<PAGE>
RULE 424(B)(2)
REGISTRATION NUMBER 33-50351
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 6, 1993)
$175,000,000
HOUSEHOLD INTERNATIONAL NETHERLANDS B.V.
6% SENIOR NOTES DUE MARCH 15, 1999
GUARANTEED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
HOUSEHOLD INTERNATIONAL, INC.
--------
INTEREST PAYABLE MARCH 15 AND SEPTEMBER 15
-------------------
THE NOTES ARE NOT REDEEMABLE PRIOR TO MATURITY, EXCEPT THAT THE NOTES MAY BE
REDEEMED IF, AT ANY TIME, THE COMPANY OR HOUSEHOLD INTERNATIONAL HAS BEEN OR
WILL BE REQUIRED TO PAY ADDITIONAL AMOUNTS WITH RESPECT TO THE NOTES.
SEE "DESCRIPTION OF THE NOTES."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
PRICE 99.59% AND ACCRUED INTEREST, IF ANY
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC (1) COMMISSIONS (2) COMPANY (1)(3)
--------------- --------------- ---------------
<S> <C> <C> <C>
PER NOTE..................... 99.59% .50% 99.09%
TOTAL........................ $174,282,500 $875,000 $173,407,500
<FN>
- ---------
(1) PLUS ACCRUED INTEREST, IF ANY, FROM MARCH 2, 1994.
(2) THE COMPANY AND HOUSEHOLD INTERNATIONAL HAVE AGREED TO INDEMNIFY THE
UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER
THE SECURITIES ACT OF 1933.
(3) BEFORE DEDUCTION OF EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT
$350,000.
</TABLE>
-------------------
THE NOTES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY MCDERMOTT, WILL & EMERY, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT
DELIVERY OF THE NOTES WILL BE MADE ON OR ABOUT MARCH 2, 1994, AT THE OFFICE OF
MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR IN
NEW YORK FUNDS.
-------------------
MORGAN STANLEY & CO. CS FIRST BOSTON
INCORPORATED
FEBRUARY 23, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER MADE HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR HOUSEHOLD INTERNATIONAL OR BY ANY UNDERWRITER, DEALER OR
AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR HOUSEHOLD
INTERNATIONAL SINCE THE DATE HEREOF. THE PROSPECTUS AND PROSPECTUS SUPPLEMENT DO
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
DESCRIPTION OF THE NOTES
The following description of the terms of the 6% Senior Notes due March 15,
1999 (the "Notes") offered hereby (referred to in the Prospectus as the "Offered
Debt Securities") supplements, insofar as such description relates to the Notes,
the description of the Debt Securities set forth in the Prospectus under the
heading "Description of Debt Securities and Guarantees" to which description
reference is hereby made.
The Notes will be issued in fully registered form only in denominations of
$100,000 or any amount in excess thereof which is an integral multiple of
$1,000. The Notes will mature on March 15, 1999.
Interest on the Notes at the rate of 6% per annum will be payable
semi-annually on March 15 and September 15, beginning September 15, 1994, to the
persons in whose names the Notes are registered at the close of business on the
last day of the preceding month, except that interest payable at maturity shall
be paid to the same persons to whom principal of the Notes is payable.
Subject to certain exceptions and limitations, the Company will pay as
additional interest on the Notes, such additional amounts as are necessary in
order that the net payment by the Company or a paying agent of the principal and
interest on the Notes, after deduction for any present or future tax, assessment
or governmental charge of The Netherlands or a political subdivision or taxing
authority thereof or therein imposed by withholding with respect to such
payment, will not be less than the amount provided in the Notes to then be due
and payable. See "Payment of Additional Amounts."
The Notes are not redeemable at the option of the Company prior to maturity,
except that the Notes may be redeemed, as a whole but not in part, at a
redemption price equal to 100% of their principal amount, together with interest
thereon to the date of redemption, if at any time the Company or Household
International has been or will be required to pay additional amounts with
respect to the Notes. See "Optional Tax Redemption." The Notes will not be
entitled to any sinking fund.
The Notes will be unconditionally guaranteed as to payment of principal and
interest (including additional amounts) by Household International.
The Notes will be issued under an Indenture dated as of September 9, 1993,
among the Company, Household International and BankAmerica National Trust
Company, as Trustee.
PAYMENT OF ADDITIONAL AMOUNTS
If any deduction or withholding for any present or future taxes, assessments
or other governmental charges of The Netherlands or any political subdivision or
taxing authority thereof or therein shall at any time be required in respect of
any amounts to be paid by the Company under the Notes, the Company will pay as
additional interest such additional amounts as may be necessary in order that
the said amounts paid to
S-2
<PAGE>
the Holder of any Note pursuant to the terms of such Note, after such deduction
or withholding, will be not less than the amounts specified in such Note to be
then due and payable; provided, however, that the Company shall not be required
to make any payment of additional amounts for or on account of:
(a) any tax, assessment or other governmental charge which would not
have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
Holder, if such Holder is an estate, trust, partnership or corporation) and
The Netherlands or any political subdivision or territory or possession of
The Netherlands or area subject to its jurisdiction, including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident or
treated as a resident thereof, being or having been present or engaged in
trade or business therein or having or having had a permanent establishment
therein or (ii) the presentation of a Note (where presentation is required)
for payment on a date more than 20 days after the date on which such payment
became due and payable or the date on which payment thereof was duly
provided for, whichever occurs later;
(b) Any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;
(c) Any tax, assessment or other governmental charge which is payable
otherwise than by withholding from payments of (or in respect of) principal
of or interest on the Notes;
(d) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure to comply by the Holder or the beneficial
owner with a request of the Company addressed to the Holder to provide
information concerning the nationality, residence or identity of the Holder
or beneficial owner of the Note, and to make such declaration or other
similar claim or reporting requirement, which is required by statute, treaty
or regulation of The Netherlands as a precondition to exemption from all or
part of such tax, assessment or other governmental charge; or
(e) any combination of items (a), (b), (c) and (d) above;
nor will additional amounts be paid with respect to any payment of the principal
or interest on any Note to any such Holder who is a fiduciary or partnership or
other than the sole beneficial owner of such payment to the extent such payment
would be required by the laws of The Netherlands (or any political subdivision
or taxing authority of or in The Netherlands) to be included in the income for
tax purposes of a beneficiary or settlor with respect to such fiduciary or
member of such partnership or a beneficial owner who would not have been
entitled to such additional amounts had it been the Holder of such Note.
