<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission file number 1-8198
------
HOUSEHOLD INTERNATIONAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3121988
- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
2700 Sanders Road, Prospect Heights, Illinois 60070
- ------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 564-5000
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
At October 31, 1995, there were 98,114,591 shares of registrant's common stock
outstanding.<PAGE>
<PAGE> 2
Part 1. FINANCIAL INFORMATION
1. FINANCIAL STATEMENTS
Household International, Inc. and Subsidiaries
STATEMENTS OF INCOME
- --------------------
All dollar amounts except per share data are stated in millions.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Finance income . . . . . . . . . . . . . . . . . . . . . . . $2,147.5 $1,945.6 $752.3 $677.6
Interest income from noninsurance investment securities. . . 104.9 90.7 19.8 29.8
Interest expense . . . . . . . . . . . . . . . . . . . . . . 1,181.6 878.6 404.1 327.0
----------------------------------------------
Net interest margin. . . . . . . . . . . . . . . . . . . . . 1,070.8 1,157.7 368.0 380.4
Provision for credit losses on owned receivables . . . . . . 569.7 502.2 188.2 173.3
----------------------------------------------
Net interest margin after provision for credit losses. . . . 501.1 655.5 179.8 207.1
----------------------------------------------
Securitization income. . . . . . . . . . . . . . . . . . . . 633.4 465.9 201.1 163.3
Insurance premiums and contract revenues . . . . . . . . . . 262.2 196.1 87.8 36.1
Investment income. . . . . . . . . . . . . . . . . . . . . . 423.3 388.1 145.5 128.7
Fee income . . . . . . . . . . . . . . . . . . . . . . . . . 139.1 193.9 48.3 65.1
Other income . . . . . . . . . . . . . . . . . . . . . . . . 189.4 123.2 58.0 42.1
----------------------------------------------
Total other revenues . . . . . . . . . . . . . . . . . . . . 1,647.4 1,367.2 540.7 435.3
----------------------------------------------
Salaries and fringe benefits . . . . . . . . . . . . . . . . 420.9 497.0 134.1 165.3
Other operating expenses . . . . . . . . . . . . . . . . . . 809.0 799.7 270.2 254.7
Policyholders' benefits. . . . . . . . . . . . . . . . . . . 416.6 343.9 133.7 84.7
----------------------------------------------
Total costs and expenses . . . . . . . . . . . . . . . . . . 1,646.5 1,640.6 538.0 504.7
----------------------------------------------
Income before income taxes . . . . . . . . . . . . . . . . . 502.0 382.1 182.5 137.7
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . 181.1 125.5 63.9 43.2
----------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 320.9 $ 256.6 $118.6 $ 94.5
==============================================
Earnings per common share:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 320.9 $ 256.6 $118.6 $ 94.5
Preferred dividends. . . . . . . . . . . . . . . . . . . . (22.2) (20.7) (8.4) (6.9)
----------------------------------------------
Earnings available to common shareholders. . . . . . . . . $ 298.7 $ 235.9 $110.2 $ 87.6
==============================================
Average common and common equivalent shares. . . . . . . . 99.1 97.2 99.9 97.4
----------------------------------------------
Fully diluted earnings per common share. . . . . . . . . . $ 3.01 $ 2.43 $ 1.10 $ .90
----------------------------------------------
Primary earnings per common share. . . . . . . . . . . . . $ 3.02 $ 2.45 $ 1.11 $ .90
----------------------------------------------
Dividends declared per common share. . . . . . . . . . . . . $ .97 $ .915 $ .34 $ .315
----------------------------------------------
</TABLE>
See notes to condensed financial statements.<PAGE>
<PAGE> 3
Household International, Inc. and Subsidiaries
BALANCE SHEETS
- --------------
<TABLE>
<CAPTION>
In millions.
- -------------------------------------------------------------------------------------------------------------
September 30, December 31,
1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
- ------
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 457.7 $ 541.2
Investment securities (fair value of $8,813.1 and $8,961.2). . . 8,693.3 9,004.5
Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . 22,959.4 20,778.3
Assets pending sale. . . . . . . . . . . . . . . . . . . . . . . - 398.3
Deferred insurance policy acquisition costs. . . . . . . . . . . 468.1 621.4
Acquired intangibles . . . . . . . . . . . . . . . . . . . . . . 480.9 649.9
Properties and equipment . . . . . . . . . . . . . . . . . . . . 438.6 512.0
Real estate owned. . . . . . . . . . . . . . . . . . . . . . . . 148.7 182.8
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1,327.2 1,650.0
------------------------------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $34,973.9 $34,338.4
====================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Debt:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,453.7 $ 8,439.0
Commercial paper, bank and other borrowings. . . . . . . . . . 6,731.7 4,372.1
Senior and senior subordinated debt (with original
maturities over one year). . . . . . . . . . . . . . . . . . 11,153.9 10,274.1
------------------------------------
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,339.3 23,085.2
Insurance policy and claim reserves. . . . . . . . . . . . . . . 6,978.2 6,715.8
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . 1,819.9 2,014.4
------------------------------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . 32,137.4 31,815.4
------------------------------------
Company obligated mandatorily redeemable preferred securities
in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.0 -
------------------------------------
Convertible preferred stock subject to mandatory redemption. . . - 2.6
------------------------------------
Preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . 205.0 320.0
------------------------------------
Common shareholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . 115.9 115.0
Additional paid-in capital . . . . . . . . . . . . . . . . . . 394.7 362.1
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . 2,601.6 2,397.4
Foreign currency translation adjustments . . . . . . . . . . . (127.8) (123.6)
Unrealized gain (loss) on investments, net . . . . . . . . . . 6.4 (103.6)
Common stock in treasury . . . . . . . . . . . . . . . . . . . (434.3) (446.9)
------------------------------------
Total common shareholders' equity. . . . . . . . . . . . . . . . 2,556.5 2,200.4
------------------------------------
Total liabilities and shareholders' equity . . . . . . . . . . . $34,973.9 $34,338.4
====================================
</TABLE>
See notes to condensed financial statements.<PAGE>
<PAGE> 4
Household International, Inc. and Subsidiaries
STATEMENTS OF CASH FLOWS
- ------------------------
<TABLE>
<CAPTION>
In millions.
- -------------------------------------------------------------------------------------------------------------
Nine months ended September 30 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 320.9 $ 256.6
Adjustments to reconcile net income to net cash provided by operations:
Provision for credit losses on owned receivables . . . . . . . . . . 569.7 502.2
Insurance policy and claim reserves. . . . . . . . . . . . . . . . . 378.4 205.1
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . 211.8 182.8
Net realized gains from sales of assets/businesses . . . . . . . . . (114.4) (6.2)
Deferred insurance policy acquisition costs. . . . . . . . . . . . . (57.9) (70.7)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (87.7) 134.5
-----------------------------------
Cash provided by operations. . . . . . . . . . . . . . . . . . . . . . 1,220.8 1,204.3
-----------------------------------
INVESTMENTS IN OPERATIONS
Investment securities:
Purchased. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,841.7) (2,859.9)
Matured. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,166.4 656.0
Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,868.1 1,903.7
Short-term investment securities, net change . . . . . . . . . . . . . 468.9 25.4
Receivables, excluding bankcard:
Originated or purchased. . . . . . . . . . . . . . . . . . . . . . . (9,423.8) (9,076.8)
Collected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,309.2 5,542.0
Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,801.7 1,241.6
Bankcard receivables:
Originated or collected, net . . . . . . . . . . . . . . . . . . . . (14,939.8) (10,540.1)
Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,048.6 10,406.5
Disposition of banking organizations:
Assets sold, net . . . . . . . . . . . . . . . . . . . . . . . . . . 155.0 -
Deposits and other liabilities sold. . . . . . . . . . . . . . . . . (3,356.6) -
(Acquisition) disposition of businesses, net . . . . . . . . . . . . . 204.9 (138.1)
Properties and equipment purchased . . . . . . . . . . . . . . . . . . (58.1) (97.9)
Properties and equipment sold. . . . . . . . . . . . . . . . . . . . . 9.7 8.2
-----------------------------------
Cash decrease from investments in operations . . . . . . . . . . . . . (4,587.5) (2,929.4)
-----------------------------------
FINANCING AND CAPITAL TRANSACTIONS
Short-term debt, net change. . . . . . . . . . . . . . . . . . . . . . 1,970.0 79.9
Time certificates accepted . . . . . . . . . . . . . . . . . . . . . . 2,593.2 2,732.6
Time certificates paid . . . . . . . . . . . . . . . . . . . . . . . . (1,796.7) (2,592.9)
Senior and senior subordinated debt issued . . . . . . . . . . . . . . 2,641.4 3,346.1
Senior and senior subordinated debt retired. . . . . . . . . . . . . . (1,909.7) (2,068.2)
Policyholders' benefits paid . . . . . . . . . . . . . . . . . . . . . (774.0) (404.8)
Cash received from policyholders . . . . . . . . . . . . . . . . . . . 669.4 718.2
Shareholders' dividends. . . . . . . . . . . . . . . . . . . . . . . . (116.8) (109.1)
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . 23.4 6.2
Issuance of company obligated mandatorily redeemable
preferred securities in trust. . . . . . . . . . . . . . . . . . . . 75.0 -
Repurchase of preferred stock. . . . . . . . . . . . . . . . . . . . . (115.0) -
-----------------------------------
Cash increase from financing and capital transactions. . . . . . . . . 3,260.2 1,708.0
-----------------------------------
Effect of exchange rate changes on cash. . . . . . . . . . . . . . . . 23.0 19.9
-----------------------------------
Increase (decrease) in cash. . . . . . . . . . . . . . . . . . . . . . (83.5) 2.8
Cash at January 1. . . . . . . . . . . . . . . . . . . . . . . . . . . 541.2 317.4
-----------------------------------
Cash at September 30 . . . . . . . . . . . . . . . . . . . . . . . . . $ 457.7 $ 320.2
===================================
Supplemental cash flow information:
Interest paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,124.6 $ 873.0
===================================
Income taxes paid. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 216.8 $ 136.1
===================================
</TABLE>
See notes to condensed financial statements.<PAGE>
<PAGE> 5
Household International, Inc. and Subsidiaries
BUSINESS SEGMENT DATA
- ---------------------
The company reassessed the significance of its Liquidating Commercial Lines
("LCL") and Corporate segments as of December 31, 1994. In recognition of the
significant 1994 decline in the level of LCL assets, a reduced risk posture for
these assets and the relative financial insignificance of the Corporate segment
to the company's operations, the LCL and Corporate segments have been combined
with the Finance and Banking segment. To better analyze financial condition and
results of operations and related trends, prior year earnings and selected
balance sheet data have been reclassified to reflect this combination.
In October 1995 the company sold most of the product lines of the Individual
Life Insurance segment. See discussion on page 11 for information on these sold
product lines. Due to the insignificance of the remaining product lines in this
segment, the company will discontinue separately reporting results for the
Individual Life Insurance segment beginning in the fourth quarter of 1995.
<TABLE>
<CAPTION>
In millions.
- -------------------------------------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
- --------
Finance and Banking. . . . . . . . . . . . . . . . . . . . . . . $3,379.6 $2,968.7 $1,134.9 $1,029.6
Individual Life Insurance. . . . . . . . . . . . . . . . . . . . 520.2 434.8 177.9 113.1
-------------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,899.8 $3,403.5 $1,312.8 $1,142.7
===========================================
NET INCOME
- ----------
Finance and Banking. . . . . . . . . . . . . . . . . . . . . . . $ 278.7 $ 216.9 $ 100.7 $ 77.1
Individual Life Insurance. . . . . . . . . . . . . . . . . . . . 42.2 39.7 17.9 17.4
-------------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 320.9 $ 256.6 $ 118.6 $ 94.5
===========================================
Return on average owned assets (1) . . . . . . . . . . . . . . . 1.22% 1.02% 1.35% 1.10%
-------------------------------------------
Return on average common shareholders' equity (1). . . . . . . . 16.6% 14.9% 17.5% 16.5%
-------------------------------------------
Efficiency ratio, normalized (2) . . . . . . . . . . . . . . . . 55.3% 59.5% 53.2% 57.5%
-------------------------------------------
(1) Annualized
(2) The company defines efficiency ratio as salaries and fringe benefits and other operating expenses as a
percent of net interest margin and total other revenues less policyholders' benefits. The normalized
efficiency ratio excludes certain non-recurring items. Including these non-recurring items, the efficiency
ratio was 52.2 and 53.4 percent for the third quarter and first nine months of 1995 compared to 57.5 and
59.5 percent in the respective periods of 1994.
In millions.
- -------------------------------------------------------------------------------------------------------------
September 30, December 31,
Assets 1995 1994
- -------------------------------------------------------------------------------------------------------------
Finance and Banking. . . . . . . . . . . . . . . . . . . . . . . $27,047.2 $26,897.0
Individual Life Insurance. . . . . . . . . . . . . . . . . . . . 7,926.7 7,441.4
-------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $34,973.9 $34,338.4
=====================================
</TABLE>
See notes to condensed financial statements.<PAGE>
<PAGE> 6
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Accounting policies used in preparation of the quarterly condensed
financial statements are consistent with accounting policies described
in the notes to financial statements contained in Household International,
Inc.'s (the "company") Annual Report on Form 10-K for its fiscal year
ended December 31, 1994. The information furnished herein reflects all
adjustments which are, in the opinion of management, necessary for a
fair statement of results for the interim periods. All such adjustments
are of a normal recurring nature. Certain prior period amounts have
been reclassified to conform with the current period's presentation.
2. INVESTMENT SECURITIES
---------------------
<TABLE>
<CAPTION>
Investment securities consisted of the following:
---------------------------------------------------------------------------------------------------------
In millions. September 30, 1995 December 31, 1994
---------------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRADING INVESTMENTS
Government securities and other. . . . . . . . . . . . . . . $ 2.2 $ 2.2 $ 17.3 $ 17.3
-------------------------------------------
AVAILABLE-FOR-SALE INVESTMENTS
Marketable equity securities . . . . . . . . . . . . . . . . 177.3 177.3 60.3 60.3
Corporate debt securities. . . . . . . . . . . . . . . . . . 2,741.3 2,741.3 2,595.9 2,595.9
Government and agency debt securities. . . . . . . . . . . . 402.5 402.5 479.1 479.1
Mortgage-backed securities . . . . . . . . . . . . . . . . . 1,231.1 1,231.1 1,755.6 1,755.6
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 228.6 228.6 109.5 109.5
-------------------------------------------
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . 4,780.8 4,780.8 5,000.4 5,000.4
-------------------------------------------
HELD-TO-MATURITY INVESTMENTS
Corporate debt securities. . . . . . . . . . . . . . . . . . 1,756.5 1,871.4 1,906.1 1,897.2
Government debt securities . . . . . . . . . . . . . . . . . 31.8 31.8 34.4 30.9
Mortgage-backed securities . . . . . . . . . . . . . . . . . 1,215.2 1,219.5 1,136.5 1,116.8
Mortgage loans on real estate. . . . . . . . . . . . . . . . 137.8 137.8 161.9 158.5
Policy loans . . . . . . . . . . . . . . . . . . . . . . . . 82.2 82.2 72.7 72.7
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 559.2 559.8 549.9 542.1
-------------------------------------------
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . 3,782.7 3,902.5 3,861.5 3,818.2
-------------------------------------------
Accrued investment income. . . . . . . . . . . . . . . . . . 127.6 127.6 125.3 125.3
-------------------------------------------
Total investment securities. . . . . . . . . . . . . . . . . $8,693.3 $8,813.1 $9,004.5 $8,961.2
===========================================
</TABLE>
In October 1995 the company sold most of the product lines, and related
assets, of the Individual Life Insurance segment. Assets sold consisted
principally of investment securities. See discussion on page 21 for the
amount of investment securities sold in connection with this transaction.
<PAGE>
<PAGE> 7
3. RECEIVABLES
-----------
<TABLE>
<CAPTION>
Receivables consisted of the following:
----------------------------------------------------------------------------------------------------------
September 30, December 31,
In millions. 1995 1994
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
First mortgage . . . . . . . . . . . . . . . . . . . . . . . $ 3,042.9 $ 3,364.2
Home equity. . . . . . . . . . . . . . . . . . . . . . . . . 4,244.4 2,865.6
Other secured. . . . . . . . . . . . . . . . . . . . . . . . 559.3 676.9
Bankcard . . . . . . . . . . . . . . . . . . . . . . . . . . 5,534.3 4,788.9
Merchant participation . . . . . . . . . . . . . . . . . . . 3,398.0 2,564.9
Other unsecured. . . . . . . . . . . . . . . . . . . . . . . 5,018.0 5,137.2
Equipment financing and other commercial . . . . . . . . . . 948.7 1,157.9
-----------------------------------------
Total receivables owned . . . . . . . . . . . . . . . . . . 22,745.6 20,555.6
Accrued finance charges. . . . . . . . . . . . . . . . . . . 335.3 305.0
Credit loss reserve for owned receivables. . . . . . . . . . (667.8) (546.0)
Unearned credit insurance premiums and claims reserves . . . (135.6) (122.2)
Amounts due and deferred from receivables sales. . . . . . . 1,031.1 922.4
Reserve for receivables serviced with limited recourse . . . (349.2) (336.5)
-----------------------------------------
Total receivables owned, net . . . . . . . . . . . . . . . . 22,959.4 20,778.3
Receivables serviced with limited recourse . . . . . . . . . 12,651.3 12,495.1
-----------------------------------------
Total managed receivables, net . . . . . . . . . . . . . . . $35,610.7 $33,273.4
=========================================
The outstanding balance of receivables serviced with limited recourse
consisted of the following:
----------------------------------------------------------------------------------------------------------
September 30, December 31,
In millions. 1995 1994
----------------------------------------------------------------------------------------------------------
Home equity. . . . . . . . . . . . . . . . . . . . . . . . . $ 4,517.3 $ 5,074.6
Bankcard . . . . . . . . . . . . . . . . . . . . . . . . . . 6,128.6 6,311.3
Merchant participation . . . . . . . . . . . . . . . . . . . 750.0 868.2
Other unsecured. . . . . . . . . . . . . . . . . . . . . . . 1,255.4 241.0
-----------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,651.3 $12,495.1
=========================================
The combination of receivables owned and receivables serviced with limited
recourse, which the company considers its managed portfolio, is shown below:
----------------------------------------------------------------------------------------------------------
September 30, December 31,
In millions. 1995 1994
----------------------------------------------------------------------------------------------------------
First mortgage . . . . . . . . . . . . . . . . . . . . . . . $ 3,042.9 $ 3,364.2
Home equity. . . . . . . . . . . . . . . . . . . . . . . . . 8,761.7 7,940.2
Other secured. . . . . . . . . . . . . . . . . . . . . . . . 559.3 676.9
Bankcard . . . . . . . . . . . . . . . . . . . . . . . . . . 11,662.9 11,100.2
Merchant participation . . . . . . . . . . . . . . . . . . . 4,148.0 3,433.1
Other unsecured. . . . . . . . . . . . . . . . . . . . . . . 6,273.4 5,378.2
Equipment financing and other commercial . . . . . . . . . . 948.7 1,157.9
-----------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,396.9 $33,050.7
=========================================
/TABLE
<PAGE>
<PAGE> 8
The amounts due and deferred from receivables sales of $1,031.1 million at
September 30, 1995 included unamortized excess servicing assets and funds
established pursuant to the recourse provisions and holdback reserves for
certain sales totaling $919.4 million. The amounts due and deferred also
included customer payments not yet remitted by the securitization trustee
to the company. In addition, the company has made guarantees relating to
certain securitizations of $270.6 million plus unpaid interest and has
subordinated interests in certain transactions, which are recorded as
receivables, for $101.6 million at September 30, 1995. The company has an
agreement with a "AAA"-rated third party who will indemnify the company for
up to $21.2 million in losses relating to certain securitization
transactions. The company maintains credit loss reserves pursuant to the
recourse provisions for receivables serviced with limited recourse which
are based on estimated probable losses under such provisions. These
reserves totaled $349.2 million at September 30, 1995 and represent the
company's best estimate of probable losses on receivables serviced with
limited recourse.
See Note 4, "Credit Loss Reserves" for an analysis of credit loss reserves
for receivables. See "Management's Discussion and Analysis" on pages 18
through 20 for additional information related to the credit quality of
receivables.
4. CREDIT LOSS RESERVES
--------------------
<TABLE>
<CAPTION>
An analysis of credit loss reserves for the nine months ended September 30
was as follows:
--------------------------------------------------------------------------------------------------------
In millions. 1995 1994
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Credit loss reserves for owned receivables at January 1. . . . . . . . $ 546.0 $ 621.9
Provision for credit losses - owned receivables. . . . . . . . . . . . 569.7 502.2
Owned receivables charged off . . . . . . . . . . . . . . . . . . . . (563.9) (577.9)
Recoveries on owned receivables . . . . . . . . . . . . . . . . . . . 96.6 87.9
Credit loss reserves on receivables purchased, net . . . . . . . . . . 4.7 .4
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7 (.9)
-----------------------------
TOTAL CREDIT LOSS RESERVES FOR OWNED RECEIVABLES AT SEPTEMBER 30 667.8 633.6
-----------------------------
Credit loss reserves for receivables serviced with
limited recourse at January 1. . . . . . . . . . . . . . . . . . . . 336.5 222.8
Provision for credit losses. . . . . . . . . . . . . . . . . . . . . . 297.2 194.1
Chargeoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300.4) (183.9)
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 6.2
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 2.3
------------------------------
TOTAL CREDIT LOSS RESERVES FOR RECEIVABLES SERVICED WITH
LIMITED RECOURSE AT SEPTEMBER 30 . . . . . . . . . . . . . . . . . . 349.2 241.5
------------------------------
TOTAL CREDIT LOSS RESERVES FOR MANAGED RECEIVABLES AT SEPTEMBER 30 . . $1,017.0 $ 875.1
==============================
</TABLE>
5. INCOME TAXES
------------
Effective tax rates for the nine months ended September 30, 1995 and 1994
of 36.1 and 32.8 percent, respectively, differ from the statutory federal
income tax rate for the respective periods primarily because of the
effects of (a) foreign loss carry forwards, (b) amortization and write-
offs of intangible assets, (c) state and local income taxes and (d)
leveraged lease tax benefits.
<PAGE>
<PAGE> 9
6. EARNINGS PER COMMON SHARE
-------------------------
Computations of earnings per common share for the nine months ended
September 30 were as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
1995 1994
----------------- -----------------
Fully Fully
In millions, except per share data. Primary Diluted Primary Diluted
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $320.9 $320.9 $256.6 $256.6
Preferred dividends. . . . . . . . . . . . . . . . . . . . (22.3) (22.2) (21.6) (20.7)
-------------------------------------------
Net income available to common shareholders. . . . . . . . . $298.6 $298.7 $235.0 $235.9
===========================================
Average shares:
Common . . . . . . . . . . . . . . . . . . . . . . . . . . 97.4 97.4 95.2 95.2
Common equivalents . . . . . . . . . . . . . . . . . . . . 1.4 1.7 .8 2.0
-------------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.8 99.1 96.0 97.2
===========================================
Earnings per common share. . . . . . . . . . . . . . . . . . $ 3.02 $ 3.01 $ 2.45 $ 2.43
-------------------------------------------
</TABLE>
Common share equivalents assume exercise of stock options, if dilutive.
Fully diluted earnings per share computations also assume conversion of
dilutive convertible preferred stock into common equivalents. Preferred
stock is considered dilutive if its dividend rate per common share
assuming conversion is less than primary earnings per common share.
7. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES IN TRUST
----------------------------------------------------------------------
In June 1995 Household Capital Trust I ("the trust"), a wholly-owned
subsidiary of the company, issued 3 million 8.25 percent Trust Originated
Preferred Securities ("preferred securities") at $25 per preferred
security. The sole asset of the trust is Junior Subordinated Deferrable
Interest Notes ("junior subordinated notes") issued by the company. The
obligations of the company with respect to the junior subordinated notes,
when considered together with certain undertakings of the company to
guarantee the distribution of payments made on the junior subordinated
notes and the payment of expenses of the trust, constitute a full and
unconditional guarantee by the company of the trust's obligations under
the preferred securities. The junior subordinated notes bear interest
at 8.25 percent on principal of $77.2 million, which is equivalent to
the amount of the trust's common and preferred equity. The junior
subordinated notes mature on June 30, 2025 and are redeemable by the
company in whole or in part beginning on June 30, 2000, at which time
the preferred securities are callable. On June 30, 2025 (or June 30,
2044, if the trust elects, at its option, to extend the maturity date for
the preferred issuance), the trust will liquidate, at which time its
preferred securities must be redeemed for $25 per preferred security
plus accrued dividends. The preferred securities are classified in the
company's balance sheet as company obligated mandatorily redeemable
preferred securities in trust (representing the minority interest in the
trust) at their face and redemption amount of $75 million. Dividends on
the preferred securities are cumulative, payable quarterly in arrears,
and are deferable at the company's option for up to five years. The
company cannot pay dividends on its preferred and common stocks during
such deferments. Net proceeds from the issuance were used for general
corporate purposes, including reduction of short-term debt.
<PAGE>
<PAGE> 10
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CONSOLIDATED OVERVIEW
Operations Summary
------------------
Net income for the third quarter and first nine months of 1995 was
$118.6 and $320.9 million, up 26 and 25 percent from the respective
1994 periods. Fully diluted earnings per share were $1.10 per share in
the third quarter and $3.01 per share for the first nine months of 1995,
up 22 and 24 percent from the same periods in 1994. The company's
annualized return on average common shareholders' equity ("ROE") for the
third quarter of 1995 improved to 17.5 percent compared to 16.5 percent
in the year-ago period. The annualized return on average owned assets
("ROA") was 1.35 percent in the 1995 third quarter, up from 1.10 percent
a year ago.
- The following is a summary of the operating results of the company's
Finance and Banking businesses for the third quarter and first nine
months of 1995 compared to the corresponding prior year periods:
The domestic consumer finance business reported higher earnings
in the third quarter and first nine months of 1995 primarily
due to portfolio growth and improved efficiency.
The credit card business increased earnings in the first nine
months of 1995 but reported lower earnings in the third quarter
of 1995 compared to the respective prior year periods.
Operating results of this business benefited from improved
efficiency and higher net interest margin and fee income
resulting from receivable growth. Offsetting these improvements
were higher credit costs resulting from portfolio seasoning
and, in the private-label credit card business, discontinued
merchant programs. The domestic bankcard business continued
to benefit from the company's association with the General
Motors credit card ("GM Card") program.
Net income increased in the United Kingdom operation primarily
due to improved efficiency and higher net interest margin
resulting from managed receivable growth, particularly in
unsecured products, including the GM Card from Vauxhall.
Operating results in the commercial business were essentially
unchanged compared to the year-ago quarter but were higher than
the first nine months of 1994. In the quarter, lower credit
costs and operating expenses were partially offset by lower
net interest margin due to lower asset levels compared to a
year ago. Earnings in the first nine months of 1995 also
benefited from gains on the disposition of assets in the
second quarter of 1995.
- During the third quarter, the company sold its consumer banking
operations in Ohio and Indiana, thus completing its exit from
consumer banking markets outside Illinois. In the quarter the
company sold deposits totaling approximately $724 million in Ohio
and Indiana and reduced related acquired intangibles by $26 million.
The company recorded after-tax gains of approximately $29 million
from these sales. Also during the third quarter, the company
recorded approximately $14 million of pretax restructuring charges
to consolidate certain other operations.
For the first nine months of 1995 the company sold approximately $3.4
billion of deposits, recording after-tax gains of approximately $55
million and reducing acquired intangibles by $93 million. The company
anticipates that lower operating expenses resulting from the sales of
these branches will more than offset higher funding costs from the
replacement of deposits and will positively impact earnings in future
periods.
- The company's normalized efficiency ratio (which is defined as the
ratio of salaries and fringe benefits and other operating expenses
to net interest margin and other revenues less policyholders'
benefits, excluding certain non-recurring items) improved to 53.2
percent for the quarter and 55.3 percent for the first nine months
of 1995. The efficiency ratio was 57.5 and 59.5 percent in the
corresponding prior year periods. The improvement over the prior
<PAGE>
<PAGE> 11
year was primarily due to lower expenses resulting from initiatives
to improve efficiency that began in the fourth quarter of 1994 and
continued through 1995. The number of employees was down 20 percent
from a year ago.
- During 1995 the company completed its exit from the traditional
domestic first mortgage business through the sale of its remaining
domestic first mortgage servicing portfolio. The company recorded
a small gain from this sale in the second quarter.
