in or from Switzerland
may only be distributed in or from Switzerland to Qualified
Investors. Any Pricing Supplements, Simplified Prospectuses, term
sheets, fact sheets or any other marketing material of products
which are to be sold exclusively to Qualified Investors may not be
distributed, copied, published or otherwise made public or
available for Non-Qualified Investors.
Notes issued under this Programme which do not qualify as
Structured Products may be offered in Switzerland on a private
placement basis only.
Additional specific selling restrictions, if any, applicable in
Switzerland will be included in the Pricing Supplements relating to
the relevant Notes.
Taiwan
The Notes have not and will not be offered or sold directly or
directly within Taiwan and the Notes may only be made available to
Taiwan resident investors for purchase outside Taiwan. No person or
entity has been authorized to offer, sell or give advice regarding
or otherwise intermediate the offering and sale of the Notes in
Taiwan.
The Republic of Korea
The Notes have not been and will not be registered with the
Financial Services Commission of Korea for public offering in Korea
under the Financial Investment Services and Capital Markets Act of
Korea and the decrees and regulations thereunder. The Notes may not
be offered or sold, directly or indirectly, or offered or sold for
re-offering or resale, directly or indirectly, in Korea or to any
resident of Korea (as defined under the Foreign Exchange
Transaction Law of Korea and its Presidential Decree), except as
otherwise permitted by the applicable Korean laws and regulations.
Furthermore, the Notes may not be resold to Korean residents unless
the purchaser of the Notes complies with all applicable regulatory
requirements (including but not limited to government reporting
requirements under the Foreign Exchange Transaction Law and its
subordinate decrees and regulations) in connection with the
purchase of the Notes.
United Arab Emirates (excluding the Dubai International
Financial Centre)
The Notes have not been and will not be offered, sold or
publicly promoted or advertised by it in the UAE other than in
compliance with any laws applicable in the UAE governing the issue,
offering and sale of securities.
GENERAL INFORMATION
1. The Issuer prepares its consolidated financial statements in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union.
2. There has been no material adverse change in the prospects of
the Issuer since 31 December 2017.
3. There has been no significant change in the financial or
trading position of the Issuer since 31 December 2017.
4. Save as disclosed under "Risks relating to the Issuer -
Macro-prudential, regulatory and legal risks to the Issuer's
business model" on page 3 of this Information Memorandum, neither
the Issuer nor any of the Issuer's subsidiary undertakings is or
has been involved in any governmental, legal or arbitration
proceedings (including any such proceedings which are pending or
threatened against the Issuer or any of its subsidiary undertakings
or the group as a whole of which the Issuer is aware), during the
12 month period before the date of this Information Memorandum
which may have, or have had in the recent past, significant effects
on the financial position or profitability of the Issuer and its
subsidiary undertakings.
5. The current auditors of the Issuer are PricewaterhouseCoopers
Limited, DIFC (authorised and regulated by Dubai Financial Services
Authority with License no. CL0215) ("PwC DIFC") of Al Fattan
Currency House, Tower 1, Level 8, Unit 801, DIFC, PO Box 11987,
Dubai - United Arab Emirates. PwC DIFC has audited the consolidated
financial statements of the Issuer for the years ended 31 December
2016 and 31 December 2017, as stated in their audit report
incorporated by reference in this Information Memorandum.
6. Where any Subordinated Notes form part of the regulatory
capital of the Issuer, no repayment of such Notes will be made
without the prior consent of or indication from the United Kingdom
Prudential Regulation Authority (or any successor authority/ies in
its/their function as the supervisor of authorised institutions)
that it does not object.
7. The Notes have been accepted for clearance through Euroclear
and Clearstream, Luxembourg and, as the case may be, CMU. Each
Pricing Supplement shall specify any other clearing system which
shall have accepted the relevant Notes for clearance. The
appropriate common code and the International Securities
Identification Number in relation to the Notes of each Series will
be set out in the relevant Pricing Supplement. The relevant Pricing
Supplement shall specify any other clearing system which shall have
accepted the relevant Notes for clearance together with any further
appropriate information.
8. Settlement arrangements will be agreed between the Issuer,
the relevant Dealer and the Principal Paying Agent, the CMU Lodging
and Paying Agent or the relevant Registrar (as the case may be) in
relation to each Tranche of Notes.
9. The continuation of the Programme was authorised by a
resolution of the Board of Directors of the Issuer passed on 3 May
2018.