OPTIONAL TAX REDEMPTION
The Notes may be redeemed, at the option of the Company or Household
International, in whole but not in part, upon not less than 30 nor more than 60
days' notice given as provided in the Indenture, at any time at a redemption
price equal to the principal amount thereof plus accrued interest to the date
fixed for redemption if, as a result of any change in or amendment to the laws
or any regulations or rulings promulgated thereunder of The Netherlands or any
political subdivision or taxing authority thereof or therein or any change in
the official application or interpretation of such laws, regulations or rulings,
or any change in the official application or interpretation of, or any execution
of or amendment to, any treaty or treaties affecting taxation to which The
Netherlands is a party, which change, execution or amendment becomes effective
on or after the original issue date of the Notes, the Company or Household
International has been or will be required to pay additional amounts with
respect to the Notes as described above under "Payment of Additional Amounts."
The Company will also pay, or make available to Holders on the date of
redemption any additional amounts (as described above under "Payment of
Additional Amounts") resulting frrom the payment of such redemption prices.
S-3
<PAGE>
CERTAIN TAX MATTERS
The following is a summary of the principal United States and Netherlands
income tax consequences with respect to the purchase, ownership and disposition
of a Note by a Holder that is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States, or any estate or trust the income of which is subject
to United States Federal income taxation regardless of its source (a "United
States Holder"). This summary is based on facts as they exist and laws,
regulations, rulings and decisions in effect on the date hereof, all of which
are subject to change, and is included for general information only and may not
apply to all United States Holders. Prospective purchasers of Notes should
consult their own tax advisors in determining the United States, Netherlands and
any other tax consequences to them of the purchase, ownership and disposition of
Notes or beneficial interests therein.
UNITED STATES TAXATION
Due to the guarantee of the Notes by Household International, it is possible
that any interest paid on the Notes will be considered as U.S. source income for
United States income tax purposes (including for purposes of computing a
Holder's U.S. foreign tax credit limitation).
Upon the sale, exchange or redemption of a Note, a United States Holder will
recognize a gain or loss, if any, for United States Federal income tax purposes
equal to the difference between the amount realized on the sale, exchange or
redemption and the United States Holder's tax basis in the Note. Such gain or
loss generally will be capital gain or loss if the Note is held as a capital
asset.
A 31% backup withholding tax and an information reporting requirement is
applicable to certain non-corporate United States Holders with respect to
payments of principal and interest on, and the proceeds of the sale of, the
Notes unless such United States Holder makes certain written certifications and
provides certain identifying information in accordance with applicable
requirements or otherwise establishes an exemption. Any amounts withheld under
the backup withholding rules from a payment to a Holder would be allowed as a
refund or a credit against such United States Holder's Federal income tax
provided that the required information is furnished to the United States
Internal Revenue Service.
THE NETHERLANDS TAXATION
No income taxes will be payable under the tax laws of The Netherlands on
payments of principal or interest on a Note to, or on a disposition of a Note
by, a Holder who is not a resident, nor deemed to be a resident, of The
Netherlands, assuming the Holder does not have an enterprise nor an interest in
an enterprise which carries on business in The Netherlands through a permanent
establishment or permanent representative to which or to whom the interest on
the Note is attributable or to which or to whom the Note belongs.
No payment of principal or interest in respect of the Notes will be subject
to Netherlands withholding tax.
RATIOS OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for Household International for the
periods indicated below were as follows:
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
SEPTEMBER
30, YEAR ENDED DECEMBER 31,
---------- ----------------------------
1993 1992 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Household International and subsidiaries..... 1.34 1.17 1.19 1.10 1.17 1.19 1.23
</TABLE>
For purposes of calculating the ratio, earnings consist of income from
continuing operations to which has been added income taxes and fixed charges.
For Household International, fixed charges consist of interest on all
indebtedness (including capitalized interest) and one-third of rental expense
(approximate portion representing interest).
S-4
<PAGE>
UNDERWRITERS
Under the terms of and subject to the conditions set forth in the
Underwriting Agreement, the Company has agreed to sell to each of the
Underwriters named below, severally, and each of the Underwriters has severally
agreed to purchase the principal amount of the Notes set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
NAME OF NOTES
- -------------------------------------------------------------------- --------------
<S> <C>
Morgan Stanley & Co. Incorporated................................... $ 87,500,000
CS First Boston Corporation......................................... 87,500,000
--------------
Total........................................................... $ 175,000,000
--------------
--------------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. The nature of the Underwriters' obligations is such
that they are committed to take and pay for all of the Notes if any are taken.
The Underwriters propose to offer the Notes directly to the public at the
public offering price set forth on the cover page of this Prospectus Supplement
and to certain dealers at such price less a concession of .30% of the principal
amount of the Notes. The Underwriters may allow and such dealers may reallow to
certain other dealers a concession not in excess of .15% of the principal amount
of the Notes. After the initial public offering, the offering price and other
selling terms may be changed by the Underwriters.
The Company and Household International have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.
The Company does not intend to apply for the listing of the Notes on a
national securities exchange, but has been advised by the Underwriters that they
currently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Notes.
LEGAL OPINIONS
The legality of the Notes and the Guarantees will be passed upon by John W.
Blenke, Assistant General Counsel and Secretary for Household International. As
of the date of this Prospectus Supplement, Mr. Blenke is a full-time employee
and an officer of Household International and owns, and holds options to
purchase, shares of Common Stock of Household International. Certain legal
matters will be passed upon for the Underwriters by McDermott, Will & Emery,
Chicago, Illinois.
EXPERTS
The financial statements and schedules of Household International and its
subsidiaries incorporated by reference in this Prospectus Supplement, to the
extent and for the periods indicated in its reports, have been audited by Arthur
Andersen & Co., independent public accountants, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
giving said reports.
