<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 31, 1995.
REGISTRATION NO. 33-59385
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
HOUSEHOLD INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT)
DELAWARE 36-3121988
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
HOUSEHOLD CAPITAL TRUST I
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT)
DELAWARE APPLIED FOR
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
708-564-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
PATRICK D. SCHWARTZ, ASSOCIATE GENERAL COUNSEL--CORPORATE FINANCE
HOUSEHOLD INTERNATIONAL, INC.
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
708-564-6301
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
WITH A COPY TO:
SCOTT N. GIERKE JOHN W. BLENKE
MCDERMOTT, WILL & EMERY ASSISTANT GENERAL COUNSEL AND SECRETARY
227 WEST MONROE STREET HOUSEHOLD INTERNATIONAL, INC.
CHICAGO, ILLINOIS 60606 2700 SANDERS ROAD
312-984-7521 PROSPECT HEIGHTS, ILLINOIS 60070
708-564-6150
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY 31, 1995
PROSPECTUS
3,000,000 PREFERRED SECURITIES
HOUSEHOLD CAPITAL TRUST I
% TRUST ORIGINATED PREFERRED SECURITIESSM ("TOPRSSM")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
HOUSEHOLD INTERNATIONAL, INC.
----------
The % Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby evidence preferred undivided beneficial interests in the assets
of Household Capital Trust I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"). Household International, Inc., a
Delaware corporation ("Household International" or the "Company"), will own all
the common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of the Trust. The Trust exists for the sole purpose of issuing
the Preferred Securities and Common Securities and investing the proceeds
thereof in an equivalent amount of % Junior Subordinated Deferrable Interest
Notes due 2025 (the "Junior Subordinated Notes") of Household International.
The Junior Subordinated Notes will be the unsecured obligations of Household
International and will
(continued on next page)
----------
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES
DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED SECURITIES
MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
OF SUCH DEFERRAL.
Application has been made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "New York Stock Exchange"). If approved, trading of
the Preferred Securities on the New York Stock Exchange is expected to commence
within a 30 day period after the initial delivery of the Preferred Securities.
See "Underwriting."
----------
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.
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<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security................ $25.00 (3) $25.00
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Total................................. $75,000,000 (3) $75,000,000
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</TABLE>
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(1) Plus accrued distributions, if any, from , 1995.
(2) Household International and the Trust have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in Junior Subordinated Notes, Household
International has agreed to pay to the Underwriters as compensation (the
"Underwriters' Compensation") for their arranging the investment therein of
such proceeds, $ per Preferred Security (or $ in the
aggregate); provided, that such compensation for sales of 10,000 or more
Preferred Securities to a single purchaser will be $ per Preferred
Security. Therefore, to the extent of such sales, the actual amount of
Underwriters Compensation will be less than the aggregate amount specified
in the preceding sentence. See "Underwriting."
(4) Expenses of the offering which are payable by Household International are
estimated to be $275,000.
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in book-
entry form through the facilities of The Depository Trust Company on or about
, 1995.
MERRILL LYNCH & CO. ---------- SMITH BARNEY INC.
----------
GOLDMAN, SACHS & CO.
The date of this Prospectus is , 1995.
SM"TRUST ORIGINATED PREFERRED SECURITIES" AND "TOPRS" ARE SERVICE MARKS OF
MERRILL LYNCH & CO., INC.
<PAGE>
(continued from previous page)
be subordinate and junior in right of payment to certain other indebtedness of
Household International, as described herein. In addition, because Household
International is a holding company, its obligations under the Junior
Subordinated Notes will be effectively subordinated to all existing and future
liabilities of its subsidiaries, as described herein. Upon an event of default
under the Declaration (as defined herein), the holders of the Preferred
Securities will have a preference over the holders of the Common Securities
with respect to payments in respect of distributions and payments upon
liquidation, redemption and otherwise.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year commencing June 30, 1995 (the "distributions"). The payment of
distributions out of moneys held by the Trust, and payments on liquidation of
the Trust or the redemption of Preferred Securities, as set forth below, are
guaranteed by Household International (the "Preferred Securities Guarantee") to
the extent the Trust has funds available therefor as described under
"Description of the Preferred Securities Guarantee". The obligations of
Household International under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all other liabilities of
Household International and will be pari passu with preferred stock issued by
Household International. In addition, because Household International is a
holding company, its obligations under the Preferred Securities Guarantee are
effectively subordinated to all existing and future liabilities of its
subsidiaries.
The distribution rate and the distribution and other payment dates for the
Preferred Securities will correspond to the interest rate and interest and
other payment dates on the Junior Subordinated Notes, which will be the sole
assets of the Trust. As a result, if principal or interest is not paid on the
Junior Subordinated Notes, no amounts will be paid on the Preferred Securities.
If Household International does not make principal or interest payments on the
Junior Subordinated Notes, the Trust will not have sufficient funds to make
distributions on the Preferred Securities, in which event the Preferred
Securities Guarantee will not apply to such distributions until the Trust has
sufficient funds available therefor.
Household International has the right to defer payments of interest on the
Junior Subordinated Notes by extending the interest payment period on the
Junior Subordinated Notes, at any time, for up to 20 consecutive quarters
(each, an "Extension Period"). If interest payments are so deferred,
distributions will also be deferred. Despite such deferral, distributions will
continue to accrue with interest thereon (to the extent permitted by applicable
law) at an annual rate of % per annum, compounded quarterly, and during any
Extension Period, holders of Preferred Securities will be required to include
deferred interest income in their gross income for United States federal income
tax purposes in advance of receipt of the cash interest payments attributable
to such deferred income. There could be multiple Extension Periods of varying
lengths throughout the term of the Junior Subordinated Notes. See "Description
of the Junior Subordinated Notes--Option to Extend Interest Payment Period,"
"Investment Considerations--Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences--Original Issue Discount, Premium and
Market Discount."
The Junior Subordinated Notes are redeemable by Household International (in
whole or in part) from time to time, on or after , 2000 or at any time
in certain circumstances upon the occurrence of a Tax Event (as defined
herein). If Household International redeems the Junior Subordinated Notes, the
Trust must redeem Trust Securities having an aggregate liquidation amount equal
to the aggregate principal amount of the Junior Subordinated Notes so redeemed
at $25 per Preferred Security plus accrued and unpaid distributions thereon
(the "Redemption Price") to the date fixed for redemption. See "Description of
the Preferred Securities--Mandatory Redemption." The Preferred Securities will
be redeemed upon maturity of the Junior Subordinated Notes. The Junior
Subordinated Notes mature on , 2025, but the maturity date may be
extended once only for up to an additional 19 years at the option of Household
International, provided certain financial covenants are met. See "Description
of the Junior Subordinated Notes--Option to Extend Maturity Date." In addition,
upon the occurrence of a Special Event (as defined herein) arising from a
change in law or a change in legal interpretation, unless the Junior
Subordinated Notes are redeemed in the limited circumstances described below,
the Trust shall be dissolved with the result that the Junior Subordinated Notes
will be distributed to the holders of the Trust Securities, on a pro rata
basis, in lieu of any cash distribution. In the case of a Special Event that is
a Tax Event, Household International will have the right in certain
circumstances to redeem the Junior Subordinated Notes, which would result in
the redemption by the Trust of the Trust Securities in the same amount on a pro
rata basis. If the Junior Subordinated Notes are distributed to the holders of
the Preferred Securities, Household International will use its best efforts to
have the Junior Subordinated Notes listed on the New York Stock Exchange or on
such other exchange as the Preferred Securities are then listed. See
"Description of the Preferred Securities--Special Event Redemption or
Distribution" and "Description of the Junior Subordinated Notes."
In the event of the voluntary or involuntary dissolution, winding up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive, for each Preferred Security, a liquidation amount of $25
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless in connection with such dissolution, the Junior
Subordinated Notes are distributed to the holders of the Preferred Securities.
See "Description of the Preferred Securities--Liquidation Distribution Upon
Dissolution."
--------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
2
<PAGE>
AVAILABLE INFORMATION
Household International and the Trust 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
Junior Subordinated Notes, Preferred Securities and Preferred Securities
Guarantee 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 included as
an exhibit to the Registration Statement are not necessarily complete. With
respect to each such financial statement, contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is hereby made to
the exhibit for a more complete description of the matter involved.
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 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and Seven World Trade Center, 13th Floor, 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, 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 Junior Subordinated Notes,
Preferred Securities or Preferred Securities Guarantee, Household International
will, upon request, send to any holder of such 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.
No separate financial statements of the Trust are included herein as such
statements are not material to holders of the Preferred Securities. The Trust
is currently not subject to the informational reporting requirements of the
Exchange Act. The Trust 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
The following documents have been filed 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, 1994;
(b) Household International's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995; and
(c) Household International's Current Report on Form 8-K dated February
7, 1995.
All documents filed by Household International or the Trust, 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 Junior Subordinated Notes, Preferred
Securities or Preferred Securities Guarantee 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
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
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Reference is made
to "Definitions" herein for the location herein of the definitions of certain
capitalized terms used herein.
PREFERRED SECURITIES OFFERED. 3,000,000 % Trust Originated Preferred
Securities evidencing preferred undivided beneficial interests in the assets of
the Trust. Holders of the Preferred Securities are entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation
amount of $25 per Preferred Security, accruing from the date of original
issuance and payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year commencing on June 30, 1995. The distribution rate
and the distribution and other payment dates for the Preferred Securities will
correspond to the interest rate and interest and other payment dates on the
Junior Subordinated Notes, which will be the sole assets of the Trust. As a
result, if principal or interest is not paid on the Junior Subordinated Notes,
no amounts will be paid on the Preferred Securities. See "Description of the
Preferred Securities" herein.
JUNIOR SUBORDINATED NOTES. The Trust will invest the proceeds from the
issuance of the Preferred Securities and Common Securities in an equivalent
amount of % Junior Subordinated Deferrable Interest Notes due 2025 of
Household International. The Junior Subordinated Notes will be subordinate and
junior in right of payment to all Senior Indebtedness of Household
International. In addition, because Household International is a holding
company, its obligations under the Junior Subordinated Notes will be
effectively subordinated to all existing and future liabilities of its
subsidiaries. See "Description of the Junior Subordinated Notes--Subordination"
herein.
PREFERRED SECURITIES GUARANTEE. Payment of distributions out of moneys held
by the Trust, and payments on liquidation of the Trust or the redemption of
Preferred Securities are guaranteed by Household International to the extent
the Trust has funds available therefor. If Household International does not
make principal or interest payments on the Junior Subordinated Notes, the Trust
will not have sufficient funds to make distributions on the Preferred
Securities, in which event the Preferred Securities Guarantee will not apply to
such distributions until the Trust has sufficient funds available therefor. See
"Description of the Preferred Securities Guarantee" and "Effect of Obligations
under the Junior Subordinated Notes and the Preferred Securities Guarantee"
herein. The obligations of Household International under the Preferred
Securities Guarantee are subordinate and junior in right of payment to all
other liabilities of Household International and will be pari passu with
preferred stock issued by Household International. In addition, because
Household International is a holding company, its obligations under the
Preferred Securities Guarantee are effectively subordinated to all existing and
future liabilities of its subsidiaries. See "Investment Considerations--Ranking
of Preferred Securities Guarantee and Junior Subordinated Notes" and
"Description of the Preferred Securities Guarantee" herein.
INTEREST DEFERRAL. Household International has the right to defer payments of
interest on the Junior Subordinated Notes by extending the interest payment
period on the Junior Subordinated Notes, at any time, for up to 20 consecutive
quarters. If interest payments on the Junior Subordinated Notes are so
deferred, distributions on the Preferred Securities will also be deferred.
During any deferral, distributions will continue to accrue with interest
thereon (to the extent permitted by law) as described herein. There could be
multiple Extension Periods of varying lengths throughout the term of the Junior
Subordinated Notes. During an Extension Period, holders of Preferred Securities
will be required to include deferred interest income in their gross income in
advance of receipt of the cash interest payments attributable thereto. See
"Description of the Junior Subordinated Notes--Option to Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences--Original Issue
Discount Premium and Market Discount."
REDEMPTION. The Junior Subordinated Notes are redeemable by Household
International (in whole or in part) from time to time, on or after ,
2000, or at any time upon the occurrence of a Tax Event. If the Junior
Subordinated Notes are redeemed, the Trust must redeem Trust Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Notes so redeemed. The Preferred Securities will be
redeemed upon maturity of the Junior Subordinated Notes. See "Description of
the Preferred Securities--Mandatory Redemption."
OPTION TO EXTEND MATURITY DATE. The Junior Subordinated Notes mature on
, 2025, but the maturity date may be extended once only for up to an
additional 19 years, provided certain financial covenants are met. If the
maturity of the Junior Subordinated Notes is extended, the maturity date of the
Preferred Securities will also be extended for the same time period. See
"Description of the Junior Subordinated Notes--Option to Extend Maturity Date."
4
<PAGE>
INVESTMENT CONSIDERATIONS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters:
RANKING OF PREFERRED SECURITIES GUARANTEE AND JUNIOR SUBORDINATED NOTES
Household International's obligations under the Preferred Securities
Guarantee are subordinate and junior in right of payment to all liabilities of
Household International and will be pari passu with preferred stock issued by
Household International. The obligations of Household International under the
Junior Subordinated Notes are subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined herein) of Household
International. At March 31, 1995, Senior Indebtedness of Household
International aggregated approximately $2.8 billion. In addition, because
Household International is a holding company, its obligations under the
Preferred Securities Guarantee and the Junior Subordinated Notes will be
effectively subordinated to all existing and future liabilities of its
subsidiaries. At March 31, 1995, such subsidiaries had total liabilities of
approximately $20.3 billion. There are no terms in the Preferred Securities,
the Junior Subordinated Notes or the Preferred Securities Guarantee that limit
Household International's ability to incur additional indebtedness, including
indebtedness that ranks senior to the Junior Subordinated Notes or the
Preferred Securities Guarantee. See "Description of the Preferred Securities
Guarantee" and "Description of the Junior Subordinated Notes--Subordination."
RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee guarantees to the holders of the Preferred
Securities the payment of (i) any accrued and unpaid distributions which are
required to be paid on the Preferred Securities, to the extent the Trust shall
have funds available therefor, (ii) the Redemption Price, including all accrued
and unpaid distributions with respect to Preferred Securities called for
redemption by the Trust, to the extent the Trust has funds available therefor
and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (other than in connection with the distribution of
Junior Subordinated Notes to the holders of Preferred Securities or a
redemption of all of the Preferred Securities), the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid distributions on the
Preferred Securities to the date of payment, to the extent the Trust has funds
available therefor and (b) the amount of assets of the Trust remaining
available for distribution to holders of the Preferred Securities in
liquidation of the Trust. The holders of a majority in liquidation amount of
the Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee (as defined herein) or to direct the exercise of any trust or power
conferred upon the Preferred Guarantee Trustee under the Preferred Securities
Guarantee. If the Preferred Guarantee Trustee fails to enforce the Preferred
Securities Guarantee, any holder of Preferred Securities may institute a legal
proceeding directly against Household International to enforce the Preferred
Guarantee Trustee's rights under the Preferred Securities Guarantee, without
first instituting a legal proceeding against the Trust, the Preferred Guarantee
Trustee or any other person or entity. If Household International were to
default in its obligation to pay amounts payable on the Junior Subordinated
Notes, the Trust would lack available funds for the payment of distributions or
amounts payable on redemption of the Preferred Securities or otherwise, and in
such event holders of the Preferred Securities would not be able to rely upon
the Preferred Securities Guarantee for payment of such amounts. Instead,
holders of the Preferred Securities would rely on the enforcement by the
Property Trustee (as defined herein) of its rights as registered holder of the
Junior Subordinated Notes against Household International pursuant to the terms
of the Junior Subordinated Notes and may also vote to appoint a Special Regular
Trustee (as defined herein), who shall have the same rights, powers and
privileges as the other Regular Trustees (as defined herein). See "Description
of the Preferred Securities Guarantee--Status of the Preferred Securities
Guarantee" and "Description of the Junior Subordinated Notes--Subordination."