10. For so long as Notes are listed on the Official List of
Euronext Dublin and admitted to trading on the Global Exchange
Market, the Issuer will, at its registered office, at the
registered office of HSBC Bank plc and at the specified offices of
the Paying Agents, make available for inspection during normal
office hours, free of charge, upon oral or written request, paper
copies of this Information Memorandum (including all information
incorporated by reference herein) and the audited consolidated
financial statements of the Issuer and its subsidiary undertakings
for the years ended 31 December 2016 and 31 December 2017. Written
or oral requests for such documents should be directed to the
specified office of any Paying Agent.
11. For so long as Notes are listed on the Official List of
Euronext Dublin and admitted to trading on the Global Exchange
Market, paper copies of the following documents may be inspected
during normal business hours at the specified office of the
Principal Paying Agent:
(a) the Agency Agreement;
(b) the Trust Deed;
(c) the constitutional documents of the Issuer;
(d) any Pricing Supplement, save that a Pricing Supplement
relating to an unlisted Note will only be available for inspection
by a holder of such Note and such holder must provide evidence
satisfactory to the Issuer as to the identity of such holder.
12. In relation to the update of the Programme, the estimated
total expenses related to the admission to trading are EUR
4,940.
13. The Legal Entity Identifier (LEI) code of the Issuer is 549300F99IL9YJDWH369.
INDEX OF DEFINED TERMS
$ ii
GBP ii
Yen ii
EUR ii
10-year Limitation Date.............................. 132,
153
2.5-year Limitation Date............................. 132,
153
2014
Definitions...................................................
179
2014 ISDA Definitions..........................................
25
30/360......................................................................
73
30E/360....................................................................
73
30E/360
(ISDA)...................................................... 74
360/360....................................................................
73
A/360.......................................................................
73
A/365
(Fixed)..........................................................
73
A/365F....................................................................
73
Accelerated or Matured............................. 144, 185
accredited investor.............................................
275
Accrued
Interest................................................. 132
Act/360...................................................................
73
Act/365
(Fixed)......................................................
73
Act/Act...................................................................
72
Act/Act
(ICMA).................................................... 72
Act/Act
(ISDA)..................................................... 72
Actual/360..............................................................
73
Actual/365
(Fixed)................................................. 73
Actual/Actual........................................................
72
Actual/Actual (ICMA).........................................
72
Actual/Actual (ISDA)..........................................
72
Additional Disruption Event................. 79, 84, 105
Adjusted Credit Outstanding Nominal Amount 122, 132
AED...........................................................................
ii
Affected
Unit(s).................................................. 107
Affiliate.................................................................
132
Agency Agreement..............................................
45
Aggregate Outstanding Amount..... 112, 120, 132
Alternative Clearing System..............................
244
Alternative Payment Amount............................. 81
Alternative Payment Currency............................ 81
Application
Law.................................................... 19
Arbitration
Law..................................................... 19
Asset.....................................................................
132
Asset Market Value............................................
133
Asset
Package.....................................................
133
Asset Package Credit Event.............................. 133
Asset Transfer Notice................................ 114,
133
Assignable Loan......................................... 142,
184
Auction.................................................................
133
Auction Cancellation Date................................
133
Auction Covered Transaction.......................... 133
Auction Final Price.............................................
133
Auction Final Price Determination Date.......... 133
Auction Settlement Date....................................
133
Auction Settlement Notice........................ 110, 133
Automatic Early Redemption Amount............... 96
Automatic Early Redemption Date(s)................ 96
Automatic Early Redemption Event................... 96
Automatic Early Redemption Level.................... 96
Automatic Early Redemption Notes................... 84
Automatic Early Redemption Price..................... 96
Automatic Early Redemption Rate..................... 96
Automatic Early Redemption Valuation Date(s) 96
Average Highest.................................................
183
Average Market..................................................
182
Averaging
Date..................................................... 84
Averaging Date Market Disruption................. 100
Bank........................................................................
45
Bankruptcy...........................................................
134
Base
Conditions..................................................
108
Base
Prospectus......................................................
1
Basket Credit Linked Notes...............................
134
Bearer Notes..................................................
46, 242
Bid.........................................................................
168
Bond......................................................................
159
Bond
Basis.............................................................
73
Bond or
Loan....................................................... 159
Borrowed Money................................................