S-5
<PAGE>
HOUSEHOLD INTERNATIONAL NETHERLANDS B.V.
SENIOR NOTES
AND
WARRANTS TO PURCHASE SENIOR NOTES
HOUSEHOLD INTERNATIONAL, INC.
GUARANTOR
Household International Netherlands B.V. (the "Company") from time to time
may offer one or more series of unsecured senior notes ("Debt Securities") and
warrants ("Warrants") to purchase Debt Securities (the Debt Securities and
Warrants being hereinafter collectively called the "Securities") having an
aggregate initial offering price of up to U.S. $300,000,000, or the equivalent
thereof if any of the Securities are denominated in a foreign currency or a
foreign currency unit. All Debt Securities will be unconditionally guaranteed as
to payment of principal, premium, if any, and interest by Household
International, Inc. ("Household International"). The guarantees of the Debt
Securities (the "Guarantees") will constitute unsecured obligations of Household
International and will rank on a parity with other unsecured senior indebtedness
of Household International. The Debt Securities will be offered as separate
series in amounts, at prices and on terms to be determined at the time of sale
and to be set forth in supplements to this Prospectus ("Prospectus Supplement").
The Debt Securities and Warrants may be sold for U.S. dollars, foreign
currencies or foreign currency units, and the principal of and any interest on
the Debt Securities may be payable in U.S. dollars, foreign currencies or
foreign currency units. Unless otherwise specified in the applicable Prospectus
Supplement, the Debt Securities will be issued only in denominations of U.S.
$100,000 or any amount in excess thereof which is an integral multiple of U.S.
$1,000. The specific designation, aggregate principal amount, the currency or
currency unit for which the Securities may be purchased, the currency or
currency unit in which the principal and any interest is payable, the rate (or
method of calculation) and time of payment of any interest, authorized
denominations, maturity, offering price, any redemption terms or other specific
terms of the Securities in respect of which this Prospectus is being delivered
will be set forth in one or more supplements to this Prospectus. With regard to
the Warrants, if any, in respect of which this Prospectus is being delivered,
the Prospectus Supplement sets forth a description of the Debt Securities for
which each Warrant is exercisable and the offering price, if any, exercise
price, duration, detachability and other terms of the Warrants.
The Company may sell Securities through underwriting syndicates led by one
or more managing underwriters or through one or more underwriting firms acting
alone, to or through dealers, acting as principals for their own account or as
agents, and also may sell Securities directly to other purchasers. See "Plan of
Distribution". The names of any underwriters or agents involved in the sale of
the Securities in respect to which this Prospectus is being delivered and their
compensation will be set forth in the Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER 6, 1993.
<PAGE>
AVAILABLE INFORMATION
The Company and Household International have filed with the Securities and
Exchange Commission (the "Commission") a combined registration statement on Form
S-3 (the "Registration Statement," which term encompasses any amendments
thereof) under the Securities Act of 1933, as amended, with respect to the
Securities and the Guarantees offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto to which reference is hereby made. Statements or extracts
presented in this Prospectus from financial statements, contracts, agreements or
other documents are not necessarily complete. With respect to each such
statement or extract, reference is hereby made to the appropriate financial
statement, contract, agreement or other document for a more complete description
of the matter involved. All information concerning the Company contained herein
has been furnished by the Company and all information concerning Household
International has been furnished by Household International.
Household International is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at the Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661 and Seven World Trade Center, New York, New York 10048. Copies of
such material can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, reports, proxy statements and other material concerning
Household International can be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005, and the Chicago Stock
Exchange, 440 South LaSalle Street, Chicago, Illinois 60605. Although Household
International is not required to send a copy of its latest Annual Report to
Shareholders to holders of the Securities, Household International will, upon
request, send to any holder of Securities a copy of its latest Annual Report to
Shareholders, as filed with the Commission, which contains financial information
that has been examined and reported upon, with an opinion expressed, by
independent certified public accountants.
The Company is currently not subject to the informational requirements of
the Exchange Act. The Company will become subject to such requirements upon
effectiveness of the Registration Statement of which this Prospectus forms a
part, although it intends to seek and expects to receive an exemption therefrom.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
No documents have been previously filed with the Commission by the Company
and, therefore, no documents of the Company have been incorporated herein by
reference. The following documents have been filed by Household International
with the Commission (File No. 1-8198) pursuant to the Exchange Act and are
incorporated herein by reference and made a part of this Prospectus:
(a) Household International's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992;
(b) Household International's Quarterly Reports on Form 10-Q for the
quarters ended March 31 and June 30, 1993; and
(c) Household International's Current Reports on Form 8-K dated January
13, February 4, April 3 and September 1, 1993.
All documents filed by Household International or the Company, as the case
may be, with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
herein by reference and made a part of this Prospectus from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
2
<PAGE>
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
Household International will provide without charge to each person to whom
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all documents incorporated herein by reference (without
exhibits other than exhibits specifically incorporated by reference). Requests
should be directed to:
Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
Attention: Office of the Secretary
Telephone: 708-564-6989
HOUSEHOLD INTERNATIONAL
Household International was formed in 1981 as a holding company for various
subsidiaries which operated in the financial services, manufacturing,
transportation and merchandising industries. In 1985 Household International
initiated a restructuring program that has resulted in the disposition of its
merchandising, transportation and manufacturing businesses. This has enabled
Household International to focus its resources in the financial services
industry through the operation of businesses involved in finance and banking,
and insurance. Household International's principal executive office is located
at 2700 Sanders Road, Prospect Heights, Illinois 60070 (telephone:
708-564-5000).
The finance and banking business of Household International is the largest
segment of Household International's operations. Through subsidiaries, such as
Household Finance Corporation ("HFC"), Household Bank, f.s.b., Household Bank,
National Association, Household Retail Services, Inc., Household Bank
(Illinois), National Association, Household Financial Corporation Limited,
Household Trust Company, Household Financial Services Limited and HFC Bank plc,
Household International offers numerous consumer finance products, including
mortgages, home equity credit lines, revolving and closed-end unsecured personal
loans, private label credit cards, and VISA* and MasterCard* credit cards. Also,
in conjunction with its consumer finance business, and where applicable laws
permit, Household International makes credit life, credit accident and health,
household contents, and term insurance available to its customers. This
insurance is generally directly written by or reinsured with Household
International's insurance subsidiary, Alexander Hamilton Life Insurance Company
of America ("Alexander Hamilton").