The Declaration (as defined herein) provides that each holder of Preferred
Securities by acceptance thereof agrees to the provisions of the Preferred
Securities Guarantee and the Indenture (as defined herein).
5
<PAGE>
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If (i) the Trust fails to pay distributions in full on the Preferred
Securities for six consecutive quarterly distribution periods, or (ii) a
Declaration Event of Default (as defined herein) occurs and is continuing, then
the holders of Preferred Securities would rely on the enforcement by the
Property Trustee of its rights as a holder of the Junior Subordinated Notes
against Household International. In addition, the holders of a majority in
aggregate liquidation amount of the Preferred Securities will have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including the
right to direct the Property Trustee to exercise the remedies available to it
as a holder of the Junior Subordinated Notes. If the Property Trustee fails to
enforce its rights under the Junior Subordinated Notes, a holder of Preferred
Securities may, after a period of 30 days has elapsed from such holder's
written request to the Property Trustee to enforce such rights, institute a
legal proceeding directly against Household International to enforce the
Property Trustee's rights under the Junior Subordinated Notes without first
instituting any legal proceeding against the Property Trustee or any other
person or entity, including the Trust. Upon the occurrence of any of the events
described in clauses (i) or (ii) above, the holders of the Preferred Securities
also will be entitled, by majority vote, to appoint a Special Regular Trustee,
who shall have the same rights, powers and privileges as the other Regular
Trustees.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Household International has the right under the Indenture to defer payments
of interest on the Junior Subordinated Notes by extending the interest payment
period at any time, and from time to time, on the Junior Subordinated Notes. As
a consequence of such an extension, quarterly distributions on the Preferred
Securities would be deferred (but despite such deferral would continue to
accrue with interest thereon compounded quarterly) by the Trust during any such
extended interest payment period. Such right to extend the interest payment
period for the Junior Subordinated Notes is limited to a period not exceeding
20 consecutive quarters. In the event that Household International exercises
this right to defer payments of interest, then (a) Household International
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
its capital stock, and (b) Household International shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem
any debt securities (including guarantees) issued by Household International
which rank pari passu with or junior to the Junior Subordinated Notes. Prior to
the termination of any such Extension Period, Household International may
further defer payments of interest by extending the interest payment period,
provided that such Extension Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarters. Upon the
termination of any Extension Period and the payment of all amounts then due,
Household International may select a new Extension Period, subject to the above
requirements. See "Description of the Preferred Securities--Distributions" and
"Description of the Junior Subordinated Notes--Option to Extend Interest
Payment Period."
Should Household International exercise its rights to defer payments of
interest by extending the interest payment period, each holder of Preferred
Securities will continue to accrue income (as original issue discount) for
United States federal income tax purposes in respect of the deferred interest
allocable to its Preferred Securities. As a result, holders of Preferred
Securities will recognize income for United States federal income tax purposes
in advance of the receipt of cash and will not receive the cash from the Trust
related to such income if such holder disposes of its Preferred Securities
prior to the record date for the date on which distributions of such amounts
are made. Household International has no current intention of exercising its
right to defer payments of interest by extending the interest payment period on
the Junior Subordinated Notes. However, should Household International
determine to exercise such right in the future, the market price of the
Preferred Securities is likely to be affected. A holder that disposes of its
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of Household
International's right to
6
<PAGE>
defer interest payments, the market price of the Preferred Securities (which
represent an undivided beneficial interest in the Junior Subordinated Notes)
may be more volatile than other securities on which original issue discount
accrues that do not have such rights. See "Certain Federal Income Tax
Consequences--Original Issue Discount, Premium and Market Discount."
SPECIAL EVENT DISTRIBUTION
Upon the occurrence of a Special Event, the Trust shall be dissolved, except
in the limited circumstances described below, with the result that the Junior
Subordinated Notes would be distributed to the holders of the Trust Securities
in connection with the liquidation of the Trust. In the case of a Special Event
that is a Tax Event, in certain circumstances Household International shall
have the right to redeem the Junior Subordinated Notes, in whole or in part, in
which event the Trust will redeem the Trust Securities on a pro rata basis to
the same extent as the Junior Subordinated Notes are redeemed. See "Description
of the Preferred Securities--Special Event Redemption or Distribution" and
"Certain Federal Income Tax Consequences."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Notes that may be distributed in exchange
for Preferred Securities if a dissolution or liquidation of the Trust were to
occur. Accordingly, the Preferred Securities that an investor may purchase, or
the Junior Subordinated Notes that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Junior Subordinated Notes upon the
occurrence of a Special Event, prospective purchasers of Preferred Securities
are also making an investment decision with regard to the Junior Subordinated
Notes and should carefully review all the information regarding the Junior
Subordinated Notes contained herein. See "Description of the Preferred
Securities--Special Event Redemption or Distribution" and "Description of the
Junior Subordinated Notes."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, except
for the rights of holders of Preferred Securities to appoint a Special Regular
Trustee upon the occurrence of certain events described herein, will not be
entitled to vote to appoint, remove or replace, or to increase or decrease the
number of, Household International Trustees (as defined herein), which voting
rights are vested exclusively in the holder of the Common Securities.
TRADING PRICE OF PREFERRED SECURITIES
The Preferred Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Notes. A holder who disposes of his Preferred Securities between
record dates for payments of distributions thereon will be required to include
accrued but unpaid interest on the Junior Subordinated Notes through the date
of disposition in income as ordinary income (i.e., OID, as defined herein), and
to add such amount to his adjusted tax basis in his pro rata share of the
underlying Junior Subordinated Notes deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences--Original Issue
Discount, Premium and Market Discount" and "--Sales of Preferred Securities."
7
<PAGE>
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 the Company initiated a
restructuring program that has resulted in the disposition of its
merchandising, transportation and manufacturing businesses. This has enabled
the Company to focus its resources in the financial services industry through
the operation of businesses involved in finance and banking, and insurance. The
Company's principal executive office is located at 2700 Sanders Road, Prospect
Heights, Illinois 60070 (telephone: 708-564-5000).
The finance and banking business of the Company is the largest segment of the
Company's operations. Through subsidiaries, such as Household Finance
Corporation ("HFC"), Household Bank, f.s.b., Household Retail Services, Inc.,
Household Bank (Illinois), National Association, Household Financial
Corporation Limited, Household Trust Company and HFC Bank plc, the Company
offers numerous consumer finance products, including 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, the Company 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 the Company's insurance subsidiary, Alexander Hamilton Life
Insurance Company of America ("Alexander Hamilton").
The Company 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.
The Company'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
independent agents in the United States.
Household International is principally a holding company whose primary source
of funds is dividends from its subsidiaries. Dividend distributions to the
Company 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 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 the Company may itself be a creditor with
recognized claims against the subsidiary. Nevertheless, there are no
restrictions that currently materially limit the Company's ability to make
payments to its creditors or to pay dividends on its preferred stock or common
stock at current levels nor are there any restrictions which Household
International reasonably believes are likely to limit materially such payments
in the future.
- --------
*VISA and MasterCard are registered trademarks of VISA, USA, Inc. and
MasterCard International Incorporated, respectively.
8
<PAGE>
HOUSEHOLD CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant to
the filing of a certificate of trust with the Delaware Secretary of State on
May 16, 1995. The Trust's business is defined in a Declaration of Trust,
executed by Household International, as Sponsor (the "Sponsor") and the
Household International Trustees (as defined herein). The Declaration of Trust
will be amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The Declaration
will be qualified as an indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Upon issuance of the Preferred Securities,
the purchasers thereof will own all of the Preferred Securities. Household
International will acquire all of the Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Trust. The Trust
exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in the Junior Subordinated
Notes and (iii) engaging in only those other activities necessary or incidental
thereto. The Trust has a term of approximately 55 years, but may terminate
earlier as provided in the Declaration.
The Trust's business and affairs will be conducted by the trustees (the
"Household International Trustees") appointed by Household International, as
holder of the Common Securities. The duties and obligations of the Household
International Trustees shall be governed by the Declaration. Pursuant to the
Declaration, the number of Household International Trustees will initially be
three. Two of the Household International Trustees (the "Regular Trustees")
will be persons who are employees or officers of, or affiliated with Household
International. The third trustee will be a financial institution which
maintains a principal place of business in the State of Delaware which is
unaffiliated with Household International that will serve as property trustee
under the Declaration and as indenture trustee for purposes of the Trust
Indenture Act (the "Property Trustee"). Wilmington Trust Company will act as
the Property Trustee until removed or replaced by the holder of the Common
Securities. Wilmington Trust Company will also act as indenture trustee under
the Preferred Securities Guarantee (the "Preferred Guarantee Trustee"). See
"Description of the Preferred Securities Guarantee." In certain circumstances,
the holders of a majority of the Preferred Securities will be entitled to
appoint one Regular Trustee (a "Special Regular Trustee"), who need not be an
officer or employee of, or otherwise affiliated with, Household International.
See "Description of the Preferred Securities--Voting Rights."
The Property Trustee will hold title to the Junior Subordinated Notes for the
benefit of the holders of the Trust Securities and will have the power to
exercise all rights, powers and privileges under the Indenture (as defined
herein) as the holder of the Junior Subordinated Notes. In addition, the
Property Trustee will maintain exclusive control of a segregated non-interest
bearing bank account (the "Property Account") to hold all payments made in
respect of the Junior Subordinated Notes for the benefit of the holders of
Trust Securities. The Property Trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Account. The Preferred Guarantee
Trustee will hold the Preferred Securities Guarantee for the benefit of the
holders of the Preferred Securities. Subject to the right of the holders of the
Preferred Securities to appoint a Special Regular Trustee, Household
International, as the holder of all the Common Securities, will have the right
to appoint, remove or replace any Household International Trustee and to
increase the number of Household International Trustees, provided that the
number of Household International Trustees shall be at least three, a majority
of which shall be Regular Trustees. Household International will pay all fees
and expenses related to the Trust and the offering of the Trust Securities. See
"Description of the Junior Subordinated Notes--Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are as set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
The Trust's registered office in the State of Delaware is c/o Wilmington
Trust Company, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890. The principal place of business of the Trust shall be c/o
Household International, 2700 Sanders Road, Prospect Heights, Illinois 60070
(telephone number (708) 564-6150).
9
<PAGE>
SELECTED FINANCIAL INFORMATION
The financial information which is set forth below for the three years ended
December 31, 1994 has been derived from the financial statements of the Company
which have been audited by Arthur Andersen LLP, independent certified public
accountants. All financial information of the Company 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" in the Prospectus. The
results of operations of the Company and subsidiaries for the three month
period ended March 31, 1995 and 1994 reflect all adjustments of a normal
recurring nature which are, in the opinion of the Company'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.
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------- --------------------------
1995 1994 1994 1993 1992
------ ------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Finance income...................... $681.7 $616.1 $2,642.3 $2,561.4 $2,584.4
Interest income from noninsurance
investment securities.............. 36.3 31.7 131.9 129.3 152.8
Interest expense.................... 377.4 257.4 1,242.7 1,149.5 1,420.2
------ ------ -------- -------- --------
Net interest margin................. 340.6 390.4 1,531.5 1,541.2 1,317.0
Provision for credit losses on owned
receivables........................ 164.3 174.1 606.8 735.8 671.5
------ ------ -------- -------- --------
Net interest margin after provision
for credit losses.................. 176.3 216.3 924.7 805.4 645.5
------ ------ -------- -------- --------
Securitization and servicing fee
income............................. 228.3 171.0 733.9 460.0 376.0
Insurance premiums and contract
revenues........................... 87.7 80.6 282.0 288.3 281.2
Investment income................... 139.8 138.5 514.4 574.0 523.7
Fee income.......................... 46.8 62.8 250.5 292.6 164.5
Other income........................ 25.4 27.9 48.3 148.9 98.0
------ ------ -------- -------- --------
Total other revenues................ 528.0 480.8 1,829.1 1,763.8 1,443.4
------ ------ -------- -------- --------
Salaries and fringe benefits........ 145.8 164.3 656.6 615.4 535.9
Other operating expenses............ 274.7 283.1 1,104.5 964.0 761.1
Policyholders' benefits............. 140.2 130.1 464.4 539.1 513.9
------ ------ -------- -------- --------
Total costs and expenses............ 560.7 577.5 2,225.5 2,118.5 1,810.9
------ ------ -------- -------- --------
Income before income taxes.......... 143.6 119.6 528.3 450.7 278.0
Income taxes........................ 47.6 42.0 160.7 152.0 87.1
------ ------ -------- -------- --------
Net income.......................... $ 96.0 $ 77.6 $ 367.6 $ 298.7 $ 190.9
====== ====== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(UNAUDITED) -----------------------------
MARCH 31, 1995 1994 1993 1992
-------------- --------- --------- ---------
<S> <C> <C> <C> <C>
PERIOD END BALANCE SHEET DATA:
Total assets.................... $34,564.9 $34,338.4 $32,961.5 $31,128.4
Total debt...................... 23,148.4 23,085.2 22,272.0 22,298.0
Deposits........................ 8,252.2 8,439.0 7,516.1 8,030.3
Convertible preferred stock
subject to mandatory
redemption..................... 2.6 2.6 19.3 36.0
Preferred stock................. 320.0 320.0 320.0 300.0
Common shareholders' equity..... 2,323.2 2,200.4 2,078.3 1,545.6
</TABLE>
10
<PAGE>
CAPITALIZATION OF HOUSEHOLD INTERNATIONAL
The following table sets forth the unaudited consolidated capitalization of
Household International at March 31, 1995, and as adjusted to reflect the
application of the estimated net proceeds from the sale of the Preferred
Securities. See "Use of Proceeds." The table should be read in conjunction with
Household International's consolidated financial statements and notes thereto
included in the documents incorporated by reference herein. See "Incorporation
of Certain Documents by Reference."
<TABLE>
<CAPTION>
MARCH 31, 1995
-------------------
ACTUAL PRO FORMA
--------- ---------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Short-term borrowings...................................... $ 4,981.7 $ 4,909.3
========= =========
Deposits................................................... $ 8,252.2 $ 8,252.2
========= =========
Long-term borrowings....................................... $ 9,914.5 $ 9,914.5
Company obligated mandatorily redeemable preferred
securities in trust(1).................................... -- 75.0
Convertible preferred stock subject to mandatory
redemption(2)............................................. 2.6 2.6
Preferred stock(3)......................................... 320.0 320.0
Common shareholders' equity................................ 2,323.2 2,320.6
--------- ---------
Total capitalization....................................... $12,560.3 $12,632.7
========= =========
</TABLE>
- --------
(1) As described in this Prospectus, the sole asset of the Trust will be the
% Junior Subordinated Deferrable Interest Notes of Household
International with a principal amount of $ .
(2) The Company has called for redemption all outstanding shares of this
preferred stock which may be converted into common stock of the Company. It
is anticipated that most holders of this preferred stock will exercise
their conversion right.
(3) The Company has called for redemption all outstanding shares of its
Flexible Rate Auction Preferred Stock, Series B ($40 million) and intends
to redeem all outstanding shares of its 9 1/2% Cumulative Preferred Stock,
Series 1989-A ($75 million).