159
Business
Day......................................................... 71
Business Day Convention...................................
71
C(WUMP)O.........................................................
274
Calculation Agent City Business Day............. 134
Calculation Agent Fallback Settlement Determination Date 111,
134
Calculation Amount..............................................
72
Calculation
Period................................................. 72
Cap........................................................ 255,
258, 263
Capital Market Authority......................................
iii
Cash Equity
Note.................................................. 84
Cash Equity
Notes.................................................. v
Cash
Settlement.....................................................
84
Cash Settlement Notice.............................. 111,
134
CBB..........................................................................
iii
CDSs.......................................................................
12
Change in Law............................................... 79,
105
CISA......................................................................
278
Clearing System...............................................
72, 91
Clearing System Business Day........................... 84
Clearing
Systems................................................... 16
Clearstream, Luxembourg............................... 16,
72
Cliquet
Period......................................................
265
Closing
Date........................................................
242
CMS...................................................... 252,
255, 257
CMS Spread................................................. 255,
258
CMSA...................................................................
275
CMU..................................................................
16, 72
CMU Instruments...............................................
246
CMU Lodging and Paying Agent...................... 45
CMU Members....................................................
246
CMU
Registrar.......................................................
45
CMU
Service..........................................................
72
CNY...........................................................................
ii
Commercial
Court.................................................. 19
Commission's Proposal......................................
270
Component...........................................................
260
Component Security.............................................
84
Conditionally Transferable Obligation............ 135
Conditions...................................... 45, 193, 196,
197
Conforming Reference Obligation.................... 135
Consent Required Loan............................. 143, 184
control...................................................................
132
Conversion.............................................................
84
Conversion
Strike................................................ 213
Couponholders......................................................
45
Coupons................................................... 45,
46, 244
CRA Regulation........................................ 1, 17,
237
CRD
IV....................................................................
10
Credit Derivatives Auction Settlement Terms 135
Credit Derivatives Determinations Committee 135
Credit
Event.........................................................
135
Credit Event Amount..........................................
136
Credit Event Backstop Date.............................. 136
Credit Event Determination Date.............. 122, 136
Credit Event Notice.............................................
138
Credit Event Payment Date................................
138
Credit Event Redemption Amount................... 138
Credit Event Redemption Date.......................... 139
Credit Event Resolution Request Date............ 139
Credit
Events.........................................................
24
Credit Linked Conditions...................................
108
Credit Settlement Currency................................
139
Credit Settlement Date........................................
139
Credit--Linked
Notes............................................... v
Currency Amount...............................................
139
Currency
Rate...................................................... 139
Currency Rate Source.........................................
140
Currency Related Variable.................................
248
Currency--Linked Notes..........................................
v
Cut-off
Date.........................................................
140
Cut-Off
Date.........................................................
114
D1......................................................................
73, 74
D2......................................................................
73, 74
Day Count Fraction..............................................
72
DC Announcement Coverage Cut-off Date.... 140
DC Credit Event Announcement...................... 140
DC Credit Event Meeting Announcement...... 140
DC Credit Event Question.................................
140
DC Credit Event Question Dismissal............... 140
DC Determination Cut-off Date................. 126, 140
DC Determination Postponed Date.......... 126, 140
DC No Credit Event Announcement................ 140
DC
Party...............................................................
140
DC
Resolution.....................................................
140
DC
Rules...............................................................
140
DC
Secretary........................................................
140
Dealer Agreement...............................................
272
Dealers...............................................................
i, 272
Default....................................................................
69
Default Requirement...........................................
141
Definitive Bearer Notes......................................
243
Definitive Registered Notes..............................
242
Delisting.................................................................
84
Deliver...................................................................
141
Deliverable Obligation........................................
141
Deliverable Obligation Category...................... 142
Deliverable Obligation Characteristics............ 142
Deliverable Obligation Provisions.................... 146
Delivered..............................................................
141
Delivery................................................................
141
Delivery Agent.................................... 114, 146,
193
Delivery
Date....................................................... 146
Delivery Disruption Event...................................
84
Deposit Agreement...............................................
84
Depositary..............................................................
84
Depositary Receipt(s)...........................................
84
Determination Business Day............................... 74
Determination
Date............................................... 74
DFSA....................................................................
274
DIFC............................................................
16, 35, 56
DIFC Court
Law..................................................... 19
DIFC
Courts...........................................................