- In October 1995 the company sold the individual life and annuity
product lines of its wholly-owned life insurance subsidiary,
Alexander Hamilton Life Insurance Company of America ("Alexander
Hamilton"). At September 30, Alexander Hamilton had assets,
principally investment securities, related to its individual life
and annuity product lines totaling approximately $6.5 billion. For
the first nine months of 1995, these product lines contributed
revenues of approximately $400 million and net income of
approximately $34 million. The annualized ROE of the sold product
lines was 8.2 percent, and the annualized ROA was .73 percent for
the nine months ended September 30, 1995. The company expects that
the sale will not have a material impact on operating results when
recorded in the fourth quarter of 1995.
- In July 1995 the company redeemed $115 million of preferred stock.
Shares redeemed consisted of all outstanding shares of flexible
rate auction preferred stock, Series B at $100 per share plus accrued
and unpaid dividends and 9.5 percent cumulative preferred stock,
Series 1989-A ("Series 1989-A preferred stock") at $104.75 per share
plus accrued and unpaid dividends. The premium paid on the Series
1989-A preferred stock resulted in a $.04 per share reduction in
earnings per share in the third quarter but will increase earnings
per share in the future due to lower preferred dividends. In
June 1995, a subsidiary of the company issued $75 million of 8.25
percent company obligated mandatorily redeemable preferred securities
in trust ("trust originated securities") (representing the minority
interest in the subsidiary).
Balance Sheet Review
--------------------
- Managed consumer receivables (owned receivables plus those serviced
with limited recourse) increased 6 percent on an annualized basis
in the third quarter. Excluding first mortgage and other secured
receivables, which the company has discontinued or de-emphasized,
managed consumer receivables grew 9 percent, annualized, in the
third quarter. On an annualized basis, credit cards were up 11
percent and other unsecured receivables increased 18 percent during
the third quarter. Home equity receivables were essentially
unchanged compared to June 30, 1995.
Excluding first mortgage and other secured receivables, managed
consumer receivables increased 16 percent over the prior year.
Credit card receivables grew 18 percent, and other unsecured
receivables were 21 percent above year-ago levels. The home equity
portfolio increased 10 percent compared to a year ago.
- Credit loss reserves as a percent of managed receivables were 2.87
percent, compared to 2.74 percent at June 30, 1995 and 2.67 percent
at September 30, 1994. The managed provision for credit losses
increased 53 and 25 percent, respectively, from the third quarter
and first nine months of 1994. Reserves as a percent of
nonperforming managed receivables were 105.2 percent compared to
103.3 percent at June 30, 1995 and 99.2 percent at September 30,
1994. Consumer two-months-and-over contractual delinquency
("delinquency") as a percent of managed consumer receivables was
3.40 percent, up from 3.26 percent at June 30, 1995 and 3.24 percent
at September 30, 1994. The annualized total consumer managed
chargeoff ratio in the third quarter of 1995 was 2.92 percent,
compared to 2.77 percent in the prior quarter and 2.69 percent
in the year-ago quarter.
- The ratio of common and preferred shareholders' equity (including
trust originated securities) to total assets was 8.11 percent
compared to 7.35 percent at December 31, 1994. These ratios were
negatively affected by Statement of Financial Accounting Standards
No. 115 ("FAS No. 115") which requires that unrealized gains or
losses in certain debt and equity securities be recorded as an
<PAGE>
<PAGE> 12
adjustment to shareholders' equity. While FAS No. 115 provides
for the adjustment of certain debt and equity securities to fair
value, it does not allow for a corresponding adjustment for a change
in related liabilities. Therefore, unrealized gains and losses do
not reflect the change in the economic value of shareholders' equity
due to changes in interest rates. The company believes that the
change in fair value of liabilities should offset a significant
amount of the change in the fair value of its investment portfolio.
Excluding the effect of the FAS No. 115 component of shareholders'
equity, the ratio of common and preferred shareholders' equity
(including trust originated securities) to total assets was 8.09
percent at September 30, 1995 and 7.65 percent at December 31, 1994.
- In July 1995 Standard & Poor's Ratings Group ("S&P") revised its
outlook on the company and its subsidiary, Household Finance
Corporation, from stable to positive based on strong reserve
coverage and recent expense control initiatives.
<PAGE>
<PAGE> 13
FINANCE AND BANKING
- -------------------
<TABLE>
<CAPTION>
Statements of Income
- -------------------------------------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
September 30, September 30,
All dollar amounts are stated in millions. 1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Finance income . . . . . . . . . . . . . . . . . . . . . . . $ 2,147.5 $ 1,945.6 $ 752.3 $ 677.6
Interest income from noninsurance investment securities. . . 104.9 90.7 19.8 29.8
Interest expense . . . . . . . . . . . . . . . . . . . . . . 1,181.6 875.3 404.1 325.9
-----------------------------------------------
Net interest margin. . . . . . . . . . . . . . . . . . . . . 1,070.8 1,161.0 368.0 381.5
Provision for credit losses on owned receivables . . . . . . 569.7 502.2 188.2 173.3
-----------------------------------------------
Net interest margin after provision for credit losses. . . . 501.1 658.8 179.8 208.2
-----------------------------------------------
Securitization income. . . . . . . . . . . . . . . . . . . . 633.4 465.9 201.1 163.3
Insurance premiums and contract revenues . . . . . . . . . . 154.4 133.4 53.5 47.5
Investment income. . . . . . . . . . . . . . . . . . . . . . 10.9 16.0 1.9 4.2
Fee income . . . . . . . . . . . . . . . . . . . . . . . . . 139.1 193.9 48.3 65.1
Other income . . . . . . . . . . . . . . . . . . . . . . . . 189.4 123.2 58.0 42.1
-----------------------------------------------
Total other revenues . . . . . . . . . . . . . . . . . . . . 1,127.2 932.4 362.8 322.2
-----------------------------------------------
Costs and expenses:
Salaries and fringe benefits . . . . . . . . . . . . . . . 404.3 478.1 128.9 159.8
Other operating expenses . . . . . . . . . . . . . . . . . 724.7 734.3 239.0 240.9
Policyholders' benefits. . . . . . . . . . . . . . . . . . 62.2 58.6 19.8 19.2
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 158.4 103.3 54.2 33.4
-----------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 278.7 $ 216.9 $ 100.7 $ 77.1
===============================================
Average receivables:
Owned . . . . . . . . . . . . . . . . . . . . . . . . . . $21,920.7* $20,770.9 $23,066.8 $21,411.1
Serviced with limited recourse . . . . . . . . . . . . . . 12,342.6 9,846.6 12,126.7 10,193.5
-----------------------------------------------
Average managed receivables. . . . . . . . . . . . . . . . . $34,263.3* $30,617.5 $35,193.5 $31,604.6
===============================================
Return on average owned assets - annualized. . . . . . . . . 1.36% 1.09% 1.48% 1.14%
-----------------------------------------------
Return on average common shareholders' equity - annualized . 20.9% 17.8% 21.4% 19.0%
-----------------------------------------------
* Includes average balance of Assets Pending Sale, which consisted of commercial receivables sold to a joint
venture in March 1995.
- --------------------------------------------------------------------------------------------------------------
September 30, December 31,
In millions. 1995 1994
- --------------------------------------------------------------------------------------------------------------
End-of-period receivables:
Owned . . . . . . . . . . . . . . . . . . $22,745.6 $20,555.6
Serviced with limited recourse . . . . . . . . . . . . . . 12,651.3 12,495.1
-----------------------------------
Managed receivables. . . . . . . . . . . . . . . . . . . . . $35,396.9 $33,050.7
===================================
End-of-period deposits . . . . . . . . . . . . . . . . . . . $ 5,453.7 $ 8,439.0
-----------------------------------
/TABLE
<PAGE>
<PAGE> 14
Overview
--------
Domestic Finance and Banking earnings for the third quarter and first nine
months of 1995 increased to $90.7 and $258.0 million from $68.8 and $205.2
million in the year-ago periods. See Operations Summary on page 10 for
further discussion of the operating results of the company's domestic
Finance and Banking businesses.
Operating results of both foreign businesses improved in both the third
quarter and first nine months of 1995 compared to the prior year periods.
The Canadian operation reported improved results primarily due to improved
efficiency. As discussed on page 10, net income for the United Kingdom
operation increased primarily due to portfolio growth and improved
efficiency.
Receivables
-----------
Managed consumer receivables grew 6 percent on an annualized basis compared
to June 30, 1995 and were up 11 percent compared to the September 30, 1994
level. See Balance Sheet Review on page 11 for further discussion.
Receivables owned totaled $22.7 billion at September 30, 1995, up from both
June 30, 1995 and September 30, 1994. The level of owned receivables may
vary from quarter to quarter depending on the timing and significance of
securitization transactions in a particular period. For the third quarter
of 1995, the company completed the securitization and sale of $1 billion of
other unsecured receivables.
Pro Forma Managed Income Data
-----------------------------
Securitizations and sales of consumer receivables have been, and will
continue to be, an important source of liquidity for the company. The
company continues to service the securitized receivables after such
receivables are sold and retains a limited recourse obligation.
Securitizations impact the classification of revenues and expenses in the
income statement. Amounts related to receivables serviced, including net
interest margin, fee and other income and provision for credit losses on
receivables serviced with limited recourse are reported as a net amount in
securitization income in the company's statements of income.
The company monitors its Finance and Banking segment on a managed basis as
well as on the historical owned basis reflected in its statements of
income. The managed basis assumes that the receivables securitized and
sold are instead still held in the portfolio. Pro forma statements of
income on a managed basis for the Finance and Banking segment for the
third quarter and nine months ended September 30, 1995 and 1994 are
presented on the following page. For purposes of this analysis, the
results do not reflect the differences between the company's accounting
policies for owned receivables and receivables serviced with limited
recourse. Accordingly, net income on the pro forma managed basis equals
net income on a historical owned basis.
<PAGE>
<PAGE> 15
PRO FORMA MANAGED FINANCE AND BANKING STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
All dollar amounts are September 30, September 30,
stated in millions. 1995 1994 1995 1994
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Finance income . . . . . . . $ 3,423.7 12.43%* $ 2,828.0 11.48%* $ 1,165.8 12.75%* $ 994.2 11.76%*
Interest income from
noninsurance investment
securities . . . . . . . . 104.9 .38 90.7 .37 19.8 .21 29.8 .35
Interest expense . . . . . . 1,782.9 6.47 1,237.1 5.02 592.5 6.48 463.8 5.49
----------------------------------------------------------------------------
Net interest margin. . . . . 1,745.7 6.34 1,681.6 6.83 593.1 6.48 560.2 6.62
Provision for credit losses. 866.9 3.15 696.3 2.83 357.3 3.90 233.3 2.76
----------------------------------------------------------------------------
Net interest margin after
provision for credit losses 878.8 3.19 985.3 4.00 235.8 2.58 326.9 3.86
Insurance premiums and
contract revenues. . . . . 154.4 .56 133.4 .54 53.5 .59 47.5 .56
Investment income. . . . . . 10.9 .04 16.0 .07 1.9 .02 4.2 .05
Fee income . . . . . . . . . 394.8 1.43 333.3 1.35 193.4 2.11 109.7 1.30
Other income . . . . . . . . 189.4 .69 123.2 .50 58.0 .63 42.1 .50
----------------------------------------------------------------------------
Total other revenues . . . . 749.5 2.72 605.9 2.46 306.8 3.35 203.5 2.41
----------------------------------------------------------------------------
Costs and expenses:
Salaries and fringe benefits 404.3 1.47 478.1 1.94 128.9 1.41 159.8 1.89
Other operating expenses . 724.7 2.63 734.3 2.98 239.0 2.61 240.9 2.85
Policyholders'
benefits . . . . . . . . 62.2 .22 58.6 .24 19.8 .22 19.2 .23
Income taxes . . . . . . . 158.4 .58 103.3 .42 54.2 .59 33.4 .39
----------------------------------------------------------------------------
Net income . . . . . . . . . $ 278.7 1.01% $ 216.9 .88% $ 100.7 1.10% $ 77.1 .91%
============================================================================
Average managed
receivables. . . . . . . . $34,263.3 $30,617.5 $35,193.5 $31,604.6
Average noninsurance
investments. . . . . . . . 2,450.6 2,221.6 1,390.9 2,219.7
----------------------------------------------------------------------------
Average managed interest-
earning assets . . . . . . $36,713.9 $32,839.1 $36,584.4 $33,824.3
============================================================================
* As a percent, annualized, of average managed interest-earning assets.
</TABLE>
The discussion below on revenues, where applicable, and provision for credit
losses includes comparisons to amounts reported on the company's historical
statements of income ("Owned Basis") as well as on the above pro forma
statements of income ("Managed Basis").
Net interest margin
-------------------
Net interest margin on an Owned Basis was $368.0 and $1,070.8 million for
the third quarter and first nine months of 1995, down from $381.5 and
$1,161.0 million in the prior year periods primarily due to higher funding
costs. Net interest margin on a Managed Basis was $593.1 and $1,745.7
million for the third quarter and first nine months of 1995, up 6 and 4
percent, respectively, compared to the same year-ago periods. Net
interest margin as a percent of average managed interest-earning assets,
annualized, was 6.48 percent compared to 6.23 percent in the previous
quarter and 6.62 percent in the year-ago quarter. The net interest
margin percentage in the second quarter of 1995 was adversely affected
by a portfolio of temporary investments that was used to build liquidity
in anticipation of the sales of consumer banking operations in the
second and early third quarters of 1995. The company believes this
temporary portfolio distorted the trend in the net interest margin
percentage. Excluding the impact of these temporary investments, net
interest margin as a percent of average managed interest-earning assets,
annualized, was 6.44 percent in the second quarter of 1995.
The increase in the net interest margin percentage over the prior
quarter was due to continued shift in product mix toward unsecured
receivables and wider spreads, partially offset by higher-cost funding
which replaced the sold consumer banking deposits. The decrease compared
to the prior year period was primarily attributable to compression on
fixed rate receivable spreads and higher cost of deposit replacement
funding, offset by wider spreads on variable rate products.
<PAGE> 16
Provision for credit losses
---------------------------
The provision for credit losses for receivables on an Owned Basis for
the third quarter and first nine months of 1995 totaled $188.2 and
$569.7 million, up 9 percent from $173.3 million and 13 percent from
$502.2 million in the comparable prior year periods. The level of
provision for credit losses on an Owned Basis may vary from quarter to
quarter, depending on the amount of securitizations and sales of
receivables in a particular period.
The provision for credit losses for receivables on a Managed Basis totaled
$357.3 and $866.9 million in the third quarter and first nine months of
1995, up 53 percent from $233.3 million and 25 percent from $696.3
million in the comparable periods of 1994. As a percent of average
managed interest-earning assets, annualized, the provision increased to
3.90 percent from 2.76 percent in the third quarter of 1994. The company
increased credit loss reserves due to continued growth and seasoning of
unsecured products and economic uncertainty. In addition, the provision
also included the over-the-life reserve requirement on the unsecured
receivables that were securitized in the quarter, which substantially
offset the income recorded on the securitization, as discussed below.
See the credit quality section for further discussion of factors
affecting the provision for credit losses.
Other revenues
--------------
Securitization income on an Owned Basis consists of income associated
with the securitizations and sales of receivables with limited recourse,
including net interest income, fee and other income and provision for
credit losses related to those receivables. The increase in
securitization income on an Owned Basis compared to the same year-ago
periods was primarily due to higher levels of securitized receivables
outstanding. In addition, growth in interchange and other credit card
fee income outpaced the growth in the securitized bankcard portfolio
due to an increase in the number of credit cards issued and greater
transaction volume. The components of securitization income are
reclassified to the applicable lines in the statements of income on a
Managed Basis.
Insurance premiums and contract revenues increased from the third quarter
and first nine months of 1994 due to higher sales volumes of specialty
and credit insurance in the domestic and United Kingdom operations
related to growth in the company's receivable base.
Fee income on an Owned Basis includes revenues from fee-based products
such as bankcards, consumer banking deposits, private-label credit cards
and, in 1994, commission income from the company's brokerage business.
Fee income was $48.3 and $139.1 million in the third quarter and first
nine months of 1995, down from $65.1 and $193.9 million in the comparable
periods of the prior year primarily due to lower interchange and other
fee income resulting from an increase in the amount of securitized credit
card receivables compared to the prior year. Fee income for the first
nine months of 1995 was also impacted by lower commission income as a
result of the sale of the company's brokerage business in the third
quarter of 1994.
Fee income on a Managed Basis, which in addition to the items discussed
above includes fees and other income related to receivables serviced
with limited recourse, increased from $109.7 and $333.3 million in the
third quarter and first nine months of 1994 to $193.4 and $394.8 million
in the same periods in 1995. The increase for the quarterly period was
primarily due to income associated with the securitization and sale of
unsecured receivables during the quarter, which was substantially offset
by the over-the-life reserve for estimated credit losses on these
receivables as previously discussed. The increase in the year-to-date
period was primarily due to higher interchange and other fee income
resulting from growth in the managed credit card portfolio and
increased transaction volume.
In the second quarter of 1995, the company exited the domestic first
mortgage servicing business through the sale of its entire domestic first
mortgage servicing portfolio. Servicing income associated with the
company's other portfolios serviced with no recourse is not expected to
be significant in the future. As a result, the company has combined
income related to the servicing of receivables with no recourse with
other income and has reclassified prior period results to reflect this
change.
<PAGE>
<PAGE> 17
Other income increased compared to the third quarter and first nine
months of 1994 primarily due to the gains on the sales of consumer
banking operations discussed previously. Also benefiting other income
in the first nine months of 1995 were gains recorded in the second
quarter from the disposition of commercial assets and from the sale of
the company's domestic first mortgage servicing portfolio. Partially
offsetting this increase was lower servicing income attributable to
lower balances of first mortgage loans serviced with no recourse
compared to prior periods and a write-down that occurred in the second
quarter of 1995 related to the servicing of a portfolio of unsecured loans
serviced with no recourse.
Expenses
--------
Salaries and fringe benefits were $128.9 and $404.3 million compared to
$159.8 and $478.1 million in the third quarter and first nine months of
1994. The improvement was primarily due to a reduction in the number
of employees in connection with decisions made to improve the operating
efficiency of certain businesses and to exit others. These initiatives
began in the fourth quarter of 1994 and continued into 1995. Other
operating expenses were essentially unchanged compared to the same
periods of 1994, despite the increase in average managed interest-earning
assets. In the third quarter of 1995 the company recorded restructuring
charges totaling approximately $14 million, primarily related to the
consolidation of office space and staff.
The effective tax rate for the Finance and Banking segment was 35.0 and
36.2 percent, compared to 30.2 and 32.3 percent in the third quarter and
first nine months of 1994.
Credit Loss Reserves
--------------------
The company's credit portfolios and credit management policies have
historically been divided into two distinct components - consumer and
commercial. For consumer products, credit policies focus on product type
and specific portfolio risk factors. The consumer credit portfolio is
diversified by product and geographic location. The commercial credit
portfolio is monitored on an individual transaction basis and is also
evaluated based on overall risk factors. See Note 3, "Receivables" in
the accompanying financial statements for receivables by product type.
Total managed credit loss reserves, which include reserves for recourse
obligations for receivables sold, were as follows (in millions):
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
September 30, June 30, December 31, September 30,
1995 1995 1994 1994
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Owned . . . . . . . . . . . . . . . . . . $ 667.8 $661.1 $546.0 $633.6
Serviced with limited recourse. . . . . . 349.2 296.1 336.5 241.5
----------------------------------------------------
Total . . . . . . . . . . . . . . . . . . $1,017.0 $957.2 $882.5 $875.1
====================================================
</TABLE>
Managed credit loss reserves were up 6 percent from June 30, 1995 and up 16
percent from September 30, 1994. Managed credit loss reserves as a percent
of nonperforming managed receivables were 105.2 percent, up from 103.3
percent at June 30, 1995 and 99.2 percent at September 30, 1994.
<TABLE>
<CAPTION>
Total owned and managed credit loss reserves as a percent of receivables
were as follows:
---------------------------------------------------------------------------------------------------------
September 30, June 30, December 31, September 30,
1995 1995 1994 1994
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Owned . . . . . . . . . . . . . . . . . 2.94% 2.95% 2.66% 2.88%
Managed . . . . . . . . . . . . . . . . 2.87 2.74 2.67 2.67
-----------------------------------------------------
</TABLE>
The level of reserves for consumer credit losses is based on delinquency
and chargeoff experience by product and judgmental factors. The level of
reserves for commercial credit losses is based on a regular review process
<PAGE>
<PAGE> 18
for all commercial credits and management's evaluation of probable future
losses in the portfolio as a whole given its geographic and industry
diversification and historical loss experience. Management also evaluates
the potential impact of existing and anticipated national and regional
economic conditions on the managed receivable portfolio when establishing
consumer and commercial credit loss reserves. While management allocates
all reserves among the company's various products, all reserves are
considered to be available to cover total loan losses. See Note 4,
"Credit Loss Reserves" in the accompanying financial statements for
analyses of reserves.
Credit Quality
--------------
Delinquency and chargeoff levels in the consumer portfolio were up compared
to the prior and year-ago quarters.
In the third quarter of 1995, the company changed its procedure regarding
chargeoffs of bankrupt Visa*/MasterCard* accounts. Prior to the third
quarter, when the company received notification that a Visa/MasterCard
customer had filed bankruptcy, the company established a reserve equal to
the full balance of the customer's receivable. If not paid, the receivable
balance would be charged off in accordance with the company's normal
chargeoff policy. Beginning in the third quarter of 1995, the company
implemented a new procedure, to more closely conform with credit card
industry practice, to charge off accounts within 30 days of notification
of bankruptcy filing. Accordingly, the company accelerated the chargeoff
of bankrupt Visa/MasterCard accounts that had been past due. The chargeoff
ratios presented below have been normalized to exclude the effect of these
nonrecurring bankrupt chargeoffs.
Delinquency
-----------
Delinquency levels are monitored on a managed basis which includes both
receivables owned and receivables serviced with limited recourse. The
latter portfolio is included since it is subjected to underwriting
standards comparable to the owned portfolio, is managed by operating
personnel without regard to portfolio ownership and results in a similar
credit loss exposure for the company.
Two-Months-and-Over Contractual Delinquency (as a percent of managed
consumer receivables):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
9/30/95 6/30/95 3/31/95 12/31/94 9/30/94
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First mortgage . . . . . . . . . . . . . 2.16% 1.74% 1.79% 1.81% 1.57%
Home equity. . . . . . . . . . . . . . . 3.14 2.78 2.75 2.83 2.88
Other secured. . . . . . . . . . . . . . 12.12 10.30 5.90 3.31 3.39
Bankcard . . . . . . . . . . . . . . . . 2.29 2.31 2.33 2.25 2.35
Merchant participation . . . . . . . . . 4.25 4.00 4.42 4.53 4.70
Other unsecured. . . . . . . . . . . . . 5.10 5.41 5.07 5.19 5.75
--------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . . 3.40% 3.26% 3.15% 3.11% 3.24%
==============================================================
</TABLE>
Delinquency as a percent of managed consumer receivables increased from the
prior quarter and the prior year. The home equity delinquency ratio
increased, as expected, primarily due to the seasoning of portfolios
acquired through the wholesale network. The delinquency ratio for other
secured receivables continued to increase during the quarter primarily due
to lower receivable levels coupled with one borrower with several loans
who declared bankruptcy in the second quarter. Delinquency on this
portfolio had little impact on the overall delinquency ratio due to the
small size of the portfolio. The bankcard delinquency ratio, excluding
the impact of the accelerated bankrupt chargeoffs discussed previously,
was 2.65 percent. The increase in the quarter was primarily due to the
continued aging of the GM Card portfolio. The merchant participation
delinquency ratio increased primarily due to merchant programs the
company has decided to exit. Excluding the impact of the previously-
mentioned accelerated chargeoffs, total delinquency was 3.52 percent.
*Visa and MasterCard are registered trademarks of VISA USA, Inc. and
MasterCard International, Incorporated, respectively.<PAGE>
<PAGE> 19
Net Chargeoffs of Consumer Receivables
--------------------------------------
<TABLE>
<CAPTION>
Net Chargeoffs of Consumer Receivables (as a percent, annualized, of average managed consumer receivables):
--------------------------------------------------------------------------------------------------------
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
1995 1995 1995 1994 1994
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First mortgage . . . . . . . . . . . . . .32% .36% .29% .26% .43%
Home equity. . . . . . . . . . . . . . . 1.12 1.04 .90 1.00 1.15
Other secured. . . . . . . . . . . . . . .63 .32 .95 .95 1.33
Bankcard*. . . . . . . . . . . . . . . . 4.24 4.05 4.04 3.96 3.73
Merchant participation . . . . . . . . . 4.63 4.71 4.29 3.84 3.52
Other unsecured. . . . . . . . . . . . . 3.45 3.21 3.25 3.61 4.23
---------------------------------------------------------------
Total* . . . . . . . . . . . . . . . . . 2.92% 2.77% 2.68% 2.65% 2.69%
===============================================================
*Normalized to exclude accelerated chargeoffs of bankrupt accounts. Including these accelerated
chargeoffs, bankcard and total chargeoffs were 5.61 and 3.39 percent, respectively, in the third quarter
of 1995.
</TABLE>
Net chargeoffs as a percent of average managed consumer receivables for
the third quarter of 1995 increased compared to both the second quarter
of 1995 and the third quarter of 1994. Home equity receivable chargeoffs
increased as expected but were below the prior year. Excluding the
previously-mentioned accelerated chargeoffs, bankcard chargeoffs
increased compared to the prior quarter and were higher than the
year-ago quarter primarily due to the continued maturation of the GM
Card portfolio. Bankcard chargeoffs were also impacted by an increase
in bankruptcy filings. Merchant participation chargeoffs were below
the previous quarter but were higher than a year ago primarily due to
merchant programs the company has decided to exit. The chargeoff ratio
for the other unsecured portfolio increased compared to the prior
quarter and was below the year-ago quarter.
Chargeoffs are a lagging indicator of credit quality and generally reflect
prior delinquency trends. However, growth associated with credit card and
other unsecured receivables has resulted in a shift in product mix toward
unsecured receivables, which have higher chargeoff rates than secured
receivables. Future changes in the overall chargeoff trend may result
from the shift in product mix to unsecured receivables, changes in
economic conditions and other factors.
Nonperforming Assets
--------------------
<TABLE>
<CAPTION>
Nonperforming assets consisted of the following:
--------------------------------------------------------------------------------------------------------
In millions. 9/30/95 6/30/95 3/31/95 12/31/94 9/30/94
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual managed receivables . . . . . $ 711.0 $ 629.3 $ 558.4 $ 581.5 $ 612.0
Accruing managed consumer receivables
90 or more days delinquent . . . . . . 233.6 255.9 238.5 228.2 225.3
Renegotiated commercial loans. . . . . . 22.0 41.8 85.9 41.8 44.9
---------------------------------------------------------------
Total nonperforming managed
receivables. . . . . . . . . . . . . . 966.6 927.0 882.8 851.5 882.2
Real estate owned. . . . . . . . . . . . 148.7 157.1 187.8 182.8 395.1
---------------------------------------------------------------
Total nonperforming assets . . . . . . . $1,115.3 $1,084.1 $1,070.6 $1,034.3 $1,277.3
===============================================================
Managed credit loss reserves
as a percent of nonperforming
managed receivables. . . . . . . . . . 105.2% 103.3% 102.2% 103.6% 99.2%
---------------------------------------------------------------
/TABLE
<PAGE>
<PAGE> 20
Effective January 1, 1995 the company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan" ("FAS No. 114"), as amended by Statement of Financial Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosure." FAS No. 114 requires that a loan be
recognized as impaired when it is probable that all contractual amounts
due will not be repaid. FAS No. 114 specifically excludes groups of
individually small dollar, homogenous loans where collectibility is
evaluated collectively, such as the company's consumer receivable
portfolio. At September 30, 1995 impaired commercial loans included in
the above table were not significant and their ultimate disposition is
not expected to have a material impact on the company's results of
operations. The adoption of FAS No. 114 had no impact on the company's
results of operations for the nine months ended September 30, 1995.
Credit loss reserves for impaired loans are included in reserves for
managed receivables described on pages 17 and 18.
<PAGE>
<PAGE> 21
INDIVIDUAL LIFE INSURANCE
- -------------------------
Individual Life Insurance net income was $17.9 and $42.2 million, compared to
$17.4 and $39.7 million in the prior year periods. As previously discussed,
the company sold the individual life and annuity product lines of this segment
in October 1995. Revenues and net income of the product lines being sold
totaled approximately $400 and $34 million, respectively, for the first nine
months of 1995. For the same period, these sold product lines had an
annualized ROE of 8.2 percent. The sale will be recorded in the fourth
quarter.