RATIOS OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for Household International and
subsidiaries for the periods indicated below was as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------- ------------------------
1995 1994 1994 1993 1992 1991 1990
------ ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges....... 1.37 1.45 1.41 1.38 1.19 1.10 1.17
</TABLE>
For purposes of calculating the above ratios, earnings consist of income from
continuing operations to which has been added income taxes and fixed charges.
Fixed charges consist of interest on all indebtedness (including capitalized
interest) and one-third of rental expense (approximate portion representing
interest).
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with Household
International's financial statements, with the Preferred Securities shown as
Company obligated mandatorily redeemable preferred securities in trust.
USE OF PROCEEDS
The proceeds of the sale of the Preferred Securities will be invested by the
Trust in the Junior Subordinated Notes of Household International. Household
International will use the net proceeds from the sale of such Junior
Subordinated Notes for the reduction of short-term indebtedness incurred in the
normal and ordinary course of its business, and for other general corporate
purposes.
11
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee will act as the indenture trustee for
purposes of compliance with the provisions of the Trust Indenture Act. The
terms of the Preferred Securities will include those stated in the Declaration
and those made part of the Declaration by the Trust Indenture Act. The
following summary of the principal terms and provisions of the Preferred
Securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Declaration, a copy of which is filed as an
exhibit to the Registration Statement, of which this Prospectus is a part, the
Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees, on behalf of the Trust, to
issue the Preferred Securities, which represent preferred undivided beneficial
interests in the assets of the Trust, and the Common Securities, which
represent common undivided beneficial interests in the assets of the Trust. All
of the Common Securities will be owned by Household International. The Common
Securities rank pari passu, and payments will be made thereon on a pro rata
basis with the Preferred Securities, except that upon the occurrence of a
Declaration Event of Default, the rights of the holders of the Common
Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Preferred Securities. The Declaration does not permit the
issuance by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Pursuant to the Declaration, the
Property Trustee will own and hold the Junior Subordinated Notes for the
benefit of the holders of the Trust Securities. The payment of distributions
out of money held by the Trust, and payments upon redemption of the Preferred
Securities or liquidation of the Trust, are guaranteed by Household
International on a subordinated basis as and to the extent described under
"Description of the Preferred Securities Guarantee." The Preferred Guarantee
Trustee will hold the Preferred Securities Guarantee for the benefit of the
holders of the Preferred Securities. The Preferred Securities Guarantee does
not cover payment of distributions on the Preferred Securities when the Trust
does not have sufficient available funds in the Property Account to make such
distributions. In such event, the remedy of a holder of Preferred Securities is
to vote to appoint a Special Regular Trustee and to direct the Property Trustee
to enforce its rights under the Junior Subordinated Notes. See "'Description of
the Preferred Securities--Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon
at the rate per annum of % thereof. The term "distributions" as used herein
includes any such interest payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1995 and will be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year to the holders of record on
the applicable record date, commencing , 1995 when, as and if
available for payment by the Property Trustee, except as otherwise described
below.
Household International has the right under the Indenture to defer payments
of interest on the Junior Subordinated Notes by extending the interest payment
period from time to time on the Junior Subordinated Notes (each, an "Extension
Period") which, if exercised, would defer quarterly distributions on the
Preferred Securities (though such distributions would continue to accrue
interest since interest would continue to accrue on the Junior Subordinated
Notes) during any such extended interest payment period. In the event that
Household International exercises this right, then (a) Household International
shall not declare or pay any
12
<PAGE>
dividend on, make any distributions with respect to, or redeem, purchase or
make a liquidation payment with respect to, any of its capital stock, and (b)
Household International shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by Household International which rank pari passu
with or junior to the Junior Subordinated Notes. Prior to the termination of
any such Extension Period, Household International may further extend the
interest payment period, provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarters. Upon the termination of any Extension Period and the payment of all
amounts then due, Household International may select a new Extension Period as
if no Extension Period had previously been declared, subject to the above
requirements. See "Description of the Junior Subordinated Notes--Interest" and
"--Option to Extend Interest Payment Period." If distributions are deferred,
the deferred distributions and accrued interest thereon shall be paid to
holders of record of the Preferred Securities, if funds are available therefor,
as they appear on the books and records of the Trust on the record date next
following the termination of such Extension Period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Junior Subordinated Notes. See "Description of the
Junior Subordinated Notes." The payment of distributions out of moneys held by
the Trust is guaranteed by Household International to the extent set forth
under "Description of the Preferred Securities Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day (as defined herein) prior to the relevant
payment dates. Such distributions will be paid through the Property Trustee,
who will hold amounts received in respect of the Junior Subordinated Notes in
the Property Account for the benefit of the holders of the Trust Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment will be made as described under "--Book-Entry
Only Issuance--The Depository Trust Company" below. In the event the Preferred
Securities shall not continue to remain in book-entry only form, the Regular
Trustees shall have the right to select record dates which shall be more than
one Business Day, but less than 30 Business Days prior to the relevant payment
dates. In the event that any date on which distributions are to be made on the
Preferred Securities is not a Business Day, then payment of the distributions
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. A "Business
Day" shall mean any day other than Saturday, Sunday or any day on which banking
institutions in the City of New York are authorized or required by law to
close.
MANDATORY REDEMPTION
The Junior Subordinated Notes will mature on , 2025, unless the
maturity date is extended, and may be redeemed, in whole or in part, at any
time on or after , 2000, or at any time in certain circumstances upon
the occurrence of a Tax Event. Upon the repayment of the Junior Subordinated
Notes, whether at maturity or upon redemption, the proceeds from such repayment
or payment shall simultaneously be applied to redeem Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Notes so repaid or redeemed at the Redemption Price;
provided that holders of Trust Securities shall be given not less than 30 nor
more than 60 days notice of such redemption. See "Description of the Junior
Subordinated Notes." In the event that fewer than all of the outstanding
Preferred Securities are to be redeemed, the Preferred Securities will be
redeemed pro rata as described under "--Book-Entry Only Issuance--The
Depository Trust Company" below.
13
<PAGE>
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
from independent tax counsel experienced in such matters (a "Dissolution Tax
Opinion") to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations, there is more than
an insubstantial risk that (i) the Trust would be subject to United States
federal income tax with respect to income accrued or received on the Junior
Subordinated Notes, (ii) interest payable to the Trust on the Junior
Subordinated Notes would not be deductible by Household International for
United States federal income tax purposes or (iii) the Trust would be subject
to more than a de minimis amount of other taxes, duties or other governmental
charges, which change or amendment becomes effective on or after the date of
this Prospectus.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel to the effect that, as a result of
the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" which is required to be registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus.
If, at any time, a Tax Event or an Investment Company Event (each, as defined
above, a "Special Event") shall occur and be continuing, the Trust shall,
except in the circumstances described below, be dissolved with the result that
Junior Subordinated Notes with an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Trust Securities would be distributed to the
holders of the Trust Securities, in liquidation of such holders' interests in
the Trust on a pro rata basis, within 90 days following the occurrence of such
Special Event; provided, however, that in the case of the occurrence of a Tax
Event, as a condition of such dissolution and distribution, the Regular
Trustees shall have received an opinion from independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may
rely on published revenue rulings of the Internal Revenue Service, to the
effect that the holders of the Trust Securities will not recognize any gain or
loss for United States federal income tax purposes as a result of such
dissolution and distribution of Junior Subordinated Notes; and, provided,
further, that, if at the time there is available to the Trust the opportunity
to eliminate, within such 90 day period, the Special Event by taking some
ministerial action, such as filing a form or making an election, or pursuing
some other similar reasonable measure, which has no adverse effect on the
Trust, Household International or the holders of the Trust Securities, the
Trust will pursue such measure in lieu of dissolution. Furthermore, if in the
case of the occurrence of a Tax Event, (i) Household International has received
an opinion (a "Redemption Tax Opinion") from independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more
than an insubstantial risk that Household International would be precluded from
deducting the interest on the Junior Subordinated Notes for United States
federal income tax purposes even after the Junior Subordinated Notes were
distributed to the holders of Trust Securities in liquidation of such holders'
interests in the Trust as described above or (ii) the Regular Trustees shall
have been informed by such tax counsel that a No Recognition Opinion cannot be
delivered, Household International shall have the right, upon not less than 30
nor more than 60 days notice, to redeem the Junior Subordinated Notes in whole
or in part for cash within 90 days following the occurrence of such Tax Event,
and, following such redemption, Trust Securities with an aggregate liquidation
amount equal to the aggregate principal amount of the Junior Subordinated Notes
so redeemed shall be redeemed by the Trust at the Redemption Price on a pro
rata basis; provided, however, that, if at the time there is available to
Household International or the Trust the opportunity to eliminate, within such
90 day period, the Tax Event by taking some ministerial action, such as filing
a form or making an election, or pursuing some other similar reasonable measure
which has no
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adverse effect on the Trust, or the holders of the Trust Securities or
Household International, the Trust will pursue such measure in lieu of
redemption.
If Junior Subordinated Notes are distributed to the holders of the Preferred
Securities, Household International will use its best efforts to have the
Junior Subordinated Notes listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Notes upon
dissolution of the Trust, (i) the Preferred Securities and Preferred Securities
Guarantee will no longer be deemed to be outstanding, (ii) the depositary or
its nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Notes to be delivered upon such distribution and (iii) any
certificates representing Preferred Securities and the Preferred Securities
Guarantee not held by the depositary or its nominee will be deemed to represent
Junior Subordinated Notes having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distribution on, such Preferred Securities, until such certificates are
presented to Household International or its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Notes that may be distributed in exchange
for the Preferred Securities if a dissolution and liquidation of the Trust were
to occur. Accordingly, the Preferred Securities that an investor may purchase,
or the Junior Subordinated Notes that the investor may receive on dissolution
and liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred Securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time, on
the redemption date, provided that Household International has paid to the
Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Junior Subordinated Notes, the Trust will
irrevocably deposit with the depositary funds sufficient to pay the applicable
Redemption Price and will give the depositary irrevocable instructions and
authority to pay the Redemption Price to the holders of the Preferred
Securities. See "--Book-Entry Only Issuance--The Depository Trust Company." If
notice of redemption shall have been given and funds deposited as required,
then immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price, but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect
of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of Preferred
Securities is improperly withheld or refused and not paid either by the Trust
or by Household International pursuant to the Preferred Securities Guarantee,
distributions on such Preferred Securities will continue to accrue, from the
original redemption date to the actual date of payment, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed pro rata as described
under "--Book-Entry Only Issuance--The Depository Trust Company" below.
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Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Household International or
its affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, the holders of the Preferred Securities
at that time will be entitled to receive out of the assets of the Trust, after
satisfaction of liabilities to creditors, distributions in an amount equal to
the aggregate of the stated liquidation amount of $25 per Preferred Security
plus accrued and unpaid distributions thereon to the date of payment (the
"Liquidation Distribution"), unless, in connection with such liquidation,
dissolution, winding-up or termination, Junior Subordinated Notes in an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, the Preferred
Securities have been distributed on a pro rata basis to the holders of
Preferred Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such dissolution pro rata with the holders of the Preferred Securities,
except that if a Declaration Event of Default has occurred and is continuing,
the Preferred Securities shall have a preference over the Common Securities.
Pursuant to the Declaration, the Trust shall terminate (i) on ,
2050, the expiration of the term of the Trust, (ii) upon the bankruptcy of
Household International, (iii) upon the filing of a certificate of dissolution
or its equivalent with respect to Household International (except for permitted
mergers, consolidations or reorganizations of Household International), the
filing of a certificate of cancellation with respect to the Trust, or the
revocation of the charter of Household International and the expiration of 90
days after the date of revocation without a reinstatement thereof, (iv) upon
the distribution of the Junior Subordinated Notes following the occurrence of a
Special Event, (v) upon the redemption of all of the Trust Securities or (vi)
upon the entry of a decree of a judicial dissolution of Household International
or the Trust.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"), provided that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until
all Declaration Events of Default with respect to the Preferred Securities have
been cured, waived or otherwise eliminated. Until such Declaration Events of
Default with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the holders of the Preferred Securities and only the holders of
the Preferred Securities will have the right to direct the Property Trustee
with respect to certain matters under the Declaration, and therefore the
Indenture.
Upon the occurrence of a Declaration Event of Default, the Property Trustee,
as the sole holder of the Junior Subordinated Notes, will have the right under
the Indenture to declare the principal of and interest on the Junior
Subordinated Notes to be immediately due and payable.
VOTING RIGHTS
Except as provided below, under the Trust Act, the Trust Indenture Act and
"Description of the Preferred Securities Guarantee--Amendments and Assignment"
and as otherwise required by law and the Declaration, the holders of the
Preferred Securities will have no voting rights.
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If (i) the Trust fails to pay distributions in full on the Preferred
Securities for six consecutive quarterly distribution periods, or (ii) a
Declaration Event of Default occurs and is continuing (each, an "Appointment
Event"), then the holders of the Preferred Securities, acting as a single
class, will be entitled by the majority vote of such holders to appoint a
Special Regular Trustee. For purposes of determining whether the Trust has
failed to pay distributions in full for six consecutive quarterly distribution
periods, distributions shall be deemed to remain in arrears, notwithstanding
any payments in respect thereof, until full cumulative distributions have been
or contemporaneously are paid with respect to all quarterly distribution
periods terminating on or prior to the date of payment of such cumulative
distributions. Any holder of Preferred Securities (other than Household
International or any of its affiliates) shall be entitled to nominate any
person to be appointed as Special Regular Trustee. Not later than 30 days after
such right to appoint a Special Regular Trustee arises, the Regular Trustees
shall convene a meeting of the holders of Preferred Securities for the purpose
of appointing a Special Regular Trustee. If the Regular Trustees fail to
convene such meeting within such 30-day period, the holders of not less than
10% of the aggregate stated liquidation amount of the outstanding Preferred
Securities will be entitled to convene such meeting. The provisions of the
Declaration relating to the convening and conduct of the meetings of the
holders will apply with respect to any such meeting. Any Special Regular
Trustee so appointed shall cease to be a Special Regular Trustee if the
Appointment Event pursuant to which the Special Regular Trustee was appointed
and all other Appointment Events cease to be continuing. Notwithstanding the
appointment of any Special Regular Trustee, Household International shall
retain all rights under the Indenture, including the right to declare an
Extension Period as provided under "Description of the Junior Subordinated
Notes--Option to Extend Interest Payment Period." If such an Extension Period
occurs, there will be no Indenture Event of Default, and therefore no
Declaration Event of Default, for failure to make any scheduled interest
payment during the Extension Period on the date originally scheduled.
The holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee, or to direct
the exercise of any trust or power conferred upon the Property Trustee under
the Declaration, including the right to direct the Property Trustee, as the
holder of the Junior Subordinated Notes, to (i) exercise the remedies available
under the Indenture with respect to the Junior Subordinated Notes, (ii) waive
any past Indenture Event of Default which is waivable under the Base Indenture
(as defined herein), or (iii) exercise any right to rescind or annul a
declaration that the principal of all Junior Subordinated Notes shall be due
and payable, provided that where a consent under the Indenture would require
the consent of more than a majority of the holders (a "Super-Majority")
affected thereby, only the holders of at least such Super-Majority of the
Preferred Securities may direct the Property Trustee to give such consent. If
the Property Trustee fails to enforce its rights under the Junior Subordinated
Notes, a holder of Preferred Securities may, after a period of 30 days has
elapsed from such holder's written request to the Property Trustee to enforce
such rights, institute a legal proceeding directly against Household
International to enforce the Property Trustee's rights under the Junior
Subordinated Notes without first instituting any legal proceeding against the
Property Trustee or any other person or entity. The Property Trustee shall
notify all holders of the Preferred Securities of any notice of default
received from the Debt Trustee (as defined herein) with respect to the Junior
Subordinated Notes. Such notice shall state that such Indenture Event of
Default also constitutes a Declaration Event of Default. Except in the case of
directing the time, method and place of conducting a proceeding for a remedy,
the Property Trustee shall not take any action described in clauses (i), (ii)
or (iii) above unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that, as a result of such action, the
Trust will not be classified as other than a grantor trust.