19
DIFC
Law..............................................................
271
Direct Loan Participation........................... 143,
184
Dirhams.....................................................................
ii
Dispute...................................................................
69
Disrupted
Day....................................................... 85
Disruption
Period.................................................. 95
dollars.......................................................................
ii
Domestic Currency.............................................
146
Domestic
Law...................................................... 146
Downstream Affiliate..........................................
146
DR Linked
Notes................................................... 85
DTC.........................................................................
85
Due and Payable Amount.................................. 147
E 136, 138
Early
Closure..........................................................
85
Eligible
Information............................................. 147
Eligible
Transferee.............................................. 147
EMU
Event...........................................................
106
English Law Documents......................................
18
enhanced
return.................................................. 265
Entitlement...........................................................
148
Equity/Index-Related Variable........................... 260
Equity--Linked
Note............................................... 85
Equity--Linked
Notes.............................................. v
EUR.....................................................................
ii, 74
EURIBOR..............................................................
252
euro.....................................................................
ii, 74
Euro Business Day...............................................
74
Euro Exchange Date..............................................
62
Euro Exchange Notice..........................................
62
Eurobond
Basis..................................................... 73
Euroclear.................................................................
74
Eurodollar Convention.........................................
72
Exchange................................................................
85
Exchange Bonds or Loans................................. 180
Exchange Business Day.......................................
85
Exchange Disruption............................................
85
Exchange
Rate....................................................... 86
Excluded Deliverable Obligation....................... 148
Excluded Obligation............................................
148
Excluded Valuation Obligation.......................... 149
Exempt
Offer.........................................................
274
Exercise Cut-off Date..........................................
149
Expenses...............................................................
149
Extension
Date..................................................... 149
Extraordinary Dividend........................................
86
Extraordinary
Event.............................................. 86
Extraordinary Fund Event....................................
86
Failure to
Deliver................................................. 105
Failure to
Pay....................................................... 150
Fallback Settlement Method.............................. 150
FATCA withholding.............................................
59
Final EUR/USD Exchange Rate......................... 211
Final Index
Level................................................... 88
Final
List...............................................................
150
Final
Price....................................................... 88,
150
FINMA.................................................................
278
First
Entity............................................................
132
First Interest Payment Date.................................
75
First
Obligation....................................................
159
First Swap
Rate...................................................... 24
Fitch............................................................
1, 35, 237
Fixed Cap.............................................. 150,
248, 262
Fixing Date...................................................
209, 210
Floating Rate Convention....................................
72
Floor......................................................................
263
Following Business Day Convention................ 71
FP...................................................................
136, 138
FRN
Convention...................................................
72
FSMA...................................................................
274
Full
Quotation......................................................
151
Fully Transferable Obligation........................... 151
Fund................................................................
88, 230
Fund
Adviser.........................................................
88
Fund
Documents................................................... 88
Further DC Resolution.......................................
191
Further Subordinated Obligation...................... 151
FX
Disruption........................................................
80
GCC...........................................................................
1
General Clearing System Business Day........... 242
General
Provisions.................................................. v
Global Bearer
Notes.............................................. 16
Global Notes....................................................
16, 67
Global Registered Note......................................
242
Global Registered Notes......................................
16
Government Bond.................................................
88
Government Bonds...............................................
88
Governmental Authority.............................. 80, 151
Governmental Intervention................................
151
Grace
Period.........................................................
152
Grace Period Business Day............................... 152
Grace Period Extension Date............................. 152
Guarantee.............................................................
153
Hedge Disruption Event....................................
153
Hedge Disruption Obligation............................ 153
Hedging Arrangements......................................
153
Hedging Auction................................................
153
Hedging Auction Final Price............................. 153
Hedging Disruption...................................... 79,
105
Hedging Representative Auction-Settled Transaction 153
Hedging Transaction Auction Settlement Terms 153
Highest.........................................................
182, 183
HKMA....................................................................
67
Holders...................................................................
46
Hong
Kong............................................................
75
Hong Kong Governmental Authority................ 75
ICSD
Registrar.......................................................
45
IFRSs.....................................................................
280
Illiquidity..........................................................
75, 80
Inconvertibility................................................
75, 80
Increased Cost of Hedging.......................... 79, 105
Index........................................................................
88
Index Adjustment Event....................................
102
Index
Cancellation............................................... 102
Index
Disruption..................................................