Household International has included its ongoing commercial finance
operations in the finance and banking segment. These operations are generally
administered by Household Commercial Financial Services, Inc. ("Household
Commercial"), a subsidiary of HFC. Products offered by Household Commercial
include loan and lease financing to businesses for capital equipment, including
aircraft and other transportation equipment, and specialized secured corporate
loans. In addition, Household Commercial also invests in publicly issued or
privately placed term preferred stocks of unaffiliated entities.
Household International's individual life insurance products are offered by
Alexander Hamilton. These products include universal life, whole life and term
insurance policies, as well as annuity products, and are sold through a network
of approximately 8,700 independent agents in the United States.
In 1991 Household International withdrew from certain selected commercial
product lines, including commercial real estate and acquisition finance, which
were offered by Household Commercial. As a result, Household International
intends to liquidate the assets generated from these product lines in a manner
that will maximize the value of these assets. These product lines will continue
to be managed by Household Commercial pending their disposition.
- ------------------------
* VISA and MasterCard are registered trademarks of VISA, USA, Inc. and
MasterCard International Incorporated, respectively.
3
<PAGE>
HOUSEHOLD INTERNATIONAL NETHERLANDS B.V.
The Company was organized under the Dutch Civil Code on September 14, 1990.
The Company is a wholly-owned indirect subsidiary of Household International
(U.K.) Limited ("U.K. Limited"), which is an indirect subsidiary of Household
International and a holding company for all operations of Household
International in the United Kingdom. HFC Bank plc, is also a wholly-owned
subsidiary of U.K. Limited and is the principal operating subsidiary of
Household International in the United Kingdom.
The registered office of the Company is at Hoekenrode 6, 1102 BR, Amsterdam,
Netherlands. The Company's telephone number is 31-20-6298033. Prior to this
offering the Company has not engaged in any business activities. The Company's
principal business activity will be to provide funds to HFC Bank plc for general
corporate purposes.
The enforcement by investors of civil liabilities under U.S. federal
securities laws may be affected adversely by the fact that the Company is
incorporated or organized under the laws of the Netherlands, that some or all of
its officers and directors may be residents of the Netherlands and that all or a
substantial portion of the assets of the Company and of those persons may be
located outside the United States.
USE OF PROCEEDS
The Company will loan the net proceeds from the sale of the Securities to
HFC Bank plc to be used for general corporate purposes, including to fund
extensions of credit to its subsidiaries and to consumers in the United Kingdom;
to reduce other outstanding indebtedness (which may include indebtedness owed to
its affiliates, including Household International); or to fund acquisitions of
other companies or portfolios.
4
<PAGE>
SELECTED FINANCIAL INFORMATION
OF HOUSEHOLD INTERNATIONAL, INC.
The financial information which is set forth below for the three years ended
December 31, 1992 has been derived from the financial statements of Household
International which have been audited by Arthur Andersen & Co., independent
certified public accountants. All financial information of Household
International and subsidiaries presented below should be read in conjunction
with the detailed financial statements included in documents on file with the
Commission and listed under "Incorporation of Certain Documents by Reference".
The results of operations of Household International and subsidiaries for the
six month periods ended June 30, 1993 and 1992 reflect all adjustments of a
normal recurring nature which are, in the opinion of Household International's
management, necessary for a fair statement of the results for the interim period
and such results are not necessarily indicative of the results of operations
that may be expected for the entire year. In addition, certain prior period
amounts have been reclassified to conform with the current period's
presentation. All dollar amounts stated below are in millions of U.S. dollars.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1993 1992 1992 1991 1990
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Finance income...................... $ 1,282.5 $ 1,300.2 $ 2,584.4 $ 3,037.5 $ 3,101.1
Interest income from noninsurance
investment securities.............. 68.0 81.0 152.8 187.4 163.1
Interest expense.................... 598.4 750.7 1,420.2 1,886.9 2,025.9
--------- --------- --------- --------- ---------
Interest margin..................... 752.1 630.5 1,317.0 1,338.0 1,238.3
Provision for credit losses on owned
receivables........................ 357.0 310.6 671.5 843.2 463.7
--------- --------- --------- --------- ---------
Interest margin after provision for
credit losses...................... 395.1 319.9 645.5 494.8 774.6
--------- --------- --------- --------- ---------
Securitization and servicing fee
income............................. 191.5 167.9 376.0 398.3 164.1
Insurance premiums and contract
revenues........................... 137.4 141.4 281.2 288.4 256.3
Investment income................... 273.9 251.5 523.7 471.5 372.4
Fees and other income............... 202.7 118.4 262.5 210.8 262.7
--------- --------- --------- --------- ---------
Other revenues...................... 805.5 679.2 1,443.4 1,369.0 1,055.5
--------- --------- --------- --------- ---------
Interest margin after provision for
credit losses and other revenues... 1,200.6 999.1 2,088.9 1,863.8 1,830.1
--------- --------- --------- --------- ---------
Salaries and fringe benefits........ 299.4 263.2 535.9 507.9 476.4
Other operating expenses............ 442.7 365.5 761.1 683.9 623.0
Policyholders' benefits............. 265.9 254.1 513.9 472.2 382.0
--------- --------- --------- --------- ---------
Total costs and expenses............ 1,008.0 882.8 1,810.9 1,664.0 1,481.4
--------- --------- --------- --------- ---------
Income before income taxes.......... 192.6 116.3 278.0 199.8 348.7
Income taxes........................ 62.4 37.8 87.1 50.0 113.4
--------- --------- --------- --------- ---------
Net income.......................... $ 130.2 $ 78.5 $ 190.9 $ 149.8 $ 235.3
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
------------ ----------------------------------
1993 1992 1991 1990
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
PERIOD END BALANCE SHEET DATA:
Total assets........................ $ 32,751.8 $ 31,128.4 $ 29,982.3 $ 29,454.7
Total debt.......................... 22,914.7 22,298.0 21,906.5 22,380.1
Deposits............................ 7,632.7 8,030.3 7,969.6 6,938.0
Convertible preferred stock subject
to mandatory redemption............ 20.1 36.0 54.4 74.0
Preferred Stock..................... 300.0 300.0 250.0 195.0
Common shareholders' equity......... $ 1,918.7 $ 1,545.6 $ 1,462.1 $ 1,281.1
</TABLE>
5
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for Household International for the
periods indicated below were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------- ----------------------------
1993 1992 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Household International and subsidiaries..... 1.31 1.15 1.19 1.10 1.17 1.19 1.23
</TABLE>
For purposes of calculating the ratio, earnings consist of income from
continuing operations to which has been added income taxes and fixed charges.