In the event the consent of the Property Trustee, as the holder of the Junior
Subordinated Notes, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Property Trustee
shall request the direction of the holders of the Trust Securities with respect
to such amendment, modification or termination and shall vote with respect to
such amendment, modification or termination as directed by a majority in
liquidation amount of the Trust Securities, voting together as a single class,
provided that where a consent under the Indenture would require the consent of
a Super-Majority, the
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Property Trustee may only give such consent at the direction of the holders of
at least the proportion in liquidation amount of the Trust Securities which the
relevant Super-Majority represents of the aggregate principal amount of the
Junior Subordinated Notes outstanding. The Property Trustee shall not take any
such action in accordance with the directions of the holders of the Trust
Securities unless the Property Trustee has obtained an opinion of independent
tax counsel to the effect that, as a result of such action, the Trust will not
be classified as other than a grantor trust for United States federal income
tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be mailed to each holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents. No vote or consent of the
holders of Preferred Securities will be required for the Trust to redeem and
cancel Preferred Securities or distribute Junior Subordinated Notes in
accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by Household International or any entity
directly or indirectly controlling or controlled by, or under direct or
indirect common control with Household International, shall not be entitled to
vote or consent and shall, for purposes of such vote or consent, be treated as
if they were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "--Book-Entry Only Issuance--The
Depository Trust Company."
Except in the limited circumstances described above in connection with the
appointment of a Special Regular Trustee, holders of the Preferred Securities
will have no rights to appoint or remove the Household International Trustees,
who may be appointed, removed or replaced solely by Household International, as
the holder of all the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be amended or modified if approved and executed by a
majority of the Regular Trustees, provided that if any proposed amendment
provides for, or the Regular Trustees otherwise propose to effect, (i) any
action that would materially adversely affect the powers, preferences or
special rights of the Trust Securities, whether by way of amendment to the
Declaration or otherwise or (ii) the dissolution, winding-up or termination of
the Trust other than pursuant to the terms of the Declaration, then the holders
of the Trust Securities as a single class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of at least 66 2/3% in liquidation amount of the Trust
Securities affected thereby, provided that (a) any modification of the right of
holders of Preferred Securities to appoint a Special Regular Trustee or (b) a
reduction of the principal amount or the distribution rate, or a change in the
payment dates or maturity dates of the Preferred Securities, shall not be
permitted without the consent of each holder of Preferred Securities. In the
event any amendment or proposal referred to in clause (i) above would
materially adversely affect only the Preferred Securities or the Common
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Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of 66 2/3% in liquidation amount of such class of
Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Property Trustee or (iii) cause the Trust to be deemed to be an "investment
company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other body, except as described below. The Trust
may, with the consent of a majority of the Regular Trustees and without the
consent of the holders of the Trust Securities, consolidate, amalgamate, merge
with or into, or be replaced by a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (x) expressly assumes
all of the obligations of the Trust with respect to the Trust Securities or (y)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Trust Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Trust Securities rank in priority
with respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) Household International expressly appoints a trustee of such
successor entity possessing the same powers and duties as the Property Trustee
as the holder of the Junior Subordinated Notes, (iii) the Preferred Securities
or any Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Preferred Securities are then listed, (iv) such
merger, consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (vi) such
successor entity has a purpose identical to that of the Trust, (vii) prior to
such merger, consolidation, amalgamation or replacement, Household
International has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (A) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), and (B) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such
successor entity will be required to register as an investment company under
the 1940 Act and (viii) Household International guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee. Notwithstanding the foregoing,
the Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified for United States federal income tax purposes as other
than a grantor trust.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as fully
registered securities registered in the name of Cede & Co. (DTC's nominee). One
or more fully registered global Preferred Securities certificates will be
issued, representing in the aggregate the total number of Preferred Securities,
and will be deposited with DTC.
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The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a global Preferred Security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased
Preferred Securities. Transfers of ownership interests in the Preferred
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Preferred Securities,
except in the event that use of the book-entry system for the Preferred
Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited by
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce pro rata the amount of
the interest of each Direct Participant in the Preferred Securities in
accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to Preferred Securities. Under its usual procedures, DTC
would mail an Omnibus Proxy to the Trust as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Preferred Securities are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
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Distribution payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payments on such payment
date. Payments by participants to Beneficial Owners will be governed by
standing instructions and customary practices, as in the case with securities
held for the account of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC, the
Trust, any trustee or Household International, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Trust, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred Security
will not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates are required to
be printed and delivered. Additionally, the Regular Trustees (with consent of
Household International) may decide to discontinue use of the system of book-
entry transfers through DTC (or a successor depositary) with respect to the
Preferred Securities. In that event, certificates for the Preferred Securities
will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
have been obtained from sources that Household International and the Trust
believe to be reliable, but Household International and the Trust take no
responsibility for the accuracy thereof.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after default, shall exercise
the same degree of care as a prudent individual would exercise in the conduct
of his or her own affairs. Subject to such provisions, the Property Trustee is
under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The holders of Preferred
Securities will not be required to offer such indemnity in the event such
holders, by exercising their voting rights, direct the Property Trustee to take
any action following a Declaration Event of Default. The Property Trustee also
serves as trustee under the Preferred Securities Guarantee.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the Property Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time. Registration of transfers of
Preferred Securities will be effected without charge by or on behalf of the
Trust, but upon payment (with the giving of such indemnity as the Trust or
Household International may require) in respect of any tax or other government
charges which may be imposed in relation to it. The Trust will not be required
to register or cause to be registered the transfer of Preferred Securities
after such Preferred Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
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MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in such
a way so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United States
federal income tax purposes as other than a grantor trust. Household
International is authorized and directed to conduct its affairs so that the
Junior Subordinated Notes will be treated as indebtedness of Household
International for United States federal income tax purposes. In this
connection, the Regular Trustees and Household International are authorized to
take any action, not inconsistent with applicable law, the Declaration or the
amended and restated certificate of incorporation of Household International,
that each of the Regular Trustees and Household International determines in
their discretion to be necessary or desirable for such purposes, as long as
such action does not materially and adversely affect the interests of the
holders of the Preferred Securities.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by Household
International for the benefit of the holders from time to time of Preferred
Securities. The Preferred Securities Guarantee will be qualified as an
indenture under the Trust Indenture Act. Wilmington Trust Company will act as
indenture trustee under the Preferred Securities Guarantee (the "Preferred
Guarantee Trustee"). The terms of the Preferred Securities Guarantee will be
those set forth therein and those made part thereof by the Trust Indenture Act.
The summary does not purport to be complete and is subject in all respects to
the provisions of, and is qualified in its entirety by reference to the
Preferred Securities Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part and the Trust
Indenture Act. The Preferred Securities Guarantee will be held by the Preferred
Guarantee Trustee for the benefit of holders of the Preferred Securities.
GENERAL
Pursuant to the Preferred Securities Guarantee, Household International will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities, the Guarantee Payments (as
defined below) (without duplication of amounts theretofore paid by the Trust),
to the extent not paid by the Trust, regardless of any defense, right of set-
off or counterclaim that the Trust may have or assert. The following payments
or distributions with respect to the Preferred Securities to the extent not
paid or made by the Trust (the "Guarantee Payments") will be subject to the
Preferred Securities Guarantee (without duplication): (i) any accrued and
unpaid distributions on the Preferred Securities where Household International
has made a payment of principal, premium or interest on the Junior Subordinated
Notes held by the Property Trustee, (ii) the Redemption Price, including all
accrued and unpaid dividends to the date of the redemption, to the extent the
Trust has funds available therefor with respect to the Preferred Securities
called for redemption by the Trust and (iii) upon a liquidation of the Trust
(other than in connection with the distribution of Junior Subordinated Notes to
the holders of Trust Securities or the redemption of all of the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds available therefor, and (b) the
amount of assets of the Trust remaining available for distribution to holders
of Preferred Securities in liquidation of the Trust. Household International's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by Household International to the holders of Preferred
Securities or by causing the Trust to pay such amounts to such holders.
If Household International does not make interest payments on the Junior
Subordinated Notes held by the Property Trustee, the Trust will not make
distributions on the Preferred Securities. The Preferred Securities Guarantee
will be a full and unconditional guarantee of the Guarantee Payments with
respect to
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the Preferred Securities from the time of issuance of the Preferred Securities,
but will not apply to the payment of distributions and other payments on the
Preferred Securities when the Property Trustee does not have sufficient funds
in the Property Account to make such distributions or other payments.
CERTAIN COVENANTS OF HOUSEHOLD INTERNATIONAL
In the Preferred Securities Guarantee, Household International will covenant
that, so long as the Preferred Securities remain outstanding, if there shall
have occurred and is continuing any event that would constitute an event of
default under the Preferred Securities Guarantee or the Declaration, then (a)
Household International will not declare or pay any dividends on, or purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its capital stock, and (b) Household International shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem
any debt securities (including guarantees) issued by Household International
which rank pari passu with or junior to such Junior Subordinated Notes.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Preferred Securities (in which case no consent will be
required), the Preferred Securities Guarantee may be amended only with the
prior approval of the holders of not less than 66 2/3% in liquidation amount of
the outstanding Preferred Securities. The manner of obtaining any such approval
of holders of the Preferred Securities is set forth under "Description of the
Preferred Securities--Voting Rights". All guarantees and agreements contained
in the Preferred Securities Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of Household International and shall
inure to the benefit of the holders of the Preferred Securities then
outstanding.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will terminate and be of no further force
and effect as to the Preferred Securities upon full payment of the Redemption
Price of all Preferred Securities, or upon distribution of the Junior
Subordinated Notes to the holders of Preferred Securities, and will terminate
completely upon full payment of the amounts payable upon liquidation of the
Trust. See "Description of the Junior Subordinated Notes--Events of Default"
for a description of the events of default and enforcement rights of the
holders of Junior Subordinated Notes. The Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities must repay to the Trust or Household
International, or their respective successors, any sums paid to them under the
Preferred Securities or the Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of Household International to perform any of its payment or other
obligations thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee in respect of Preferred Securities Guarantee or
to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred Securities Guarantee. If the Preferred
Guarantee Trustee fails to enforce the Preferred Securities Guarantee, any
holder of Preferred Securities may institute a legal proceeding directly
against Household International to enforce the Preferred Guarantee Trustee's
rights under such Preferred Securities Guarantee, without first instituting a
legal proceeding against the Trust, the Preferred Guarantee Trustee or any
other person or entity.
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STATUS OF THE PREFERRED SECURITIES GUARANTEE
Household International's obligations under the Preferred Securities
Guarantee to make the Guarantee Payments will constitute an unsecured
obligation of Household International and will rank (i) subordinate and junior
in right of payment to all other liabilities of Household International,
including the Junior Subordinated Notes, except those made pari passu or
subordinate by their terms, and (ii) pari passu with the most senior preferred
stock now or hereafter issued by Household International and with any guarantee
now or hereafter entered into by Household International in respect of any
preferred stock of any affiliate of Household International. The terms of the
Preferred Securities provide that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of
the Preferred Securities Guarantee. In addition, because Household
International is a holding company, its obligations under the Preferred
Securities Guarantee are effectively subordinated to all existing and future
liabilities of its subsidiaries.
The Preferred Securities Guarantee will constitute a guarantee of payment and
not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity). The Preferred Securities Guarantee will be deposited with the
Property Trustee to be held for the benefit of the holders of the Preferred
Securities. Except as otherwise noted herein, the Property Trustee has the
right to enforce the Preferred Securities Guarantee on behalf of the holders of
the Preferred Securities. The Preferred Securities Guarantee will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Trust).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee
and, after default, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provisions, the Preferred Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by the Preferred Securities Guarantee
at the request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby. The Preferred Guarantee Trustee also serves as Property Trustee.
GOVERNING LAW
The Preferred Securities Guarantee will be governed by and construed in
accordance with the laws of the State of Illinois.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the terms of the Junior Subordinated
Notes. The following description does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the Indenture (the "Base
Indenture"), dated as of , 1995, among Household International, the
Trust and The First National Bank of Chicago, as trustee (the "Debt Trustee"),
as supplemented by a First Supplemental Indenture, dated as of , 1995
(the Base Indenture, as so supplemented, is hereinafter referred to as the
"Indenture"), the forms of which are filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The terms of the Junior
Subordinated Notes will include those stated in the Indenture and those made a
part of the Indenture by reference to the Trust Indenture Act. Certain
capitalized terms used herein are defined in the Indenture.
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Under certain circumstances involving the dissolution of the Trust following
the occurrence of a Special Event, Junior Subordinated Notes may be distributed
to the holders of Trust Securities in liquidation of the Trust. See
"Description of the Preferred Securities--Special Event Redemption or
Distribution."
If the Junior Subordinated Notes are distributed to the holders of the Trust
Securities, Household International will use its best efforts to have the
Junior Subordinated Notes listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
GENERAL
The Junior Subordinated Notes will be issued as unsecured junior subordinated
debt securities under the Indenture. The Junior Subordinated Notes will be
limited in aggregate principal amount to approximately $ million, such
amount being the sum of the aggregate stated liquidation amount of the
Preferred Securities and the capital contributed by Household International in
exchange for the Common Securities (the "Payment").
The Junior Subordinated Notes are not subject to a sinking fund provision.
The entire principal amount of the Junior Subordinated Notes will mature and
become due and payable, together with any accrued and unpaid interest thereon,
including Additional Interest (as defined herein), if any, on , 2025,
subject to the election of Household International to extend the scheduled
maturity date of the Junior Subordinated Notes to a date not later than
, 2044, provided that Household International satisfies certain financial
covenants. See "--Option to Extend Maturity Date."
If Junior Subordinated Notes are distributed to holders of the Preferred
Securities in liquidation of such holders' interests in the Trust, such Junior
Subordinated Notes will initially be issued as a Global Security (as defined
below). As described herein, under certain limited circumstances, Junior
Subordinated Notes may be issued in certificated form in exchange for a Global
Security. See "--Book-Entry and Settlement." In the event Junior Subordinated
Notes are issued in certificated form, the Junior Subordinated Notes will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below. Payments on Junior Subordinated Notes
issued as Global Securities will be made to the depositary for the Junior
Subordinated Notes. In the event Junior Subordinated Notes are issued in
certificated form, principal and interest will be payable, the transfer of the
Junior Subordinated Notes will be registrable and Junior Subordinated Notes
will be exchangeable for Junior Subordinated Notes of other denominations of a
like aggregate principal amount at the corporate trust office of the Debt
Trustee in New York, New York; provided, that payment of interest may be made
at the option of Household International by check mailed to the address of the
persons entitled thereto.
The Indenture does not contain provisions that afford holders of Junior
Subordinated Notes protection in the event of a highly leveraged transaction
involving Household International.