102
Index Modification..............................................
102
Index
Sponsor........................................................
88
Index--Linked
Note................................................. 88
Index--Linked
Notes................................................ v
Indicative Quotation...........................................
128
Indices....................................................................
88
Information Memorandum................................. 197
Initial Index
Level.................................................. 88
initial interest
rate................................................ 254
Initial
Price..............................................................
89
initial
rate..............................................................
254
Insolvency.............................................................
89
Insolvency
Filing................................................ 105
Instalment Amounts.............................................
55
Instalment
Notes................................................... 46
Instalment Payment Date...................................
214
Instalment Payment Date 1................................
214
Instalment Payment Date 2................................
214
Instalment Payment Date 3................................
214
Instalment Payment Date 4................................
214
Instalment Payment Dates.................................
214
Interest Adjusted Credit Outstanding Nominal Amount 153
Interest
Amount.................................................... 53
Interest Credit Outstanding Nominal Amount 122
Interest Determination Date................................
75
Interest Payment Date..........................................
75
Interest
Period.......................................................
75
Interest Rate--Linked Notes...................................
v
Interest-Related Variable....................................
252
Intervening Period........................................ 94,
153
Investor's
Currency.............................................. 18
ISDA.....................................................................
153
ISDA
Definitions...................................................
75
ISDA
Rate..............................................................
52
Issuer..........................................................
1, 45, 192
Japanese
Yen...........................................................
ii
Joint Potential Successor...................................
180
Joint Relevant Obligation..................................
180
Judicial Authority Law.........................................
19
Knock--in Determination Day...............................
97
Knock--in Determination Period........................... 97
Knock--in
Event...................................................... 97
Knock--in
Level...................................................... 97
Knock--in Period Beginning Date........................ 97
Knock--in Period Ending Date..............................
97
Knock--in
Price....................................................... 97
Knock--in Valuation Time.....................................
97
Knock-Out Barrier...............................................
213
Knock--out Determination Day............................ 98
Knock--out Determination Period........................ 98
Knock--out
Event................................................... 98
Knock--out
Level.................................................... 98
Knock--out Period Beginning Date..................... 98
Knock--out Period Ending Date........................... 98
Knock--out
Price..................................................... 98
Knock--out Valuation Time...................................
98
KSA Regulations................................................
275
Largest Asset Package.......................................
153
Latest Maturity Restructured Bond or Loan 153, 173
LCIA........................................................................
69
LCIA
Rules.............................................................
19
LIBOR...................................................................
252
Lifetime Cap................................. 249, 252, 256,
264
Lifetime
Floor.......................................................
252
Limit Valuation
Date............................................. 98
Limitation
Date.................................................... 153
Listed....................................................................
160
Loan......................................................................
159
Local Banking
Day................................................ 76
London Business Day........................................
155
M(M)R Restructuring.........................................
154
M1.....................................................................
73, 74
M2.....................................................................
73, 74
Market...................................................................
182
Market Disruption Event.....................................
89
Market Value................................................
128, 154
Markets in Financial Instruments Directive........ 1
Maximum Maturity...................................... 144,
185
Memorandum of Guidance.................................. 19
Merger Event...................................................
89, 90
Method for Determining Obligations............... 158
Mid-market...........................................................
168
MiFID
II................................................................
273
Minimum Quotation Amount............................ 154
Modified Business Day Convention................. 72
Modified Eligible Transferee.............................
154
Modified Following Business Day Convention 72
Modified Postponement....................................
101
Modified Restructuring Maturity Limitation Date 154
Moody's..................................................... 1,
35, 237
Movement Option...............................................
154
Movement Option Cut-off Date........................ 155
Multiple Exchange Index......................................
90
Multiple Exchange Index--Linked Notes............. 90
Multiple Holder Obligation................................
189
Multiple Valuation Dates...................................
182
n 213
N............................................................................
213
National Currency Unit........................................
76
National Currency Units....................................
106
Nationalisation......................................................
90
New York Convention..........................................
19
Next Currency Fixing Time.................................
155
No
Adjustment......................................................
72
No Auction Announcement Date.................... 155
No Fixed Cap................................ 248, 262, 263,
267
Non
transferability................................................
80
Non-Conforming Reference Obligation........... 155
Non-Conforming Substitute Reference Obligation 155
Non--Contingent Amount...................................