For Household International, fixed charges consist of interest on all
indebtedness (including capitalized interest) and one-third of rental expense
(approximate portion representing interest).
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Debt Securities offered by any
Prospectus Supplement (the "Offered Debt Securities") and the extent to which
such general terms and provisions may apply to the Offered Debt Securities will
be described in the Prospectus Supplement relating to such Offered Debt
Securities.
GENERAL
The Offered Debt Securities will constitute unsecured senior debt of the
Company, will rank on a parity with other unsecured senior debt of the Company
(of which none is currently outstanding) and will be unconditionally guaranteed
as to payment of principal, interest and premium, if any, by Household
International. The Offered Debt Securities will be issued under one of two
indentures specified elsewhere herein (the "Indentures"). Copies of the forms of
the Indentures are filed as exhibits to the Registration Statement which
registers the Securities and the Guarantees with the Commission. The following
summaries do not purport to be complete and, where particular provisions of the
Indentures are referred to, such provisions, including definitions of certain
terms, are incorporated by reference as part of such summaries, which are
qualified in their entirety by such reference.
The Indentures provide that Debt Securities may be issued thereunder from
time to time in one or more series and do not limit the aggregate principal
amount of the Debt Securities, except as may be otherwise provided with respect
to any particular series of Offered Debt Securities.
Unless otherwise indicated in the Prospectus Supplement with respect to any
particular series of Offered Debt Securities, the Debt Securities will be issued
in definitive registered form without coupons, will be exchangeable for
authorized denominations and will be transferable at any time or from time to
time. No charge will be made to any Holder for any exchange or registration of
transfer except for any tax or governmental charge incident thereto.
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms and other
information to the extent applicable with respect to the Offered Debt
Securities: (1) the title of the Offered Debt Securities; (2) any limit on the
aggregate principal amount of the Offered Debt Securities; (3) the price
(expressed as a percentage of the aggregate principal
amount thereof) the Company will be paid for the Offered Debt Securities and the
initial offering price, if any, at which the Offered Debt Securities will be
offered to the public; (4) the currency, currencies or currency units for which
the Offered Debt Securities may be purchased and the currency, currencies or
currency units in which the principal of and any interest on such Offered Debt
Securities may be payable; (5) the date or dates on which the Offered Debt
Securities will mature; (6) the rate or rates (which may be fixed or variable)
per annum at which the Offered Debt Securities will bear interest, if any; (7)
the date from which such interest, if any, on the Offered Debt Securities will
accrue, the dates on which such interest, if any, will be payable, the date on
which payment of such interest, if any, will commence and the Regular Record
Dates for such Interest Payment Dates, if any; (8) the dates, if any, on which
and the price or prices at
6
<PAGE>
which the Offered Debt Securities will, pursuant to any mandatory sinking fund
provisions, or may, pursuant to any optional sinking fund or purchase fund
provisions, be redeemed by the Company and the other detailed terms and
provisions of such sinking and/or purchase funds; (9) the date, if any, after
which and the price or prices at which the Offered Debt Securities may, pursuant
to any optional redemption provisions, be redeemed at the option of the Company
or of the Holder thereof and the other detailed terms and provisions of such
optional redemption; (10) the securities exchange, if any, on which the Offered
Debt Securities will be listed; and (11) additional provisions, if any, with
respect to the Offered Debt Securities. With respect to Offered Debt Securities
sold through dealers acting as agents, however, the maturities and interest
rates of such Offered Debt Securities may be established by the Company from
time to time and, if not set forth in the Prospectus Supplement relating
thereto, will be made available through such dealers.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of or any interest on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Debt Securities and such currencies or currency
units will be set forth in the Prospectus Supplement relating thereto.
Debt Securities may be issued as Original Issue Discount Securities to be
offered and sold at a discount below their stated principal amount. "Original
Issue Discount Securities" means any Debt Securities that provide for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the maturity thereof upon the occurrence of an Event of
Default and the continuance thereof. As used in the following summary of certain
terms of the Debt Securities, the term "principal amount" means, in the case of
any Original Issue Discount Security, the amount that would then be due and
payable upon acceleration of the maturity thereof, as specified in such Debt
Securities.
GUARANTEES
Household International will unconditionally guarantee the due and punctual
payment of the principal of, premium, if any, and interest on the Debt
Securities when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise. The Guarantees are unsecured obligations
of Household International and will rank equally with all other unsecured and
unsubordinated obligations of Household International. The Guarantees provide
that in the event of a default in payment of principal, premium, if any, or
interest on a Debt Security, the Holder of the Debt Security may institute legal
proceedings directly against Household International to enforce the Guarantee
without first proceeding against the Company. The Indentures provide that
Household International may, without the consent of any Holder, under certain
circumstances assume all rights and obligations of the Company under the
Indentures with respect to a series of Debt Securities. Upon such an assumption,
the Company shall be released from its liabilities with respect to such series
of Debt Securities. (Section 2.12)
Household International is principally a holding company whose primary
source of funds is dividends from its subsidiaries. Dividend distributions to
Household International from its savings and loan, banking and insurance
subsidiaries may be restricted by federal and state laws and regulations.