SUBORDINATION
The Indenture provides that the Junior Subordinated Notes are subordinated
and junior in right of payment to all Senior Indebtedness of Household
International. No payment of principal of (including redemption payments, if
any), premium, if any, or interest on, the Junior Subordinated Notes may be
made if (a) any Senior Indebtedness is not paid when due and any applicable
grace period with respect to such default has ended with such default not being
cured or waived or ceasing to exist, or (b) the maturity of any Senior
Indebtedness has been accelerated because of a default. Upon any distribution
of assets of Household International to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all principal of,
premium, if any, and interest due or to become due on, all Senior Indebtedness
must be paid in full before the holders of Junior Subordinated Notes are
entitled to receive or retain any payment. The rights of the holders of the
Junior Subordinated Notes will be subrogated to the rights of the holders of
Senior Indebtedness to receive
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payments or distributions applicable to such Senior Indebtedness until all
amounts owing on the Junior Subordinated Notes are paid in full.
The term "Senior Indebtedness" means, with respect to Household
International, (i) any payment in respect of (a) indebtedness of such obligor
for money borrowed (including any financial derivative, hedging or futures
contract or similar instrument) and (b) indebtedness evidenced by securities,
debentures, bonds, notes or other similar instruments issued by Household
International which, by their terms, are senior or senior subordinated debt
securities including, without limitation, all obligations under its indentures
with various trustees; (ii) all capital lease obligations; (iii) all
obligations issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations of Household International
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business); (iv) all obligations for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) above of other persons the payment of
which Household International is responsible or liable as obligor, guarantor or
otherwise; and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other persons secured by any lien on any property or asset
of Household International (whether or not such obligation is assumed by
Household International), except for (1) any such indebtedness that is by its
terms subordinated to or pari passu with the Junior Subordinated Notes and (2)
any unsecured indebtedness between or among Household International or its
affiliates. Such Senior Indebtedness shall continue to be Senior Indebtedness
and be entitled to the benefits of the subordination provisions irrespective of
any amendment, modification or waiver of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
which may be issued by Household International. As of March 31, 1995, Senior
Indebtedness of Household International aggregated approximately $2.8 billion.
In addition, because Household International is a holding company, its
obligations under the Junior Subordinated Notes will be effectively
subordinated to all existing and future liabilities of its subsidiaries. At
March 31, 1995, such subsidiaries had total liabilities of approximately $20.3
billion.
CERTAIN COVENANTS
If (i) there shall have occurred any event that would constitute an Event of
Default under the Indenture or (ii) Household International shall be in default
with respect to its payment of any obligations under the Preferred Securities
Guarantee, then (a) Household International shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase or
make a liquidation payment with respect to, any of its capital stock, and (b)
Household International shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued
by Household International which rank pari passu with or junior to the Junior
Subordinated Notes.
If Household International shall have given notice of its election of an
Extension Period as provided in the Indenture and such period, or any extension
thereof, shall be continuing, then (a) Household International shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock, and (b) Household International shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees) issued by Household International which
rank pari passu with or junior to the Junior Subordinated Notes.
For so long as the Trust Securities remain outstanding, Household
International will covenant (i) to directly or indirectly maintain 100%
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of Household International under the Indenture may succeed
to Household International's ownership of such Common Securities, and (ii) to
use its reasonable efforts to cause the Trust (a) to remain a statutory
business trust, except in connection with the distribution of Junior
Subordinated Notes to the holders of Trust Securities in liquidation of the
Trust, the redemption of all of the Trust Securities of the Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the Declaration,
and (b) to otherwise continue to be classified as a grantor trust for United
States federal income tax purposes.
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OPTIONAL REDEMPTION
Household International shall have the right to redeem the Junior
Subordinated Notes, in whole or in part, from time to time, on or after
, 2000, or at any time in certain circumstances upon the occurrence of a Tax
Event as described under "Description of the Preferred Securities--Special
Event Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice, at a Redemption Price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest,
if any, to the redemption date. If a partial redemption of the Preferred
Securities resulting from a partial redemption of the Junior Subordinated Notes
would result in the delisting of the Preferred Securities, Household
International may only redeem the Junior Subordinated Notes in whole.
INTEREST
Each Junior Subordinated Note shall bear interest at the rate of % per
annum from the original date of issuance, payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year (each, an "Interest
Payment Date"), commencing , to the person in whose name such
Junior Subordinated Note is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment
Date. In the event the Junior Subordinated Notes shall not continue to remain
in book-entry only form, Household International shall have the right to select
such record dates which shall be not less than fifteen days prior to each
Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period will be computed on the basis
of the actual number of days elapsed per 30-day month. In the event that any
date on which interest is payable on the Junior Subordinated Notes is not a
Business Day, then payment of the interest payable on such date will be made on
the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
OPTION TO EXTEND MATURITY DATE
The maturity date of the Junior Subordinated Notes is , 2025 (the
"Scheduled Maturity Date"). Household International, however, may, before the
Scheduled Maturity Date, extend such maturity date no more than one time, for
up to an additional 19 years from the Scheduled Maturity Date, provided that
(a) Household International is not in bankruptcy or otherwise insolvent, (b)
Household International is not in default on the Junior Subordinated Notes, (c)
Household International has made timely payments on the Junior Subordinated
Notes for the immediately preceding six quarters without deferrals, (d) the
Trust is not in arrears on payments of distributions on the Preferred
Securities, and (e) the Junior Subordinated Notes are rated in one of the four
highest rating categories by either Standard & Poor's Corporation, Moody's
Investors Service, Inc., Fitch Investor Services, Inc., Duff & Phelps Credit
Rating Company or any other nationally recognized statistical rating
organization. Pursuant to the Declaration, the Regular Trustees are required to
give notice of Household International's election to extend the Scheduled
Maturity Date to the holders of the Preferred Securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Household International shall have the right at any time, and from time to
time, during the term of the Junior Subordinated Notes to defer payments of
interest by extending the interest payment period for a period not exceeding 20
consecutive quarters, at the end of which Extension Period, Household
International shall pay all interest then accrued and unpaid (including any
Additional Interest) (together with interest thereon at the rate specified for
the Junior Subordinated Notes to the extent permitted by applicable law);
provided, that, during any such Extension Period, (a) Household International
shall not declare or pay any dividend or
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make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock, and (b)
Household International shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by Household International which rank pari passu
with or junior to the Junior Subordinated Notes. Prior to the termination of
any such Extension Period, Household International may further defer payments
of interest by extending the interest payment period, provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarters. Upon the termination of any Extension
Period and the payment of all amounts then due, Household International may
select a new Extension Period, as if no Extension Period had previously been
declared, subject to the above requirements. No interest during an Extension
Period, except at the end thereof, shall be due and payable. Household
International has no present intention of exercising its rights to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Notes. If the Property Trustee shall be the sole holder of the
Junior Subordinated Notes, Household International shall give the Regular
Trustees and the Property Trustee notice of its selection of such Extension
Period one Business Day prior to the earlier of (i) the date distributions on
the Preferred Securities are payable or (ii) the date the Regular Trustees are
required to give notice to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Preferred Securities of the
record date or the date such distribution is payable, but in any event not less
than one Business Day prior to such record date. The Regular Trustees shall
give notice of Household International's selection of such Extension Period to
the holders of the Preferred Securities. If the Property Trustee shall not be
the sole holder of the Junior Subordinated Notes, Household International shall
give the holders of the Junior Subordinated Notes notice of its selection of
such Extension Period ten Business Days prior to the earlier of (i) the
Interest Payment Date or (ii) the date Household International is required to
give notice to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Junior Subordinated Notes of the record or
payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in
any such case, Household International will pay as additional interest
("Additional Interest") such additional amounts as shall be required so that
the net amounts received and retained by the Trust after paying such taxes,
duties, assessments or other governmental charges will be not less than the
amounts the Trust would have received had no such taxes, duties, assessments or
other governmental changes been imposed.
INDENTURE EVENTS OF DEFAULT
In case any Indenture Event of Default shall occur and be continuing, the
Property Trustee, as the holder of the Junior Subordinated Notes, will have the
right to declare the principal of and the interest on the Junior Subordinated
Notes (including Additional Interest, if any) and any other amounts payable
under the Indenture to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Junior Subordinated Notes.
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Junior Subordinated Notes:
(a) failure for 60 days to pay interest on the Junior Subordinated Notes,
including any Additional Interest in respect thereof, when due; provided,
however, that a valid extension of the interest payment period by Household
International shall not constitute a default in the payment of interest for
this purpose; or
(b) failure to pay principal or premium, if any, on the Junior
Subordinated Notes when due whether at maturity or upon earlier redemption;
provided, however, that a valid extension of the maturity of the Junior
Subordinated Notes shall not constitute a default for this purpose; or
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(c) failure to observe or perform any other covenant (other than those
specifically relating to another series of junior subordinated notes)
contained in the Indenture for 90 days after written notice to Household
International from the Debt Trustee or the holders of at least 25% in
principal amount of the outstanding Junior Subordinated Notes; or
(d) certain events of bankruptcy, insolvency, or reorganization of
Household International; or
(e) the voluntary or involuntary dissolution, winding-up or termination
of the Trust, except in connection with the distribution of Junior
Subordinated Notes to the holders of Preferred Securities in liquidation of
the Trust and in connection with certain mergers, consolidations or
amalgamation permitted by the Declaration.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Notes have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Debt Trustee. The
Debt Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Notes may declare the principal due
and payable immediately on default, but the holders of a majority in aggregate
outstanding principal amount may annul such declaration and waive the default
if the default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration and
any applicable premium has been deposited with the Debt Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Notes affected thereby may, on behalf of the holders of all
the Junior Subordinated Notes, waive any past default, except (i) a default in
the payment of principal, premium, if any, or interest (unless such default
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and any applicable premium has
been deposited with the Debt Trustee) or (ii) a default in the covenant of
Household International not to declare or pay dividends on, or redeem, purchase
or acquire any of its capital stock during an Extension Period. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders
of Preferred Securities in certain circumstances have the right to direct the
Property Trustee to exercise its rights as the holder of the Junior
Subordinated Notes. See "Description of the Preferred Securities--Declaration
Events of Default" and "--Voting Rights."
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of the Trust as
a result of the occurrence of a Special Event, the Junior Subordinated Notes
will be issued in the form of one or more global certificates (each, a "Global
Security") registered in the name of the depositary or its nominee. Except
under the limited circumstances described below, Junior Subordinated Notes
represented by the Global Security will not be exchangeable for, and will not
otherwise be issuable as, Junior Subordinated Notes in definitive form. The
Global Securities described above may not be transferred except by the
depositary to a nominee of the depositary or by a nominee of the depositary to
the depositary or another nominee of the depositary or to a successor
depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Notes in definitive form and will not be considered the holders
(as defined in the Indenture) thereof for any purpose under the Indenture, and
no Global Security representing Junior Subordinated Notes shall be
exchangeable, except for another Global Security of like denomination and tenor
to be registered in the name of the depositary or its nominee or to a successor
depositary or its nominee. Accordingly, each beneficial owner must rely on the
procedures of the depositary
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and, if such person is not a Participant, on the procedures of the Participant
through which such person owns its interest, to exercise any rights of a Holder
under the Indenture.
If Junior Subordinated Notes are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities depositary for the Junior Subordinated Notes. For a description
of DTC and the specific terms of the depository arrangements, see "Description
of the Preferred Securities--Book-Entry Only Issuance--The Depository Trust
Company." The description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. Household
International may appoint a successor to DTC or any successor depositary in the
event DTC or such successor depositary is unable or unwilling to continue as
depositary.
None of Household International, the Trust, the Debt Trustee, any paying
agent and any other agent of Household International or the Debt Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security for such Junior Subordinated Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
A Global Security shall be exchangeable for Junior Subordinated Notes
registered in the names of persons other than the depositary or its nominee
only if (i) the depositary notifies Household International that it is
unwilling or unable to continue as a depositary for such Global Security and no
successor depositary shall have been appointed, or if at any time the
depositary ceases to be a clearing agency registered under the Exchange Act at
a time when the depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, (ii)
Household International in its sole discretion determines that such Global
Security shall be so exchangeable or (iii) there shall have occurred an Event
of Default with respect to the Junior Subordinated Notes. Any Global Security
that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Junior Subordinated Notes registered in such
names as the depositary shall direct. It is expected that such instructions
will be based upon directions received by the depositary from its Participants
with respect to ownership of beneficial interests in such Global Security.
In the event the Junior Subordinated Notes are not represented by one or more
Global Securities, certificates evidencing Junior Subordinated Notes may be
presented for registration of transfer (with the form of transfer endorsed
thereon duly executed) or exchange, at the office of the Note Registrar or at
the office of any transfer agent designated by Household International for such
purpose with respect to the Junior Subordinated Notes, without service charge
and upon payment of any taxes and other governmental charges as described in
the Indenture. Such transfer or exchange will be effected upon the Note
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. Household
International has appointed the Debt Trustee as Note Registrar with respect to
the Junior Subordinated Notes. Household International may at any time rescind
the designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that Household International
will be required to maintain a transfer agent at the place of payment.
Household International may at any time designate additional transfer agents
with respect to the Junior Subordinated Notes.
In the event of any redemption in part, Household International shall not be
required to (i) issue, register the transfer of or exchange Junior Subordinated
Notes during a period beginning at the opening of business 15 days before any
selection for redemption of Junior Subordinated Notes and ending at the close
of business on the earliest date on which the relevant notice of redemption is
deemed to have been given to all holders of the Junior Subordinated Notes and
(ii) register the transfer of or exchange any Junior Subordinated Notes so
selected for redemption, in whole or in part, except the unredeemed portion of
any Junior Subordinated Notes being redeemed in part.
30
<PAGE>
PAYMENT AND PAYING AGENTS
Payment of principal of and premium (if any) on the Junior Subordinated Notes
will be made only against surrender to the Paying Agent of the Junior
Subordinated Notes. Principal of and any premium and interest, if any, on
Junior Subordinated Notes will be payable, subject to any applicable laws and
regulations, at the office of such Paying Agent or Paying Agents as Household
International may designate from time to time, except that at the option of
Household International payment of any interest may be made by check mailed to
the address of the person entitled thereto as such address shall appear in the
Note Register with respect to the Junior Subordinated Notes. Payment of
interest on Junior Subordinated Notes on any Interest Payment Date will be made
to the person in whose name the Junior Subordinated Notes (or predecessor
security) is registered at the close of business on the Regular Record Date for
such interest payment.
Household International will act as Paying Agent with respect to the Junior
Subordinated Notes. Household International may at any time designate
additional Paying Agents or rescind the designation of any Paying Agents or
approve a change in the office through which any Paying Agent acts, except that
Household International will be required to maintain a Paying Agent at the
place of payment.
All moneys paid by Household International to a Paying Agent for the payment
of the principal of or premium or interest, if any, on the Junior Subordinated
Notes which remain unclaimed at the end of two years after such principal,
premium, if any, or interest shall have become due and payable will be repaid
to Household International and the holder of such Junior Subordinated Notes
will thereafter look only to Household International for payment thereof.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting Household International and the
Debt Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Notes, to modify the Indenture or
any supplemental indenture affecting that series or the rights of the holders
of the Junior Subordinated Notes; provided, that no such modification may,
without the consent of the holder of each outstanding Junior Subordinated Note
affected thereby, (i) extend the fixed maturity of the Junior Subordinated
Notes, or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon, or reduce any premium payable upon the
redemption thereof, without the consent of the holder of Junior Subordinated
Notes so affected or (ii) reduce the percentage of Junior Subordinated Notes,
the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of each Junior Subordinated Note
then outstanding and affected thereby.