162
Non--deliverability of Specified Currency.......... 80
Non-Financial Instrument..................................
155
Non-Qualified Investors....................................
278
Non-Standard Credit Event Determination Date 156
Non-Standard Exercise Cut-off Date................ 157
Non-Standard Reference Obligation................ 157
Non--transferability................................................
76
Non-Transferable Instrument............................ 157
Not Bearer....................................................
144, 185
Not Domestic Currency......................................
160
Not Domestic Issuance......................................
160
Not Domestic Law...............................................
160
Not Sovereign Lender........................................
160
Not Subordinated................................................
159
Noteholders...........................................................
45
Notes...........................................................
1, 45, 192
Notice Delivery Date..........................................
157
Notice Delivery Period.......................................
157
Notice of Physical Settlement........... 111, 119, 157
Notice of Publicly Available Information........ 158
Notice to Exercise Movement Option.............. 158
Notional Sale Date.......................................... 90,
91
Number of Valuation Business Days............... 158
Obligation.............................................................
158
Obligation Acceleration.....................................
161
Obligation Category...........................................
158
Obligation Characteristics.................................
159
Obligation Currency...........................................
161
Obligation
Default............................................... 161
Observation Period.............................................
213
Observation Period 1..........................................
213
Observation Period 2..........................................
213
Observation Period 3..........................................
213
Observation Period 4..........................................
213
Observation Window.........................................
213
Offer......................................................................
168
offer of Notes to the public...............................
273
Offers of Securities Regulations....................... 275
Omission...............................................................
100
Option
Notice......................................................
245
Original Non-Standard Reference Obligation. 161
Original Notional Amount.................................
161
Outstanding Amount................................. 120, 161
Outstanding Principal Balance.......................... 161
Package Observable Bond................................. 162
Parallel
Auction................................................... 162
Parallel Auction Cancellation Date................... 162
Parallel Auction Settlement Terms................... 162
Parallel Notice of Physical Settlement Date.... 162
Partial Cash Settlement Amount....................... 129
Partial Cash Settlement Date.............................
129
Partial Cash Settlement Notice.......................... 128
Partial Redemption Amount.............................. 188
Participating Member State......................... 76, 106
participating Member States............................. 270
Partly Paid
Notes................................................... 46
Paying Agent.................................................
43, 192
Paying
Agents.......................................................
45
Payment................................................................
158
Payment Requirement.........................................
162
Performance Cap......................... 249, 250, 266, 267
Performance Floor....................................... 250,
266
Permanent Global Note................................. 16,
243
Permissible Deliverable Obligations................. 162
Permitted Contingency.......................................
162
Permitted
Transfer............................................... 163
Physical Settlement Amendment Notice 112, 120, 163
Physical Settlement Period................................
163
Post Dismissal Additional Period..................... 163
Postponed Cut-off Date............................. 128, 163
Postponed Maturity Date.......................... 128, 163
Postponement......................................................
100
Potential Adjustment Event................................
90
Potential Credit Event.........................................
163
Potential Failure to Pay......................................
164
Potential Repudiation/Moratorium................... 164
pounds......................................................................
ii
Pounds
Sterling.......................................................
ii
PRA.........................................................................
10
PRC..............................................................
ii, 76, 276
PRC
Government...................................................
32
Preceding Business Day Convention................ 72
Pricing Supplement................................... 1, 45,
108
Principal
Currency................................................. 22
Principal Paying Agent................................ 45,
192
Prior DC Resolution............................................
191
Prior Deliverable Obligation..............................
164
Prior Reference Obligation.................................
160
Private-side
Loan................................................ 164
Proceedings...........................................................
70
Programme..........................................................
1, 45
Prohibited
Action................................................ 164
Prospectus Directive.............................. 1, 273,
274
PSN Cut-off
Date................................................. 164
PSN Effective Date..............................................
165
Public
Source.......................................................
165
Publicly Available Information......................... 165
PwC.......................................................................
280
Qualified Investors.............................................
278
Qualifying Affiliate Guarantee.......................... 166
Qualifying Day............................................ 256,
257
Qualifying Guarantee..........................................
166
Qualifying Participation Seller...........................
167
Quantum of the Claim.........................................
167
Quotation.....................................................
130, 167
Quotation Amount...................................... 130,
167
Quotation
Dealer................................................. 168
Quotation Method...................................... 130,
168
Receipts..................................................................