Dividend distributions from its foreign subsidiaries, including the Company, may
also be restricted by exchange controls of the country in which the subsidiary
is located. Also, as a holding company the rights of any creditors or
stockholders of Household International to participate in the assets of any
subsidiary upon the latter's liquidation or recapitalization will be subject to
the prior claims of the subsidiary's creditors, except to the extent that
Household International may itself be a creditor with recognized claims against
the subsidiary. Nevertheless, there are no restrictions that currently
materially limit Household International's ability to make payments to its
creditors at current levels nor are there any restrictions which Household
International reasonably believes are likely to limit materially such payments
in the future.
INDENTURES
Offered Debt Securities and the related Guarantees will be issued under (i)
an Indenture dated as of September 9, 1993, among the Company, Household
International and The First National Bank of Boston, as Trustee, or (ii) an
Indenture dated as of September 9, 1993, among the Company, Household
International and BankAmerica National Trust Company, as Trustee.
7
<PAGE>
Unless a different place is specified in the Prospectus Supplement with
respect to any particular series of Debt Securities, principal of and interest,
if any, on Debt Securities will be payable at the office or agency of the
respective Trustee or Paying Agent, if any, in either Boston, Massachusetts,
with respect to the Indenture with The First National Bank of Boston, or in New
York, New York, with respect to the Indenture with BankAmerica National Trust
Company, provided, however, that payment of interest may be made at the option
of the Company by check or draft mailed to the person entitled thereto.
COVENANT OF HOUSEHOLD INTERNATIONAL AGAINST CREATION OF PLEDGES OR LIENS
Household International covenants in the Indentures that, with the
exceptions listed below, it will not issue, assume or guarantee any indebtedness
for borrowed money secured by a mortgage, security interest, pledge or lien
("security interest") of or upon any of its property, now owned or hereafter
acquired, unless the Guarantees, by supplemental indenture, are effectively
secured by such security interest equally and ratably with all other
indebtedness secured thereby. The term "indebtedness for borrowed money" does
not include any guarantee or other recourse obligation in connection with the
sale or discount by Household International or any of its subsidiaries of
finance or accounts receivable, trade acceptances, or other paper arising in the
ordinary course of its business.
The foregoing covenant does not apply to (a) security interests to secure
the payment of the purchase price on property, shares of capital stock, or
indebtedness acquired by Household International or the cost of construction or
improvement of such property or the refinancing of all or any part of such
secured indebtedness, provided that such security interests do not apply to any
other property, shares of capital stock, or indebtedness of Household
International; (b) security interests on property, shares of capital stock, or
indebtedness existing at the time of acquisition by Household International; (c)
security interests on property of a corporation which security interests exist
at the time such corporation merges or consolidates with or into Household
International or which security interests exist at the time of the sale of
transfer of all or substantially all of the assets of such corporation to
Household International; (d) security interests of Household International to
secure any of its indebtedness to a subsidiary; (e) security interests in
property of Household International in favor of the United States of America or
any state or agency or instrumentality thereof, or in favor of any other country
or political subdivision, to secure partial, progress, advance, or other
payments pursuant to any contract or statute or to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase price or
the cost of construction of the property subject to such security interests; (f)
security interests on properties financed through tax exempt municipal
obligations, provided that such security interests are limited to the property
so financed; (g) security interests existing on September 9, 1993; and (h) any
extension, renewal, refunding, or replacement (or successive extensions,
renewals, refundings, or replacements), in whole or in part, of any security
interest referred to in the foregoing clauses (a) through (g) inclusive,
provided, however, that the principal amount of indebtedness secured in such
extension, renewal, refunding, or replacement does not exceed the principal
amount of indebtedness secured at the time by such security interest, and
provided further, that such extension, renewal, refunding, or replacement of
such security interest is limited to all or part of the property subject to such
security interest so extended, renewed, refunded, or replaced.
Notwithstanding the foregoing, Household International may, without equally
and rateably securing the Guarantees, issue, assume, or guarantee indebtedness
secured by a security interest not excepted pursuant to clauses (a) through (h)
above, if the aggregate amount of such indebtedness, together with all other
indebtedness of, or guaranteed by, Household International existing at such time
and secured by security interests not so excepted, does not at the time exceed
10% of Household International's Consolidated Net Worth. As used herein,
"Consolidated Net Worth" shall mean the difference between Household
International's consolidated assets and consolidated liabilities as shown on
Household International's most recent audited consolidated financial statements
prepared in accordance with United States generally accepted accounting
principles. In addition, an arrangement with any person providing for the
leasing by Household International of any property, which property has been or
is to be sold or transferred by Household International to such person with the
intention that such property be leased back to Household International, shall
not be deemed to create any indebtedness secured by a security interest if the
obligation with respect to such lease would not be included as liabilities on a
consolidated balance sheet of Household
8
<PAGE>
International. The Holders of not less than a majority in principal amount of
the Debt Securities at the time outstanding under an Indenture, on behalf of the
Holders of all of the Debt Securities issued under such Indenture, may waive
compliance with the foregoing covenant. (Section 4.04)
SATISFACTION, DISCHARGE AND DEFEASANCE OF THE INDENTURES AND DEBT SECURITIES
If there is deposited irrevocably with the Trustee as trust funds for the
benefit of the Holders of Debt Securities of a particular series, for the
purpose hereinafter stated, an amount, in money or the equivalent in securities
of the United States or securities the principal of and interest on which is
fully guaranteed by the United States, sufficient to pay the principal, premium,
if any, and interest, if any, on such series of Debt Securities on the dates
such payments are due in accordance with the terms of such series of Debt
Securities through their maturity, and if the Company has paid or caused to be
paid all other sums payable by it under the applicable Indenture with respect to
such series, then the Company will be deemed to have satisfied and discharged
the entire indebtedness represented by such series of Debt Securities and all
the obligations of the Company and Household International under such Indenture
with respect to such series, except as otherwise provided in such Indenture. In
the event of any such defeasance, Holders of such Debt Securities will be able
to look only to such trust funds for payment of principal, premium, if any, and
interest, if any, on their Debt Securities (Section 7.03)
For federal income tax purposes, any such defeasance may be treated as a
taxable exchange of the related Debt Securities for an issue of obligations of
the trust or a direct interest in the cash and securities held in the trust. In
that case, Holders of such Debt Securities may recognize a gain or loss as if
the trust obligations or the cash or securities deposited, as the case may be,
had actually been received by them in exchange for their Debt Securities. Such
Holders thereafter would be required to include in income a share of the income,
gain or loss of the trust. The amount so required to be included in income could
be a different amount than would be includable in the absence of defeasance.