In addition, Household International and the Debt Trustee may execute,
without the consent of holders of the Junior Subordinated Notes, any
supplemental indenture for certain other usual purposes including the creation
of any new series of junior subordinated notes.
CONSOLIDATION, MERGER AND SALE
The Indenture does not contain any covenant which restricts the Trust's or
Household International's ability to merge or consolidate with or into any
other corporation, sell or convey all or substantially all of its assets to any
person, firm or corporation or otherwise engage in restructuring transactions.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, Household International will be discharged
from any and all obligations in respect of the Junior Subordinated Notes
(except in each case for certain obligations to register the transfer or
exchange of Junior Subordinated Notes, replace stolen, lost or mutilated Junior
Subordinated Notes, maintain paying agencies and hold moneys for payment in
trust) if Household International deposits with the Debt Trustee, in trust,
moneys or government obligations, in an amount sufficient to pay all the
principal of, and interest on, the Junior Subordinated Notes on the dates such
payments are due in accordance with the terms of the Junior Subordinated Notes.
31
<PAGE>
For federal income tax purposes, any such defeasance of the Junior
Subordinated Notes will be treated as a taxable exchange of the Junior
Subordinated Notes for an issue of obligations of the trust or a direct
interest in the cash or government securities held in the trust. In that case,
holders of the Preferred Securities would recognize gain or loss as if the
trust obligations or the cash or government obligations deposited, as the case
may be, had actually been received by them in exchange for their Preferred
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. Holders of the Preferred Securities should consult their
own tax advisors as to the specific consequences of defeasance.
GOVERNING LAW
The Indenture and the Junior Subordinated Notes will be governed by, and
construed in accordance with, the internal laws of the State of Illinois.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, undertakes to perform only such duties as
are specifically set forth in the Indenture and, after default, shall exercise
the same degree of care as a prudent individual would exercise in the conduct
of his or her own affairs. Subject to such provision, the Debt Trustee is under
no obligation to exercise any of the powers vested in it by the Indenture at
the request of any holder of Junior Subordinated Notes, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debt Trustee is not required to expand or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debt Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
Household International and certain of its affiliates maintain a deposit
account and a banking relationship with the Debt Trustee. The Debt Trustee
serves as trustee under other indentures pursuant to which debt securities of
an affiliate of Household International are outstanding.
MISCELLANEOUS
Household International will have the right at all times to assign any of its
rights or obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of Household International; provided, that, in the event of any such
assignment, Household International will remain liable for all of their
respective obligations. Subject to the foregoing, the Indenture will be binding
upon and inure to the benefit of the parties thereto and their respective
successors and assigns. The Indenture provides that it may not otherwise be
assigned by the parties thereto.
The Indenture will also provide that Household International will pay all
fees and expenses related to (i) the offering of the Trust Securities and the
Junior Subordinated Notes, (ii) the organization, maintenance and dissolution
of the Trust, (iii) the retention of the Household International Trustees and
(iv) the enforcement by the Property Trustee of the rights of holders of
Preferred Securities.
EFFECT OF OBLIGATIONS UNDER THE JUNIOR SUBORDINATED NOTES
AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
Trust Securities and invest the proceeds thereof in the Junior Subordinated
Notes.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Notes, such payments will be sufficient to cover
distributions and payments due on the Trust Securities
32
<PAGE>
primarily because (i) the aggregate principal amount of Junior Subordinated
Notes will be equal to the sum of the aggregate stated liquidation amount of
the Trust Securities; (ii) the interest rate and interest and other payment
dates on the Junior Subordinated Notes will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii)
Household International shall pay for all costs and expenses of the Trust; and
(iv) the Declaration provides that the Household International Trustees shall
not cause or permit the Trust to, among other things, engage in any activity
that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor
are available) are guaranteed by Household International as and to the extent
set forth under "Description of the Preferred Securities Guarantee." If
Household International does not make interest payments on the Junior
Subordinated Notes purchased by the Trust, it is expected that the Trust will
not have sufficient funds to pay distributions on the Preferred Securities. The
Preferred Securities Guarantee is a full and unconditional guarantee from the
time of its issuance, but does not apply to any payment of distributions unless
and until the Trust has sufficient funds for the payment of such distributions.
If Household International fails to make interest or other payments on the
Junior Subordinated Notes when due (taking into account any Extension Period),
the Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities--Voting Rights," may (i) appoint a Special Regular Trustee and (ii)
direct the Property Trustee to enforce its rights under the Junior Subordinated
Notes, including proceeding directly against Household International to enforce
the Junior Subordinated Notes. If the Property Trustee fails to enforce its
rights under the Junior Subordinated Notes, a holder of Preferred Securities
may, after a period of 30 days has elapsed from such holder's written request
to the Property Trustee to enforce such rights, institute a legal proceeding
directly against Household International to enforce the Property Trustee's
rights under the Junior Subordinated Notes without first instituting any legal
proceeding against the Property Trustee or any other person or entity.
If Household International fails to make payments under the Preferred
Securities Guarantee, the Preferred Securities Guarantee provides a mechanism
whereby the holders of the Preferred Securities may direct the Preferred
Guarantee Trustee to enforce its rights thereunder. If the Preferred Guarantee
Trustee fails to enforce the Preferred Securities Guarantee, any holder of
Preferred Securities may institute a legal proceeding directly against
Household International to enforce the Preferred Guarantee Trustee's rights
under the Preferred Securities Guarantee, without first instituting a legal
proceeding against the Trust, the Preferred Guarantee Trustee or any other
person or entity.
The above mechanisms and obligations, taken together, are equivalent to a
full and unconditional guarantee by Household International of payments due on
the Preferred Securities. See "Description of the Preferred Securities
Guarantee--General."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the principal United States federal
income tax consequences of the purchase, ownership and disposition of the
Preferred Securities to a holder that is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized under
the laws of the United States or any state thereof or the District of Columbia
or an estate or trust the income of which is subject to United States federal
income taxation regardless of source (a "Holder"). This summary does not
address the United States federal income tax consequences to persons other than
Holders.
This summary is based on the United States federal income tax laws,
regulations and rulings and decisions now in effect, all of which are subject
to change, possibly on a retroactive basis. This summary does not address the
tax consequences applicable to investors that may be subject to special tax
rules such as banks,
33
<PAGE>
thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors
or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a Holder. Further,
it does not include any description of any alternative minimum tax consequences
or the tax laws of any state or local government or of any foreign government
that may be applicable to a Holder.
CLASSIFICATION OF HOUSEHOLD CAPITAL TRUST I
Sidley & Austin, special counsel to Household International and the Trust, is
of the opinion that, under current law and assuming full compliance with the
terms of the Indenture and the Declaration (and certain other documents),
Household Capital Trust I will be classified as a "grantor trust" for federal
income tax purposes and will not be classified as an association taxable as a
corporation or a partnership. Each Holder will be treated as owning an
undivided beneficial interest in the Junior Subordinated Notes. Accordingly,
each Holder will be required to include in its gross income the original issue
discount ("OID") accrued with respect to its allocable share of Junior
Subordinated Notes. Investors should be aware that the opinion of Sidley &
Austin does not address any other issue and is not binding on the Internal
Revenue Service (the "Service") or the courts.
ORIGINAL ISSUE DISCOUNT, PREMIUM AND MARKET DISCOUNT
Because of the option that Household International has, under the terms of
the Junior Subordinated Notes, to defer payments of interest by extending
interest payment periods for up to 20 quarters, the Junior Subordinated Notes
will be treated as issued with OID in an amount equal to all of the stated
interest payments on the Junior Subordinated Notes. Holders must include the
OID attributable to the Junior Subordinated Notes in income on an economic
accrual basis before the receipt of cash attributable to the interest,
regardless of their method of tax accounting. The amount of OID that accrues in
any month will approximately equal the amount of the interest that accrues in
that month at the stated interest rate. In the event that the interest payment
period is extended, Holders will continue to accrue OID approximately equal to
the amount of the interest payment due at the end of the extended interest
payment period on an economic accrual basis over the length of the extended
interest period. Corporate Holders of Preferred Securities will not be entitled
to a dividends-received deduction with respect to any income earned with
respect to the Preferred Securities.
To the extent a Holder acquires its Preferred Securities at a price that is
greater or less than the adjusted issue price of such Holder's share of Junior
Subordinated Notes (which generally should approximate par plus accrued but
unpaid interest), the Holder will be deemed to have acquired its interest in
the Preferred Securities with acquisition premium or with market discount, as
the case may be. A Holder acquiring Preferred Securities at a premium will be
permitted to reduce the amount of OID required to be included in income to
reflect the acquisition premium. A Holder acquiring Preferred Securities at a
market discount will also include the amount of such discount in income in
accordance with the market discount rules described below.
A Holder acquiring Preferred Securities at a market discount generally will
be required to recognize ordinary income to the extent of accrued market
discount upon the retirement of the underlying Junior Subordinated Notes or, to
the extent of any gain, upon the disposition of the Preferred Securities. Such
market discount would accrue ratably, or, at the election of the Holder, under
a constant yield method over the remaining term of the Junior Subordinated
Notes. A Holder will also be required to defer the deduction of a portion of
the interest paid or accrued on indebtedness incurred to purchase or carry
Preferred Securities acquired with market discount. In lieu of the foregoing, a
Holder may elect to include market discount in
34
<PAGE>
income currently as it accrues on all market discount instruments acquired by
such Holder in the taxable year of the election or thereafter, in which case
the interest deferral rule will not apply. A Holder may elect, in lieu of
applying the market discount or premium rules described above, to account for
all income under the Preferred Securities as if it were OID.
RECEIPT OF JUNIOR SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Preferred Securities--Special Event Redemption or Distribution," Junior
Subordinated Notes may be distributed to Holders in exchange for the Preferred
Securities and in liquidation of the Trust. Such a distribution would be
treated as a non-taxable event to each Holder and each Holder would receive an
aggregate tax basis in the Junior Subordinated Notes equal to such Holder's
aggregate tax basis in its Preferred Securities. A Holder's holding period in
the Junior Subordinated Notes so received in liquidation of the Trust would
include the period for which the Preferred Securities were held by such Holder.
SALE OF PREFERRED SECURITIES
A Holder that sells Preferred Securities will recognize gain or loss equal to
the difference between its adjusted tax basis in the Preferred Securities and
the amount realized on the sale. A Holder's adjusted tax basis in the Preferred
Securities generally will be its initial purchase price increased by original
issue discount previously includible in such Holder's gross income to the date
of disposition (and the accrual of market discount, if any) and decreased by
payments received on the Preferred Securities. Subject to the market discount
rules described above, any such gain or loss generally will be capital gain or
loss.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Notes. A Holder disposing of its Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest through the date of disposition in income
as ordinary income (i.e. OID), and to add such amount to its adjusted tax basis
in its Preferred Securities. To the extent the selling price is less than the
Holder's adjusted tax basis (which will include, in the form of OID, all
accrued but unpaid interest), a Holder will recognize a capital loss. Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
FOREIGN INVESTORS
Subject to the discussion of backup withholding below, interest (including
OID) with respect to the Preferred Securities paid to a nonresident alien
individual, foreign corporation, foreign partnership or foreign estate or trust
will be exempt from U.S. withholding tax, provided that the holder complies
with applicable certification requirements (and does not actually or
constructively own ten percent or more of the voting stock of the Company and
is not a controlled foreign corporation related to the Company or its
affiliates).
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Preferred
Securities will be reported to Holders on Form 1099, which forms should be
mailed to Holders of Preferred Securities by January 31 following each calendar
year.
The Trust will be obligated to report annually to Cede & Co., as Holder of
record of the Preferred Securities, the OID with respect to the Preferred
Securities that accrued during that year. The Trust currently intends to report
such information on Form 1099 prior to January 31 following each calendar year
even though the Trust is not legally required to report to record Holders until
April 15 following each calendar year. The Underwriters have indicated to the
Trust that, to the extent that they hold Preferred Securities as nominees for
beneficial Holders, they currently expect to report to such beneficial Holders
on Forms 1099 by
35
<PAGE>
January 31 following each calendar year. Under current law, Holders of
Preferred Securities who hold as nominees for beneficial Holders will not have
any obligation to report information regarding the beneficial Holders to the
Trust. The Trust, moreover, will not have any obligation to report to
beneficial Holders who are not also record Holders. Thus, beneficial Holders of
Preferred Securities who hold their Preferred Securities through the
Underwriters will receive Forms 1099 reflecting the income on their Preferred
Securities from such nominee Holders rather than the Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities may
be subject to a "backup" withholding tax of 31% unless the Holder complies with
certain identification requirements. Any withheld amounts will be allowed as a
credit against the Holder's federal income tax, provided the required
information is provided to the Service.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
36
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Smith Barney Inc. and Goldman, Sachs & Co.
are acting as representatives (the "Representatives"), has severally agreed to
purchase the number of Preferred Securities set forth opposite its name below.
In the Underwriting Agreement, the several Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all the Preferred
Securities offered hereby if any of the Preferred Securities are purchased. In
the event of default by an Underwriter, the Underwriting Agreement provides
that, in certain circumstances, the purchase commitments of the nondefaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
----------- -----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................
Smith Barney Inc.............................................
Goldman, Sachs & Co..........................................
-----------
Total................................................... 3,000,000
===========
</TABLE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus Supplement, and in part to certain securities dealers
at such price less a concession of $. per Preferred Security. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $. per Preferred Security to certain brokers and dealers. After
the Preferred Securities are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Representatives.
In view of the fact that the proceeds of the sale of the Preferred Securities
will be used to purchase the Junior Subordinated Notes of Household
International, the Underwriting Agreement provides that Household International
will agree to pay as compensation ("Underwriters' Compensation") for the
Underwriters' arranging the investment therein of such proceeds, an amount in
New York Clearing House (next day) funds of $. per Preferred Security (or
$ in the aggregate) for the accounts of the several Underwriters, provided
that such compensation for sales of 10,000 or more Preferred Securities to any
single purchaser will be $. per Preferred Security. Therefore, to the extent
of such sales, the actual amount of Underwriter's Compensation will be less
than the aggregate amount specified in the preceding sentence.
During a period of 30 days from the date of the Prospectus Supplement,
neither the Trust, nor Household International will, without the prior written
consent of the Underwriters, directly or indirectly, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, any Preferred Securities,
any security
37
<PAGE>
convertible into or exchangeable into or exercisable for Preferred Securities
or any equity securities substantially similar to the Preferred Securities
(except for any series of subordinated debt securities and the Preferred
Securities offered hereby).
The Preferred Securities are expected to be approved for listing on the New
York Stock Exchange, subject to official notice of issuance. Trading of the
Preferred Securities on the New York Stock Exchange is expected to commence
within a 30 day period after the initial delivery of the Preferred Securities.
The Representatives have advised the Trust that they intend to make a market in
the Preferred Securities prior to the commencement of trading on the New York
Stock Exchange. The Representatives will have no obligation to make a market in
the Preferred Securities, however, and may cease market making activities, if
commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
Household International and the Trust have agreed to indemnify the
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Household International and its subsidiaries
in the ordinary course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Trust by Morris, Nichols, Arsht
and Tunnell, Wilmington, Delaware, special Delaware counsel to the Trust. The
validity of the Junior Subordinated Notes, the Preferred Securities Guarantee
and certain matters relating thereto will be passed upon on behalf of Household
International by John W. Blenke, Assistant General Counsel and Secretary of
Household International. Certain legal matters will be passed upon for the
Underwriters by McDermott, Will & Emery, Chicago, Illinois. Certain United
States federal income taxation matters will be passed upon for Household
International and the Trust by Sidley & Austin, Chicago, Illinois.