46
Record Date...................................................
61, 242
Recovery
Value................................................... 136
Redemption Amount............................................
61
Redenomination Date...........................................
76
Reference
Asset.................................................... 14
Reference
Bank...................................................... 76
Reference Currencies............................................
22
Reference Currency........................................ 22,
80
Reference Currency Jurisdiction......................... 80
Reference
Dealers................................................. 80
Reference
Entities................................................. 24
Reference Entity............................................ 24,
168
Reference Entity Notional Amount.................. 168
Reference
Level..................................................... 90
Reference Obligation..........................................
168
Reference Obligation Only................................
159
Reference Obligation Only Notes..................... 169
Reference
Price...................................................... 91
Reference
Rate....................................................... 76
Reference Transaction.......................................
169
Registered Notes........................................... 46,
242
Registrar................................................... 43,
45, 192
Registrars...............................................................
45
Regular
Date..........................................................
76
Regular
Period.......................................................
76
Regulations............................................................
47
Related
Exchange.................................................. 91
Relevant Banking Day..........................................
77
Relevant City Business Day.............................. 169
Relevant Currency.......................................... 62,
80
Relevant
Date........................................................ 59
Relevant
Factor..................................................... 14
Relevant Financial Centre Day............................ 77
Relevant Guarantee.............................................
169
Relevant
Holder................................................... 169
Relevant Implementation Date.......................... 273
Relevant Member State........................... i, 273, 274
Relevant Obligations..........................................
169
Relevant Observation Window........................ 214
Relevant
Period..................................................... 77
Relevant Screen Page...........................................
77
Relevant Screen Rate............................................
81
Relevant
Time........................................................ 77
RENA............................................................
136, 138
Renminbi.............................................................
ii, 77
Renminbi Calculation Agent............................... 77
Renminbi Clearing Banks.....................................
32
Renminbi
Dealer.................................................... 77
Replaced Deliverable Obligation Outstanding Amount 112, 120, 170
Replacement Deliverable Obligation 112, 120, 170
Representative Amount.....................................
170
Representative Auction-Settled Transaction. 170
Repudiation/Moratorium...................................
170
Repudiation/Moratorium Evaluation Date...... 171
Repudiation/Moratorium Extension Condition 171
Repudiation/Moratorium Extension Notice.... 171
Required
Payment................................................. 81
Resettable Note Interest Payment Date............. 77
Residual
Amount.................................................. 91
Residual Cash Amount........................................
91
Resolve"...............................................................
171
Resolved...............................................................
171
Resolves...............................................................
171
Restricted Global Registered Note..................... 77
Restructured Bond or Loan............................... 171
Restructuring.......................................................
172
Restructuring Date..............................................
173
Restructuring Maturity Limitation Date.......... 173
Revised Currency Rate.......................................
173
RMB..........................................................................
ii
RMS..............................................................
252, 257
Rules.......................................................................
69
Saudi
Investor.....................................................
275
Scheduled Averaging Date............................... 101
Scheduled Closing Time......................................
91
Scheduled Credit Settlement Date.................... 139
Scheduled Final Averaging Date...................... 101
Scheduled Maturity Date........... 154, 173, 198, 199
Scheduled Trading Day.......................................
91
Scheduled Valuation Date...................................
91
Screen
Rate............................................................
81
Screen Rate
Fall--Back........................................... 81
Second Obligation..............................................
159
Second Swap Rate................................................
24
Securities................................................................
91
Securities
Act.......................................................... 1
Securities Transfer Amount................................
91
Security...................................................................
91
Senior
Obligation................................................ 173
Seniority
Level..................................................... 173
Series.......................................................................
45
Settlement Arrangements....................................
32
Settlement
Cycle.................................................... 91
Settlement
Date..................................................... 91
Settlement Disruption Event...............................
92
Settlement Method.............................................
174
Settlement Notice........................................ 117,
174
SFA.......................................................................
276
Shortfall Amount......................................... 122,
174
Simplified Prospectus.........................................
278
Single Reference Entity Credit Linked Notes.. 174
Solvency Capital Provisions............................. 174
Sovereign.............................................................
174
Sovereign Restructured Deliverable Obligation 174
Sovereign Restructured Valuation Obligation 174
Sovereign Succession Event............................. 174
Specified Currency.................................. 78, 80,
160
Specified Currency Jurisdiction.................... 80, 81
Specified Number................................................