<TABLE>
<CAPTION>
Statements of Income
- -------------------------------------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
September 30, September 30,
All dollar amounts are stated in millions. 1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income. . . . . . . . . . . . . . . . . . . . . . . . $412.4 $372.1 $143.6 $124.5
Insurance premiums and contract revenues . . . . . . . . . . . . 107.8 62.7 34.3 (11.4)
-------------------------------------------
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . 520.2 434.8 177.9 113.1
Costs and expenses
Policyholders' benefits. . . . . . . . . . . . . . . . . . . . 354.4 285.3 113.9 65.5
Operating expenses . . . . . . . . . . . . . . . . . . . . . . 100.9 87.6 36.4 20.4
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 22.7 22.2 9.7 9.8
-------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42.2 $ 39.7 $ 17.9 $ 17.4
===========================================
Return on average assets - annualized. . . . . . . . . . . . . . .72% .75% .91% .97%
-------------------------------------------
Return on average common shareholders' equity - annualized . . . 7.2% 8.4% 9.0% 10.7%
-------------------------------------------
- -------------------------------------------------------------------------------------------------------------
September 30, December 31,
In millions. 1995 1994
- -------------------------------------------------------------------------------------------------------------
Investment securities. . . . . . . . . . . . . . . . . . . . . . $ 7,135.5 $ 6,669.9
-------------------------------------------
Life insurance in-force. . . . . . . . . . . . . . . . . . . . . 38,499.3 36,560.4
-------------------------------------------
</TABLE>
Investment securities for the Individual Life Insurance segment totaled $7.1
billion, up from $7.0 billion at June 30, 1995 and $6.7 billion at December 31,
1994. The Individual Life Insurance portfolio represented approximately 82
percent of the company's total investment portfolio at September 30, 1995.
Investment securities sold in connection with the above-mentioned sale of
product lines totaled approximately $5.8 billion.
Investment income includes both interest income on investment securities and
realized gains and losses on the sale of available-for-sale investments.
Investment income in the third quarter and first nine months of 1995 was $143.6
and $412.4 million, up compared with the year-ago periods primarily due to
higher interest income resulting from higher yields and a larger investment
portfolio.
In the third quarter of 1994, the company sold its whole life line of business
and, as a result, reduced both contract revenues and policyholders' benefits by
$47.8 million. This represented the amount of claim reserves on the policies
that were sold to the new insurer. Excluding the impact of this transaction,
insurance premiums and contract revenues for the third quarter and first nine
months of 1995 were slightly below the respective prior year periods. Also,
excluding the impact of this sale, policyholders' benefits in the first nine
months of 1995 were higher than the prior year primarily due to higher interest
credited to policyholders caused by higher interest rates and life insurance
in-force. Policyholders' benefits in the third quarter of 1995 were
essentially unchanged compared to the year-ago quarter, excluding the impact
of the sale.
<PAGE>
<PAGE> 22
Operating expenses in the third quarter and first nine months of 1995 were up
compared to the respective prior year periods primarily due to higher levels of
deferred insurance policy acquisition cost amortization associated with higher
investment income.
The effective tax rate was 35.1 and 35.0 percent for the third quarter and
first nine months of 1995, compared to 36.0 and 35.9 percent in the respective
periods of 1994.<PAGE>
<PAGE> 23
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.(i) Restated Certificate of Incorporation of Household
International, as amended.
12 Statement of Computation of Ratio of Earnings to Fixed Charges
and to Combined Fixed Charges and Preferred Stock Dividends.
21 List of Household International subsidiaries.
27 Financial Data Schedule.
(b) Reports on Form 8-K
During the third quarter of 1995, the Registrant filed a Current Report
on Form 8-K dated August 9, 1995, pertaining to the sale of Alexander
Hamilton Life Insurance Company of America to Jefferson-Pilot
Corporation.<PAGE>
<PAGE> 24
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOUSEHOLD INTERNATIONAL, INC.
-----------------------------
(Registrant)
Date: November 13, 1995 By: /s/ David A. Schoenholz
----------------- ----------------------------
David A. Schoenholz,
Senior Vice President -
Chief Financial Officer
and on behalf of
Household International, Inc.
<PAGE>
<PAGE> 25
Exhibit Index
-------------
3.(i) Restated Certificate of Incorporation of Household International, as
amended.
12 Statement of Computation of Ratio of Earnings to Fixed Charges and
to Combined Fixed Charges and Preferred Stock Dividends.
21 List of Household International subsidiaries.
27 Financial Data Schedule.
<PAGE> 1
HOUSEHOLD INTERNATIONAL, INC.
RESTATED CERTIFICATE OF INCORPORATION INDEX
PAGE DATE DESCRIPTION
- ---- -------- -----------
2 9/4/81 Restated Certificate of Incorporation
12 7/25/84 Certificate of Change of Address of
Registered Office and of Registered Agent
14 11/14/94 Certificate of Elimination for Series A
Junior Participating Preferred Stock and
Certificate of Designation, Preferences and
Rights of Series A Junior Participating
Preferred Stock (dated 8/17/84)
20 5/13/87 Certificate of Amendment (Article VII)
23 7/11/89 Certificate of Elimination for $2.375
Cumulative Convertible Voting Preferred Stock
and $2.50 Cumulative Convertible Voting
Preferred Stock, Certificate of Designation,
Preferences and Rights of $2.375 Cumulative
Convertible Voting Preferred Stock (dated
6/25/81) and $2.50 Cumulative Convertible
Voting Preferred Stock (dated 6/25/81)
29 8/16/95 Certificate of Elimination for 9-1/2%
Cumulative Preferred Stock, Series 1989-A and
Certificate of Designation, Preferences and
Rights of 9-1/2% Cumulative Preferred Stock,
Series 1989-A (dated 11/6/89)
35 8/16/95 Certificate of Elimination for Flexible Rate
Auction Preferred Stock, Series B,
Certificate of Elimination for Flexible Rate
Auction Preferred Stock, Series A (dated
7/13/93), and Certificate of Designation,
Preferences and Rights of Flexible Rate
Auction Preferred Stock, Series A and B
(dated 7/18/90)
66 11/14/94 Certificate of Elimination for 11-1/4%
Enhanced Rate Cumulative Preferred Stock and
Certificate of Designation, Preferences and
Rights of 11-1/4% Enhanced Rate Cumulative
Preferred Stock
72 8/5/91 Certificate of Designation, Preferences and
Rights of 9-1/2% Cumulative Preferred Stock,
Series 1991-A
77 10/14/92 Certificate of Designation, Preferences and
Rights of 8-1/4% Cumulative Preferred Stock,
Series 1992-A
82 5/12/93 Certificate of Amendment (Article IV)
83 9/1/93 Certificate of Designation, Preferences and
Rights of 7.35% Cumulative Preferred Stock,
Series 1993-A<PAGE>
<PAGE> 2
RESTATED
CERTIFICATE OF INCORPORATION
OF
HOUSEHOLD INTERNATIONAL, INC.
This Restated Certificate of Incorporation was duly adopted
by the Board of Directors of Household International, Inc. in
accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware. This Restated
Certificate of Incorporation only restates and integrates and
does not further amend the provisions of the Corporation's
certificate of incorporation as heretofore amended or
supplemented, and there is no discrepancy between those
provisions and the provisions of this Restated Certificate of
Incorporation. The original Certificate of Incorporation was
filed with the Secretary of State of Delaware on February 20,
1981.
ARTICLE I
The name of the corporation is Household International, Inc.
ARTICLE II
The address of the Corporation's registered office in the
State of Delaware is 100 West Tenth Street, Wilmington, Delaware
19899. The name of its registered agent at such address is The
Corporation Trust Company, in the county of New Castle.
ARTICLE III
The Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
The total number of shares that may be issued by the
Corporation is 75,655,004 of which 8,155,004 shares shall be
Preferred Stock without par value and 67,500,000 shares shall be
Common Stock of the par value of $1 per share.
The 8,155,004 shares of Preferred Stock may be issued from
time to time in one or more series, which may have such
designations, powers, preferences and relative, participating,
optional or other special rights, and qualifications, limitations
or restrictions thereof, as shall be stated in the resolution or
resolutions (authorizing resolutions) providing for the issue of
such shares adopted by the Board of Directors. Without otherwise
limiting the generality of the foregoing provision, the Board of
Directors is expressly authorized to provide, with respect to
each such series, that:
(a) the shares of such series shall be subject to redemption
(including redemption through a sinking fund or analogous fund)
at such time or times and at such price or prices as shall be
stated in the authorizing resolutions;
(b) the holders of the shares of such series shall be
entitled to receive dividends at such rates, on such conditions
and at such times, payable in preference, or in such relation, to
the dividends payable on any other class or classes or of any
other series of stock of the Corporation, and cumulative or non-
cumulative, all as shall be stated in the authorizing
resolutions;
(c) the holders of the shares of such series shall be
entitled to such rights upon the dissolution, or upon any
distribution of the assets, of the Corporation as shall be stated
in the authorizing resolutions;
(d) the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock,
or of any series thereof, of the Corporation at such price or
prices or at such rate or rates and with such adjustments, all as
shall be stated in the authorizing resolutions;
<PAGE>
<PAGE> 3
(e) the shares of such series shall have such voting powers,
full or limited, or no voting powers, as shall be stated in the
authorizing resolutions.
The following is a statement of the powers, preferences, and
rights, and the qualifications, limitations or restrictions
thereof, in respect of the Preferred Stock, except such thereof
as the Board of Directors is herein authorized to provide for,
and in respect of the Common Stock:
(1) Except as otherwise provided in authorizing resolutions
creating series of Preferred Stock, each share of Preferred Stock
shall rank on a parity with each other share of Preferred Stock,
regardless of series, in preference to the Common Stock, with
respect to the payment of dividends at the respectively
designated rates. No dividend shall be declared or paid on the
shares of any particular series of Preferred Stock unless at the
same time a dividend in like proportion to the respectively
designated dividend rates shall be declared or paid on the shares
of each other series of Preferred Stock then issued and
outstanding ranking prior to or on a parity with such particular
series with respect to the payment of dividends. Except as
otherwise provided in the authorizing resolutions creating
additional series of Preferred Stock, each share of Preferred
Stock shall rank on a parity with each other share of Preferred
Stock, regardless of series, in preference to the Common Stock,
with respect to the distribution of assets according to the
amounts to which the shares of the respective series are
thereupon entitled.
(2) The holders of shares of the Preferred Stock shall be
entitled to receive, when and as declared by the Board of
Directors, out of any funds legally available for that purpose,
dividends in cash at such respective rates, payable on such dates
in each year and in respect of such dividend periods, all as
stated in the authorizing resolutions, before any dividends shall
be declared or paid or set apart for payment upon the Common
Stock. Dividends on the shares of each series of the Preferred
Stock shall be cumulative or non-cumulative and, if cumulative,
shall be cumulative from such date, all as stated in the
authorizing resolutions.
At any time after all dividends shall have been paid, as
above provided, on the Preferred Stock of all series then
outstanding and after, or concurrently with, the declaration and
setting aside of a sum for the payment of full dividends on the
Preferred Stock of each series then outstanding for the then
current dividend period established for such series, then, but
not prior thereto, such dividends (payable either in cash, stock,
or otherwise) as may be determined by the Board of Directors may
be declared and paid on the Common Stock out of any remaining
assets legally available for the declaration of dividends and the
Preferred Stock shall not be entitled to participate in any such
dividends whether payable in cash, stock, or otherwise. No
Preferred Stock or Common Stock may be purchased by the
Corporation if any Preferred Stock dividends are in arrears, and
no Preferred Stock may be redeemed in such case unless all issued
and outstanding shares of Preferred Stock are redeemed.
(3) The whole or any part of the Preferred Stock, of any one
or more series, redeemable pursuant to provisions stated in the
respective authorizing resolutions, at the time outstanding, may,
at the option of the Board of Directors, be redeemed, in
accordance with such authorizing resolutions, at any time or from
time to time, by the payment or by making provision for payment
of such price or prices per share in the case of every such
redemption as shall be stated in such authorizing resolutions,
and, in every case, a sum equal to accrued and unpaid dividends,
if any, with respect to each such share to be so redeemed, at the
rate of the dividends fixed therefor, to the date fixed for
redemption.
In case of redemption of a part only of any series of the
Preferred Stock at the time outstanding, such redemption shall be
made by lot or pro rata in such manner as may be prescribed by
resolution of the Board of Directors. The Board of Directors
shall have full power and authority, subject to the limitations
and provisions herein contained and stated in the respective<PAGE>
<PAGE> 4
authorizing resolutions, to prescribe the manner in which and the
terms and conditions upon which Preferred Stock shall be redeemed
from time to time.
Notice of the Corporation's intention to redeem Preferred
Stock, specifying the date of redemption, shall be published in
newspapers of general circulation in New York, New York, and
Chicago, Illinois, and shall be mailed not less than forty-five
nor more than ninety days before the redemption date to the
holders of record of such stock to be redeemed at their
respective addresses as the same shall appear on the books of the
Corporation, and, if less than all the shares owned by any such
stockholder are then to be redeemed, the notice shall specify the
number of shares thereof which are to be redeemed.
If notice shall be given as aforesaid and the funds
necessary to redeem such stock shall have been set aside by the
Corporation (other than by the trust deposit hereinafter provided
for) separate and apart from its other funds for the benefit of
the holders of the shares called for redemption, such stock shall
be redeemed upon such date of redemption and shall cease to be
outstanding; the right to receive dividends thereon shall cease
to accrue from and after such date of redemption and all rights
of holders of the Preferred Stock so called for redemption shall
forthwith on such redemption date cease and terminate except only
the right of the holders thereof, upon presentation and surrender
of their respective certificates representing said shares, to
receive the redemption price therefor but without interest, and
the right of conversion, if any.
Anything herein contained to the contrary notwithstanding,
if notice shall be given as aforesaid and before the redemption
date an amount sufficient to redeem the shares so called for
redemption shall be deposited in trust to be applied to such
redemption with a bank or with bankers authorized to conduct
banking business or with a trust company, in the Borough of
Manhattan, City of New York, or in the City of Chicago, having a
combined capital and surplus of at least $5,000,000, then, from
and after the date of such deposit, such shares shall be deemed
to be redeemed and to cease to be outstanding, and all rights of
the holders of the shares called for redemption, as stockholders
of the Corporation, shall cease except (i) the right, upon
presentation and surrender of their respective certificates
representing said shares, to receive from such bank or bankers or
trust company on or after such redemption date the moneys so
deposited in trust, but without interest, and (ii) the right of
conversion, if any. The Corporation shall be entitled to any
interest payable on the funds so deposited. Any redemption funds
unclaimed at the end of six years shall be repaid to the
Corporation, after which holders of the redeemed shares shall
look only to the Corporation for payment of the redemption price,
but without interest thereon.
(4) In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, the
holders of the Preferred Stock shall be entitled to be paid or to
have set apart for payment such sum or sums per share as shall be
stated in the respective authorizing resolutions, together in
each case with a sum equal to accrued and unpaid dividends, if
any, at the rate of the dividends fixed therefor, to the date
fixed for payment of such price or prices, before any
distribution or payment shall be made to the holders of the
Common Stock. No consolidation or merger of the Corporation with
another corporation or corporations and no sale by the
Corporation of its assets as an entirety or substantially as an
entirety shall be deemed to be a liquidation, dissolution, or
winding up of the Corporation within the meaning of this
subdivision (4).
(5) The Corporation shall not, without the consent
(expressed either in writing or by affirmative vote at a meeting
called for that purpose) of the holders of two-thirds of the then
outstanding Preferred Stock of all series, other than series in
respect of which the authorizing resolutions expressly provide
that such consent shall not be required:
<PAGE>
<PAGE> 5
(i) consolidate or merge with another corporation or
corporations or sell its assets as an entirety or
substantially as an entirety, provided, however, that the
purchase for cash, stock, or otherwise by the Corporation of
all or any part of the assets, stock or other securities of
another corporation or corporations shall not be deemed to
be a consolidation or merger;
(ii) issue Preferred Stock of any series if there shall
be cumulative dividends in arrears on outstanding Preferred
Stock, irrespective of series;
(iii) increase the authorized amount of the Preferred
Stock, or create or issue any class of stock ranking prior
to or on a parity with the Preferred Stock, or any series
thereof, as to the payment of dividends or the distribution
of assets;
(iv) adopt any amendment to the Certificate of
Incorporation of the Corporation which adversely alters any
preference, power, or special right of the Preferred Stock,
or of the holders thereof; provided, however, that if any
such amendment would adversely alter any preference, power,
or special right of one or more but not all of the series of
the Preferred Stock or of the holders thereof, then the
consent (expressed as above provided) only of the holders of
two-thirds of the then outstanding shares of all series so
affected, voting as a class, other than series in respect of
which the authorizing resolutions expressly provide that
such consent shall not be required, shall be required for
the adoption of such amendment.
(6) In the event that any four quarterly cumulative
dividends, whether consecutive or not, upon the Preferred Stock,
or any series thereof, shall be in arrears, the holders of
Preferred Stock of all series, other than series in respect of
which the right is expressly withheld by the authorizing
resolutions, shall have the right, at the next meeting of
stockholders called for the election of directors, to elect one-
third of the members of the Board of Directors out of the number
fixed by the by-laws, and the holders of such Preferred Stock
shall continue to have such right until all unpaid dividends upon
the Preferred Stock shall have been paid in full. In the event
that any eight quarterly cumulative dividends, whether
consecutive or not, upon the Preferred Stock, or any series
thereof, shall be in arrears, the holders of Preferred Stock of
all series, other than series in respect of which the right is
expressly withheld by the authorizing resolutions, shall have the
right, at the next meeting of stockholders called for the
election of directors, to elect a majority of the members of the
Board of Directors out of the numbers fixed by the by-laws, and
the holders of such Preferred Stock shall continue to have such
right until all unpaid dividends upon the Preferred Stock shall
have been paid in full.
(7) The holders of the Common Stock shall be entitled to
vote at all meetings of the stockholders and, subject to the
rights of holders of Preferred Stock to elect directors in
accordance with the provisions of the foregoing subdivision (6),
shall be entitled to one vote for each share of Common Stock
held.
ARTICLE V
There is hereby created a series of Preferred Stock of the
Corporation, such series to be within the class of Preferred
Stock authorized by Article IV hereof; to be designated $6.25
Cumulative Convertible Voting Preferred Stock (the "$6.25
Preferred Stock"); to consist of 3,454,635 shares; to have the
powers, preferences and rights and the qualifications,
limitations and restrictions set forth in, and to be subject to
all of the terms and provisions of, Article IV hereof (except to
the extent that the same may be inconsistent with this Article
V); and to have the following additional powers, preferences,
rights, qualifications, limitations, restrictions, terms and
provisions:
<PAGE>
<PAGE> 6
(a) $6.25 per share is fixed as the amount per annum at
which the holders of $6.25 Preferred Stock shall be entitled to
receive dividends when and as declared by the Board of Directors,
such dividends to be paid only from retained earnings of the
Corporation; and such dividends shall be cumulative and shall
accrue, whether or not earned or declared, from the Issue Date
(as hereinafter defined), and shall be payable quarterly on the
fifteenth day of January, April, July and October in each year to
holders of record on the respective business days next preceding
the first days of those months (and the quarterly dividend
periods shall commence on the first days of those months);
provided, however, that as to any shares of $6.25 Preferred Stock
issued less than 60 days prior to a dividend payment date, the
dividend that would otherwise be payable on such dividend payment
date will be payable on the next succeeding dividend payment
date; and provided, further, that no dividend shall be declared
or paid if (i) the Corporation is insolvent or would be rendered
insolvent by payment of such dividend or (ii) the payment of such
dividend would impair the Corporation's capital (i.e., the fair
market value of the remaining assets of the Corporation would be
less than the sum of its liabilities and the liquidation value of
any classes and series of its Preferred Stock ranking prior to or
on a parity with the $6.25 Preferred Stock). The "Issue Date"
shall mean the day on which occurs the merger of Wallace-Murray
Corporation, a Delaware corporation, into Household Acquisition
Corporation Second, a Delaware corporation, or other subsidiary
of the Corporation. An "Anniversary Date" shall mean any
anniversary date of the Issue Date.
(b) The shares of $6.25 Preferred Stock shall be subject to
redemption at the option of the Corporation at any time, and from
time to time, in whole or in part, at the redemption price of $50
per share plus the amount of accrued and unpaid dividends, if
any, thereon to the date fixed for redemption; provided, however,
that no such optional redemption shall be made unless (i) the
date fixed for redemption is on or after the fifth Anniversary
Date, and (ii) at all times during the twelve-month period
terminating on the date on which notice of such redemption is
first given, the annualized rate of dividends in respect of the
outstanding shares of Common Stock of the Corporation shall have
equalled or exceeded the quotient obtained by dividing $6.25 by
the conversion rate specified in paragraph (d) hereof (as said
conversion rate may have been adjusted pursuant to the provisions
of said paragraph). As used herein, the term "annualized rate of
dividends" shall mean, as of any particular time, the aggregate
per share amount of regular cash dividends (excluding special and
extraordinary dividends) paid on shares of the Common Stock of
the Corporation generally, in respect of the most recently
completed twelve-month period.
(c) The amount to which shares of $6.25 Preferred Stock
shall be entitled upon liquidation, dissolution, or winding up of
the Corporation, whether voluntary or involuntary, shall be $50
per share, plus the amount of accrued and unpaid dividends, if
any, thereon to the date fixed for payment, and no more.
(d) The shares of $6.25 Preferred Stock shall be convertible
at any time after issue at the option of the record holder
thereof, in the manner hereinafter provided, into fully paid and
nonassessable shares of Common Stock of the Corporation at the
rate of 1.923 shares (adjusted to 2.327 shares as of close of
business on April 7, 1989 and 4.654 shares as of close of
business on October 15, 1993) of Common Stock for each share of
$6.25 Preferred Stock; provided, however, that as to any shares
of $6.25 Preferred Stock which shall have been called for
redemption, the right of conversion shall terminate at the close
of business on the fifth full business day prior to the date
fixed for redemption. No payment or adjustment shall be made for
dividends accrued on any shares of $6.25 Preferred Stock that
shall be converted or for dividends on any shares of Common Stock
that shall be issuable upon such conversion, but all dividends
accrued and unpaid on such shares of $6.25 Preferred Stock up to
the dividend payment date immediately preceding the date of
conversion shall be payable to the converting shareholder, and no
dividend shall be paid upon the shares of Common Stock until the
same shall be paid or sufficient funds set apart for the payment
thereof.<PAGE>
<PAGE> 7
The conversion rate provided for above shall be subject to
the following adjustments:
(i) In case the Corporation shall declare and pay to
the holders of the shares of Common Stock a dividend in
shares of Common Stock, the conversion rate in effect
immediately prior to the time fixed for the determination of
shareholders entitled to such dividend shall be
proportionately increased (adjusted to the nearest, or if
there shall be no nearest then to the next lower, one-
thousandth of a share of Common Stock), such adjustment to
become effective immediately after the time fixed for such
determination.
(ii) In case the Corporation shall subdivide the
outstanding shares of Common Stock into a greater number of
shares of Common Stock or combine the outstanding shares of
Common Stock into a smaller number of shares of Common
Stock, the conversion rate in effective immediately prior to
such subdivision or combination, as the case may be, shall
be proportionately increased or decreased (adjusted to the
nearest, or if there shall be no nearest then to the next
lower, one-thousandth of a share of Common Stock), as the
case may require, such increase or decrease, as the case may
be, to become effective when such subdivision or combination
becomes effective.
(iii) In case of any reclassification or change of
outstanding shares of Common Stock of the class issuable
upon conversion of the shares of $6.25 Preferred Stock, or
in case of any consolidation or merger of the Corporation
with or into another corporation, or in case of any sale or
conveyance to another corporation of all or substantially
all of the property of the Corporation, the holder of each
share of $6.25 Preferred Stock then outstanding shall have
the right thereafter, so long as his conversion right
hereunder shall exist, to convert such share into the kind
and amount of shares of stock and other securities and
property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock of the Corporation into
which such shares of $6.25 Preferred Stock might have been
converted immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance, and shall
have no other conversion rights under these provisions;
provided, however, that effective provision shall be made,
in the Articles or Certificate of Incorporation of the
resulting, surviving, or successor corporation or otherwise,
so that the provisions set forth herein for the protection
of the conversion rights of the shares of $6.25 Preferred
Stock shall thereafter be applicable, as nearly as
reasonably may be, to any such other shares of stock and
other securities and property deliverable upon conversion of
the shares of $6.25 Preferred Stock remaining outstanding or
other convertible preferred shares received by the holders
in place thereof; and provided, further, that any such
resulting, surviving, or successor corporation shall
expressly assume the obligation to deliver, upon the
exercise of the conversion privilege, such shares,
securities, or property as the holders of the shares of
$6.25 Preferred Stock remaining outstanding, or other
convertible preferred shares received by the holders in
place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provision for the protection
of the conversion right as above provided. In case
securities or property other than shares of Common Stock
shall be issuable or deliverable upon conversion as
aforesaid, then all references in this paragraph shall be
deemed to apply, so far as appropriate and as nearly as may
be, to such other securities or property. The subdivision
or combination of shares of Common Stock at any time
outstanding into a greater or lesser number of shares of
Common Stock (whether with or without par value) shall not
be deemed to be a reclassification of the Common Stock of
the Corporation for the purposes of this subparagraph (iii).
<PAGE>
<PAGE> 8
(iv) Unless the holders of shares of the $6.25
Preferred Stock shall be issued subscription rights or
warrants on a reasonably equivalent basis, in case the
Corporation shall issue to the holders of shares of any
class of its capital stock subscription rights or warrants
entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Average Market
Price (as hereinafter defined) at the time fixed for
determination of shareholders entitled to such subscription
rights or warrants, the conversion rate in effect
immediately prior to the time of said determination shall be
increased (adjusted to the nearest, or if there shall be no
nearest then to the next lower, one-thousandth of a share of
Common Stock) by multiplying said rate by a fraction of
which the numerator shall be the sum of the number of shares
of Common Stock outstanding at the time of such
determination and the number of additional shares of Common
Stock so offered for subscription or purchase, and of which
the denominator shall be the sum of the number of shares of
Common Stock outstanding at the time of such determination
and the number of shares of Common Stock which the aggregate
subscription price of the total number of shares so offered
would purchase at the Average Market Price, such adjustment
to become effective immediately after the time fixed for
such determination; provided, however, that if such
subscription rights or warrants shall have a term not
exceeding 45 days and if any such subscription rights or
warrants expire unexercised, then the conversion rate will
be readjusted, effective immediately after the expiration of
such term, to the conversion rate which would have obtained
if such unexercised subscription rights or warrants had not
been issued.
For the purposes of any computation under this
subparagraph (iv) or subparagraph (v), the "Average Market
Price" per share of Common Stock for any time shall be the
average of the daily closing prices for the 30 consecutive
business days commencing 45 business days before the time in
question. The closing price for each day shall be the last
sales price regular way or, in case no such sale takes place
on such day, the average of the closing bid and asked prices
regular way, in either case as recorded on the New York
Stock Exchange (or, if the Common Stock is not regularly
traded on the New York Stock Exchange, on the principal
market or system on which trades in the Common Stock are
recorded).
(v) Unless the holders of shares of the $6.25 Preferred
Stock shall be distributed evidences of indebtedness or
other assets on a reasonably equivalent basis, in case the
Corporation shall distribute to the holders of the shares of
Common Stock evidences of indebtedness of the Corporation or
other assets of the Corporation (other than cash dividends
to the extent paid from retained earnings, dividends in
shares of Common Stock or subscription rights or warrants
entitling them to subscribe for or purchase shares of Common
Stock, but including securities convertible into capital
stock of the Corporation), the conversion rate in effect
immediately prior to the time fixed for determination of
shareholders entitled to such distribution shall be
increased (adjusted to the nearest, or if there shall be no
nearest then to the next lower, one-thousandth of a share of
Common Stock) by multiplying said rate by a fraction of
which the numerator shall be the number of shares of Common
Stock outstanding at the time of such determination, and of
which the denominator shall be the difference between the
number of shares of Common Stock outstanding at the time of
such determination and a number of shares of Common Stock
having an aggregate Average Market Price at the time of such
determination equal to the fair value (as determined by the
Board of Directors of the Corporation in good faith) of the
evidences of indebtedness or other assets so distributed,
such adjustment to become effective immediately after the
time fixed for such determination.