EXPERTS
The financial statements and schedules of Household International and its
subsidiaries incorporated by reference in this Prospectus, to the extent and
for the periods indicated in its reports, have been audited by Arthur Andersen
LLP, independent public accountants, and are incorporated by reference herein
in reliance upon the authority of said firm as experts in giving said reports.
38
<PAGE>
DEFINITIONS
<TABLE>
<CAPTION>
TERM PAGE(S)
- ---- -------
<S> <C>
Additional Interest..................................................... 28
Alexander Hamilton...................................................... 8
Appointment Event....................................................... 17
Base Indenture.......................................................... 24
Beneficial Owner........................................................ 20
Business Day............................................................ 13
Change in 1940 Act Law.................................................. 14
Commission.............................................................. 3
Common Securities....................................................... 1
Company................................................................. 1
DTC..................................................................... 19
Debt Trustee............................................................ 24
Declaration............................................................. 9
Declaration Event of Default............................................ 16
Direct Participants..................................................... 20
Dissolution Tax Opinion................................................. 14
distributions........................................................... 2, 12
Event of Default........................................................ 28
Exchange Act............................................................ 3
Extension Period........................................................ 2, 12
Global Security......................................................... 29
Guarantee Payments...................................................... 22
Holder.................................................................. 33
HFC..................................................................... 8
Household Commercial.................................................... 8
Household International................................................. 1
Household International Trustees........................................ 9
Indenture............................................................... 24
Indenture Event of Default.............................................. 16
Indirect Participants................................................... 20
Interest Payment Date................................................... 27
Investment Company Event................................................ 14
Junior Subordinated Notes............................................... 1
Liquidation Distribution................................................ 16
MasterCard.............................................................. 8
New York Stock Exchange................................................. 1
1940 Act................................................................ 14
No Recognition Opinion.................................................. 14
OID..................................................................... 34
Participants............................................................ 20
Payment................................................................. 25
Preferred Guarantee Trustee............................................. 9, 22
Preferred Securities.................................................... 1
Preferred Securities Guarantee.......................................... 2
Property Account........................................................ 9
Property Trustee........................................................ 9
Redemption Price........................................................ 2
Redemption Tax Opinion.................................................. 14
Registration Statement.................................................. 3
Regular Trustees........................................................ 9
Representatives......................................................... 37
Scheduled Maturity Date................................................. 27
Senior Indebtedness..................................................... 26
Special Event........................................................... 14
Special Regular Trustee................................................. 9
Sponsor................................................................. 9
Successor Securities.................................................... 19
Super-Majority.......................................................... 17
Tax Event............................................................... 14
Trust................................................................... 1
Trust Act............................................................... 9
Trust Indenture Act..................................................... 9
Trust Securities........................................................ 1
Underwriters............................................................ 37
Underwriters' Compensation.............................................. 1, 37
Underwriting Agreement.................................................. 37
VISA.................................................................... 8
</TABLE>
39
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HOUSEHOLD INTERNATIONAL,
INC., HOUSEHOLD CAPITAL TRUST I OR THE UNDERWRITERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CRE-
ATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF HOUSEHOLD
INTERNATIONAL, INC. OR HOUSEHOLD CAPITAL TRUST I, SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES 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.
---------------
TABLE OF CONTENTS
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
Prospectus Summary........................................................ 4
Investment Considerations................................................. 5
Household International................................................... 8
Household Capital Trust I................................................. 9
Selected Financial Information............................................ 10
Capitalization of Household International................................. 11
Ratio of Earnings to Fixed Charges........................................ 11
Accounting Treatment...................................................... 11
Use of Proceeds........................................................... 11
Description of the Preferred Securities................................... 12
Description of the Preferred Securities Guarantee......................... 22
Description of the Junior Subordinated Notes.............................. 24
Effect of Obligations Under the Junior Subordinated Notes and the
Guarantee................................................................ 32
Certain Federal Income Tax Consequences................................... 33
Underwriting.............................................................. 37
Legal Matters............................................................. 38
Experts................................................................... 38
Definitions............................................................... 39
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3,000,000
PREFERRED SECURITIES
HOUSEHOLD CAPITAL TRUST I
% TRUST ORIGINATED
PREFERRED SECURITIES ("TOPRS")
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
HOUSEHOLD INTERNATIONAL, INC.
---------------
PROSPECTUS
---------------
MERRILL LYNCH & CO.
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
, 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
1 + Form of Underwriting Agreement for Preferred Securities.
4(a)+ Form of Indenture between Household International, Inc. and The First
National Bank of Chicago, as Trustee.
4(b)+ Form of Supplemental Indenture between Household International, Inc. and
The First National Bank of Chicago, as Trustee.
4(c)+ Declaration of Trust of Household Capital Trust I.
4(d)+ Form of Amended and Restated Declaration of Trust.
4(e)+ Forms of Preferred Security (included in Exhibit 4(d) above).
4(f)+ Form of Junior Subordinated Notes (included in Exhibit 4(b) above).
4(g) Form of Guarantee with respect to Preferred Securities.
4(h)+ Certificate of Trust
5(a) Opinion and Consent of Mr. John W. Blenke, Assistant General Counsel and
Secretary of Household International, Inc.
5(b) Opinion and Consent of Morris, Nichols, Arsht and Tunnell.
8 Tax opinion of Sidley & Austin.
12 Statement on the Computation of Ratio of Earnings to Fixed Charges and to
Combined Fixed Charges and Preferred Stock Dividends (incorporated herein
by reference from Exhibit 12 to the Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 and from Exhibit 12 to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995 of Household
International, Inc. (File No. 1-8198)).
23(a)+ Consent of Arthur Andersen LLP, Certified Public Accountants.
23(b) Consent of Mr. John W. Blenke, Assistant General Counsel and Secretary of
Household International, Inc. is contained in his opinion (Exhibit 5(a)).
23(c) Consent of Sidley & Austin is contained in their opinion (Exhibit 8).
23(d) Consent of Morris, Nichols, Arsht and Tunnell is contained in their
opinion (Exhibit 5(b)).
24(a)+ Powers of Attorney with respect to Household International officers and
directors.
24(b)+ Powers of Attorney with respect to Household Capital Trust I trustees
(included in Exhibit 4(c) filed herewith.
25(a)+ Statement of eligibility and qualification of Wilmington Trust Company.
25(b)+ Statement of eligibility and qualification of The First National Bank of
Chicago.
</TABLE>
- --------
+Previously filed.
II-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 2 TO
THE REGISTRATION STATEMENT ON FORM S-3 TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PROSPECT HEIGHTS, AND
STATE OF ILLINOIS, ON THE 31ST DAY OF MAY, 1995.
Household International, Inc.
*
By: _________________________________
William F. Aldinger
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED AND ON THE 31ST DAY OF MAY, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* President, Chief Executive Officer, and
___________________________________________ Director (as Principal Executive Officer)
(William F. Aldinger)
* Chairman of the Board and Director
___________________________________________
(Donald C. Clark)
* Director
___________________________________________
(Robert J. Darnall)
* Director
___________________________________________
(Gary G. Dillon)
* Director
___________________________________________
(John A. Edwardson)
* Director
___________________________________________
(Mary Johnston Evans)
* Director
___________________________________________
(Cyrus F. Freidheim, Jr.)
* Director
___________________________________________
(Louis E. Levy)
* Director
___________________________________________
(George A. Lorch)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Director
___________________________________________
(John D. Nichols)
* Director
___________________________________________
(James B. Pitblado)
* Director
___________________________________________
(S. Jay Stewart)
* Director
___________________________________________
(Louis W. Sullivan, M.D.)
* Director
___________________________________________
(Raymond C. Tower)
* Senior Vice President-Chief Financial
___________________________________________ Officer (as Principal Accounting and
(David A. Schoenholz) Financial Officer)
</TABLE>
/s/ John W. Blenke
*By: ________________________________
John W. Blenke
Attorney-in-fact
The Registrant reasonably believes that the security rating to be assigned to
the Securities registered hereunder will make the Securities "investment grade
securities" pursuant to Transaction Requirement B.2 of Form S-3.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, HOUSEHOLD CAPITAL
TRUST I CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT ON FORM S-3 TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PROSPECT HEIGHTS,
STATE OF ILLINOIS, ON THIS 31ST DAY OF MAY, 1995.
Household Capital Trust I
*
By: _________________________________
Name: Edgar Ancona
Title: Trustee
*
By: _________________________________
Name: B. B. Moss, Jr.
Title: Trustee
/s/ John W. Blenke
*By: ________________________________
John W. Blenke
Attorney-in-fact
The Registrant reasonably believes that the security rating to be assigned to
the Securities registered hereunder will make the Securities "investment grade
securities" pursuant to Transaction Requirement B.2 of Form S-3.
II-4
<PAGE>
Exhibit 4(g)
----------------------------------------
PREFERRED SECURITIES GUARANTEE AGREEMENT
Household International, Inc.
Dated as of _______________, 1995
----------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Trust Indenture Section of
Act of 1939, as amended Guarantee Agreement
- -------------------------- -------------------
<S> <C>
310(a)................................ 4.1(a)
310(b)................................ 4.1(c)
310(c)................................ Inapplicable
311(a)................................ 2.2(b)
311(b)................................ 2.2(b)
311(c)................................ Inapplicable
312(a)................................ 2.2(a)
312(b)................................ 2.2(b)
313 ................................ 2.3
314(a)................................ 2.4
314(b)................................ Inapplicable
314(c)................................ 2.5
314(d)................................ Inapplicable
314(f)................................ Inapplicable
315(a)................................ 3.1(b)
315(b)................................ 2.7
315(c)................................ 3.1(a)
315(d)................................ 3.1(a)
316(a)................................ 5.4(a), 2.6
</TABLE>
__________________
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
__________, 1995, is executed and delivered by Household International, Inc., a
Delaware corporation (the "Guarantor"), and Wilmington Trust Company, a
Delaware banking corporation, as trustee (the "Preferred Guarantee Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of Household Capital Trust I, a
Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of __________, 1995, among the trustees of the Issuer
named therein, the Guarantor as Sponsor and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof $__________ aggregate stated liquidation amount of
Preferred Securities designated the ____% Trust Originated Preferred Securities
(the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally to agree,
to the extent set forth in this Guarantee Agreement, to pay to the Holders of
the Preferred Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee Agreement") in substantially
identical terms to this Guarantee Agreement for the benefit of the holders of
the Common Securities (as defined herein) except that if an Event of Default (as
defined in the Indenture (as defined herein)), has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Guarantee
Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION.
------------------------------
In this Guarantee Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not defined in
the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933 as amended or any successor rule thereunder.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder of Preferred Securities.
"Distributions" means a distribution payable to holders of the Preferred
Securities or the Common Securities in accordance with Section 6.1 of the
Declaration.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement.
-2-
<PAGE>
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Issuer: (i) any accrued and unpaid Distributions which are required
to be paid on such Preferred Securities to the extent the Issuer shall have
funds available therefore, (ii) the redemption price, including all accrued and
unpaid Distributions to the date of redemption (the "Redemption Price") to the
extent the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Notes to the Holders in exchange for
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution"). If an Event of Default
under the Indenture has occurred and is continuing, the rights of Holders of the
Common Securities to receive Guarantee Payments under the Common Securities
Guarantee Agreement are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any entity directly or indirectly controlling or
controlled by or under direct or indirect common control with the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate
of the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agents of the Preferred
Guarantee Trustee.
"Indenture" means the Indenture dated as of May 15, 1995 among Household
International, Inc., a Delaware corporation (as "Debt Issuer") and The First
National Bank of Chicago, a national banking association, as trustee and any
indenture supplemental thereto pursuant to which certain subordinated debt
securities of the Debt Issuer are to be issued to the Property Trustee of the
Issuer.
"Majority in liquidation amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, Holder(s) of Preferred Securities voting
separately as a class, who vote Preferred Securities and the aggregate
liquidation amount (including the stated amount that would be paid on
redemption,
-3-
<PAGE>
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of the Preferred Securities voted
by such Holders represents more than 50% of the above stated liquidation amount
of all Preferred Securities.
"Notes" means a series of debt securities issued by the Debt Issuer
pursuant to the Indenture to be known as ____% Junior Subordinated Deferrable
Interest Notes due 2025.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means Wilmington Trust Company, a Delaware
banking corporation, until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment pursuant to the terms of this
Guarantee Agreement and thereafter means each such Successor Preferred Guarantee
Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, the chairman of the board of directors, the president, any vice-
president, any assistant vice-president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any trust officer or assistant trust
officer or any
-4-
<PAGE>
other officer of the Preferred Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
--------------------------------
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be a part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
------------------------------
(a) To the extent the Preferred Securities Trustee shall not also be acting
as Property Trustee at the time action is called for under (i) or (ii) below,
the Guarantor shall provide the Preferred Securities Trustee (i) within 14 days
after January 1 and June 30 of each year, a list, in such form as the Preferred
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders of the Preferred Securities ("List of Holders") as of such date,
provided that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Preferred Guarantee Trustee by the Guarantor, and
(ii) at any other time, within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Preferred Guarantee Trustee. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
-5-
<PAGE>
(b) The Preferred Guarantee Trustee shall comply with its obligations under
Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.
------------------------------------------
Within 60 days after May 15 of each year, the Preferred Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.
-----------------------------------------------
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
------------------------------------------------
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement which relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officer's Certificate.
SECTION 2.6 EVENT OF DEFAULT; WAIVER.
------------------------
The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
-6-
<PAGE>
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
------------------------
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default known to the Preferred Guarantee Trustee, unless such defaults have been
cured before the giving of such notice, provided that, the Preferred Guarantee
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers, of the Preferred Guarantee Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default except any Event of Default as to which the Preferred
Guarantee Trustee shall have received written notice or a Responsible Officer
charged with the administration of the Declaration shall have obtained written
notice of.
SECTION 2.8 CONFLICTING INTERESTS.
---------------------
The Declaration shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
----------------------------------------------------
(a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders of the Preferred Securities and the
Preferred Guarantee Trustee shall not transfer this Guarantee Agreement to any
Person except a Holder of Preferred Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee on
acceptance by such Successor Preferred Guarantee Trustee of its appointment to
act as Preferred Guarantee Trustee. The right, title and interest of the
Preferred Guarantee Trustee shall automatically vest in any Successor Preferred
Guarantee Trustee and such vesting and
-7-
<PAGE>
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
(b) If an Event of Default has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Preferred Guarantee Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6), the Preferred Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee Agreement, and use the same degree of care
and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs;
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Preferred Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the curing
or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Preferred Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be read
into this Guarantee Agreement against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or opinions
that by any provision
-8-
<PAGE>
hereof are specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be under
a duty to examine the same to determine whether or not they
conform to the requirements of the Declaration;
(ii) the Preferred Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Preferred
Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts;
(iii) the Preferred Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities at the time
outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Preferred Trustee, or
exercising any trust or power conferred upon the Preferred Guarantee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the Preferred
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
---------------------------------------------
(a) Subject to the provisions of Section 3.1:
(i) the Preferred Guarantee Trustee may rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Guarantor contemplated by this Guarantee
Agreement shall be sufficiently evidenced by an Officers' Certificate;
-9-
<PAGE>
(iii) whenever in the administration of this Guarantee Agreement, the
Preferred Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part and request and rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof);
(v) the Preferred Guarantee Trustee may consult with counsel and the
written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its Affiliates, and
may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Preferred Guarantee Trustee adequate
security and indemnity which would satisfy a reasonable person in the
position of the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Preferred Guarantee Trustee provided, that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Preferred Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee
Agreement;
(vii) the Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent,
-10-
<PAGE>
order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Preferred Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Preferred Guarantee Trustee
shall not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Preferred Guarantee Trustee or its agents
hereunder shall bind the Holders of the Preferred Securities and the
signature of the Preferred Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such action; and no third
party shall be required to inquire as to the authority of the
Preferred Guarantee Trustee to so act, or as to its compliance with
any of the terms and provisions of this Guarantee Agreement, both of
which shall be conclusively evidenced by the Preferred Guarantee
Trustee's or its agent's taking such action; and
(x) whenever in the administration of this Guarantee Agreement the
Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder the Preferred Guarantee Trustee (i) may
request instructions from the Holders of the Preferred Securities,
(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be
protected in acting in accordance with such instructions; and
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Preferred Guarantee Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Preferred
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Preferred Guarantee Trustee shall be construed to be a duty.