174
Specified
Period..................................................... 78
Spot
Market.........................................................
214
Spot
Rate................................................................
78
SRO
List................................................................
174
Standard Reference Obligation......................... 174
Standard Specified Currency............................. 174
Standard
Terms................................................... 217
Steps
Plan.............................................................
175
Sterling......................................................................
ii
Strike
Date..............................................................
92
Strike
Price..............................................................
92
Structured Products............................................
278
Subordinated.......................................................
159
Subordinated Notes..............................................
45
Subordinated Obligation....................................
175
Subordination......................................................
159
Substitute Reference Obligation....................... 175
Substitution
Date................................................ 177
Substitution Event..............................................
177
Substitution Event Date.....................................
177
sub--unit............................................................
49, 53
succeed"...............................................................
180
Succession
Date.................................................. 177
Successor.............................................................
178
Successor Backstop Date..................................
180
Successor Index............................................ 92,
102
Successor Notice................................................
180
Successor Resolution Request Date................ 181
Suspension Period........................................ 28,
131
Talons.....................................................................
45
TARGET Business Day.......................................
74
TARGET2...............................................................
78
TEFRA
C..............................................................
243
TEFRA
D..............................................................
243
Temporary Global Note................................ 16,
243
Tender
Offer...........................................................
92
Trade
Date............................................................
181
Trading
Disruption............................................... 92
Tranche...................................................................
45
Transaction Auction Settlement Terms........... 181
Transaction Type................................................
181
Transfer
Agent...................................................... 45
Transfer
Date.........................................................
78
Transfer
Expenses................................................. 92
Transfer
Notice...................................................... 92
Transferable.................................................
143, 184
Treaty......................................................................
78
Trust
Deed.......................................................... i,
45
Trustee.................................................................
i, 45
U.S.
dollars...............................................................
ii
UAE...........................................................
18, 35, 270
UC..................................................................
136, 138
Undeliverable Obligation...................................
181
Underlying Company...........................................
93
Underlying Index........................................... 93,
230
Underlying Obligation........................................
181
Underlying Obligor.............................................
181
Underlying
Security.............................................. 93
Unit..................................................................
93, 230
Universal Successor...........................................
179
Unwind
Costs...................................................... 181
US Dollar Equivalent............................................
78
US
Dollars..............................................................
78
US$............................................................................
ii
USD...........................................................................
ii
Valid
Date...............................................................
93
Valuation Date....................................... 93, 130,
182
Valuation Method....................................... 130,
182
Valuation Obligation................................... 130,
183
Valuation Obligation Category......................... 183
Valuation Obligation Characteristics............... 184
Valuation Obligation Notification..................... 183
Valuation Time....................................... 93, 131,
188
Variable Coupon Amount Notes........................ 55
Weighted Average Quotation.................. 131, 188
Y1.......................................................................
73, 74
Y2.......................................................................
73, 74
Zero Coupon Note................................................
55
THE ISSUER
HSBC Bank Middle East Limited
Level 1
Building No. 8, Gate Village
Dubai International Financial Centre
PO Box 502601
Dubai
United Arab Emirates
TRUSTEE
The Law Debenture Trust Corporation p.l.c.
Fifth Floor
100 Wood Street
London EC2V 7EX
England
PRINCIPAL PAYING AGENT,
ICSD REGISTRAR AND TRANSFER AGENT
HSBC Bank plc
8 Canada Square
London E14 5HQ
England
PROGRAMME ARRANGER AND DEALER
HSBC Bank plc
8 Canada Square
London E14 5HQ
England
LEGAL ADVISERS
To the Issuer as to English law
Clifford Chance LLP
10 Upper Bank Street
London E14 5JJ
England
To the Issuer as to DIFC law
Clifford Chance LLP
PO Box 9380
Dubai
United Arab Emirates
To the Trustee as to English law
Allen & Overy LLP
One Bishops Square
London E1 6AD
England
AUDITORS TO THE ISSUER FOR THE YEARS ENDED 31 DECEMBER
2016 AND 31 DECEMBER 2017
PricewaterhouseCoopers Limited
Al Fattan Currency House,
Tower 1, Level 8, Unit 801
DIFC, PO Box 11987
Dubai - United Arab Emirates
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
PDIQLLFFVDFZBBK
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July 12, 2018 13:10 ET (17:10 GMT)
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