Except as provided in the foregoing subparagraphs (i)
through (v), there shall be no adjustments to the conversion rate
set forth above.<PAGE>
<PAGE> 9
In order to convert shares of $6.25 Preferred Stock into
shares of Common Stock, the holder thereof shall surrender the
certificate or certificates for shares of $6.25 Preferred Stock,
duly endorsed to the Corporation or in blank, at the office of
any Transfer Agent for the shares of $6.25 Preferred Stock (or
such other place as may be designated by the Corporation), and
shall give written notice to the Corporation at said office that
he elects to convert the same and shall state in writing therein
the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued. The
Corporation shall, as soon as practicable thereafter, deliver at
said office to such holder of shares of $6.25 Preferred Stock or
to his nominee or nominees, a certificate or certificates for the
number of full shares of Common Stock to which he shall be
entitled as aforesaid and shall make appropriate payment in cash
for any fractional shares. Shares of $6.25 Preferred Stock shall
be deemed to have been converted as of the date of the surrender
of such shares for conversion as provided above, and the person
or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on
such date.
No fractions of shares of Common Stock shall be issued upon
conversion, but in lieu thereof the Corporation shall adjust such
fractional interest by payment to the holders of an amount in
cash equal (computed to the nearest cent) to the same fraction of
the closing price (as defined in subparagraph (iv) above) on the
business day immediately preceding such conversion.
A number of authorized shares of Common Stock sufficient to
provide for the conversion of the shares of $6.25 Preferred Stock
outstanding upon the bases hereinbefore provided shall at all
times be reserved for such conversion.
(e) There shall be a sinking fund (the "Sinking Fund") for
the benefit of the shares of $6.25 Preferred Stock. For the
purposes of the Sinking Fund, out of any net assets of the
Corporation legally available therefor (but only from retained
earnings and subject to the provisions of the last sentence of
paragraph (2) of Article IV of the Certificate of Incorporation),
before any dividends, in cash or property, shall be paid or
declared, or any distribution ordered or made on the Common Stock
of the Corporation, and before any shares of Common Stock of the
Corporation shall be purchased, redeemed, or otherwise acquired
for value by the Corporation or any subsidiary, the Corporation
shall have paid or set aside in cash annually on the day prior to
each Anniversary Date commencing with the tenth Anniversary Date,
so long as there shall be outstanding any shares of $6.25
Preferred Stock, an amount sufficient to redeem, on the day prior
to each such Anniversary Date prior to the thirtieth, 4% of the
number of shares of $6.25 Preferred Stock issued on the Issue
Date (or such lesser number as remains outstanding) and, on the
day prior to the thirtieth Anniversary Date, all such shares of
$6.25 Preferred Stock as remain outstanding, at a price of $50
per share plus the amount of accrued and unpaid dividends, if
any, thereon to the date so fixed for redemption; provided,
however, that there shall be allowed to the Corporation as a
credit thereagainst any shares of $6.25 Preferred Stock which the
Corporation may have acquired (as a result of the conversion of
such shares or otherwise, which it may have redeemed pursuant to
paragraph (b) hereof, or which it may have redeemed pursuant to
this paragraph (e) (otherwise than through the operation of the
Sinking Fund), which have not theretofore been used for the
purpose of any such credit or any credit against a redemption of
$6.25 Preferred Stock at the Corporation's election as
hereinafter in this paragraph (e) provided for and which shares
shall have been set aside by the Corporation for the purpose of
the Sinking Fund; and provided, further, that no monies shall be
paid or set aside for the Sinking Fund if at the day prior to any
such Anniversary Date the Corporation is in arrears in respect of
a sinking fund obligation under any other series of Preferred
Stock ranking prior to or on a parity with the $6.25 Preferred
Stock except to the extent that, in the case of any series
ranking on a parity with the $6.25 Preferred Stock, provision is
made for the payment or setting aside of monies for the Sinking
Fund and for the sinking funds of such other series in proportion
to the respective aggregate amounts then required to be paid or<PAGE>
<PAGE> 10
set aside therefor; and provided, further, that no monies shall
be paid or set aside for the Sinking Fund if (i) the Corporation
is insolvent or would be rendered insolvent by the payment or
setting aside of such monies or (ii) the payment or setting aside
of such monies would impair the Corporation's capital (i.e., the
fair market value of the remaining assets of the Corporation
would be less than the sum of its liabilities and the liquidation
value of classes and series of its Preferred Stock ranking prior
to or on a parity with the $6.25 Preferred Stock). The Sinking
Fund shall be cumulative so that if on the day prior to any such
Anniversary Date, the net assets of the Corporation legally
available therefor or the retained earnings of the Corporation
shall be insufficient to permit any such amount be paid or set
aside in full, or if for any other reason such amount shall not
have been paid or set aside in full, the amount of the deficiency
shall be paid or set aside, but without interest, before any
dividend, in cash or property, shall be paid or declared, or any
other distribution ordered or made, on the Common Stock of the
Corporation, and before any shares of Common Stock of the
Corporation shall be purchased, redeemed or otherwise acquired
for value by the Corporation or by any subsidiary of the
Corporation. The Corporation may elect to redeem, on any Sinking
Fund redemption date, up to an additional 4% of the number of
shares of $6.25 Preferred Stock issued on the Issue Date, at a
price of $50 per share plus the amount of accrued and unpaid
dividends, if any, thereon to the date fixed for redemption;
provided, however, that there shall be allowed to the Corporation
as a credit thereagainst any shares of $6.25 Preferred Stock
which the Corporation may have acquired or redeemed otherwise
than pursuant to paragraph (b) above and this paragraph (e) which
have not theretofore been used for the purpose of any such credit
or for the purpose of any credit against a redemption of $6.25
Preferred Stock pursuant to the Sinking Fund. Such optional
right shall not be cumulative and, if unexercised in a particular
year, may not be carried forward to subsequent years.
(f) The holders of $6.25 Preferred Stock shall be entitled
to vote at all meetings of the stockholders, and at each such
meeting shall be entitled to one vote for each share held.
(g) To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, in respect
of additional series of Preferred Stock, none of the preferences
or rights of any such additional series as fixed by the Board of
Directors shall be prior or superior in any respect to those of
the $6.25 Preferred Stock. Without limiting the rights conferred
by paragraph (5) of Article IV of the Certificate of
Incorporation of the Corporation, the Corporation shall not,
without the consent of the holders of two-thirds of the then
outstanding shares of $6.25 Preferred Stock, adopt any amendment
to the Certificate of Incorporation of the Corporation or take
other action, whether by the Board of Directors or stockholders,
which adversely alters the preferences, powers and special rights
conferred by the provisions of paragraphs (b), d(iv), d(v) or (e)
hereof.
ARTICLE VI
In furtherance, and not in limitation, of the powers
conferred by statute, the Board of Directors of the Corporation
is expressly authorized:
(1) To make, alter, amend and rescind the by-laws of
the Corporation.
(2) To determine from time to time, whether and to what
extent, and at what times and places, and under what
conditions and regulations the accounts and books of the
Corporation (other than the stock ledger) or any of them
shall be open to inspection of the stockholders; and no
stockholder shall have any right to inspect any account,
book or document of the Corporation, except as conferred by
statute, unless authorized by a resolution of the
stockholders then entitled to vote thereon or the Board of
Directors.
<PAGE>
<PAGE> 11
IN WITNESS WHEREOF, said Household International, Inc. has
caused its corporate seal to be hereunto affixed and this
certificate to be signed by D. C. Clark, its President, and
attested by J. D. Pinkerton, its Secretary, this 4th day of
September, 1981.
Household International, Inc.
By: /s/ D. C. Clark
---------------
President
[SEAL]
Attest:
By: /s/ J. D. Pinkerton
-------------------
Secretary
A:\WP51\IC9481.WP
<PAGE>
<PAGE> 12
CERTIFICATE OF CHANGE OF ADDRESS OF
REGISTERED OFFICE AND OF REGISTERED AGENT
PURSUANT TO SECTION 134 OF TITLE 8 OF THE DELAWARE CODE
To: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 of Title 8 of the
Delaware Code, the undersigned Agent for service of process, in
order to change the address of the registered office of the
corporations for which it is registered agent, hereby certifies
that:
1. The name of the agent is: The Corporate Trust Company
2. The address of the old registered office was:
100 West Tenth Street
Wilmington, Delaware 19801
3. The address to which the registered office is to be
changed is:
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
The new address will be effective on July 30, 1984.
4. The names of the corporation represented by said agent
are set forth on the list annexed to this certificate
and made a part hereof by reference.
IN WITNESS WHEREOF, said agent has caused this certificate
to be signed on its behalf by its Vice-President and Assistant
Secretary this 25th day of July, 1984.
THE CORPORATION TRUST COMPANY
(Name of Registered Agent)
By: Virginia Colwell
----------------
(Vice-President)
Attest:
Mick Nurman
- ---------------------
(Assistant Secretary) <PAGE>
<PAGE> 13
PAGE 796
STATE OF DELAWARE - DIVISION OF CORPORATIONS
CHANGE OF ADDRESS FILING FOR
CORPORATION TRUST AS OF JULY 27, 1984
DOMESTIC
0908612 HOUSEHOLD INTERNATIONAL, INC. 02/21/1981 D DE
A:\WP51\IC72584.WP<PAGE>
<PAGE> 14
CERTIFICATE OF HOUSEHOLD INTERNATIONAL, INC.
UNDER SECTION 151(g) OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Household International, Inc., a Delaware corporation
(hereinafter referred to as the "Corporation"), does hereby
certify that the following resolution was duly adopted by the
Corporation's Board of Directors:
"WHEREAS, no shares of the Corporation's Series A
Junior Participating Preferred Stock (the "Junior
Preferred") have been issued or are outstanding;
"NOW THEREFORE, BE IT RESOLVED, that no shares of the
Junior Preferred will be issued pursuant to the terms of the
Certificate of Designation, Preferences and Rights for such
series of the Corporation's Preferred Stock; and
"FURTHER RESOLVED, that the officers of the Corporation
are duly authorized to file a certificate with the Secretary
of State of the State of Delaware eliminating from the
Corporation's Certificate of Incorporation all matters set
forth in the Certificate of Designation, Preferences and
Rights for the Junior Preferred."
Upon the effective date of the filing of this Certificate,
it shall eliminate from the Corporation's Certificate of
Incorporation all matters set forth in the Certificate of
Designation, Preferences and Rights with respect to the
Corporation's Series A Junior Participating Preferred Stock, and
all of such shares of Series A Junior Participating Preferred
Stock shall resume the status of authorized and unissued shares
of the Corporation's class of Preferred Stock.
IN WITNESS WHEREOF, said Household International, Inc., has
caused its corporate seal to be hereunto affixed and this
Certificate to be signed by John W. Blenke, its Secretary, and
attested by Susan E. Casey, its Assistant Secretary, this 14th
day of November, 1994.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. W. Blenke
------------------------
Secretary
Attest:
By: /s/ S. E. Casey
-------------------
Assistant Secretary
U:\WP\EMP819\EDGAR\111494.A<PAGE>
<PAGE> 15
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HOUSEHOLD INTERNATIONAL, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, D. C. Clark, Chairman of the Board and Chief Executive
Officer, and J. D. Pinkerton, Secretary, of Household
International, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DO HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the
said Corporation, the said Board of Directors on August 14, 1984
adopted the following resolution creating a series of seven
hundred thousand (700,000) shares of Preferred Stock designated
as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the
provisions of its Restated Certificate of Incorporation, a series
of Preferred Stock of the Corporation be and it hereby is
created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as
follows:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series A Junior Participating
Preferred Stock" (the "Series A Preferred Stock") and the number
of shares constituting such series shall be 700,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the fifteenth day of
January, April, July and October in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $25.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on
the Common Stock, par value $1.00 per share, of the Corporation
(the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event
the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such
case the amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of share of Common
Stock that were outstanding immediately prior to such event.
The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in this paragraph (A)
immediately after it declares a dividend or distribution on the<PAGE>
<PAGE> 16
Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $25.00
per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares of Series A Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series
A Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the
Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such
case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) In the event that any four quarterly cumulative
dividends, whether consecutive or not, upon the Series A
Preferred Stock shall be in arrears, the holders of preferred
stock of the Corporation of all series (including the Series A
Preferred Stock), other than series in respect of which the right
is expressly withheld by the authorizing resolutions, shall have
the right, at the next meeting of stockholders called for the
election of directors, to elect one-third of the members of the
Board of Directors out of the number fixed by the by-laws, and
the holders of such preferred stock shall continue to have such
right until all unpaid dividends upon the Series A Preferred
Stock shall have been paid in full. In the event that any eight
quarterly cumulative dividends, whether consecutive or not, upon
the Series A Preferred Stock shall be in arrears, the holders of
preferred stock of all series (including the Series A Preferred
Stock), other than series in respect of which the right is
expressly withheld by the authorizing resolutions, shall have the
right, at the next meeting of stockholders called for the
election of directors, to elect a majority of the members of the
Board of Directors out of the number fixed by the by-laws, and<PAGE>
<PAGE> 17
the holders of such preferred stock shall continue to have such
right until all unpaid dividends upon the Series A Preferred
Stock shall have been paid in full.
(D) Except as set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been
paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of preferred stock and may be reissued as part of
a new series of preferred stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon
any voluntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100.00 per share, plus an<PAGE>
<PAGE> 18
amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per
share to holders of Common Stock, or (2) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock
and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon
such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such
case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
the shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Ranking. The Series A Preferred Stock shall
rank junior to all other series of the Corporation's preferred
stock outstanding as of August 14, 1984, as to the payment of
dividends and the distribution of assets.
Section 10. Amendment. The Certificate of Incorporation of
the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-
thirds or more of the outstanding shares of Series A Preferred
Stock, voting together as a single class.
<PAGE>
<PAGE> 19
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the
penalties of perjury this 17th day of August, 1984.
/s/ D. C. Clark
---------------------------------
D. C. Clark, Chairman of the
Board and Chief Executive Officer
/s/ J. D. Pinkerton
---------------------------------------
J. D. Pinkerton, Senior Vice President-
Administration and Secretary
A:\WP51\IC81784.WP<PAGE>
<PAGE> 20
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Household International, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Restated Certificate of Incorporation, as
heretofore amended, of said Corporation has been further amended
by inserting the following as Article VII:
ARTICLE VII
(1) Elimination of Certain Liability of Directors. A
director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law or
successor provision, or (iv) for any transaction from which
the director derived an improper personal benefit. Any
repeal or amendment to this Section shall not adversely
affect any right or protection of a director of the
Corporation for any act or occurrence taking place prior to
such repeal or amendment.
(2) Indemnification and Insurance.
(a) Each person who was or is made a party or is
threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or
was a director, officer, or employee of the Corporation or
is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation
or of a partnership, joint venture, trust, or other
enterprise, including service with respect to employee
benefit plans, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law
permitted the Corporation to provide prior to such
amendment), against all expense, liability, and loss
(including attorneys' fees, judgments, fines, ERISA excise
taxes, or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person
in connection therewith, and such indemnification shall
continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit
of his or her heirs, executors and administrators; provided,
however, that except as provided in paragraph (b) hereof,
the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors
of the Corporation. The right to indemnification conferred
in this Section shall be a contract right and shall include
the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its
final disposition upon delivery to the Corporation of an
undertaking to repay all amounts so advanced if it shall
ultimately be determined that such person is not entitled to
be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors,
provide indemnification to agents of the Corporation with
the same scope and effect as the foregoing indemnification
of directors, officers, and employees.<PAGE>
<PAGE> 21
(b) If a claim under paragraph (a) of this
Section is not paid in full by the Corporation, the claimant
may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and,
if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final
disposition where the required undertaking has been tendered
to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the
Delaware General Corporation Law and paragraph (a) of this
Section for the Corporation to indemnify the claimant for
the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the
circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(c) The right to indemnification and the payment
of expenses incurred in defending a proceeding in advance of
its final disposition conferred in this Section shall not be
exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of this
Certificate of Incorporation, bylaw, agreement, contract,
vote of stockholders or disinterested directors, or
otherwise.
(d) The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of
this Section, the Delaware General Corporation Law, or
otherwise.
SECOND: That the aforesaid amendment of the Restated
Certificate of Incorporation of said Corporation, set forth in
Paragraph FIRST hereinabove, has been duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by
D. C. Clark, its Chairman of the Board and Chief Executive
Officer, and J. D. Pinkerton, its Senior Vice President -
Administration and Secretary, this 13th day of May, 1987.
HOUSEHOLD INTERNATIONAL, INC.
[SEAL]
By: /s/ D. C. Clark
-------------------------
Chairman of the Board and
Chief Executive Officer
Attest:
/s/ J. D. Pinkerton
- ----------------------------
Senior Vice President -
Administration and Secretary
A:\WP51\IC51387.WP<PAGE>
<PAGE> 22
CERTIFICATE OF HOUSEHOLD INTERNATIONAL, INC.
UNDER SECTION 151 (g) OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Household International, Inc., a Delaware corporation
(hereinafter referred to as the "Corporation"), does hereby
certify that the following resolutions were duly adopted by the
Corporation's Board of Directors:
"WHEREAS, no shares of the Corporation's $2.375
Cumulative Convertible Voting Preferred Stock (the '$2.375
Preferred Stock') and $2.50 Cumulative Convertible Voting
Preferred Stock (the '$2.50 Preferred Stock') are
outstanding, it is hereby
"RESOLVED, that no shares of $2.375 Preferred Stock and
$2.50 Preferred Stock will be issued pursuant to the terms
of the Certificate of Designation, Preferences, and Rights
of each such series of the Corporation's Preferred Stock.
"FURTHER RESOLVED, that the officers of the Corporation
are duly authorized to file a certificate with the Secretary
of State of Delaware eliminating from the Corporation's
Certificate of Incorporation all matters set forth in each
Certificate of Designation, Preferences, and Rights for the
$2.375 and $2.50 Preferred Stock."
Upon the effective date of the filing of this Certificate,
it shall eliminate from the Corporation's Certificate of
Incorporation all matters set forth in the Certificates of
Designation, Preferences, and Rights with respect to the
Corporation's $2.375 Cumulative Convertible Voting Preferred
Stock and $2.50 Cumulative Convertible Voting Preferred Stock,
and all of such shares of $2.375 Cumulative Convertible Preferred
Stock and $2.50 Cumulative Convertible Voting Preferred Stock
shall resume the status of authorized and unissued shares of the
Corporation's Preferred Stock.
IN WITNESS WHEREOF, said Household International, Inc. has
caused its corporate seal to be hereunto affixed and this
Certificate to be signed by J. D. Pinkerton, its Senior Vice
President-Administration and Secretary, and attested by R. C.
Roselli, its Assistant Secretary, this 11th day of July, 1989.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. D. Pinkerton
----------------------------
Senior Vice President-
Administration and Secretary
Attest:
By: /s/ R. C. Roselli
-------------------
Assistant Secretary<PAGE>
<PAGE> 23
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
PREFERRED STOCK BY RESOLUTION OF THE BOARD OF DIRECTORS
PROVIDING FOR A SERIES OF 512,139 SHARES OF
PREFERRED STOCK DESIGNATED $2.375 CUMULATIVE
CONVERTIBLE VOTING PREFERRED STOCK
We, D.C. Clark, President, and J. D. Pinkerton, Secretary,
of Household International Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the
said Corporation, the said Board of Directors by unanimous
written consent dated June 25, 1981, adopted resolutions
providing for the issuance of a series of 512,139 shares of
Preferred Stock, which resolutions are as follows:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the
provisions of its Restated Certificate of Incorporation, a series
of Preferred Stock of the Corporation be and it hereby is
created, such series of Preferred Stock to be designated $2.375
Cumulative Convertible Voting Preferred Stock (the "$2.375
Preferred Stock"), to consist of 512,139 shares;
FURTHER RESOLVED,
(a) $2.375 per share is fixed as the amount per annum at
which the holders of $2.375 Preferred Stock shall be entitled to
receive dividends; and such dividends shall be cumulative and
shall accrue, whether or not earned or declared, from April 1,
1981, as to all shares issued on or before June 30, 1981, and the
first day of the quarterly dividend period during which such
shares were issued, as to all shares issued after June 30, 1981,
and shall be payable quarterly on the fifteenth days of January,
April, July and October in each year (and the quarterly dividend
periods shall commence on the first days of those months).
(b) The shares of $2.375 Preferred Stock shall be subject
to redemption in whole or in part at the redemption price of
$50.00 per share.
(c) The amount to which shares of $2.375 Preferred Stock
shall be entitled upon voluntary liquidation, dissolution, or
winding up of the Corporation, shall be $50.00 per share plus the
amount of accrued and unpaid dividends, if any, thereon to the
date fixed for payment, and no more.
The amount to which shares of $2.375 Preferred Stock shall
be entitled upon involuntary liquidation, dissolution, or winding
up of the Corporation, shall be $30 per share, plus the amount of
accrued and unpaid dividends, if any, thereon to the date fixed
for payment, and no more.
(d) The shares of $2.375 Preferred Stock shall be
convertible at the option of the record holder thereof, in the
manner hereinafter provided, into shares of Common Stock of the
Corporation; provided, however, that as to any shares of $2.375
Preferred Stock which shall have been called for redemption, the
right of conversion shall terminate at the close of business on
the fifth full business day prior to the date fixed for
redemption. No payment or adjustment shall be made for dividends
accrued on any shares of $2.375 Preferred Stock that shall be
converted or for dividends on any shares of Common Stock that
shall be issuable upon such conversion, but all dividends accrued
and unpaid on such shares of $2.375 Preferred Stock up to the
dividend payment date immediately preceding the date of
conversion shall constitute a debt of the Corporation payable to
the converting shareholder, and no dividend shall be paid upon
the shares of Common Stock until such debt shall be paid or
sufficient funds set apart for the payment thereof.
Shares of $2.375 Preferred Stock may be converted at any
time after issue (subject to the above time limitation in the
case of a call for redemption), at the option of the record
holder thereof, into shares of Common Stock of the Corporation at<PAGE>
<PAGE> 24
the rate of two and one-quarter shares of Common Stock for each
share of $2.375 Preferred Stock.
The conversion rate provided for above shall be subject to
the following adjustments:
(i) In case the Corporation shall declare and pay to the
holders of the shares of Common Stock a dividend in shares of
Common Stock, or in securities convertible into shares of Common
Stock, the conversion rate in effect immediately prior to the
time fixed for the determination of shareholders entitled to such
dividend shall be proportionately increased (adjusted to the
nearest, or if there shall be no nearest then to the next lower,
one-hundredth of a share of Common Stock), such adjustment to
become effective immediately after the time fixed for such
determination.
(ii) In case the Corporation shall subdivide the
outstanding shares of Common Stock into a greater number of
shares of Common Stock or combine the outstanding shares of
Common Stock into a smaller number of shares of Common Stock, the
conversion rate in effect immediately prior to such subdivision
or combination, as the case may be, shall be proportionately
increased or decreased (adjusted to the nearest, or if there
shall be no nearest then to the next lower, one-hundredth of a
share of Common Stock), as the case may require, such increase or
decrease, as the case may be, to become effective when such
subdivision or combination becomes effective.
(iii) No adjustment of the conversion rate shall be made by
reason of the issuance of shares of Common Stock for cash,
property, or services. In order to protect the conversion rights
of the holders of $2.375 Preferred Stock from dilution, if stock
warrants, subscription, or other rights are offered to the
holders of shares of Common Stock, such rights shall also be
offered to the holders of shares of $2.375 Preferred Stock on the
basis of the number of shares of Common Stock into which the
shares of $2.375 Preferred Stock are then convertible.
(iv) In case of any reclassification or change of
outstanding shares of Common Stock of the class issuable upon
conversion of the shares of $2.375 Preferred Stock, or in the
case of any consolidation or merger of the Corporation with or
into another corporation, or in case of any sale or conveyance to
another corporation of all or substantially all of the property
of the Corporation, the holder of each share of $2.375 Preferred
Stock then outstanding shall have the right thereafter, so long
as his conversion right hereunder shall exist, to convert such
share into the kind and amount of shares of stock and other
securities and property receivable upon such reclassification,
change, consolidation, merger, sale or conveyance by a holder of
the number of shares of Common Stock, of the Corporation into
which such shares of $2.375 Preferred Stock might have been
converted immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance, and shall have no
other conversion rights under these provisions; provided, that
effective provision shall be made, in the Articles or Certificate
of Incorporation of the resulting, surviving, or successor
corporation or otherwise, so that the provisions set forth herein
for the protection of the conversion rights of the shares of
$2.375 Preferred Stock shall thereafter be applicable, as nearly
as reasonably may be, to any such other shares of stock and other
securities and property deliverable upon conversion of the shares
of $2.375 Preferred Stock remaining outstanding or other
convertible preferred shares received by the holders in place
thereof; and provided, further, that any such resulting,
surviving, or successor corporation shall expressly assume the
obligation to deliver, upon the exercise of the conversion
privilege, such shares, securities, or property as the holders of
the shares of $2.375 Preferred Stock remaining outstanding, or
other convertible preferred shares received by the holders in
place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provision for the protection of
the conversion right as above provided. In case securities or
property other than shares of Common Stock shall be issuable or
deliverable upon conversion as aforesaid, then all references in
this paragraph shall be deemed to apply, so far as appropriate
and as nearly as may be, to such other securities or property. <PAGE>
<PAGE> 25
The subdivision or combination of shares of Common Stock at any
time outstanding into a greater or lesser number of shares of
Common Stock (whether with or without par value) shall not be
deemed to be a reclassification of the Common Stock of the
Corporation for the purposes of this subparagraph (iv).
In order to convert shares of $2.375 Preferred Stock into
shares of Common Stock, the holder thereof shall surrender the
certificate or certificates for shares of $2.375 Preferred Stock,
duly endorsed to the Corporation or in blank, at the office of
any Transfer Agent for the shares of $2.375 Preferred Stock (or
such other place as may be designated by the Corporation), and
shall give written notice to the Corporation at said office that
he elects to convert the same and shall state in writing therein
the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued. The
Corporation shall, as soon as practicable thereafter, deliver at
said office to such holder of shares of $2.375 Preferred Stock,
or to his nominee or nominees, a certificate or certificates for
the number of full shares of Common Stock to which he shall be
entitled as aforesaid and make appropriate payment in cash for
any fractional shares. Shares of $2.375 Preferred Stock shall be
deemed to have been converted as of the date of the surrender of
such shares for conversion as provided above, and the person or
persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such
date.
A number of authorized shares of Common Stock sufficient to
provide for the conversion of the shares of $2.375 Preferred
Stock outstanding upon the basis hereinbefore provided shall at
all times be reserved for such conversion.
(e) Shares of $2.375 Preferred Stock redeemed shall not be
reissued.
(f) The holders of $2.375 Preferred Stock shall be entitled
to vote at all meetings of the stockholders, and at each such
meeting shall be entitled to one vote for each share held.
(g) To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, in respect
of additional series of Preferred Stock, none of the preferences
or rights of any such additional series as fixed by the Board of
Directors shall be prior or superior in any respect to those of
the $2.375 Preferred Stock.
IN WITNESS WHEREOF, said Household International, Inc. has
caused its corporate seal to be hereunto affixed and this
certificate to be signed by D. C. Clark, its President, and
attested by J. D. Pinkerton, its Secretary, this 25th day of
June, 1981.
Household International, Inc.
(SEAL) By: /s/ D. C. Clark
---------------
President
ATTEST:
By: /s/ J. D. Pinkerton
-------------------
Secretary
<PAGE>
<PAGE> 26
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
PREFERRED STOCK BY RESOLUTION OF THE BOARD OF DIRECTORS
PROVIDING FOR A SERIES OF 2,234,045 SHARES OF
PREFERRED STOCK DESIGNATED $2.50 CUMULATIVE
CONVERTIBLE VOTING PREFERRED STOCK
We, D. C. Clark, President, and J. D. Pinkerton, Secretary,
of Household International, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the
said Corporation, the said Board of Directors by unanimous
consent dated June 25, 1981, adopted resolutions providing for
the issuance of a series of two million two hundred and thirty-
four thousand forty-five (2,234,045) shares of Preferred Stock,
which resolutions are as follows:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the
provisions of its Restated Certificate of Incorporation, a series
of Preferred Stock of the Corporation be and it hereby is
created, such series of Preferred Stock to be designated $2.50
Cumulative Convertible Voting Preferred Stock (the "$2.50
Preferred Stock") and to consist of 2,234,045 shares; and
FURTHER RESOLVED,
(a) $2.50 per share is fixed as the amount per annum at
which the holders of $2.50 Preferred Stock shall be entitled to
receive dividends; and such dividends shall be cumulative and
shall accrue, whether or not earned or declared, from April 1,
1981, as to all shares issued on or before June 30, 1981, and the
first day of the quarterly dividend period during which such
shares were issued, as to all shares issued after June 30, 1981,
and shall be payable quarterly on the fifteenth days of January,
April, July and October in each year (and the quarterly dividend
periods shall commence on the first days of those months.).