-11-
<PAGE>
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
-----------------------------------------------------
The recitals contained in this Guarantee shall be taken as the statements
of the Guarantor and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
----------------------------------------
(a) There shall at all times be a Preferred Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor;
(ii) be a corporation organized and doing business under the laws of the
United States of America or any state or territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by federal, state, territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and
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Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
-----------------------------------------------------------
TRUSTEE.
-------
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance with
this Section 4.2 until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold office
until a Successor Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Preferred Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guarantee Trustee. Such court may
thereupon after such notice, if any, as it may deem proper and prescribe,
appoint a Successor Preferred Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE.
---------
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert. The Guarantor's obligation to
make
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<PAGE>
a Guarantee Payment may be satisfied by direct payment of the required amounts
by the Guarantor to the Holders or by causing the Issuer to pay such amounts to
the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND.
---------------------------
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED.
------------------------
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Notes or any extension of the maturity date of the Notes
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors,
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<PAGE>
reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation on the Holders or any other Person to give notice
to, or obtain consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 5.4 RIGHTS OF HOLDERS.
-----------------
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or power conferred
upon Preferred Guarantee Trustee under this Guarantee Agreement.
(b) If the Preferred Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against the Issuer, the
Preferred Guarantee Trustee or any other Person.
SECTION 5.5 GUARANTEE OF PAYMENT.
--------------------
This Guarantee Agreement creates a guarantee of payment and not of
collection.
SECTION 5.6 SUBROGATION.
-----------
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee Agreement; provided, however, that
the Guarantor shall
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<PAGE>
not (except to the extent required by mandatory provisions of law) be entitled
to enforce or exercise any rights which it may acquire by way of subrogation or
any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Guarantee Agreement. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS.
-----------------------
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Preferred Securities and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS.
--------------------------
So long as any Preferred Securities remain outstanding, if there shall have
occurred and is continuing any event that would constitute an Event of Default
or an Event of Default under the Declaration, then (a) the Guarantor shall not
declare or pay any dividends on, or purchase, acquire or make a distribution or
liquidation payment with respect to any of its capital stock, and (b) the
Guarantor shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities issued by the Guarantor
which rank pari passu with or junior to the Notes.
SECTION 6.2 RANKING.
-------
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor, including the Notes, except those made pari
passu or subordinate by their terms, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of
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<PAGE>
any Affiliate of the Guarantor and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION.
-----------
This Guarantee Agreement shall terminate upon full payment of the
Redemption Price of all of the Preferred Securities and Common Securities upon
the distribution of the Notes to the Holder's of all of the Preferred Securities
or upon full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION.
-----------
(a) No indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee Agreement and
in a manner such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee
Agreement or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets,
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<PAGE>
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
SECTION 8.2 INDEMNIFICATION.
---------------
(a) To the fullest extent permitted by applicable law, the Guarantor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this in accordance with this Guarantee Agreement, except
that no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason or
negligence or willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS.
----------------------
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.
SECTION 9.2 AMENDMENTS.
----------
Except with respect to any changes which do not adversely affect the rights
of Holders (in which case no consent of Holders will be required), this
Guarantee Agreement may only be amended with the prior approval of the Holders
of at least 66-2/3% in liquidation amount of all the outstanding Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect to
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<PAGE>
meetings of Holders of the Preferred Securities and Common Securities apply to
the giving of such approval.
SECTION 9.3 NOTICES.
-------
All notices provided for in this Guarantee Agreement shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Preferred Guarantee Trustee at the Preferred Guarantee
Trustee's mailing address set forth below(or such other address as the
Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attn: Corporate Trust Administration
(b) if given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of
to the Holders of the Preferred Securities):
Household International, Inc.
2700 Sanders Road
Prospect Heights, IL 60070
Attn: Treasurer
(c) if given to any holder of Preferred Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 BENEFIT.
-------
This Guarantee Agreement is solely for the benefit of the Holders of the
Preferred Securities and subject to Section 3.1(a) is not separately
transferable from the Preferred Securities.
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<PAGE>
SECTION 9.5 GOVERNING LAW.
-------------
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
HOUSEHOLD INTERNATIONAL, INC.
By:___________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Preferred Guarantee Trustee
By:___________________________
Name:
Title:
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<PAGE>
Exhibit 5(a)
May 31, 1995
Household International, Inc.
2700 Sanders Road
Prospect Heights, IL 60070
Re: Combined Registration Statement on Form S-3, relating to Junior
Subordinated Debt Securities and Preferred Securities Guarantee
of Household International, Inc. and the Preferred Securities of
Household Capital Trust I--Registration No. 33-59385
----------------------------------------------------------------
Ladies and Gentlemen:
I am Secretary and Assistant General Counsel of Household International, Inc.
("Household"), I am generally familiar with the proceedings in connection with
the Registration Statement on Form S-3 of Household and Household Capital Trust
I (the "Trust") filed with the Securities and Exchange Commission (the
"Commission") on May 17, 1995, amended by Amendment No. 1 filed with the
Commission on May 26, 1995 and Amendment No. 2 filed with the Commission on
May 31, 1995 (as amended, the "Registration Statement"), relating to the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of preferred securities of the Trust (the "Preferred Securities"),
subordinated debt securities (the "Junior Subordinated Notes") and a preferred
securities guarantee (the "Preferred Securities Guarantee"), guaranteeing
distributions on the Preferred Securities to the extent set forth in a Preferred
Securities Guarantee Agreement, a form of which is filed as an exhibit to the
Registration Statement (the "Guarantee Agreement"). The Junior Subordinated
Notes, which constitute unsecured junior subordinated debt of Household, will be
issuable under an Indenture dated as of May 15, 1995, between Household and The
First National Bank of Chicago, as Trustee and a First Supplemental Indenture
dated as of May 31, 1995 (together, the "Indenture"). The Indenture, or forms as
filed thereof, have been included as exhibits to the Registration Statement as
filed with the Commission.
Based upon my review of the records and documents of Household I am of the
opinion that:
1. Household is a corporation duly incorporated and validly existing under the
Laws of the State of Delaware.
2. The Indenture and the Guarantee Agreement constitute, and each of them will,
after being duly authorized,
<PAGE>
Household International, Inc.
May 31, 1995
Page 2
executed and delivered by Household, constitute, a valid and legally
binding instrument of Household enforceable in accordance with its terms,
except as enforcement of the provisions thereof may be limited by
bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity of at law).
3. When (i) the Registration Statement on Form S-3 filed by Household with
respect to the Junior Subordinated Notes and the Preferred Securities
Guarantee shall have become effective under the Securities Act, (ii)
the issuance of Junior Subordinated Notes and the Preferred Securities
Guarantee have been duly authorized by the appropriate corporate action,
and (iii) such Junior Subordinated Notes and the Preferred Securities
Guarantee have been duly executed, authenticated, issued and delivered
against payment of the agreed consideration therefor in accordance with
the appropriate Indenture or Guarantee Agreement as described in the
Registration Statement, including the Prospectus relating to the offering
of Preferred Securities, such Junior Subordinated Notes and the Preferred
Securities Guarantee will be legally and validly issued and will be the
legal and binding obligations of Household enforceable in accordance with
their terms, except as enforcement of the provisions thereof may be limited
by bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to me under the heading "Legal Opinions" in any
Preliminary Prospectus or Prospectus forming a part of the Registration
Statement.
In giving such consent I do not admit that I am in the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Commission thereunder.
Very truly yours,
/s/ John W. Blenke
<PAGE>
Exhibit 5(b)
May 31, 1995
Household Capital Trust I
c/o Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
Re: Household Capital Trust I
-------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to Household Capital Trust
I, a Delaware statutory business trust (the "Trust"), in connection with certain
matters relating to the organization of the Trust and the proposed issuance of
Preferred Securities to beneficial owners pursuant to and as described in
Registration Statement No. 33-59385 (and the Prospectus forming a part thereof)
on Form S-3 filed with the Securities and Exchange Commission, as amended by
Pre-Effective Amendment Nos. 1 and 2 thereto (as amended, the "Registration
Statement"). Capitalized terms used herein and not otherwise herein defined are
used as defined in the Amended and Restated Declaration of Trust of the Trust in
the form attached as an exhibit to the Registration Statement (the "Governing
Instrument").
In rendering this opinion, we have examined copies of the following
documents in the forms provided to us: the Certificate of Trust of the Trust as
filed in the Office of the Secretary of State of the State of Delaware (the
"State Office") on May 16, 1995 (the "Certificate"); a Declaration of Trust
dated as of May 16, 1995 (the "Original Governing Instrument"); the Governing
Instrument; the form of Indenture dated as of May 15, 1995 between Household
International, Inc. and The First National Bank of Chicago, as Trustee; the
Preferred Securities Guarantee Agreement by Household International, Inc. dated
as of May 31, 1995; the First Supplemental Indenture dated as of May 31, 1995
between Household International, Inc. and the First National Bank of Chicago, as
Trustee; the Underwriting Agreement relating to the Preferred Securities; the
Registration Statement; and a certificate of good standing of the Trust obtained
as of a recent date from the State Office. In such examinations, we have
assumed the genuine-
<PAGE>
Household Capital Trust I
May 31, 1995
Page 2
ness of all signatures, the conformity to original documents of all documents
submitted to us as drafts or copies or forms of documents to be executed and the
legal capacity of natural persons to complete the execution of documents. We
have further assumed for purposes of this opinion: (i) the due formation or
organization, valid existence and good standing of each entity (other than the
Trust) that is a party to any of the documents reviewed by us under the laws of
the jurisdiction of its respective formation or organization; (ii) the due
authorization, execution and delivery by, or on behalf of, each of the parties
thereto of the above-referenced documents (including, without limitation, the
due execution and delivery of the Governing Instrument and the Underwriting
Agreement prior to the first issuance of Preferred Securities); (iii) that no
event has occurred subsequent to the filing of the Certificate that would cause
a dissolution or liquidation of the Trust under the Original Governing
Instrument or the Governing Instrument, as applicable; (iv) that the activities
of the Trust have been and will be conducted in accordance with the Original
Governing Instrument or the Governing Instrument, as applicable, and the
Delaware Business Trust Act, 12 Del. C. (S) 3801 et seq. (the "Delaware Act");
(v) that each Holder of Preferred Securities has made payment of the required
consideration therefor and received a Preferred Securities Certificate in
consideration thereof in accordance with the terms and conditions of the
Governing Instrument, Registration Statement and Underwriting Agreement; (vi)
that the Preferred Securities are issued and sold to the Preferred Securities
Holders in accordance with the terms, conditions, requirements and procedures
set forth in the Governing Instrument, Registration Statement and Underwriting
Agreement; and (vii) that the documents examined by us are in full force and
effect, express the entire understanding of the parties thereto with respect to
the subject matter thereof and have not been modified, supplemented or otherwise
amended, except as herein referenced. No opinion is expressed with respect to
the requirements of, or compliance with, federal or state securities or blue sky
laws. We have not participated in the preparation of the Registration Statement
or any other offering materials relating to the Preferred Securities and we
assume no responsibility for their contents. As to any fact material to our
opinion, other than those assumed, we have relied without independent
investigation on the above-referenced documents and on the accuracy, as of the
date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly organized and validly existing business trust
in good standing under the laws of the State of Delaware.
<PAGE>
Household Capital Trust I
May 31, 1995
Page 3
2. The Preferred Securities, upon issuance, will constitute validly
issued and, subject to the qualifications set forth in paragraph 3 below, fully
paid and nonassessable beneficial interests in the Trust.
3. Under the Delaware Act and the terms of the Governing Instrument,
each Preferred Security Holder of the Trust, in such capacity, will be entitled
to the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized under the General Corporation Law of
the State of Delaware; provided, however, we express no opinion with respect to
the liability of any Preferred Security Holder who is, was or may become a named
Trustee of the Trust. Notwithstanding the foregoing, we note that pursuant to
(S) 11.4 of the Governing Instrument, the Trust may withhold amounts otherwise
distributable to a Holder and pay over such amounts to the applicable
jurisdictions in accordance with federal, state and local law and any amount
withheld will be deemed to have been distributed to such Holder and that,
pursuant to the Governing Instrument, Preferred Security Holders may be
obligated to make payments or provide indemnity or security under the
circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. This opinion speaks only as of
the date hereof and is based on our understandings or assumptions as to present
facts, and on our review of the above referenced documents and the application
of Delaware law as the same exist as of the date hereof, and we undertake no
obligation to update or supplement this opinion after the date hereof for the
benefit of any person or entity with respect to any facts or circumstances that
may hereafter come to our attention or any changes in facts or law that may
hereafter occur or take effect. This opinion is intended solely for the benefit
of the addressee hereof in connection with the matters contemplated hereby and
may not be relied on by any other person or entity or for any other purpose
without our prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
<PAGE>
EXHIBIT 8
May 31, 1995
Household Capital Trust I
Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
Re: Household Capital Trust I
____% Trust Originated Preferred
Securities ("TOPrS")
--------------------------------
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-3 (No. 33-59385)
filed with the Securities and Exchange Commission by Household International,
Inc. ("HII") and Household Capital Trust I (the "Trust") and amended by
Amendments Nos. 1 and 2 thereto and the preliminary prospectus (the "Preliminary
Prospectus") included in such Amendment.
We have acted as special tax counsel to HII and the Trust in connection
with the Preliminary Prospectus. The statements contained in the Preliminary
Prospectus under the heading "Certain Federal Income Tax Consequences" to the
extent they constitute matters of federal income tax law or legal
conclusions with respect thereto, have been prepared or reviewed by us, and, in
our opinion, are correct in all material respects.
This opinion is provided to you only and, without our prior written
consent, may not be relied upon, used, circulated, quoted or otherwise referred
to in any manner by any person, firm, governmental authority or entity
whatsoever. This opinion letter is limited to the matters stated herein and no
opinion is implied or may be inferred beyond the matters expressly stated
herein. This opinion letter shall not be construed as or deemed to be a guaranty
or insuring agreement.
<PAGE>
Household International, Inc.
May 31, 1995
Page 2
Notwithstanding the immediately preceding paragraph, we hereby consent to
the filing of this opinion as an exhibit to the Registration Statement and to
the reference to this Firm under the caption "Certain Income Tax Consequences"
and "Legal Matters" in the Preliminary Prospectus included in the Registration
Statement. By giving such consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules promulgated thereunder.
This opinion is rendered as of the date hereof based on the law and facts
in existence on the date hereof, and we do not undertake, and hereby disclaim,
any obligation to advise you of any changes in law or fact, whether or not
material, which may be brought to our attention at a later date.
Very truly yours,
/s/ Sidley & Austin
