Tier 2

Agreement with Respect to the Exercise of UK Bail-in Power

By its acquisition of the Notes, each noteholder (which, for these purposes, includes each beneficial owner) will acknowledge, accept, consent and agree, notwithstanding any other term of the Notes, the Indenture or any other agreements, arrangements or understandings between us and any noteholder, to be bound by (a) the effect of the exercise of any UK bail-in power (as defined under “Description of the Notes—Definitions”) by the relevant UK resolution authority (as defined under “Description of the Notes—Definitions”); and (b) the variation of the terms of the Notes or the Indenture, if necessary, to give effect to the exercise of any UK bail-in power by the relevant UK resolution authority. No repayment or payment of Amounts Due will become due and payable or be paid after the exercise of any UK bail-in power by the relevant UK resolution authority if and to the extent such amounts have been reduced, converted, cancelled, amended or altered as a result of such exercise. For these purposes, “Amounts Due” are the principal amount of, and any accrued but unpaid interest, including any Additional Amounts (as defined under “Description of the Notes—Additional Amounts”), on the Notes. References to such amounts will include amounts that have become due and payable, but which have not been paid, prior to the exercise of any UK bail-in power by the relevant UK resolution authority. See “Description of the Notes—Agreement with Respect to the Exercise of UK Bail-in Power.”

Moreover, each noteholder (which, for these purposes, includes each beneficial owner) will consent to the exercise of any UK bail-in power as it may be imposed without any prior notice by the relevant UK resolution authority of its decision to exercise such power with respect to the Notes.

Capital Disqualification Event Redemption

Following the occurrence of a Capital Disqualification Event, we may, within 90 days of the occurrence of the relevant Capital Disqualification Event, in our sole discretion, redeem the Notes in whole, but not in part at a redemption price equal to 100% of their principal amount, plus any accrued and unpaid interest, if any, to (but excluding) the date fixed for redemption.

A “Capital Disqualification Event” means an event that shall be deemed to have occurred if we determine at any time after the Issue Date, that there is a change in the regulatory classification of the Notes that results in or will result in either their:

(i) exclusion in whole or in part from the regulatory capital of the HSBC Group; or
(ii) reclassification in whole or in part as a form of regulatory capital of the HSBC Group that is lower than Tier 2 capital (if any).