(b) The shares of $2.50 Preferred Stock shall be subject to
redemption in whole or in part at the redemption price of $50.00
per share.
(c) The amount to which shares of $2.50 Preferred Stock
shall be entitled upon voluntary liquidation, dissolution, or
winding up of the Corporation, shall be $50.00 per share, plus
the amount of accrued and unpaid dividends, if any, thereon to
the date fixed for payment, and no more.
The amounts to which shares of $2.50 Preferred Stock shall
be entitled upon involuntary liquidation, dissolution, or winding
up of the Corporation, shall be $18.00 per share, plus the amount
of accrued and unpaid dividends, if any, thereon to the date
fixed for payment, and no more.
(d) The shares of $2.50 Preferred Stock shall be
convertible at the option of the record holder thereof, in the
manner hereinafter provided, into shares of Common Stock of the
Corporation; provided, however, that as to any shares of $2.50
Preferred Stock which shall have been called for redemption, the
right of conversion shall terminate at the close of business on
the fifth full business day prior to the date fixed for
redemption. No payment or adjustment shall be made for dividends
accrued on any shares of $2.50 Preferred Stock that shall be
converted or for dividends on any shares of Common Stock that
shall be issuable upon such conversion, but all dividends accrued
and unpaid on such shares of $2.50 Preferred Stock up to the
dividend payment date immediately preceding the date of
conversion shall constitute a debt of the Corporation payable to
the converting shareholder, and no dividend shall be paid upon
the shares of Common Stock until such debt shall be paid or
sufficient funds set apart for the payment thereof.
Shares of $2.50 Preferred Stock may be converted at any time
after issue (subject to the above time limitation in the case of<PAGE>
<PAGE> 27
a call for redemption), at the option of the record holder
thereof, into shares of Common Stock of the Corporation at the
rate of one and one-half shares of Common Stock for each share of
$2.50 Preferred Stock.
The conversion rate provided for above shall be subject to
the following adjustments:
(i) In case the Corporation shall declare and pay to the
holders of the shares of Common Stock a dividend in shares of
Common Stock, or in securities convertible into shares of Common
Stock, the conversion rate in effect immediately prior to the
time fixed for the determination of shareholders entitled to such
dividend shall be proportionately increased (adjusted to the
nearest, or if there shall be no nearest then to the next lower,
one-hundredth of a share of Common Stock), such adjustment to
become effective immediately after the time fixed for such
determination.
(ii) In case the Corporation shall subdivide the
outstanding shares of Common Stock into a greater number of
shares of Common Stock or combine the outstanding shares of
Common Stock into a smaller number of shares of Common Stock, the
conversion rate in effect immediately prior to such subdivision
or combination, as the case may be, shall be proportionately
increased or decreased (adjusted to the nearest, or if there
shall be no nearest then to the next lower, one-hundredth of a
share of Common Stock), as the case may require, such increase or
decrease, as the case may be, to become effective when such
subdivision or combination becomes effective.
(iii) No adjustment of the conversion rate shall be made by
reason of the issuance of shares of Common Stock for cash,
property, or services. In order to protect the conversion rights
of the holders of $2.50 Preferred Stock from dilution, if stock
warrants, subscription, or other rights are offered to the
holders of shares of Common Stock, such rights shall also be
offered to the holders of shares of $2.50 Preferred Stock on the
basis of the number of shares of Common Stock into which the
shares of $2.50 Preferred Stock are then convertible.
(iv) In case of any reclassification or change of
outstanding shares of Common Stock of the class issuable upon
conversion of the shares of $2.50 Preferred Stock, or in case of
any consolidation or merger of the Corporation with or into
another corporation, or in case of any sale or conveyance to
another corporation of all or substantially all of the property
of the Corporation, the holder of each share of $2.50 Preferred
Stock then outstanding shall have the right thereafter, so long
as his conversion right hereunder shall exist, to convert such
share into the kind and amount of shares of stock and other
securities and property receivable upon such reclassification,
change, consolidation, merger, sale or conveyance by a holder of
the number of shares of Common Stock, of the Corporation into
which such shares of $2.50 Preferred Stock might have been
converted immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance, and shall have no
other conversion rights under these provisions; provided, that
effective provision shall be made, in the Articles or Certificate
of Incorporation of the resulting, surviving, or successor
corporation or otherwise, so that the provisions set forth herein
for the protection of the conversion rights of the shares of
$2.50 Preferred Stock shall thereafter be applicable, as nearly
as reasonably may be, to any such other shares of stock and other
securities and property deliverable upon conversion of the shares
of $2.50 Preferred Stock remaining outstanding or other
convertible preferred shares received by the holders in place
thereof; and provided, further, that any such resulting,
surviving, or successor corporation shall expressly assume the
obligation to deliver, upon the exercise of the conversion
privilege, such shares, securities, or property as the holders of
the shares of $2.50 Preferred Stock remaining outstanding, or
other convertible preferred shares received by the holders in
place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provision for the protection of
the conversion right as above provided. In case securities or
property other than shares of Common Stock shall be issuable or
deliverable upon conversion as aforesaid, then all references in<PAGE>
<PAGE> 28
this paragraph shall be deemed to apply, so far as appropriate
and as nearly as may be, to such other securities or property.
The subdivision or combination of shares of Common Stock at any
time outstanding into a greater or lesser number of shares of
Common Stock (whether with or without par value) shall not be
deemed to be a reclassification of the Common Stock of the
Corporation for the purposes of this subparagraph (iv).
In order to convert shares of $2.50 Preferred Stock into
shares of Common Stock, the holder thereof shall surrender the
certificate or certificates for shares of $2.50 Preferred Stock,
duly endorsed to the Corporation or in blank, at the office of
any Transfer Agent for the shares of $2.50 Preferred Stock (or
such other place as may be designated by the Corporation), and
shall give written notice to the Corporation as said office that
he elects to convert the same and shall state in writing therein
the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued. The
Corporation shall, as soon as practicable thereafter, deliver at
said office to such holder of shares of $2.50 Preferred Stock, or
to his nominee or nominees, a certificate or certificates for the
number of full shares of Common Stock to which he shall be
entitled as aforesaid and make appropriate payment in cash for
any fractional shares. Shares of $2.50 Preferred Stock shall be
deemed to have been converted as of the date of the surrender of
such shares for conversion as provided above, and the person or
persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such
date.
A number of authorized shares of Common Stock sufficient to
provide for the conversion of the shares of $2.50 Preferred Stock
outstanding upon the basis hereinbefore provided shall at all
times be reserved for such conversion.
(e) Shares of $2.50 Preferred Stock redeemed shall not be
reissued.
(f) The holders of $2.50 Preferred Stock shall be entitled
to vote at all meetings of the stockholders, and at each such
meeting shall be entitled to one vote for each share held.
(g) To the extent that the Board of Directors is authorized
to fix the designation, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, in respect
of additional series of Preferred Stock, none of the preferences
or rights of any such additional series as fixed by the Board of
Directors shall be prior or superior in any respect to those of
the $2.50 Preferred Stock.
IN WITNESS WHEREOF, said Household International, Inc. has
caused its corporate seal to be hereunto affixed and this
certificate to be signed by D.C. Clark, its President, and
attested by J.D. Pinkerton, its Secretary, this 25th day of June,
1981.
Household International, Inc.
(SEAL)
By: /s/ D. C. Clark
---------------
President
Attest:
By: /s/ J. D. Pinkerton
-------------------
Secretary
A:\WP51\IC71189.WP<PAGE>
<PAGE> 29
CERTIFICATE OF HOUSEHOLD INTERNATIONAL, INC.
UNDER SECTION 151(g) OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Household International, Inc., a Delaware corporation
(hereinafter referred to as the "Corporation"), does hereby
certify that:
1) the Corporation's 9-1/2% Cumulative Preferred Stock,
Series 1989-A (the "Preferred Stock") has been redeemed in its
entirety and that no shares of the Preferred Stock are
outstanding as of the date hereof.
2) the following resolution has been duly adopted by the
Corporation's Board of Directors:
"RESOLVED, that the officers of the Corporation are
duly authorized to file a certificate with the Secretary of
State of Delaware eliminating from the Corporation's
Certificate of Incorporation all matters set forth in each
Certificate of Designation, Preferences and Rights for the
Preferred Stock and as permitted by the Certificate of
Designation, Preferences and Rights for the Preferred Stock,
such shares of Preferred Stock redeemed shall resume the
status of authorized and unissued shares of the
Corporation's preferred stock."
Upon the effective date of the filing of this Certificate,
it shall eliminate from the Corporation's Certificate of
Incorporation all matters set forth in the Certificate of
Designation, Preferences and Rights with respect to the
Corporation's 9-1/2% Cumulative Preferred Stock, Series 1989-A,
and all of such shares of 9-1/2% Cumulative Preferred Stock,
Series 1989-A, shall resume the status of authorized and unissued
shares of the Corporation's class of Preferred Stock.
IN WITNESS WHEREOF, said Household International, Inc., has
caused its corporate seal to be hereunto affixed and this
Certificate to be signed by John W. Blenke, its Secretary, and
attested by Susan E. Casey, its Assistant Secretary, this 16th
day of August, 1995.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. W. Blenke
------------------------
Secretary
Attest:
By: /s/ S. E. Casey
-------------------
Assistant Secretary<PAGE>
<PAGE> 30
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
9 1/2% CUMULATIVE PREFERRED STOCK, SERIES 1989-A
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolutions
were duly adopted by the Board of Directors of the Corporation
and by the Preferred Stock Committee of the Board of Directors,
pursuant to authority conferred upon the Board of Directors by
the provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and pursuant to authority conferred
upon the Preferred Stock Committee by the resolutions of the
Board of Directors set forth herein and in accordance with
Section 141 (c) of the General Corporation Law of the State of
Delaware.
1. The Board of Directors on September 12, 1989, adopted
the following resolutions designating a Preferred Stock Committee
of the Board of Directors and authorizing the Preferred Stock
Committee to act on behalf of the Board of Directors (within
certain limitations) in connection with the designation, issuance
and sale of shares in one or more series of Preferred Stock of
the Corporation:
"RESOLVED, that a Preferred Stock Committee of the
Board of Directors is hereby designated which shall have and
may exercise, to the fullest extent permitted by law, the
full power and authority of the Board of Directors with
respect to the issuance and sale of one or more new series
of the Corporation's Preferred Stock without par value (each
such series herein referred to as the "New Preferred
Stock"), including, without limitation, establishing the
purchase price therefor, and fixing the designations and any
of the preferences, powers, rights (other than voting powers
or voting rights which shall be fixed by the Board of
Directors) and relative, participating, optional or other
special rights and qualifications, limitations or
restrictions thereof, of such shares of each series of New
Preferred Stock, and fixing the number of shares of each
series of New Preferred Stock.
"FURTHER RESOLVED, that the Committee is authorized to
take such additional actions and adopt such additional
resolutions as it deems necessary or appropriate for the
purpose of authorizing and implementing the issuance, offer,
and sale for cash of New Preferred Stock, including, without
limiting the generality of the foregoing, the authorization
and execution of agreements (including underwriting
agreements) relating to the offer and sale of New Preferred
Stock, authorization and approval of listing applications
(including amendments or supplements thereto) for the
listing of such New Preferred Stock on a stock exchange,
approval of forms of stock certificates and authorization of
issuance of New Preferred Stock in uncertificated form, any
actions which may be necessary to qualify the offering and
sale of New Preferred Stock under Blue Sky Laws of the
various states, any necessary filings with the Secretary of
the State of Delaware and other jurisdictions, and the
appointment of a transfer agent.
"FURTHER RESOLVED, that notwithstanding the foregoing
resolutions, the Preferred Stock Committee may not authorize
the sale of New Preferred Stock for more than $250 million
cash consideration in the aggregate, and the power and
authority of the Preferred Stock Committee set forth in the
preceding resolutions shall expire on September 12, 1990.
"FURTHER RESOLVED, that the members of the Preferred
Stock Committee shall be D. C. Clark, E. P. Hoffman, and G.
P. Osler. In the absence of Mr. Osler, A. E. Rasmussen is
designated as an alternate member of the Preferred Stock
Committee to serve in his place."<PAGE>
<PAGE> 31
2. The Board of Directors on October 17, 1989, adopted the
following resolution pertaining to the voting rights for series
of Preferred Stock authorized for issuance by the Preferred Stock
Committee of the Board of Directors:
"RESOLVED, that holders of each series of the
Corporation's Preferred Stock which is authorized by the
Preferred Stock Committee of the Board of Directors to be
issued and sold pursuant to authority granted to the
Preferred Stock Committee by the Board of Directors (each
such series herein referred to as the "New Preferred Stock")
shall have no voting rights, and their consent shall not be
required for taking any corporate action, except as
otherwise set forth herein, except as otherwise required by
law, and except as otherwise provided by the Board of
Directors with respect to any particular series of New
Preferred Stock.
The consent of the holders of the New Preferred Stock
with respect to the matters set forth in sub-sections (i)
and (iii) of paragraph (5) of Article IV of the
Corporation's Restated Certificate of Incorporation
("Paragraph (5)") shall not be required, except with respect
to the creation or issuance of any class of stock ranking
prior to or on a parity with the Preferred Stock, or any
series thereof, as to the payment of dividends or the
distribution of assets; but the other provisions of
Paragraph (5) shall be applicable to the New Preferred
Stock. The holders of the New Preferred Stock shall have no
right to elect directors pursuant to paragraph (6) of
Article IV of the Corporation's Restated Certificate of
Incorporation ("Paragraph (6)"), such right hereby being
expressly withheld.
In the event that any six quarterly cumulative
dividends, whether consecutive or not, upon the New
Preferred Stock shall be in arrears, the holders of the New
Preferred Stock shall have the right, voting separately as a
class with holders of shares of any one or more other series
of Preferred Stock ranking on a parity with the New
Preferred Stock either as to payment of dividends or the
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and upon which
like voting rights have been conferred and are then
exercisable, at the next meeting of stockholders called for
the election of directors, to elect two members of the Board
of Directors. The right of such holders of such shares of
the New Preferred Stock, voting separately as a class, to
elect (together with the holders of shares of any one or
more other series of Preferred Stock ranking on such a
parity) members of the Board of Directors of the Corporation
as aforesaid shall continue until such time as all dividends
accumulated on such shares of the New Preferred Stock shall
have been paid in full, at which time such right shall
terminate, except as herein or by law expressly provided,
subject to revesting in the event of each and every
subsequent failure to pay dividends of the character above
mentioned.
Upon any termination of the right of the holders of the
New Preferred Stock as a class to elect directors as herein
provided, the term of office of all directors so elected
shall terminate immediately. If the office of any director
elected by such holders voting as a class becomes vacant by
reason of death, resignation, retirement, disqualification,
removal from office or otherwise, the remaining director
elected by such holders voting as a class may choose a
successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. Whenever the term
of office of the directors elected by such holders voting as
a class shall end and the special voting powers vested in
such holders as provided in this resolution shall have
expired, the number of directors shall thereupon be such
number as may be provided for in the Corporation's Bylaws
irrespective of any increase made pursuant to the provisions
of this resolution.
<PAGE>
<PAGE> 32
Until all unpaid dividends on the New Preferred Stock
shall have been paid in full, and in order to permit the
holders of the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, and any other series of Preferred
Stock issued by the Corporation having the voting rights set
forth in Paragraph (6) to exercise fully the right to elect
directors as granted by and provided in Paragraph (6), the
number of directors constituting the whole Board of
Directors of the Corporation shall not be less than seven.
If, upon any such arrearage in dividends, the number of
directors constituting the whole Board of Directors shall be
less than seven, the size of the Board of Directors shall,
immediately prior to the next meeting of stockholders called
for the election of directors, automatically be increased by
such number as shall be necessary to cause the number of
directors constituting the whole Board of Directors to be no
less than seven.
To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof in
respect of additional series of Preferred Stock, none of the
preferences or rights of any such additional series as fixed
by the Board of Directors shall rank prior to the New
Preferred Stock as to payment of dividends or the
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, without the
consent of the holders of two-thirds of the outstanding
shares of such series of New Preferred Stock voting as a
class.
The foregoing voting provisions shall not apply to any
series of New Preferred Stock if, at or prior to the time
when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of
such series of New Preferred Stock shall have been redeemed
or sufficient funds shall have been deposited in trust to
effect such redemption.
On any time in which the holders of New Preferred Stock
are entitled to vote, such holders shall be entitled to one
vote for each share held."
3. The Preferred Stock Committee of the Board of Directors
on November 2, 1989 adopted the following resolution pursuant to
authority conferred upon the Preferred Stock Committee of the
Board of Directors by the resolution of the Board of Directors
set forth in paragraph 1 above of this Certificate of
Designation, Preferences and Rights:
"RESOLVED, that the issue of a series of Preferred
Stock without par value of the Corporation is hereby
authorized and the designation, preferences and privileges,
relative, participating, optional and other special rights,
and qualifications, limitations and restrictions thereof, in
addition to those set forth in the Restated Certificate of
Incorporation, as amended, of the Corporation, are hereby
fixed as follows:
9 1/2% CUMULATIVE PREFERRED STOCK, SERIES 1989-A
(1) Number of Shares and Designation. 750,000 shares of
Preferred Stock without par value of the Corporation are hereby
constituted as a series of Preferred Stock without par value and
designated as 9 1/2% Cumulative Preferred Stock, Series 1989-A
(hereinafter called the "Preferred Stock, Series 1989-A").
(2) Dividends. The holders of shares of the Preferred
Stock, Series 1989-A, shall be entitled to receive cash
dividends, when and as declared by the Board of Directors of the
Corporation, out of assets legally available for the purpose, at
the rate determined as provided below. Such dividends shall be
cumulative from the date of original issue of such shares and
shall be payable quarterly in arrears, when and as declared by
the Board of Directors of the Corporation, on the fifteenth day
of January, April, July and October in each year to holders of<PAGE>
<PAGE> 33
record on the respective business days next preceding the first
days of those months (and the quarterly dividend periods shall
commence on the first days of those months).
Dividends on the Preferred Stock, Series 1989-A, for all
quarterly dividend periods will be payable at the rate of 9 1/2%
per annum applied to the amount of $100 per share of Preferred
Stock, Series 1989-A. The amount of dividends payable on each
share of Preferred Stock, Series 1989-A, for each full quarterly
dividend period shall be computed by dividing the dividend rate
by four and applying the dividend rate to the amount of $100 per
share. The amount of dividends payable for any dividend period
shorter or longer than a full quarterly dividend period shall be
computed on the basis of 30-day months and a 360-day year.
(3) Liquidation Preference. The amount to which shares of
Preferred Stock, Series 1989-A, shall be entitled upon
liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, shall be $100 per share, plus
an amount equal to all accrued and unpaid dividends, if any,
thereon to the date fixed for payment, and no more.
(4) Redemption. The shares of Preferred Stock, Series
1989-A, shall be subject to redemption in whole or in part at the
option of the Corporation on or after November 9, 1994, at the
following redemption prices, plus an amount equal to all accrued
and unpaid dividends, if any, thereon to the date fixed for
redemption, and no more:
$104.75 per share if redeemed on or before November 8, 1995;
$103.80 per share if redeemed thereafter and on or before
November 8, 1996;
$102.85 per share if redeemed thereafter and on or before
November 8, 1997;
$101.90 per share if redeemed thereafter and on or before
November 8, 1998;
$100.95 per share if redeemed thereafter and on or before
November 8, 1999;
$100.00 per share if redeemed thereafter.
(5) Shares to be Retired. All shares of Preferred Stock,
Series 1989-A, purchased or redeemed by the Corporation shall be
retired and cancelled and shall be restored to the status of
authorized but unissued shares of the class of Preferred Stock
without par value, without designated as to series, and may
thereafter be issued, but not as shares of Preferred Stock,
Series 1989-A.
(6) Conversion or Exchange. The holders of shares of
Preferred Stock, Series 1989-A, shall not have any rights herein
to convert such shares into or exchange such shares for shares of
any other series of any class or classes of capital stock (or any
other security) of the Corporation.
(7) Ranking. The Preferred Stock, Series 1989-A, shall rank
on a parity with the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock as to payment of dividends and
distribution of assets upon liquidation, dissolution, or winding
up, whether voluntary or involuntary, and shall rank prior to the
Corporation's Common Stock and Series A Junior Participating
Preferred Stock as to payment of dividends and distribution of
assets upon liquidation, dissolution, or winding up, whether
voluntary or involuntary, and prior to any other series of stock
authorized to be issued by the Corporation which ranks junior to
the $6.25 Cumulative Convertible Voting Preferred Stock as to
payment of dividends and distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or involuntary."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by Donald C. Clark, Chairman of the Board and Chief Executive
officer of the Corporation, and attested by James D. Pinkerton,<PAGE>
<PAGE> 34
the Corporation's Senior Vice President-Administration and
Secretary, this 6th day of November, 1989.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ D. C. Clark
-------------------------
Chairman of the Board and
Chief Executive Officer
Attest:
/s/ J. D. Pinkerton
- ----------------------------
Senior Vice President-
Administration and Secretary
A:\WP51\IC111689.WP<PAGE>
<PAGE> 35
CERTIFICATE OF HOUSEHOLD INTERNATIONAL, INC.
UNDER SECTION 151(g) OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Household International, Inc., a Delaware corporation
(hereinafter referred to as the "Corporation"), does hereby
certify that the following resolution was duly adopted by the
Corporation's Board of Directors:
"WHEREAS, no shares of the Corporation's Flexible Rate
Auction Preferred Stock, Series B (the "Preferred Stock"),
are outstanding as of the July 13, 1995, redemption date, it
is hereby
"RESOLVED, that the officers of the Corporation are
duly authorized to file a certificate with the Secretary of
State of Delaware eliminating from the Corporation's
Certificate of Incorporation all matters set forth in each
Certificate of Designation, Preferences and Rights for the
Preferred Stock and as permitted by the Certificate of
Designation, Preferences and Rights for the Preferred Stock,
such shares of Preferred Stock redeemed shall resume the
status of authorized and unissued shares of the
Corporation's preferred stock."
Upon the effective date of the filing of this Certificate,
it shall eliminate from the Corporation's Certificate of
Incorporation all matters set forth in the Certificate of
Designation, Preferences, and Rights with respect to the
Corporation's Flexible Rate Auction Preferred Stock, Series B,
and all of such shares of Flexible Rate Auction Preferred Stock,
Series B, shall resume the status of authorized and unissued
shares of the Corporation's Preferred Stock.
IN WITNESS WHEREOF, said Household International, Inc., has
caused its corporate seal to be hereunto affixed and this
Certificate to be signed by John W. Blenke, its Secretary, and
attested to by Susan E. Casey, its Assistant Secretary, this 16th
day of August, 1995.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. W. Blenke
------------------------
Secretary
Attest:
By: /s/ S. E. Casey
-------------------
Assistant Secretary
<PAGE>
<PAGE> 36
CERTIFICATE OF HOUSEHOLD INTERNATIONAL, INC.
UNDER SECTION 151(g) OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Household International, Inc., a Delaware corporation
(hereinafter referred to as the "Corporation"), does hereby
certify that the following resolution was duly adopted by the
Corporation's Board of Directors:
"WHEREAS, no shares of the Corporation's Flexible Rate
Auction Preferred Stock, Series A (the "Preferred Stock"),
are outstanding as of the July 13, 1993, redemption date, it
is hereby
"RESOLVED, that the officers of the Corporation are
duly authorized to file a certificate with the Secretary of
State of Delaware eliminating from the Corporation's
Certificate of Incorporation all matters set forth in each
Certificate of Designation, Preferences and Rights for the
Preferred Stock and as permitted by the Certificate of
Designation, Preferences and Rights for the Preferred Stock,
such shares of Preferred Stock redeemed shall resume the
status of authorized and unissued shares of the
Corporation's preferred stock."
Upon the effective date of the filing of this Certificate,
it shall eliminate from the Corporation's Certificate of
Incorporation all matters set forth in the Certificate of
Designation, Preferences, and Rights with respect to the
Corporation's Flexible Rate Auction Preferred Stock, Series A,
and all of such shares of Flexible Rate Auction Preferred Stock,
Series A, shall resume the status of authorized and unissued
shares of the Corporation's Preferred Stock.
IN WITNESS WHEREOF, said Household International, Inc., has
caused its corporate seal to be hereunto affixed and this
Certificate to be signed by J. R. Hull, its Senior Vice
President-Secretary and General Counsel, and attested by
J. W. Blenke, its Assistant General Counsel and Assistant
Secretary, this 13th day of July, 1993.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. R. Hull
-----------------------------
Senior Vice President-
Secretary and General Counsel
Attest:
By: /s/ J. W. Blenke
-------------------------
Assistant General Counsel
and Assistant Secretary <PAGE>
<PAGE> 37
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 141 of the
General Corporation Law of the State of Delaware
FLEXIBLE RATE AUCTION PREFERRED STOCK, SERIES A AND B
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized
and existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolutions
were duly adopted by the Board of Directors of the Corporation
and by the Preferred Stock Committee of the Board of Directors,
pursuant to authority conferred upon the Board of Directors by
the provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and pursuant to authority conferred
upon the Preferred Stock Committee by the resolutions of the
Board of Directors set forth herein and in accordance with
section 141(c) of the General Corporation Law of the State of
Delaware.
I. The Board of Directors on September 12, 1989,
adopted the following resolutions designating a Preferred Stock
Committee of the Board of Directors and authorizing the Preferred
Stock Committee to act on behalf of the Board of Directors
(within certain limitations) in connection with the designation,
issuance and sale of shares in one or more series of Preferred
Stock of the Corporation:
"RESOLVED, that a Preferred Stock Committee of the
Board of Directors is hereby designated which shall have and
may exercise, to the fullest extent permitted by law, the
full power and authority of the Board of Directors with
respect to the issuance and sale of one or more new series
of the Corporation's Preferred Stock without par value (each
such series herein referred to as the "New Preferred
Stock"), including, without limitation, establishing the
purchase price therefor, and fixing the designations and any
of the preferences, powers, rights (other than voting powers
or voting rights which shall be fixed by the Board of
Directors) and relative, participating, optional or other
special rights and qualifications, limitations or
restrictions thereof, of such shares of each series of New
Preferred Stock, and fixing the number of shares of each
series of New Preferred Stock.
"FURTHER RESOLVED, that the Committee is authorized to
take such additional actions and adopt such additional
resolutions as it deems necessary or appropriate for the
purpose of authorizing and implementing the issuance, offer,
and sale for cash of New Preferred Stock, including, without
limiting the generality of the foregoing, the authorization
and execution of agreements (including underwriting
agreements) relating to the offer and sale of New Preferred
Stock, authorization and approval of listing applications
(including amendments or supplements thereto) for the
listing of such New Preferred Stock on a stock exchange,
approval of forms of stock certificates and authorization of
issuance of New Preferred Stock in uncertificated form, any
actions which may be necessary to qualify the offering and
sale of New Preferred Stock under Blue Sky Laws of the
various states, any necessary filings with the Secretary of
State of Delaware and other jurisdictions, and the
appointment of a transfer agent.
"FURTHER RESOLVED, that notwithstanding the foregoing
resolutions, the Preferred Stock Committee may not authorize
the sale of New Preferred Stock for more than $250 million
cash consideration in the aggregate, and the power and
authority of the Preferred Stock Committee set forth in the
preceding resolutions shall expire on September 12, 1990.
"FURTHER RESOLVED, that the members of the Preferred
Stock Committee shall be D. C. Clark, E. P. Hoffman, and G.
P. Osler. In the absence of Mr. Osler, A. E. Rasmussen is
designated as an alternate member of the Preferred Stock
Committee to serve in his place."<PAGE>
<PAGE> 38
II. The Board of Directors on July 10, 1990, adopted
the following resolution pertaining to the voting rights which
will be applicable to the Flexible Rate Auction Preferred Stock,
Series A and B:
"RESOLVED, that notwithstanding the resolution of the
Board of Directors adopted on October 17, 1989, the holders
of any series of Preferred Stock which on or after July 10,
1990, is authorized by the Corporation's Preferred Stock
Committee of the Board of Directors to be issued and sold
pursuant to authority granted to the Preferred Stock
Committee by the Board of Directors (each such series herein
referred to as the "New Preferred Stock") shall have no
voting rights, and their consent shall not be required for
taking any corporate action, except as otherwise set forth
herein, except as otherwise required by law, and except as
otherwise provided by the Board of Directors with respect to
any particular series of New Preferred Stock.