Prospective investors are urged to consult their own tax advisors as to the
specific consequences to them of defeasance.
THE TRUSTEES
First National Bank of Boston and BankAmerica National Trust Company provide
lines of credit to Household International or its subsidiaries in the normal
course of business.
MODIFICATION OF INDENTURES
Each Indenture provides that the Holders of not less than a majority in
principal amount of each series of Debt Securities at the time outstanding under
such Indenture may enter into supplemental indentures for the purpose of
amending or modifying, in any manner, provisions of the Indenture or of any
supplemental indenture modifying the rights of Holders of such series of Debt
Securities. However, no such supplemental indenture, without the consent of the
Holder of each outstanding Debt Security affected thereby, shall, among other
things, (i) change the maturity of the principal of, or any installment of
interest on any Debt Security, or reduce the principal amount thereof or the
interest thereon or any premium payable upon the redemption thereof, or (ii)
reduce the aforesaid percentage of the Debt Securities, the consent of the
Holders of which is required for the execution of any such supplemental
indenture or for any waiver of compliance with any covenant or condition in such
Indenture. (Section 12.02)
Each Indenture may be amended or supplemented without the consent of any
Holder of Debt Securities under certain circumstances, including (i) to cure any
ambiguity, defect or inconsistency in the Indenture, any supplemental indenture,
or in the Debt Securities of any series; (ii) to evidence the succession of
another corporation to the Company or Household International and to provide for
the assumption of all the obligations of the Company or Household International
under the Indenture by such corporation; (iii) to provide for uncertificated
debt securities in addition to certificated debt securities; (iv) to make any
change that does not adversely affect the rights of Holders of Debt Securities
issued thereunder; (v) to provide for a new series of Debt Securities; or (vi)
to add to rights to Holders of Debt Securities or add additional Events of
Default. (Section 12.01)
9
<PAGE>
SUCCESSOR ENTITY
Household International may not consolidate with or merge into, or transfer,
sell or lease its properties and assets as, or substantially as, an entirety to
another entity unless the successor entity is a corporation incorporated within
the United States and, after giving effect thereto, no default under the
Indenture shall have occurred and be continuing. Thereafter, except in the case
of a lease, all obligations of Household International under the Indenture
terminate. (Sections 11.01 and 11.02)
The Indentures do not contain any covenants specifically designed to protect
Holders of Debt Securities against a reduction in the creditworthiness of
Household International or the Company in the event of a highly leveraged
transaction.
EVENTS OF DEFAULT
Each Indenture defines the following as Events of Default with respect to
any series of Debt Securities: default for 30 days in the payment of any
interest upon any Debt Security of such series issued under such Indenture;
default in the payment of any principal of or premium on any such Debt Security;
default for 30 days in the deposit of any sinking fund or similar payment for
such series of Debt Securities; default for 60 days after notice in the
performance of any other covenant in the Indenture; certain defaults for 30 days
after notice in the payment of principal or interest, or in the performance of
other covenants, with respect to borrowed money under another indenture in which
the Trustee for such Debt Securities is trustee which results in the principal
amount of such indebtedness becoming due and payable prior to maturity, which
acceleration has not been rescinded or annulled; and certain events of
bankruptcy, insolvency or reorganization. The Company and Household
International are required to file with each Trustee annually an Officers'
Certificate as to the absence of certain defaults under the Indenture. (Sections
8.01, 3.06 and 4.05)
If an Event of Default with respect to Debt Securities of any series at the
time outstanding occurs and is continuing, either the Trustee or the Holders of
not less than 25% in principal amount of the outstanding Debt Securities of such
series by notice as provided in the Indenture may declare the principal amount
of all the Debt Securities of any such series to be due and payable immediately.
At any time after a declaration of acceleration with respect to Debt Securities
of any series has been made, but before a judgment or decree for payment of
money has been obtained by the Trustee, the Holders of not less than a majority
in principal amount of outstanding Debt Securities of such series may, under
certain circumstances, rescind or annul such declaration of acceleration.
(Section 8.02)
The Holders of not less than a majority in principal amount of the
outstanding Debt Securities of each series may, on behalf of all Holders of Debt
Securities of such series, waive any past default under the Indenture and its
consequences with respect to Debt Securities of such series, except a default
(a) in the payment of principal of or premium, if any, or interest, if any, on
any Debt Securities of such series, or (b) in respect of a covenant or provision
of the Indenture which cannot be modified or amended without the consent of the
Holder of each outstanding Debt Security of such series affected. (Section 8.13)
Each Indenture provides that the Trustee thereunder may withhold notice to
Holders of Debt Securities of any default (except in payment of the principal of
(or premium, if any) or interest on any Debt Security issued under such
Indenture or in the payment of any sinking fund or similar payment) if it
considers it in the interest of Holders of Debt Securities to do so. (Section
9.02)
Holders of Debt Securities may not enforce an Indenture except as provided
therein. (Section 8.07) Each Indenture provides that the Holders of a majority
in principal amount of the outstanding Debt Securities issued under such
Indenture have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. (Section 8.12) The Trustee will not be required
to comply with any request or direction of Holders of Debt Securities pursuant
to the Indenture unless offered indemnity against costs and liabilities which
might be incurred by the Trustee as a result of such compliance. (Section
9.03(e))
DESCRIPTION OF WARRANTS
The Company may issue, together with any Debt Securities offered by any
Prospectus Supplement or separately, Warrants for the purchase of other Debt
Securities. The Warrants are to be issued under warrant
10
<PAGE>
agreements (each a "Warrant Agreement") to be entered into among the Company,
Household International and a bank or trust company, as warrant agent ("Warrant
Agent"), all as set forth in the Prospectus Supplement relating to the
particular issue of Warrants ("Offered Warrants"). A copy of the forms of
Warrant Agreement, including the form of warrant certificates representing the
Warrants ("Warrant Certificates"), reflecting the alternative provisions to be
included in the Warrant Agreements that will be entered into with respect to
particular offerings of Warrants, is filed as an exhibit to the Registration
Statement. The following summaries of certain provisions of the Warrant
Agreement and the Warrant Certificates do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Warrant Agreement and the Warrant Certificates, respectively,
including the definitions therein of certain terms.