The consent of the holders of the New Preferred Stock
with respect to the matters set forth in subsections (i) and
(iii) of paragraph (5) of Article IV of the Corporation's
Restated Certificate of Incorporation ("Paragraph (5)")
shall not be required, except with respect to the creation
or issuance of any class of stock ranking prior to or on a
parity with the Preferred Stock, or any series thereof, as
to the payment of dividends or the distribution of assets;
but the other provisions of Paragraph (5) shall be
applicable to the New Preferred Stock. The holders of the
New Preferred Stock shall have no right to elect directors
pursuant to paragraph (6) of Article IV of the Corporation's
Restated Certificate of Incorporation ("Paragraph (6)"),
such right hereby being expressly withheld.
In the event that any six quarterly cumulative
dividends (which shall be deemed to include dividends in
respect of a number of non-quarterly dividend periods
containing not less than 540 days), whether consecutive or
not, upon the New Preferred Stock shall be in arrears, the
holders of the New Preferred Stock shall have the right,
voting separately as a class with holders of shares of any
one or more other series of Preferred Stock ranking on a
parity with the New Preferred Stock either as to payment of
dividends or the distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and upon which like voting rights have been
conferred (which shall include the Corporation's 9-1/2%
Cumulative Preferred Stock, Series 1989-A) and are then
exercisable, at the next meeting of stockholders called for
the election of directors, to elect two members of the Board
of Directors. The right of such holders of such shares of
the New Preferred Stock, voting separately as a class, to
elect (together with the holders of shares of any one or
more other series of Preferred Stock ranking on such a
parity) members of the Board of Directors of the Corporation
as aforesaid shall continue until such time as all dividends
accumulated on such shares of the New Preferred Stock shall
have been paid in full, at which time such right shall
terminate, except as herein or by law expressly provided,
subject to revesting in the event of each and every
subsequent failure to pay dividends of the character above
mentioned.
Upon any termination of the right of the holders of the
New Preferred Stock as a class to elect directors as herein
provided, the term of office of all directors so elected
shall terminate immediately. If the office of any director
elected by such holders voting as a class becomes vacant by
reason of death, resignation, retirement, disqualification,
removal from office or otherwise, the remaining director
elected by such holders voting as a class may choose a
successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. Whenever the term
of office of the directors elected by such holders voting as
a class shall end and the special voting powers vested in
such holders as provided in this resolution shall have
expired, the number of directors shall thereupon be such
number as may be provided for in the Corporation's Bylaws<PAGE>
<PAGE> 39
irrespective of any increase made pursuant to the provisions
of this resolution.
Until all unpaid dividends on the New Preferred Stock
shall have been paid in full, and in order to permit the
holders of the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, and any other series of Preferred
Stock issued by the Corporation having the voting rights set
forth in Paragraph (6) to exercise fully the right to elect
directors as granted by and provided in paragraph (6), the
number of directors constituting the whole Board of
Directors of the Corporation shall not be less than seven.
If, upon any such arrearage in dividends, the number of
directors constituting the whole Board of Directors shall be
less than seven, the size of the Board of Directors shall,
immediately prior to the next meeting of stockholders called
for the election of directors, automatically be increased by
such number as shall be necessary to cause the number of
directors constituting the whole Board of Directors to be no
less than seven.
To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof in
respect of additional series of Preferred Stock, none of the
preferences or rights of any such additional series as fixed
by the Board of Directors shall rank prior to the New
Preferred Stock as to payment of dividends or the
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, without the
consent of the holders of two-thirds of the outstanding
shares of such series of New Preferred Stock voting as a
class.
The foregoing voting provisions shall not apply to any
series of New Preferred Stock if, at or prior to the time
when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of
such series of New Preferred Stock shall have been redeemed
or sufficient funds shall have been deposited in trust to
effect such redemption.
On any item in which the holders of New Preferred Stock
are entitled to vote, such holders shall be entitled to one
vote for each share held."
III. The Preferred Stock Committee of the Board of
Directors on July 18, 1990 adopted the following resolution
pursuant to authority conferred upon the Preferred Stock
Committee of the Board of Directors by the resolution of the
Board of Directors set forth in paragraph I above of this
Certificate of Designation, Preferences and Rights:
"RESOLVED, that the issue of two series of Preferred
Stock without par value of the Corporation is hereby
authorized and the designation, preferences and privileges,
relative, participating, optional and other special rights,
and qualifications, limitations and restrictions thereof, in
addition to those set forth in the Restated Certificate of
Incorporation, as amended, of the Corporation, are hereby
fixed as follows:
PART I
1. Designation; Amount and Series. The two Series of
Preferred Stock created hereby shall comprise 750,000 shares
designated as "Flexible Rate Auction Preferred Stock" (referred
to as the "Flex APS"). The 750,000 shares of the Flex APS shall
be issuable in the following Series: 350,000 shares designated
"Flexible Rate Auction Preferred Stock, Series A" (the "Series A
Flex APS") and 400,000 shares designated "Flexible Rate Auction
Preferred Stock, Series B" (the "Series B Flex APS"). Each share
of each separate Series of Flex APS shall be identical and equal
in all respects to every other share of such Series, and the
shares of all of the Series shall, except as expressly provided
herein, or as otherwise provided by law, be identical and equal
in all respects.<PAGE>
<PAGE> 40
2. Definitions. Unless the context or use indicates
another or different meaning or intent, the following terms shall
have the following meanings, whether used in the singular or
plural:
"60-day 'AA' Composite Commercial Paper Rate," on any
date, means (i) the interest equivalent of the 60-day rate
on commercial paper placed on behalf of issuers whose
corporate bonds are rated "Aa" by Moody's or AA by S&P or
the equivalent of such rating by another rating agency, as
such 60-day rate is made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the
Business Day immediately preceding such date, or (ii) in the
event that the Federal Reserve Bank of New York does not
make available such a rate, then the arithmetic average of
the interest equivalent of the 60-day rate on commercial
paper placed on behalf of such issuers, as quoted on a
discount basis or otherwise by the Commercial Paper Dealers
to the Auction Agent for the close of business on the
Business Day immediately preceding such date. If any
Commercial Paper Dealer does not quote a rate required to
determine the 60-day "AA" Composite Commercial Paper Rate,
the 60-day "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations
furnished by the remaining Commercial Paper Dealer or
Commercial Paper Dealers and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by
the Corporation to provide such rate or rates not being
supplied by any Commercial Paper Dealer or Commercial Paper
Dealers, as the case may be, or, if the Corporation does not
select any such Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers, by the remaining
Commercial Paper Dealer or Commercial Paper Dealers. If the
Board of Directors of the Corporation, however, shall adjust
the number of Dividend Period Days pursuant to the second
sentence of paragraph 3(b)(v) in the event of a change in
the dividends received deduction minimum holding period
contained in the Code, then (i) if the Dividend Period Days
shall be less than 70 days, such rate shall be the interest
equivalent of the 60-day rate on such commercial paper, (ii)
if the Dividend Period Days shall be 70 or more days but
less than 85 days, such rate shall be the arithmetic average
of the interest equivalent of the 60-day and 90-day rates on
such commercial paper and (iii) if the Dividend Period Days
shall be 85 or more days but less than 99 days, such rate
shall be the interest equivalent of the 90-day rate on such
commercial paper. For the purposes of such definition,
"interest equivalent" means the equivalent yield on a 360-
day basis of a discount basis security to an interest
bearing security.
"Act" shall mean the Securities Act of 1933, as
amended.
"Applicable 'AA' Composite Commercial Paper Rate" for
any Long-Term Dividend Period on any date, shall mean (A) in
the case of any Long-Term Dividend Period of less than 70
days, the interest equivalent of the 60-day rate, (B) in the
case of any Long-Term Dividend Period of 70 days or more but
less than 85 days, the arithmetic average of the interest
equivalent of the 60-day and 90-day rates, (C) in the case
of any Long-Term Dividend Period of 85 days or more but less
than 120 days, the interest equivalent of the 90-day rate,
(D) in the case of any Long-Term Dividend Period of 120 days
or more but less than 148 days, the arithmetic average of
the interest equivalent of the 90-day and 180-day rates, (E)
in the case of any Long-Term Dividend Period of 148 days or
more but less than 210 days, the interest equivalent of the
180-day rate, (F) in the case of any Long-Term Dividend
Period of 210 days or more but less than 238 days, the
arithmetic average of the interest equivalent of the 180-day
and 270-day rates and (G) in the case of any Long-Term
Dividend Period of 238 or more days, the interest equivalent
of the 270-day rate on commercial paper placed on behalf of
issuers whose corporate bonds are rated "Aa" by Moody's or
AA by S&P, or the equivalent of such rating by another
rating agency, as made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the<PAGE>
<PAGE> 41
Business Day immediately preceding such date or in the event
that the Federal Reserve Bank of New York does not make
available any such rate, then the arithmetic average of such
rates, as quoted on a discount basis or otherwise, by the
Commercial Paper Dealers, to the Auction Agent for the close
of business on the Business Day next preceding such date.
If any Commercial Paper Dealer does not quote a rate
required to determine the "AA" Composite Commercial Paper
Rate, the "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations
furnished by the remaining Commercial Paper Dealer or
Commercial Paper Dealers and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by
the Corporation to provide such rate or rates not being
supplied by any Commercial Paper Dealer or Commercial Paper
Dealers, as the case may be, or, if the Corporation does not
select any such Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers, by the remaining
Commercial Paper Dealer or Commercial Paper Dealers. For
purposes of this definition, the "interest equivalent" means
the equivalent yield on a 360-day basis of a discount-basis
security to an interest-bearing security.
"Applicable Rate" means the rate per annum established
pursuant to paragraph 3(c) hereof at which dividends are
payable on a Series for any Auction Dividend Period for such
Series.
"Applicable Treasury Rate" on any date, with respect to
any Series of Flex APS with a Long-Term Dividend Period of
one year or more, means the interest equivalent of the rate
for direct obligations of the United States Treasury having
an original maturity which is equal to, or next lower than,
the length of such Long-Term Dividend Period, as published
weekly by the Federal Reserve Board in "Federal Reserve
Statistical Release H.15 (519)--Selected Interest Rates," or
any successor publication by the Federal Reserve Board
within five Business Days preceding such date. In the event
that the Federal Reserve Board does not publish such weekly
per annum interest rate, or if such release is not yet
available, the Applicable Treasury Rate will be the
arithmetic mean of the secondary market bid rates as of
approximately 3:30 p.m., New York City time, on the Business
Day next preceding such date of the U.S. Government
Securities Dealers obtained by the Auction Agent (in the
case of a determination of the Applicable Treasury Rate on
any Auction Date) or the Corporation (in the case of a
determination of such rate on any other day) for the issue
of direct obligations of the United States Treasury, in an
aggregate principal amount of at least $1,000,000, with a
remaining maturity equal to, or next lower than, the length
of such Long-Term Dividend Period. If any U.S. Government
Securities Dealer does not quote a rate required to
determine the Applicable Treasury Rate, the Applicable
Treasury Rate shall be determined on the basis of the
quotation or quotations furnished by the remaining U.S.
Government Securities Dealer or Dealers or any Substitute
U.S. Government Securities Dealer or Dealers selected by the
Corporation to provide such rate or rates not being supplied
by any U.S. Government Securities Dealer or Dealers, as the
case may be, or, if the Corporation does not select any such
Substitute U.S. Government Securities Dealer or Dealers, by
the remaining U.S. Government Securities Dealer or Dealers;
provided that, in the event the Corporation is unable to
cause such quotations to be furnished to the Auction Agent
(or, if applicable, to the Corporation) by such sources, the
Corporation may cause such rates to be furnished to the
Auction Agent (or, if applicable, to the Corporation) by
such alternative source as the Corporation in good faith
deems to be reliable. For purposes of this definition, the
"interest equivalent" of a rate stated on a discount basis
shall be equal to the quotient of (A) the discount rate
divided by (B) the difference between 1.00 and the discount
rate.
"Auction" means each periodic operation of the Auction
Procedures.
<PAGE>
<PAGE> 42
"Auction Agent" means such bank or trust company or
other entity which has been appointed as such by a
resolution of the Board of Directors of the Corporation.
"Auction Date" has the meaning specified in Part II
below.
"Auction Dividend Period" has the meaning set forth in
paragraph 3(b)(vii) below.
"Auction Procedures" means the procedures for
conducting Auctions set forth in Part II below.
"Bid" has the meaning set forth in Part II below.
"Board of Directors" means the Board of Directors of
the Corporation and any duly authorized committee of the
Board of Directors.
"Business Day" means a day on which the New York Stock
Exchange is open for trading and which is not a day on which
banks in New York City are authorized by law to close.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commercial Paper Dealers" means Goldman, Sachs & Co.,
Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce,
Fenner & Smith Incorporated or, in lieu of any thereof,
their respective affiliates or successors.
"Common Stock" means the Corporation's common stock,
$1.00 par value, and any other shares of stock into which
such stock may hereinafter be changed from time to time.
"Corporation" means Household International, Inc., a
Delaware corporation, or its successor.
"Date of Original Issue," with respect to any share of
Flex APS, means the date on which the Corporation originally
issues such share of Flex APS.
"Dividend Payment Date" has the meaning set forth in
paragraph 3(b)(vi) below.
"Dividend Period Days" has the meaning set forth in
paragraph 3(b)(v) below.
"Dividend Quarter" has the meaning set forth in
paragraph 3(b)(vi) below.
"Existing Holder" has the meaning set forth in Part II
below.
"Failure to Deposit" means, with respect to any Series
of Flex APS, the failure by the Corporation to irrevocably
deposit with the Paying Agent sufficient funds for either
the payment of dividends or the redemption price on such
Series of Flex APS and to give the Paying Agent irrevocable
instructions to apply such funds and, if applicable, the
income and proceeds therefrom, to the payment of such
dividends or redemption price not later than noon New York
City time on the Business Day immediately preceding each
Dividend Payment Date or date fixed for redemption with
respect to such shares of Flex APS.
"Fixed Dividend Period" has the meaning set forth in
paragraph 3(b)(i) below.
"Flex APS" has the meaning set forth in paragraph 1
above.
"Holder" means the holder of shares of the
Corporation's Flex APS as the same appears on the Stock
Books of the Corporation.
"Initial Auction", "Initial Auction Date", "Initial
Auction Holders" and "Initial Dividend Period" have the
meanings set forth in Part II below.<PAGE>
<PAGE> 43
"LIBOR" means, on any date for any Auction Dividend
Period, the arithmetic average (rounded to the next higher
1/16 of 1%), computed by the Auction Agent of the following
rates per annum or arithmetic averages thereof quoted by
each of the principal London offices of the Reference Banks,
at which United States dollar deposits in the amount of U.S.
$10,000,000 are offered by such Reference Banks (i) in the
case of any Auction Dividend Period with Dividend Period
Days of less than 30 days, the one-month rate, (ii) in the
case of any Auction Dividend Period with Dividend Period
Days of 30 days or more but less than 70 days, the two-month
rate, (iii) in the case of any Auction Dividend Period with
Dividend Period Days of 70 or more days but less than 85
days, the two-month and three-month rates and (iv) in the
case of any Auction Dividend Period with Dividend Period
Days of 85 or more but less than 98 days or in the case that
a Failure to Deposit occurs during a Long-Term Dividend
Period, the three-month rate, to leading banks in the London
interbank market at approximately 11:00 a.m. (London time)
on the first day of such Auction Dividend Period (or
Dividend Quarter), or if such day is not a day on which
dealings in United States dollars are transacted in the
London interbank market, then on the next preceding day on
which such dealings are transacted in such market. If any
Reference Bank does not quote a rate required to determine
LIBOR, LIBOR shall be determined on the basis of the
quotations furnished by the remaining Reference Bank or
Reference Banks and any Substitute Reference Bank or
Substitute Reference Banks selected by the Corporation to
provide such quotation or quotations not being supplied by
any Reference Bank or Reference Banks, as the case may be,
or, if the Corporation does not select any Substitute
Reference Bank or Substitute Reference Banks, by the
remaining Reference Bank or Reference Banks. For each
Auction Dividend Period or Dividend Quarter for which the
rate is determined with reference to 200% of LIBOR, the
Auction Agent will obtain rates from the Reference Banks and
determine LIBOR and notify the Corporation of such
determination.
"Long-Term Dividend Period" has the meaning set forth
in paragraph 3(b)(vii) below.
"Maximum Applicable Rate," with respect to any Series
with a Short-Term Dividend Period, on any Auction Date will
be the rate obtained by multiplying the 60-day "AA"
Composite Commercial Paper Rate on such Auction Date, and
with respect to any Series with a Long-Term Dividend Period,
the Maximum Applicable Rate on any Auction Date will be the
rate obtained by multiplying the Reference Rate on such
Auction Date, by a percentage determined as set forth below
based on the credit rating or ratings assigned to the Flex
APS by Moody's and S&P (or if Moody's or S&P or both shall
not make such rating available, the equivalent of either or
both or such ratings by a Substitute Rating Agency or two
Substitute Rating Agencies or, in the event that only one
such rating shall be available, the percentage will be based
on such rating).
Applicable Percentage of
Credit Rating 60-day "AA" Composite
-------------------------------- Commercial Paper Rate
Moody's S&P or Reference Rate
------- --- ------------------------
aa3 or Above AA- or Above 110%
a3 to a1 A- to A+ 125%
baa3 to baa1 BBB- to BBB+ 175%
ba3 to ba1 BB- to BB+ 200%
Below ba3 Below BB- 250%
If the ratings for any Series of Flex APS are split
between two of the foregoing categories, the lower rating
will determine the prevailing rating.
The Corporation shall take all reasonable action
necessary to enable Moody's and S&P to provide a rating for
each Series. If either Moody's or S&P shall not make such
rating available or neither Moody's nor S&P shall make such<PAGE>
<PAGE> 44
a rating available, Goldman, Sachs & Co. or its affiliates
and successors, after consultation with the Corporation,
shall select a Substitute Rating Agency or two Substitute
Rating Agencies, as the case may be.
"Minimum Holding Period" has the meaning set forth in
paragraph 3(b)(v) below.
"Moody's" means Moody's Investors Service, Inc., or its
successor, so long as such agency (or successor) is in the
business of rating securities of the type of the Flex APS
and, if such agency is not in such business, then a
Substitute Rating Agency.
"Non-Auction Rate" has the meaning set forth in
paragraph 3(c)(i) below.
"Normal Dividend Payment Date" has the meaning set
forth in paragraph 3(b)(ii) below.
"Notice of Long-Term Dividend Period" has the meaning
set forth in paragraph 3(b)(viii) below.
"Notice of Removal" has the meaning set forth in
paragraph 3(b)(viii) below.
"Notice of Revocation" has the meaning set forth in
paragraph 3(b)(viii) below.
"Paying Agent" means the Auction Agent unless another
bank or trust company has been appointed for such purpose by
resolution of the Board of Directors of the Corporation.
"Rating Agencies" means Moody's and S&P.
"Reference Banks" means Citibank, N.A., Bankers Trust
Company and Morgan Guaranty Trust Company of New York, or,
in lieu thereof, their respective successors.
"Reference Rate" means for Long-Term Dividend Periods
(i) from 50 days to less than 270 days, the Applicable "AA"
Composite Commercial Paper Rate, (ii) from 270 days to less
than one year, the higher of the 270-day Applicable "AA"
Composite Commercial Paper Rate and the one-year Applicable
Treasury Rate and (iii) of one year or more, the Applicable
Treasury Rate.
"Securities Depository" means The Depository Trust
Company and its successors and assigns or any other
securities depository selected by the Corporation which
agrees to follow the procedures required to be followed by
such securities depository in connection with the Flex APS.
"Sell Order" has the meaning set forth in Part II
below.
"Series" means the Series A Flex APS or the Series B
Flex APS authorized herein.
"Short-Term Dividend Period" has the meaning set forth
in paragraph 3(b)(vii) below.
"S&P" means Standard & Poor's Corporation, or its
successor, so long as such agency (or successor) is in the
business of rating securities of the type of the Flex APS
and, if such agency is not in such business, then a
Substitute Rating Agency.
"Stock Books" means the stock transfer books of the
Corporation maintained by the Paying Agent.
"Substitute Commercial Paper Dealer" means The First
Boston Corporation or Shearson Lehman Hutton Inc. or, in
lieu of each thereof, their respective affiliates or
successors.
"Substitute Rating Agency" means a nationally
recognized statistical rating organization (as that term is<PAGE>
<PAGE> 45
used in the rules and regulations of the Securities Exchange
Act of 1934) selected by the Term Selection Agent after
consultation with the Corporation, and may include Fitch
Investors Service, Inc. and Duff & Phelps, Inc.
"Substitute Reference Bank" means the principal London
offices of any of The Bank of Tokyo Ltd., The First National
Bank of Chicago or Commerebank A.G. or, in lieu thereof,
their respective successors, or, if none of such Substitute
Reference Banks are engaged in dealings in United States
dollars in the London interbank market, then a bank or banks
selected by the Corporation, engaged in dealings in United
States dollars in the London interbank market.
"Substitute U.S. Government Securities Dealer" means
Merrill Lynch, Pierce, Fenner & Smith Incorporated or The
First Boston Corporation, or their respective affiliates or
successors.
"Successful Initial Auction" shall have the meaning set
forth in Part II below.
"Term Selection Agent" means Goldman, Sachs & Co.,
unless or until another investment banking firm has been
appointed as such by a resolution of the Board of Directors
of the Corporation.
"Unit" with respect to each Series shall mean 1,000
shares of Flex APS of such Series.
"U.S. Government Securities Dealer" means Goldman,
Sachs & Co., Salomon Brothers Inc. and Morgan Stanley & Co.
Incorporated or, in lieu of any thereof, their respective
affiliates or successors.
3. Dividends. (a) Holders of shares of each
Series of Flex APS shall be entitled to receive, when, as
and if declared by the Board of Directors of the
Corporation, out of surplus (as defined in the General
Corporation Law of the State of Delaware), or net profits of
the Corporation for the fiscal year in which the dividend is
declared and/or for the preceding fiscal year, cumulative
cash dividends at the applicable dividend rate per annum
established or determined as set forth herein, payable on
the respective dates set forth below.
(b) (i) Dividends on the shares of each Series shall
accumulate at the respective rates for such Series
(whether or not declared) from the Date of Original
Issue. From the Date of Original Issue to but not
including July 15, 1993 with respect to the Series A
Flex APS and July 15, 1995 with respect to the Series B
Flex APS (in each case the "Fixed Dividend Period"),
dividends on the Flex APS shall be payable on the
fifteenth day of October, January, April, and July in
each year commencing on October 15, 1990.
(ii) Following the respective Fixed Dividend
Period for any Series of Flex APS, dividends on the
shares of such Series with a Short-Term Dividend Period
shall be payable, except as provided below in this
paragraph 3(b), every 49 days on the day following the
last day of such Short-Term Dividend Period. Dividends
on the shares of each Series with a Long-Term Dividend
Period shall be payable, except as provided below in
this paragraph 3(b), on the day following the last day
of such Long-Term Dividend Period and, if occurring
prior to the day following the last day of such Long-
Term Dividend Period, on the fifteenth day of the third
month after the commencement of such Long-Term Dividend
Period and quarterly thereafter on the fifteenth day of
each succeeding third month. Each day on which
dividends on shares of a Series would be payable as
determined as set forth in this clause (ii) but for the
provisions set forth below in this paragraph 3(b) is
referred to herein as a "Normal Dividend Payment Date."
<PAGE>
<PAGE> 46
(iii) In the case of dividends payable on the
shares of a Series with a Short-Term Dividend Period,
if:
(A)(I) The Securities Depository shall
continue to make available to its members and
participants the amounts due as dividends on the
shares of such Series in next-day funds on the
dates on which such dividends are payable and (II)
a Normal Dividend Payment Date for such Series is
not a Business Day, or the day next succeeding
such Normal Dividend Payment Date is not a
Business Day, then dividends shall be payable on
the first Business Day preceding such Normal
Dividend Payment Date that is next succeeded by a
Business Day; or
(B)(I) The Securities Depository shall
make available to its members and participants the
amounts due as dividends on the shares of such
Series in immediately available funds on the dates
on which such dividends are payable (and the
Securities Depository shall have so advised the
Auction Agent) and (II) a Normal Dividend Payment
Date for such Series is not a Business Day, then
dividends shall be payable on the first Business
Day following such Normal Dividend Payment Date.
(iv) In the case of dividends payable on the
shares of a Series with a Long-Term Dividend Period,
if:
(A)(I) The Securities Depository shall
continue to make available to its members and
participants the amounts due as dividends on the
shares of such Series in next-day funds on the
dates on which such dividends are payable and (II)
a Normal Dividend Payment Date for such Series is
not a Business Day, or the day next succeeding
such Normal Dividend Payment Date is not a
Business Day, then dividends shall be payable on
the first Business Day following such Normal
Dividend Payment Date that is next succeeded by a
Business Day; or
(B)(I) The Securities Depository shall
make available to its members and participants the
amounts due as dividends on the shares of such
Series in immediately available funds on the dates
on which such dividends are payable (and the
Securities Depository shall have so advised the
Auction Agent) and (II) a Normal Dividend Payment
Date for such Series is not a Business Day, then
dividends shall be payable on the first Business
Day following such Normal Dividend Payment Date.
(v) Notwithstanding the foregoing, if the date on
which dividends on the shares of any Series would be
payable as determined as set forth in clauses (ii),
(iii) or (iv) above is a day that would result in the
number of days between successive Auction Dates for
such Series (determined by including the first Auction
Date and excluding the second Auction Date) not being
at least equal to the then current Minimum Holding
Period, then dividends on such shares shall be payable,
if either clauses (iii)(A) or (iv)(A) above would be
applicable to such Series, on the first Business Day
following such date on which dividends would be so
payable that is next succeeded by a Business Day or, if
either clauses (iii)(B) or (iv)(B) above would be
applicable to such Series, on the first Business Day
following such day on which dividends would be so
payable, that in either case results in the number of
days between such successive Auction Dates for such
Series (determined as set forth above) being at least
equal to the then current Minimum Holding Period.
<PAGE>
<PAGE> 47
In addition, notwithstanding the foregoing, in the
event of a change in law altering the minimum holding
period (the "Minimum Holding Period") required for
corporate taxpayers generally to be entitled to the
dividends received deduction for federal income tax
purposes in respect of dividends (other than
extraordinary dividends) paid on preferred stock held
by non-affiliated corporations, the Board of Directors
of the Corporation may adjust the period of time
between Dividend Payment Dates for each Series so as to
adjust uniformly the number of days (such number of
days without giving effect to the provisions in
paragraphs 3(b)(iii) and (iv) being hereinafter
referred to as "Dividend Period Days") in Auction
Dividend Periods for each Series commencing after the
date of such change in law to equal or exceed the then
current Minimum Holding Period, provided that the
number of Dividend Period Days shall not exceed by more
than nine days the length of such then current Minimum
Holding Period and shall be evenly divisible by seven,
and the maximum number of Dividend Period Days, as
adjusted pursuant to this provision, in no event shall
exceed 98 days. Upon any such change in the number of
Dividend Period Days as a result of a change in law,
the Corporation shall mail notice of such change by
first-class mail, postage prepaid, to the Auction Agent
and the Paying Agent and to each Existing Holder.
(vi) Each date on which dividends on the shares of
a Series for an Auction Dividend Period shall be
payable as determined as set forth in paragraph
3(b)(ii) above shall be referred to herein as a
"Dividend Payment Date" for such Series. If
applicable, the period from the preceding Dividend
Payment Date to the next Dividend Payment Date for any
Series with a Long-Term Dividend Period is herein
referred to as a "Dividend Quarter." Although any
particular Dividend Payment Date for a Series may not
occur on the originally scheduled Normal Dividend
Payment Date for such Series because of the foregoing
provisions, each succeeding Dividend Payment Date for
such Series shall be, subject to such provisions, the
date determined as set forth in clause (ii) above as if
each preceding Dividend Payment Date had occurred on
the respective originally scheduled Normal Dividend
Payment Date.