GENERAL
The Prospectus Supplement will describe the terms of the Offered Warrants,
the Warrant Agreement relating to the Offered Warrants and the Warrant
Certificates representing the Offered Warrants, including the following: (1) the
designation, aggregate principal amount, and terms of the Debt Securities
purchasable upon exercise of the Offered Warrants; (2) the designation and terms
of any related Debt Securities with which the Offered Warrants are issued and
the number of Offered Warrants issued with each such Debt Security; (3) the
date, if any, on and after which the Offered Warrants and the related Offered
Debt Securities will be separately transferable; (4) the principal amount of
Debt Securities purchasable upon exercise of one Offered Warrant and the price
at which such principal amount of Debt Securities may be purchased upon such
exercise; (5) the date on which the right to exercise the Offered Warrants shall
commence and the date ("Expiration Date") on which such right shall expire; (6)
whether the Warrants represented by the Warrant Certificates will be issued in
registered or bearer form, and if registered, where they may be transferred and
registered; and (7) any other terms of the Offered Warrants.
Warrant Certificates will be exchangeable on the terms specified in the
Prospectus Supplement for new Warrant Certificates of different denominations,
and Warrants may be exercised at the corporate trust office of the Warrant Agent
or any other office indicated in the Prospectus Supplement. Prior to the
exercise of their Warrants, holders of Warrants will not have any of the rights
of holders of the Debt Securities purchasable upon such exercise and will not be
entitled to payments of principal of, premium, if any, or interest, if any, on
the Debt Securities purchasable upon such exercise.
EXERCISE OF WARRANTS
Each Offered Warrant will entitle the holder to purchase such principal
amount of Debt Securities at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the Prospectus Supplement relating
to the Offered Warrants by payment of such exercise price in full in the manner
specified in the Prospectus Supplement. Offered Warrants may be exercised at any
time up to the close of business on the Expiration Date set forth in the
Prospectus Supplement relating to the Offered Warrants. After the close of
business on the Expiration Date, unexercised Warrants will become void.
Upon receipt of payment of the exercise price and the Warrant Certificate
properly completed and duly executed at the corporate trust office of the
Warrant Agent or any other office indicated in the Prospectus Supplement, the
Company will, as soon as practicable, forward the Debt Securities purchasable
upon such exercise. If less than all of the Warrants represented by such Warrant
Certificate are exercised, a new Warrant Certificate will be issued for the
remaining amount of Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number of purchasers or to a
single purchaser; or (iii) through agents. The Prospectus Supplement will set
forth the terms of the offering of the Offered Debt Securities and any Offered
Warrants (collectively, the "Offered Securities"), including the name or names
of any underwriters, dealers or agents, the purchase price of the Offered
Securities and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' compensation, and any
discounts and commissions allowed or paid to dealers. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
11
<PAGE>
If the Offered Securities are sold through underwriters, the Prospectus
Supplement relating thereto will describe the nature of the obligation of the
underwriters to take the Offered Securities. The Offered Securities may be
offered to the public either through underwriting syndicates represented by one
or more managing underwriters or directly by one or more underwriting firms
acting alone. The underwriter or underwriters with respect to a particular
underwritten offering of Offered Securities will be named in the Prospectus
Supplement relating to such offering, and, if an underwriting syndicate is used,
the managing underwriter or underwriters will be set forth on the cover of such
Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement,
the obligations of the underwriters to purchase the Offered Securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all the Offered Securities if any are purchased.
The Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement relating thereto.
Underwriters and agents who participate in the distribution of the Offered
Securities may be entitled under agreements which may be entered into by the
Company or Household International to indemnification by the Company and
Household International against certain liabilities, including liabilities under
the Securities Act of 1933, or to contribution with respect to payments which
the underwriters or agents may be required to make in respect thereof.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase Offered Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will not be subject to any conditions except that (i)
the purchase of the Offered Securities shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is
subject, and (ii) if the Offered Securities are also being sold to underwriters,
the Company shall have sold to such underwriters the Offered Securities not sold
for delayed delivery. The underwriters, dealers and such other persons will not
have any responsibility in respect to the validity or performance of such
contracts.
There can be no assurance that a secondary market will be created for the
Offered Securities or, if it is created, that it will continue.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with the ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of Securities on behalf
of such Plan should determine whether such purchase is permitted under the
governing Plan documents and is prudent and appropriate for the Plan in view of
its overall investment policy and the composition and diversification of its
portfolio. Other provisions of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code") prohibit certain transactions between a
Plan and persons who have certain specified relationships to the Plan ("parties
in interest" within the meaning of ERISA or "disqualified persons" within the
meaning of Section 4975 of the Code). Thus, a Plan fiduciary considering the
purchase of Securities should consider whether such a purchase might constitute
or result in a prohibited transaction under ERISA or Section 4975 of the Code.
The Company or Household International may be considered a "party in
interest" or a "disqualified person" with respect to many Plans that are subject
to ERISA. The purchase of Securities by a Plan that is subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
Section 4975 of the Code (including individual retirement accounts and other
plans described in Section 4975(c)(1) of the Code) and with respect to which the
Company or Household International is a party in
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interest or a disqualified person may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Securities are
acquired pursuant to and in accordance with an applicable exemption, such as
Prohibited Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset manager),
PTCE 80-51 (an exemption for certain transactions involving bank collective
investment funds) or PTCE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts). Any pension or other employee
benefit plan proposing to acquire any Securities should consult with its
counsel.
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