(vii) After the Fixed Dividend Period for each
Series, each subsequent Auction Dividend Period for
such Series (except for the adjustments for non-
Business Days provided in clauses (iii) and (iv) above)
shall be 49 days (each such 49-day period, subject to
any adjustment as a result of a change in law
lengthening the Minimum Holding Period as provided in
clause (v) above, being referred to herein as a "Short-
Term Dividend Period"), unless as provided in clause
(viii) below, the Term Selection Agent specifies that
any such subsequent Auction Dividend Period shall be an
Auction Dividend Period of any specified number of days
greater than a Short-Term Dividend Period and, except
as otherwise designated by the Term Selection Agent in
the case of the Initial Auction Dividend Period,
consisting of a whole number of weeks (each such period
being referred to herein as a "Long-Term Dividend
Period," and each such Short-Term Dividend Period and
Long-Term Dividend Period being referred to herein as
an "Auction Dividend Period"). The Initial Auction
Dividend Period will commence on July 15, 1993 with
respect to the Series A Flex APS, and on July 15, 1995
with respect to the Series B Flex APS. Thereafter,
each successive Auction Dividend Period for such Series
shall commence on the Dividend Payment Date for the
preceding Auction Dividend Period and shall end (i) in
the case of any Series with a Short-Term Dividend
Period, on the day preceding the next Dividend Payment
Date for such Series and (ii) in the case of any Series
with a Long-Term Dividend Period, on the day preceding
the last Dividend Payment Date for such Long-Term<PAGE>
<PAGE> 48
Dividend Period specified by the Term Selection Agent
in the related notice of Long-Term Dividend Period.
(viii) Not less than 10 and not more than 20 days
prior to an Auction Date for any Series and based on
the criteria set forth below, the Term Selection Agent
may give telephonic and written notice to the
Corporation, the Auction Agent, the Paying Agent and
the Securities Depository that the next succeeding
Auction Dividend Period for such Series will be longer
than a Short-Term Dividend Period (a "Notice of Long-
Term Dividend Period"). Such notice will specify the
next succeeding Auction Dividend Period for such Series
as a Long-Term Dividend Period, which may be any period
designated by the Term Selection Agent greater than the
Short-Term Dividend Period and, except as otherwise
designated by the Term Selection Agent in the case of
the Initial Auction Dividend Period, consisting of a
whole number of weeks, provided that for any Auction
occurring after the Initial Auction for any Series, the
Term Selection Agent may not give a Notice of Long-Term
Dividend Period for such Series (and any such notice
shall be null and void) unless Sufficient Clearing Bids
were made in the last occurring Auction for such Series
and full cumulative dividends for all Series payable
prior to such date have been paid in full. The Term
Selection Agent shall state in each Notice of Long-Term
Dividend Period (i) that the next succeeding Auction
Dividend Period for such Series shall be a Long-Term
Dividend Period, (ii) the term thereof and (iii)
whether or not the shares of such Series for such Long-
Term Dividend Period will be redeemable at the option
of the Corporation and, if they are, the date or dates
upon which such shares will be so redeemable, the
redemption price (which shall not be less than $100 per
share plus an amount equal to accrued and unpaid
dividends thereon (whether or not earned or declared)
to the date fixed for redemption), and such other terms
as may be necessary or appropriate to effect such
redemption. The Term Selection Agent may establish a
Long-Term Dividend Period for the shares of a Series of
Flex APS and the applicable redemption provisions
therefor, if the Term Selection Agent determines that
such Long-Term Dividend Period and such redemption
provisions, in its sole opinion, provides the
Corporation with the most favorable financing
alternative based upon the following: (i) short-term
and long-term market rates and indices of such short-
term and long-term rates, (ii) the amounts, maturities
and interest or dividend rates on the then outstanding
securities of the Corporation or its subsidiaries,
(iii) market supply and demand for short-term and long-
term securities, (iv) yield curves for short-term and
long-term securities comparable to the shares of Flex
APS, (v) industry and financial conditions which may
affect the shares of Flex APS including the Term
Selection Agent's expectations with respect thereto,
(vi) current tax laws and administrative
interpretations with respect thereto, (vii) the number
of shares of Flex APS Outstanding on the next Auction
Date and (viii) the number of potential purchasers.
Any Notice of Long-Term Dividend Period may be revoked
by the Term Selection Agent on or prior to the second
Business Day prior to the related Auction by telephonic
and written notice (a "Notice of Revocation") to the
Corporation, the Auction Agent, the Paying Agent and
the Securities Depository, specifying that the Term
Selection Agent has determined that because of
subsequent changes in any of the foregoing factors,
such Long-Term Dividend Period would not result in the
most favorable financing alternative for the
Corporation, and shall be deemed to have been revoked
if on or prior to the second Business Day prior to the
related Auction, the Term Selection Agent shall have
been removed and the Corporation shall have given
written and telephonic notice of such removal ("Notice
of Removal") to the Auction Agent, the Paying Agent and
the Securities Depository. Except with respect to a<PAGE>
<PAGE> 49
Notice of Long-Term Dividend Period that is deemed to
be revoked, any Long-Term Dividend Period specified by
the Term Selection Agent for a Series of Flex APS and
any revocation thereof shall be conclusive and binding
on the Corporation and the Holders.
The Corporation may remove the Term Selection
Agent for any Series of Flex APS upon 5 days' written
notice. If there is no Term Selection Agent with
respect to any Auction Dividend Period, then such
Auction Dividend Period shall be a Short-Term Dividend
Period.
If the Term Selection Agent does not give a Notice
of Long-Term Dividend Period with respect to the next
succeeding Auction Dividend Period for any Series of
Flex APS or gives a Notice of Revocation with respect
thereto or such Notice of Long-Term Dividend Period
shall be deemed to have been revoked, such next
succeeding Auction Dividend Period shall be a Short-
Term Dividend Period. In addition, in the event the
Term Selection Agent has given a Notice of Long-Term
Dividend Period with respect to the next succeeding
Auction Dividend Period for any Series of Flex APS and
has not given a Notice of Revocation with respect
thereto and such Notice of Long-Term Dividend Period
shall not have been deemed revoked, but Sufficient
Clearing Bids are not made in the related Auction for
such Series or such Auction is not held for any reason,
such next succeeding Auction Dividend Period shall,
notwithstanding such Notice of Long-Term Dividend
Period, be a Short-Term Dividend Period and the Term
Selection Agent may not again give a Notice of Long-
Term Dividend Period (and any such notice shall be null
and void) for such Series until Sufficient Clearing
Bids have been made in an Auction with respect to a
Short-Term Dividend Period for such Series.
(ix) Not later than noon New York City time on the
Business Day immediately preceding each Dividend
Payment Date with respect to which dividends on any
shares of Flex APS have been declared, the Corporation
shall irrevocably deposit with the Paying Agent
sufficient funds for the payment of such dividends and
shall give the Paying Agent irrevocable instructions to
apply such funds and, if applicable, the income and
proceeds therefrom, to the payment of such dividends.
(x) Each dividend on the shares of any Series
declared by the Board of Directors of the Corporation
for an Auction Dividend Period shall be paid to Holders
of such shares as such Holders' names appear on the
Stock Books on the related record date, which shall be
the opening of business on the Business Day immediately
preceding the Dividend Payment Date for such dividend.
Subject to Article IV of the Corporation's Restated
Certificate of Incorporation, as amended, dividends on
the shares of any Series of Flex APS in arrears may be
declared by the Board of Directors and paid on any date
fixed by the Board of Directors on such date as is
established by the Board of Directors, to Holders of
such shares as such Holders' names appear on the Stock
Books on the related record date fixed by the Board of
Directors which shall not be more than 15 days before
the date fixed for the payment of such dividends.
(c)(i)(A) The Fixed Dividend Rate for the Fixed
Dividend Period for Series A Flex APS shall be
9.25% per annum and for Series B Flex APS shall be
9.50% per annum. The amount of dividends payable
on each share of Flex APS for each full quarterly
dividend period during the Fixed Dividend Period
shall be computed by dividing the Fixed Dividend
Rate by four and applying such rate to the amount
of $100 per share. The amount of dividends
payable for any dividend period shorter or longer
than a full quarterly dividend period shall be
computed on the basis of 30-day months and a 360-<PAGE>
<PAGE> 50
day year. The dividend rate on the shares of each
Series for each Auction Dividend Period shall be
the rate per annum determined for such Series
pursuant to Part II below; provided, however, that
in the event that an Auction for any Auction
Dividend Period for any Series is not held for any
reason (other than as a result of the existence of
a Failure to Deposit on the Auction Date for such
Auction Dividend Period), the dividend rate on the
shares of such Series for such Auction Dividend
Period shall be the Non-Auction Rate on the
Auction Date with respect to such Auction Dividend
Period. The "Non-Auction Rate" for any Series on
an Auction Date for such Series shall be the
greater of (x) the Applicable Rate in effect for
such Series immediately prior to such Auction Date
or (y) the Maximum Applicable Rate in effect on
such Auction Date for a Short-Term Dividend
Period, regardless of whether an Auction is held.
The dividend rate on the shares of any Series for
any Auction Dividend Period or part thereof
determined as set forth in this clause (c) is
referred to herein as the "Applicable Rate" for
such Series for such Auction Dividend Period or
part thereof.
(B) In the event a Failure to Deposit occurs
prior to the beginning of an Auction Dividend
Period and is not cured in accordance with the
next succeeding sentence, Auctions for such Series
will be suspended, until such time as set forth
below, and the Applicable Rate for shares of such
Series for each Auction Dividend Period (until
Auctions are resumed) commencing after such
Failure to Deposit shall be equal to 200% of LIBOR
on the first day of each such Auction Dividend
Period and each such Auction Dividend Period shall
be a Short-Term Dividend Period. Any such Failure
to Deposit with respect to the shares of any
Series shall be deemed cured if by 12:00 noon, New
York City time, on the third Business Day next
succeeding any such Failure to Deposit, the
Corporation shall have deposited with the Auction
Agent all accumulated and unpaid dividends on the
shares of such Series and shall have deposited any
unpaid redemption payments with the Paying Agent,
including the full amount of any dividends to be
paid with respect to the Auction Dividend Period
with respect to which such Failure to Deposit
occurred, plus an amount computed by multiplying
(i) 200% of the 60-Day "AA" Composite Commercial
Paper Rate for the Auction Dividend Period during
which such Failure to Deposit occurred on the
Dividend Payment Date for such Auction Dividend
Period by (ii) a fraction, the numerator of which
shall be the number of days for which such Failure
to Deposit is not cured in accordance with this
sentence (including the day such Failure to
Deposit occurs and excluding the day such Failure
to Deposit is cured) and the denominator of which
shall be 360, and applying the rate obtained
against the aggregate liquidation preference of
the shares of such Series then Outstanding.
(C) In the event a Failure to Deposit occurs
during a Long-Term Dividend Period, the Applicable
Rate for such Auction Dividend Period shall remain
unchanged, and an additional amount computed by
multiplying (i) 200% of LIBOR on the date on which
such Failure to Deposit occurred by (ii) a
fraction, the numerator of which shall be the
number of days for which such Failure to Deposit
is not cured (including the day such Failure to
Deposit occurs and excluding the day such Failure
to Deposit is cured) and the denominator of which
shall be 360, and applying the rate obtained
against accumulated dividends not paid when due,
shall accumulate as additional dividends on the<PAGE>
<PAGE> 51
shares of such Series of Flex APS. In the event
that such Failure to Deposit is not cured prior to
the next succeeding Auction Date for shares of
such Series, Auctions for such Series shall be
suspended, the next succeeding Auction Dividend
Period shall be a Short-Term Dividend Period and
the Applicable Rate shall be equal to 200% of
LIBOR on the first day of such Auction Dividend
Period. Thereafter until such Failure to Deposit
shall have been cured and full and cumulative
dividends on the shares of such Series shall have
been paid in full or the Board of Directors of the
Corporation shall have declared a dividend in such
amount and funds sufficient for the payment
thereof shall have been irrevocably deposited with
the Paying Agent, each subsequent Auction Dividend
Period and Applicable Rate for such Series will be
determined pursuant to the next preceding
paragraph.
(D) If prior to an Auction Date for shares
of such Series, full and cumulative dividends
shall have been paid in full or the Board of
Directors of the Corporation shall have declared a
dividend in such amount and funds sufficient for
the payment thereof shall have been irrevocably
deposited with the Paying Agent, Auctions for such
Series will resume.
(ii) The amount of dividends per share of any
Series of the Flex APS payable for each Auction
Dividend Period (or for each Dividend Quarter during
any Long-Term Dividend Period) for any such Series
shall be computed by multiplying the Applicable Rate
for each Auction Dividend Period (or Dividend Quarter)
by a fraction the numerator of which shall be the
number of days in the Auction Dividend Period (or
Dividend Quarter) such share was Outstanding and the
denominator of which shall be 360 and multiplying the
amount so obtained by $100.
(d) (i) Notwithstanding paragraph 1 of Article IV of
the Corporation's Restated Certificate of
Incorporation, dividends on other series of the
Corporation's Preferred Stock ranking on a parity with
the Flex APS may from time to time be declared or paid
on different dates than dividends on the Flex APS are
declared or paid. Holders of Flex APS shall not be
entitled to any dividends, whether in cash, property or
stock, in excess of full cumulative dividends. No
interest, or sum if money in lieu of interest, shall be
payable in respect of any dividend payment or payments
on the shares of Flex APS which may be in arrears.
(ii) The Flex APS shall rank on a parity with the
Corporation's $6.25 Cumulative Convertible Voting
Preferred Stock and 9 1/2% Cumulative Preferred Stock,
Series 1989-A, as to payment of dividends and
distribution of assets upon liquidation, dissolution,
or winding up, whether voluntary or involuntary, and
shall rank prior to the Corporation's Common Stock and
Series A Junior Participating Preferred Stock as to
payment of dividends and distribution of assets upon
liquidation, dissolution, or winding up, whether
voluntary or involuntary, and prior to any other series
of stock authorized to be issued by the Corporation
which ranks junior to the $6.25 Cumulative Convertible
Voting Preferred Stock and 9 1/2% Cumulative Preferred
Stock, Series 1989-A, as to payment of dividends and
distribution of assets upon liquidation, dissolution,
or winding up, whether voluntary or involuntary.
(iii) Any dividend payment made on shares of Flex
APS shall first be credited against the dividends
accumulated with respect to the earliest period for
which dividends have not been paid.
<PAGE>
<PAGE> 52
(iv) Except in an Auction, the Corporation shall
have the right to purchase or otherwise acquire any
shares of Flex APS in the open market at any lawful
price so long as the Corporation is current in the
payment of dividends on the shares of all series of its
Preferred Stock. Any shares of Flex APS purchased or
otherwise acquired by the Corporation shall not be
resold and shall be retired and canceled, and shall be
restored to the status of authorized but unissued
shares of the class of the Corporation's Preferred
Stock without designation as to series, and may
thereafter be issued as a new series of Preferred
Stock.
4. Liquidation Rights. The amount to which shares of
Flex APS shall be entitled upon liquidation, dissolution, or
winding up of the Corporation, whether voluntary or involuntary,
shall be $100 per share, plus an amount equal to all accrued and
unpaid dividends, if any, thereon to the date fixed for payment,
and no more.
5. Voting Rights. The Holders of the shares of each
Series of Flex APS shall have such voting rights as have been
established by the Board of Directors of the Corporation.
6. Redemption. During the Fixed Dividend Period for
a Series of Flex APS, the Corporation may not redeem the shares
of such Series except on the Business Day prior to the Initial
Auction Date for such Series, at which time the Corporation may
redeem shares of such Series which in the aggregate constitute
one or more Units out of funds legally available therefor, in
whole or in part, at a redemption price of $100 per share plus an
amount equal to accrued and unpaid dividends (whether or not
earned or declared) to the date fixed for redemption. Following
the Fixed Dividend Period for a Series of Flex APS, the
Corporation may redeem shares of Flex APS of such Series, as a
whole or in part, in an aggregate amount constituting one or more
Units, at $100 per share, plus an amount equal to accrued and
unpaid dividends thereon (whether or not earned or declared) to
the date fixed for redemption, (i) in the case of a Short-Term
Dividend Period, on the Dividend Payment Date for such period and
(ii) in the case of a Long-Term Dividend Period, on such dates
and upon such terms as the Term Selection Agent may specify in
the applicable Notice of Long-Term Dividend Period for such
Series but in no case may the redemption price for such shares be
less than $100 per share.
Not later than noon New York City time on the Business
Day immediately preceding the date fixed for redemption of any
shares of Flex APS, the Corporation shall irrevocably deposit
with the Paying Agent sufficient funds for such purpose and shall
give the Paying Agent irrevocable instructions to apply such
funds and, if applicable, the income and proceeds therefrom, to
the redemption of such shares.
7. Restrictions on Transfer. The Flex APS shall be
subject to the restrictions on transfer set forth herein,
including the Purchaser's Letter attached hereto. Prior to a
Successful Initial Auction for Series, shares of such Series will
be represented by certificates which will be freely transferable.
Thereafter, shares of such Series may be transferred only in
Units and, except for deemed sales by the Initial Auction Holders
in the Initial Auction, only pursuant to a Bid or a Sell Order
placed in an Auction or to or through a Broker-Dealer or to a
person that has delivered a signed Purchaser's Letter to the
Auction Agent.
8. Additional Agreements. (a) Term Selection
Agent. Following the Fixed Dividend Period, the Corporation
shall use its best efforts to maintain a Term Selection
Agent with respect to the Series A Flex APS and Series B
Flex APS to act in accordance with the provisions set forth
herein with respect to each such Series.
(b) Auction Agent. Following the Fixed Dividend
Period, the Corporation shall use its best efforts to
maintain an Auction Agent with respect to the Series A Flex
APS and Series B Flex APS to act in accordance with the<PAGE>
<PAGE> 53
provisions set forth herein with respect to each such
Series.
PART II
AUCTION PROCEDURES
1. Certain Definitions.
(a) "Affiliate" shall mean any Person known to the
Auction Agent to be controlled by, in control of or under
common control with the Corporation.
(b) "Agent Member" shall mean the member of the
Securities Depository that will act on behalf of a Bidder
and is identified as such in such Bidder's Purchaser's
Letter.
(c) "Available Flex APS" shall have the meaning
specified in paragraph (a) of Section 4 of this Part II.
(d) "Bid" and "Bids" shall have the respective
meanings specified in paragraph (a) of Section 2 of this
Part II.
(e) "Bidder" and "Bidders" shall have the respective
meanings specified in paragraph (a) of Section 2 of this
Part II.
(f) "Broker-Dealer" shall mean any broker-dealer, or
other entity permitted by law to perform the functions
required of a Broker-Dealer in this Part II, that is a
member of, or a participant in, the Securities Depository,
and that has been selected by the Corporation and has
entered into a Broker-Dealer Agreement with the Auction
Agent that remains effective.
(g) "Broker-Dealer Agreement" shall mean an agreement
between the Auction Agent and a Broker-Dealer pursuant to
which such Broker-Dealer agrees to follow the procedures
specified in this Part II.
(h) "Existing Holder" shall mean a Person who signed a
Purchaser's Letter and is listed as the beneficial owner of
Flex APS in the records of the Auction Agent.
(i) "Hold Order" and "Hold Orders" shall have the
respective meanings specified in paragraph (a) of Section 2
of this Part II.
(j) "Initial Auction" shall mean the Auction conducted
on the Business Day prior to the beginning of the Initial
Auction Dividend Period and, if on such date Sufficient
Clearing Bids do not exist, then each subsequent Auction up
to and including the first Auction at which Sufficient
Clearing Bids exist.
(k) "Initial Auction Date" shall mean each date upon
which an Initial Auction is conducted.
(l) "Initial Auction Dividend Period" shall mean the
first Auction Dividend Period and each subsequent Auction
Dividend Period, if any, that occurs subsequent to an
Initial Auction until there shall be a Successful Initial
Auction.
(m) "Initial Auction Holder" shall have the meaning
specified in Section 6 of this Part II.
(n) "Maximum Applicable Rate," with respect to a
Short-Term Dividend Period, on any Auction Date will be the
rate obtained by multiplying the 60-day "AA" Composite
Commercial Paper Rate on such Auction Date, and with respect
to a Long-Term Dividend Period, the Maximum Applicable Rate
on any Auction Date will be the rate obtained by multiplying
the Reference Rate on such Auction Date, by a percentage
determined as set forth below based on the credit ratings
assigned to the Flex APS by Moody's and S&P (or if Moody's<PAGE>
<PAGE> 54
or S&P or both shall not make such rating available, the
equivalent of either or both of such ratings by a Substitute
Rating Agency or two Substitute Rating Agencies or, in the
event that only one such rating shall be available, the
percentage will be based on such rating).
Applicable Percentage of
Credit Rating 60-day "AA" Composite
-------------------------------- Commercial Paper Rate
Moody's S&P or Reference Rate
------- --- ------------------------
aa3 or Above AA- or Above.... 110%
a3 to a1 A- to A+........ 125%
baa3 to baa1 BBB- to BBB+.... 175%
ba3 to ba1 BB- to BB+...... 200%
Below ba3 Below BB-....... 250%
If the ratings are split between two of the foregoing
categories, the lower rating will determine the prevailing
rating.
The Corporation shall take all reasonable action
necessary to enable Moody's and S&P to provide a rating for
the Flex APS. If either Moody's or S&P shall not make such
rating available or neither Moody's nor S&P shall make such
a rating available, Goldman, Sachs & Co. or its affiliates
and successors, after consultation with the Corporation,
shall select a Substitute Rating Agency or two Substitute
Rating Agencies, as the case may be.
(o) "Order" and "Orders" shall have the respective
meanings specified in paragraph (a) of Section 2 of this
Part II.
(p) "Person" shall mean and include an individual, a
partnership, a corporation, a trust, an unincorporated
association, a joint venture or other entity or a government
or any agency or political subdivision thereof.
(q) "Potential Holder" shall mean any Person,
including any Existing Holder, (i) who shall have executed a
Purchaser's Letter and (ii) who may be interested in
acquiring Units of Flex APS (or, in the case of an Existing
Holder, additional Units of Flex APS).
(r) "Purchaser's Letter" shall mean a Purchaser's
Letter, the form of which is attached hereto, addressed to
the Corporation, the Auction Agent and an Agent Member in
which a Person agrees, among other things, to offer to
purchase, to offer to sell and/or to sell Units of Flex APS
as set forth in this Part II, or a similar letter containing
substantially the same information and representations, or
such other letter as the Board of Directors shall approve.
(s) "Sell Order" and "Sell Orders" shall have the
respective meanings specified in paragraph (a) of Section 2
of this Part II.
(t) "Submission Deadline" shall mean 12:30 P.M., New
York City time, on any Auction Date or such other time on
any Auction Date by which Broker-Dealers are required to
submit Orders to the Auction Agent as specified by the
Auction Agent from time to time.
(u) "Submitted Bid" and "Submitted Bids" shall have
the respective meanings specified in paragraph (a) of
Section 4 of this Part II.
(v) "Submitted Hold Order" and "Submitted Hold Orders"
shall have the respective meanings specified in paragraph
(a) of Section 4 of this Part II.
(w) "Submitted Order" and "Submitted Orders" shall
have the respective meanings specified in paragraph (a) of
Section 4 of this Part II.
(x) "Submitted Sell Order" and "Submitted Sell Orders"
shall have the respective meanings specified in paragraph
(a) of Section 4 of this Part II.<PAGE>
<PAGE> 55
(y) "Successful Initial Auction" shall mean an Initial
Auction at which Sufficient Clearing Bids exist.
(z) "Sufficient Clearing Bids" shall have the meaning
specified in paragraph (a) of Section 4 of this Part II.
(aa) "Unit" shall mean 1,000 shares of Flex APS.
(bb) "Winning Bid Rate" shall have the meaning
specified in paragraph (a) of Section 4 of this Part II.
2. Orders by Existing Holders and Potential Holders.
(a) Prior to the Submission Deadline on each Auction Date:
(i) each Existing Holder may submit to a Broker-
Dealer information as to:
(A) the number of outstanding Units, if any,
of Flex APS held by such Existing Holder which
such Existing Holder desires to continue to hold
without regard to the Applicable Rate for the next
succeeding Auction Dividend Period;
(B) the number of outstanding Units, if any,
of Flex APS that such Existing Holder desires to
continue to hold if the Applicable Rate for the
next succeeding Auction Dividend Period shall not
be less than the rate per annum specified by such
Existing Holder; and/or
(C) the number of outstanding Units, if any,
of Flex APS held by such Existing Holder which
such Existing Holder offers to sell without regard
to the Applicable Rate for the next succeeding
Auction Dividend Period; and
(ii) one or more Broker-Dealers, using lists of
Potential Holders, shall in good faith for the purpose
of conducting a competitive Auction in a commercially
reasonable manner, contact Potential Holders, including
Persons that are not Existing Holders, on such lists to
determine the number of Units, if any, of Flex APS
which each such Potential Holder offers to purchase,
provided that the Applicable Rate for the next
succeeding Auction Dividend Period shall not be less
than the rate per annum specified by such Potential
Holder.
For the purpose hereof, the communication to a Broker-
Dealer of information referred to above is hereinafter
referred to as an "Order" and collectively as "Orders" and
each Existing Holder and each Potential Holder placing an
Order is hereinafter referred to as a "Bidder" and
collectively as "Bidders"; an Order containing the
information referred to in clause (i)(A) of this paragraph
(a) is hereinafter referred to as a "Hold Order" and
collectively as "Hold Orders"; an Order containing the
information referred to in clause (i)(B) or (ii) of this
paragraph (a) is hereinafter referred to as a "Bid" and
collectively as "Bids"; and an Order containing the
information referred to in clause (i)(C) of this paragraph
(a) is hereinafter referred to as a "Sell Order" and
collectively as "Sell Orders."
(b) (i) A Bid by an Existing Holder shall constitute
an irrevocable offer to sell:
(A) the number of outstanding Units of Flex
APS specified in such Bid if the Applicable Rate
determined on such Auction Date shall be less than
such specified rate; or
(B) such number or a lesser number of
outstanding Units of Flex APS to be determined as
set forth in subparagraph (a) (iv) of Section 5 of
this Part II if the Applicable Rate determined on
such Auction Date shall be equal to such specified
rate; or<PAGE>
<PAGE> 56
(C) a lesser number of outstanding Units of
Flex APS to be determined as set forth in
subparagraph (b) (iii) of Section 5 of this Part
II if such specified rate shall be higher than the
Maximum Applicable Rate and Sufficient Clearing
Bids do not exist.
(ii) A Sell Order by an Existing Holder shall
constitute an irrevocable offer to sell:
(A) the number of outstanding Units of Flex
APS specified in such Sell Order; or
(B) such number or a lesser number of
outstanding Units of Flex APS as set forth in
subparagraph (b) (iii) of Section 5 of this Part
II if Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute
an irrevocable offer to purchase.
(A) the number of outstanding Units of Flex
APS specified in such Bid if the Applicable Rate
determined on such Auction Date shall be higher
than such specified rate; or
(B) such number or a lesser number of
outstanding Units of Flex APS as set forth in
subparagraph (a) (v) of Section 5 of this Part II
if the Applicable Rate determined on Such Auction
Date shall be equal to such specified rate.
3. Submission of Orders by Broker-Dealers to Auction
Agent. (a) Each Broker-Dealer shall submit in writing to
the Auction Agent prior to the Submission Deadline on each
Auction Date all Orders obtained by such Broker-Dealer and
specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of Units of Flex APS
that are the subject of such Order;
(iii) to the extent that such Bidder is an Existing
Holder:
(A) the number of Units, if any, of Flex APS
subject to any Hold Order placed by such Existing
Holder;
(B) the number of Units, if any, of Flex APS
subject to any Bid placed by such Existing Holder
and the rate specified in such Bid; and
(C) the number of Units, if any, of Flex APS
subject to any Sell Order placed by such Existing
Holder; and
(iv) to the extent such Bidder is a Potential
Holder, the rate specified in such Potential Holder's
Bid.
(b) If any rate specified in any Bid contains more
than three figures to the right of the decimal point, the
Auction Agent shall round such rate up to the next highest
one thousandth (.001) of 1%.
(c) If an Order or Orders covering all of the
outstanding Units of Flex APS held by any Existing Holder is
not submitted to the Auction Agent prior to the Submission
Deadline, the Auction Agent shall deem a Hold Order to have
been submitted on behalf of such Existing Holder covering
the number of outstanding Units of Flex APS held by such
Existing Holder and not subject to Orders submitted to the
Auction Agent.
(d) If one or more Orders covering in the aggregate
more than the number of outstanding Units of Flex APS held<PAGE>
<PAGE> 57
by any Existing Holder are submitted to the Auction Agent,
such Orders shall be considered valid as follows and in the
following order of priority:
(i) all Hold Orders shall be considered valid,
but only up to and including in the aggregate the
number of Units of Flex APS held by such Existing
Holder, and, solely for purposes of allocating
compensation among the Broker-Dealers submitting Hold
Orders, if the number of Units of Flex APS held by such
Existing Holder is less than the aggregate number of
Units that are the subject of such Existing Holder's
Hold Orders, the number of Units subject to each Hold
Order shall be reduced pro rata to cover the number of
Units of Flex APS held by such Existing Holder;
(ii) (A) any Bid shall be considered valid up to
and including the excess of the number of
outstanding Units of Flex APS held by such
Existing Holder over the number of Units of Flex
APS subject to any Hold Orders referred to in
subparagraph (i) above;
(B) subject to clause (A), if more than one
Bid with the same rate is submitted on behalf of
such Existing Holder and the number of Units of
Flex APS subject to such Bids is greater than such
excess, such Bids shall be considered valid up to
the amount of such excess, and, solely for
purposes of allocating compensation among the
Broker-Dealers submitting Bids with the same rate,
the number of Units of Flex APS subject to each
Bid with the same rate shall be reduced pro rata
to cover the number of Units of Flex APS equal to
such excess;
(C) subject to clause (A), if more than one
Bid with different rates is submitted on behalf of
such Existing Holder, such Bid shall be considered
valid in the ascending order of their respective
rates up to the amount of such excess; and
(D) in any such event the number, if any, of
such Units subject to Bids not valid under this
subparagraph (ii) shall be treated as the subject
of a Bid a Potential Holder; and
(iii) all Sell Orders shall be considered valid but
only up to and including in the aggregate the excess of
the number of outstanding Units of Flex APS held by
such Existing Holder over the sum of the Units of Flex
APS subject to Hold Orders referred to in subparagraph
(i) and valid Bids by such Existing Holder referred to
in subparagraph (ii) above, provided that if more than
one Sell Order is submitted on behalf of any Existing
Holder and the number of Units subject to such Sell
Orders is greater than such excess, the number of Units
subject to such Sell Orders shall be reduced pro rata
so that such Sell Orders shall cover the number of
Units equal to such excess.
(e) If more than one Bid is submitted on behalf of any
Potential Holder, each Bid submitted shall be a separate Bid
with the rate and number of Units specified therein.
(4) Determination of Sufficient Clearing Bids, Winning
Bid Rate and Applicable Rate. (a) Not earlier than the
Submission Deadline on each Auction Date, the Auction Agent
shall assemble all Orders submitted or deemed submitted to
it by the Broker-Dealers (each such Order as submitted or
deemed submitted by a Broker-Dealer being hereinafter
referred to individually as a "Submitted Hold Order," a
"Submitted Bid" or a "Submitted Sell Order," as the case may
be, or as a "Submitted Order" and collectively as "Submitted
Hold Orders," "Submitted Bids" or "Submitted Sell Orders,"
as the case may be, or as "Submitted Orders") and shall
determine:
<PAGE>
<PAGE> 58
(i) the excess of the total number of outstanding
Units of Flex APS over the number of outstanding Units
of Flex APS that are the subject of Submitted Hold
Orders (such excess being hereinafter referred to as
the "Available Flex APS");
(ii) from the Submitted Orders whether:
(A) the number of outstanding Units of Flex
APS that are the subject of Submitted Bids by
Potential Holders specifying one or more rates
equal to or lower than the Maximum Applicable Rate
exceeds or is equal to the sum of:
(I) the number of outstanding Units of
Flex APS that are the subject of Submitted
Bids by Existing Holders specifying one or
more rates higher than the Maximum Applicable
Rate; and
(II) the number of outstanding Units of
Flex APS that are the subject of Submitted
Sell Orders
(in the event of such excess or such equality
(other than because the sum of the number of Units
of Flex APS in clauses (I) and (II) above is zero
because all of the outstanding Units of Flex APS
are the subject of Submitted Hold Orders), such
Submitted Bids in clause (A) above being
hereinafter referred to collectively as
"Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest
rate specified in the Submitted Bids (the "Winning Bid
Rate") which if:
(A)(I) each Submitted Bid from Existing
Holders specifying such lowest rate and (II) all
other Submitted Bids from existing Holders
specifying lower rates were accepted, thus
entitling such Existing Holders to continue to
hold the Units of Flex APS that are the subject of
such Submitted Bids; and
(B)(I) each Submitted Bid from Potential
Holders specifying such lowest rate and (II) all
other Submitted Bids from Potential Holders
specifying lower rates were accepted, thus
entitling the Potential Holders to purchase the
Units of Flex APS that are the subject of those
Submitted Bids,
would result in such Existing Holders described in
clause (A) continuing to hold an aggregate number of
outstanding Units of Flex APS which, when added to the
number of outstanding Units of Flex APS to be purchased
by such Potential Holders described in clause (B),
would equal not less than the Available Flex APS.
(b) Promptly after the Auction Agent has made the
determinations pursuant to paragraph (a) of this Section 4,
the Auction Agent shall advise the Corporation of the
Maximum Applicable Rate and, based on such determinations,
the Applicable Rate for the next succeeding Auction Dividend
Period as follows:
(i) if Sufficient Clearing Bids exist, that the
Applicable Rate for the next succeeding Auction
Dividend Period shall be equal to the Winning Bid Rate
so determined;
(ii) if Sufficient Clearing Bids do not exist
(other than because all of the outstanding Units of
Flex APS are the subject of Submitted Hold Orders),
then (a) if the Term Selection Agent has not given a
Notice of Long-Term Dividend Period with respect to the
next succeeding Auction Dividend Period or has given a<PAGE>
<PAGE> 59
Notice of Revocation with respect thereto or such
Notice of Long-Term Dividend Period shall be deemed to
have been revoked, the Applicable Rate for such next
succeeding Auction Dividend Period shall be the Maximum
Applicable Rate on the Auction Date for a Short-Term
Dividend Period and (b) if the Term Selection Agent has
given a Notice of Long-Term Dividend Period with
respect to the next succeeding Auction Dividend Period
and has not given a Notice of Revocation with respect
thereto and such Notice of Long-Term Dividend Period
shall not have been deemed revoked, such next
succeeding Auction Dividend Period shall,
notwithstanding such Notice of Long-Term Dividend
Period, be a Short-Term Dividend Period, and the
Applicable Rate for such next succeeding Auction
Dividend Period shall be the greatest of (i) the
Applicable Rate in effect immediately prior to the
applicable Auction, (ii) the Maximum Applicable Rate on
the Auction Date for a Short-Term Dividend Period or
(iii) the Maximum Applicable Rate on the Auction Date
for the specified Long-Term Dividend Period; or
(iii) if all the outstanding Units of Flex APS are
the subject of Submitted Hold Orders, that the
Applicable Rate for the next succeeding Auction
Dividend Period shall (1) in the case of a Short-Term
Dividend Period, be equal to 59% of the 60-day "AA"
Composite Commercial Paper Rate in effect on the date
of such Auction, and (2) in the case of a Long-Term
Dividend Period, be equal to 59% of the Reference Rate
in effect on the date of such Auction.
5. Acceptance and Rejection of Submitted Bids and
Submitted Sell Orders and Allocation of Units. Based on the
determinations made pursuant to paragraph (a) of Section 4 of
this Part II, the Submitted Bids and Submitted Sell Orders Shall
be accepted or rejected and the Auction Agent shall take such
other action as set forth below:
(a) If Sufficient Clearing Bids have been made,
subject to the provisions of paragraphs (c), (d) and (e) of
this Section 5, Submitted Bids and Submitted Sell Orders
shall be accepted or rejected as follows in the following
order of priority and all other Submitted Bids shall be
rejected:
(i) the Submitted Sell Orders of Existing Holders
shall be accepted and the Submitted Bid of each of the
Existing Holders specifying any rate that is higher
than the Winning Bid Rate shall be rejected, thus
requiring each such Existing Holder to sell the Units
of Flex APS that are the subject of such Submitted Bid;
(ii) the Submitted Bid of each of the Existing
Holders specifying any rate that is lower than the
Winning Bid rate shall be accepted, thus entitling such
Existing Holder to continue to hold the Units of Flex
APS that are the subject of each Submitted Bid;
(iii) the Submitted Bid of each of the Potential
Holders specifying any rate that is lower than the
Winning Bid Rate shall be accepted;
(iv) the Submitted Bid of each of the Existing
Holders specifying a rate that is equal to the Winning
Bid Rate shall be accepted, thus entitling each such
Existing Holder to continue to hold the Units of Flex
APS that are the subject of such Submitted Bid, unless
the number of outstanding Units of Flex APS subject to
all such Submitted Bids shall be greater than the
number of Units of Flex APS ("remaining Units") equal
to the excess of the Available Flex APS over the number
of Units of Flex APS subject to Submitted Bids
described in subparagraphs (ii) and (iii) of this
paragraph (a), in which event the Submitted Bids of
each such Existing Holder shall be rejected, and each
such Existing Holder shall be required to sell Units of
Flex APS, but only in an amount equal to the difference<PAGE>
<PAGE> 60
between (A) the number of outstanding Units of Flex APS
then held by such Existing Holder subject to such
Submitted Bid and (B) the number of Units of Flex APS
obtained by multiplying the number of remaining Units
by a fraction the numerator of which shall be the
number of outstanding Units of Flex APS held by such
Existing Holder subject to such Submitted Bid and the
denominator of which shall be the sum of the number of
outstanding Units of Flex APS subject to such Submitted
Bids made by all such Existing Holders that specified a
rate equal to the Winning Bid Rate; and
(v) the Submitted Bid of each of the Potential
Holders specifying a rate that is equal to the Winning
Bid Rate shall be accepted but only in an amount equal
to the number of Units of Flex APS obtained by
multiplying the difference between the Available Flex
APS and the number of Units of Flex APS subject to
Submitted Bids described in subparagraphs (ii), (iii)
and (iv) of this paragraph (a) by a fraction the
numerator of which shall be the number of outstanding
Units of Flex APS subject to such Submitted Bid and the
denominator of which shall be the sum of the number of
outstanding Units of Flex APS subject to such Submitted
Bids made by all such Potential Holders that specified
a rate equal to the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made
(other than because all of the outstanding Units of Flex APS
are subject to Submitted Hold Orders), subject to the
provisions of paragraph (c), (d) and (e) of this Section 5,
Submitted Orders shall be accepted or rejected as follows in
the following order of priority and all other Submitted Bids
shall be rejected:
(i) the Submitted Bid of each Existing Holder
specifying any rate that is equal to or lower than the
Maximum Applicable Rate shall be accepted, thus
entitling such Existing Holder to continue to hold the
Units of Flex APS that are the subject to such
Submitted Bid;
(ii) the Submitted Bid of each Potential Holder
specifying any rate that is equal to or lower than the
Maximum Applicable Rate shall be accepted; and
(iii) the Submitted Bids of each Existing Holder
specifying any rate that is higher than the Maximum
Applicable Rate shall be rejected and the Submitted
Sell Orders of each Existing Holder shall be accepted,
in both cases only in an amount equal to the difference
between (A) the number of outstanding Units of Flex APS
then held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and (B) the
number of Units of Flex APS obtained by multiplying the
difference between the Available Flex APS and the
aggregate number of Units of Flex APS subject to
Submitted Bids described in subparagraphs (i) and (ii)
of this paragraph (b) by a fraction the numerator of
which shall be the number of outstanding Units of Flex
APS held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and the
denominator of which shall be the number of outstanding
Units of Flex APS subject to all such Submitted Bids
and Submitted Sell Orders.
(c) If all of the outstanding Units of Flex APS are
the subject of Submitted Hold Orders, all Submitted Bids
shall be rejected.
(d) If, as a result of the procedures described in
paragraph (a) or (b) of this Section 5, any Existing Holder
would be entitled or required to sell, or any Potential
Holder would be entitled or required to purchase, a fraction
of a Unit of Flex APS on any Auction Date, the Auction
Agent, in such manner as it shall determine in its sole
discretion, shall round up or down the number of Units of
Flex APS to be purchased or sold by any Existing Holder or<PAGE>
<PAGE> 61
Potential Holder on such Auction Date so that the number of
Units purchased or sold by each Existing Holder or Potential
Holder on such Auction Date shall be whole Units of Flex
APS.
(e) If, as a result to the procedures described in
paragraph (a) of this Section 5, any Potential Holder would
be entitled or required to purchase less than a whole Unit
of Flex APS on any Auction Date, the Auction Agent, in such
manner as it shall determine in its sole discretion, shall
allocate Units for purchase among Potential Holders so that
only whole Units of Flex APS are purchased on such Auction
Date by any Potential Holder, even if such allocation
results in one or more of such Potential Holders not
purchasing Units of Flex APS on such Auction Date.
(f) Based on the results of each Auction, the Auction
Agent shall determine the aggregate number of Units of Flex
APS to be purchased and the aggregate number of Units of
Flex APS to be sold by Potential Holders and Existing
Holders on whose behalf each Broker-Dealer submitted Bids or
Sell Orders and, with respect to each Broker-Dealer, to the
extent that such aggregate number of Units to be purchased
and such aggregate number of Units to be sold differ,
determine to which other Broker-Dealer or Broker-Dealers
acting for one or more purchasers such Broker-Dealer shall
deliver, or from which other Broker-Dealer or Broker-Dealers
acting for one or more sellers such Broker-Dealer shall
receive, as the case may be, Units of Flex APS.
6. The Initial Auction Date. On the Initial Auction
Date, each holder of Flex APS ("Initial Auction Holder") will be
deemed to have submitted an order to the Auction Agent to sell
all shares of Flex APS then held, at a price of $100 per share,
without regard to the Applicable Rate for the Initial Auction
Dividend Period.
7. Initial Auction Procedure. (a) In connection
with a Successful Initial Auction, the Auction Agent shall
mail, within two Business Days of such Initial Auction, a
written notice of deemed sale by first class mail, postage
prepaid, to each Initial Auction Holder (a "Notice of Deemed
Sale"). The Corporation shall provide the Auction Agent
with written notice of the information to be contained in
the Notice of Deemed Sale at least one day prior to the date
the Notice of Deemed Sale is mailed to such Initial Auction
Holders. For purposes of the calculation of the date on
which notice is given pursuant to this Section 7(a), a
Notice of Deemed Sale shall be deemed to be given on the day
such notice is first mailed by first class mail, postage
prepaid, to such Initial Auction Holders. Each Notice of
Deemed Sale shall be addressed to the holder at the address
of the holder appearing on the stock transfer books
maintained by the Auction Agent. Each Notice of Deemed Sale
shall include a statement setting forth (i) the deemed sale
date, (ii) the number of shares of Flex APS deemed to have
been sold, (iii) the deemed sales price (as specified in
Section 6), (iv) that the deemed seller shall not be
entitled to dividends on such shares after the Initial
Auction Date and (v) the place or places (which shall be in
the City of New York) where holders may surrender the
certificates evidencing such shares of Flex APS and obtain
payment of the deemed sales price.
(b) In connection with an Initial Auction at which
Sufficient Clearing Bids do not exist, the Auction Agent
shall mail, within two Business Days of such Initial
Auction, a written notice of a failed Initial Auction by
first class mail, postage prepaid, to each Initial Auction
Holder (a "Notice of Failed Initial Auction"). The
Corporation shall provide the Auction Agent with written
notice of the information to be contained in the Notice of
Failed Initial Auction at least one day prior to the date
the Notice of Failed Initial Auction is mailed to such
Initial Auction Holders. For the purposes of the
calculation of the date on which notice is give pursuant to
this Section 7(b), a Notice of Failed Initial Auction shall
be deemed to be given on the day such notice is first mailed<PAGE>
<PAGE> 62
by first class mail, postage prepaid, to such Initial
Auction Holders. Each Notice of Failed Initial Auction
shall include a statement setting forth (i) the date of
Failed Initial Auction, (ii) that Sufficient Clearing Bids
did not exist, (iii) that all Submitted Bids were rejected,
(iv) that all shares of Flex APS deemed to have been the
subject of Sell Orders pursuant to Section 6 hereof were not
sold and shall continue to be held by such Initial Auction
Holder of such shares, (v) that the Applicable Rate for the
next Auction Dividend Period shall be the Maximum Applicable
Rate and (vi) that for the purposes of these Auction
Procedures the next succeeding Auction Date shall also be
considered an Initial Auction Date, the next succeeding
Auction shall also be considered an Initial Auction and the
next succeeding Auction Dividend Period shall also be
considered an Initial Auction Dividend Period.
(c) On or after a Successful Initial Auction, each
Initial Auction Holder of shares of Flex APS that were
deemed sold shall surrender the certificate or certificates
evidencing such shares to the Corporation at any place
designated for such surrender in the Notice of Deemed Sale
and shall then be entitled to receive payment of the deemed
sales price for such shares.
(d) Subsequent to a Successful Initial Auction the
Paying Agent shall pay the deemed sales price to the Initial
Auction Holders upon surrender of certificates representing
shares of Flex APS.
(e) Subsequent to a Successful Initial Auction all
rights of the Initial Auction Holders shall cease, except
the right to receive the deemed sales price against delivery
of the certificates evidencing such shares, but without
interest, and the right to receive any accrued and unpaid
dividends to and including such Initial Auction Date. The
Corporation shall be entitled to receive, from time to time,
from the Auction Agent the interest, if any, earned on such
monies deposited with the Auction Agent by Bidders who have
submitted successful Bids at such Initial Auction, and the
holders of such shares shall have no claim to any such
interest. With regard to any such funds which are unclaimed
by holders of such shares at the end of two years from such
deemed sales date, the Auction Agent shall, upon demand, pay
over to the Corporation such amount remaining on deposit,
and the Auction Agent shall thereupon be relieved of all
responsibility to the holders of such shares and the holders
of shares of Flex APS so sold shall thereafter be entitled
to look only to the Corporation for payment thereof.
8. Miscellaneous. (a) The Board of Directors of the
Corporation may interpret the provisions of this paragraph 8
to resolve any inconsistency or ambiguity, remedy any formal
defect or make any other change or modification which does
not adversely affect the rights of Existing Holders of Flex
APS and may in appropriate cases authorize the filing of a
Certificate of Correction.
(b) So long as the Applicable Rate is based on the
results of an Auction, an Existing Holder (i) may sell,
transfer or otherwise dispose of Units of Flex APS only
pursuant to a Bid or Sell Order in accordance with the
procedures described in this Part II or to or through a
Broker-Dealer or to a Person that has delivered a signed
copy of a Purchaser's Letter to the Auction Agent, provided
that in the case of all transfers other than pursuant to
Auctions such Existing Holder or its Broker-Dealer advises
the Auction Agent of such transfer, and (ii) shall have the
ownership of the Units of Flex APS held by it maintained in
book entry form by the Securities Depository in the account
of its Agent Member, which in turn will maintain records of
such Existing Holder's beneficial ownership.
(c) The Corporation and its Affiliates shall not
submit any Order in any Auction except as set forth in the
next sentence. Any Broker-Dealer that is an Affiliate of
the Corporation may submit Orders in Auctions but only if
such Orders are not for its own account, except that if such<PAGE>
<PAGE> 63
affiliated Broker-Dealer holds Units of Flex APS for its own
account, it must submit a Sell Order in the next Auction
with respect to such Units of Flex APS.
(d) Unless the context otherwise requires, all
references to the Flex APS in Part II hereof are deemed to
refer to a single series of the Flex APS.
* * * *
IN WITNESS WHEREOF, HOUSEHOLD INTERNATIONAL, INC. has
caused this Certificate to be made under the seal of the
Corporation and signed by David D. Wesselink, its Vice President
and Treasurer, and attested by Ronald C. Roselli, its Assistant
Secretary, this 18th day of July, 1990.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ David D. Wesselink
----------------------
David D. Wesselink
Vice President and
Treasurer
(CORPORATE SEAL)
ATTEST:
By: /s/ Ronald C. Roselli
---------------------
Ronald C. Roselli
Assistant Secretary
<PAGE>
<PAGE> 64
FORM OF
PURCHASER'S LETTER
Relating to Securities Involving Rate
Settings Through Auctions
TO BE SUBMITTED TO YOUR BROKER-DEALER WHO WILL THEN DELIVER
COPIES ON YOUR BEHALF TO THE RESPECTIVE AUCTION AGENT
The Company
The Auction Agent
A Broker-Dealer
An Agent member
Other Persons
1. This letter is designed to apply to auctions for
publicly or privately offered debt or equity securities
("Securities") of any issuer ("Company") which are described in
any final prospectus or other offering materials relating to such
Securities as the same may be amended or supplemented
(collectively, with respect to the particular Securities
concerned, the "Prospectus") and which involve periodic rate
settings through auctions ("Auctions"). This letter shall be for
the benefit of any Company and of any trust company or auction
agent (collectively, "Auction Agent"), broker-dealer, agent
member, securities depository or other interested person in
connection with any Securities and related Auctions (it being
understood that such persons may be required to execute specified
agreements and nothing herein shall alter such requirements).
The terminology used herein is intended to be general in its
application and not to exclude any Securities in respect of which
(in the Prospectus or otherwise) alternative terminology is used.
2. We may from time to time offer to purchase, purchase,
offer to sell and/or sell Securities of any Company as described
in the Prospectus relating thereto. We agree that this letter
shall apply to all such purchases, sales and offers and to
Securities owned by us. We understand that the dividend/interest
rate on Securities may be based from time to time on the results
of Auctions as set forth in the Prospectus.
3. We agree that any bid or sell order placed by us shall
constitute an irrevocable offer by us to purchase or sell the
Securities subject to such bid or sell order, or such lesser
amount of Securities as we shall be required to sell or purchase
as a result of such Auction, at the applicable price, all as set
forth in the Prospectus, and that if we fail to place a bid or
sell order with respect to Securities owned by us with a broker-
dealer on any auction date, or a broker-dealer to which we
communicate a bid or sell order fails to submit such bid or sell
order to the Auction Agent concerned, we shall be deemed to have
placed a hold order with respect to such Securities as described
in the Prospectus. We authorize any broker-dealer that submits a
bid or sell order as our agent in Auctions to execute contracts
for the sale of Securities covered by such bid or sell order. We
recognize that the payment by such broker-dealer for Securities
purchased on our behalf shall not relieve us of any liability to
such broker-dealer for payment for such Securities.
4. We agree that, during the applicable period as
described in the Prospectus, dispositions of Securities can be
made only in the denominations set forth in the Prospectus and we
will sell, transfer or otherwise dispose of any Securities held
by us from time to time only pursuant to a bid or sell order
placed in an Auction to or through a broker-dealer or, when
permitted in the Prospectus, to a person that has signed and
delivered or caused to be delivered on its behalf, to the
applicable Auction Agent a letter substantially in the form of
this letter (or other applicable purchaser's letter), provided
that in the case of all transfers other than pursuant to Auctions
we or our broker-dealer or our agent member shall advise such
Auction Agent of such transfer. We understand that a restrictive
legend will be placed on certificates representing the Securities
and stop-transfer instructions will be issued to the transfer
agent and/or registrar, all as set forth in the Prospectus. We
agree to comply with any other transfer restrictions or other
related procedures as described in the Prospectus.<PAGE>
<PAGE> 65
5. We agree that, during the applicable period as
described in the Prospectus, ownership of Securities shall be
represented by a global certificate registered in the name of the
applicable securities depository or its nominee, that we will not
be entitled to receive any certificate representing the
Securities and that our ownership of any Securities will be
maintained in book entry form by the securities depository for
the account of our agent member, which in turn will maintain
records of our beneficial ownership. We authorize and instruct
our agent member to disclose to the applicable Auction Agent such
information concerning our beneficial ownership of Securities as
such Auction Agent shall request.
6. We acknowledge that partial deliveries of Securities
purchased in Auctions may be made to us and such deliveries shall
constitute good delivery as set forth in the Prospectus.
7. This letter is not a commitment by us to purchase any
Securities.
8. This letter supersedes any prior-dated version of this
purchaser's letter, and supplements any prior-or post-dated
purchaser's letter specific to particular Securities; any
recipient of this letter may rely upon it until such recipient
has received a signed writing amending or revoking this letter.
9. The descriptions of Auction Procedures set forth in
each applicable Prospectus are incorporated by reference herein
and, in case of any conflict between this letter and any such
description, such description shall control.
10. Any photocopy or other reproduction of this letter
shall be deemed of equal effect as a signed original.
11. Our agent member of Securities depository currently is
_____________________________________________________________.
12. Our personnel authorized to place orders with broker-
dealers for the purposes set forth in the Prospectus in Auctions
currently is/are _____________________________________________,
telephone number _____________________________________________.
13. Our tax payer identification number is _____________.
14. In the case of each offer to purchase, purchase, offer
to sell or sale by us of Securities not registered under the
Securities Act of 1933, as amended (the "Act"), we represent and
agree as follows:
A. We understand and expressly acknowledge that the
Securities have not been and will not be registered under
the Act and, accordingly, that the Securities may not be
reoffered, resold or otherwise pledged, hypothecated or
transferred unless an applicable exemption from the
registration requirements of the Act is available.
B. We hereby confirm that any purchase of Securities
made by us will be for our own account, or for the account
of one or more parties for which we are acting as trustee or
agent with complete investment discretion and with authority
to bind such parties, and not with a view to any public
resale or distribution thereof. We and each other party for
which we are acting which will acquire Securities will be
"accredited investors" within the meaning of Regulation D
under the Act with respect to the Securities to be purchased
by us or such party, as the case may be, will have
previously invested in similar types of instruments and will
be able and prepared to bear the economic risk of investing
in and holding such Securities.
Dated: _____________________ ______________________________
Mailing Address of Purchaser (Name of Purchaser)
By: __________________________
Printed Name: ________________
Title: _______________________
A:\WP51\IC71890.WP<PAGE>
<PAGE> 66
CERTIFICATE OF HOUSEHOLD INTERNATIONAL, INC.
UNDER SECTION 151(g) OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Household International, Inc., a Delaware corporation
(hereinafter referred to as the "Corporation"), does hereby
certify that:
1) the Corporation's 11-1/4% Enhanced Rate Cumulative
Preferred Stock (the "Preferred Stock") has been redeemed in its
entirety and that no shares of the Preferred Stock are
outstanding as of the date hereof.
2) the following resolution has been duly adopted by the
Corporation's Board of Directors:
"RESOLVED, that the officers of the Corporation are
duly authorized to file a certificate with the Secretary of
State of Delaware eliminating from the Corporation's
Certificate of Incorporation all matters set forth in each
Certificate of Designation, Preferences and Rights for the
Preferred Stock and as permitted by the Certificate of
Designation, Preferences and Rights for the Preferred Stock,
such shares of Preferred Stock redeemed shall resume the
status of authorized and unissued shares of the
Corporation's preferred stock."
Upon the effective date of the filing of this Certificate,
it shall eliminate from the Corporation's Certificate of
Incorporation all matters set forth in the Certificate of
Designation, Preferences and Rights with respect to the
Corporation's 11-1/4% Enhanced Rate Cumulative Preferred Stock,
and all of such shares of 11-1/4% Enhanced Rate Cumulative
Preferred Stock shall resume the status of authorized and
unissued shares of the Corporation's class of Preferred Stock.
IN WITNESS WHEREOF, said Household International, Inc., has
caused its corporate seal to be hereunto affixed and this
Certificate to be signed by John W. Blenke, its Secretary, and
attested by Susan E. Casey, its Assistant Secretary, this 14th
day of November, 1994.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. W. Blenke
------------------------
Secretary
Attest:
By: /s/ S. E. Casey
-------------------
Assistant Secretary
U:\WP\EMP819\EDGAR\111494.B<PAGE>
<PAGE> 67
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
11-1/4% ENHANCED RATE CUMULATIVE PREFERRED STOCK
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolutions
were duly adopted by the Board of Directors of the Corporation
and by the Preferred Stock Committee of the Board of Directors,
pursuant to authority conferred upon the Board of Directors by
the provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and pursuant to authority conferred
upon the Preferred Stock Committee by the resolutions of the
Board of Directors set forth herein and in accordance with
Section 141(c) of the General Corporation Law of the State of
Delaware.
1. The Board of Directors has adopted the following
resolutions designating a Preferred Stock Committee of the Board
of Directors and authorizing the Preferred Stock Committee to act
on behalf of the Board of Directors (within certain limitations)
in connection with the designation, issuance and sale of shares
in one or more series of Preferred Stock of the Corporation:
"RESOLVED, that a Preferred Stock Committee of the
Board of Directors is hereby designated which shall have and
may exercise, to the fullest extent permitted by law, the
full power and authority of the Board of Directors with
respect to the issuance and sale of one or more new series
of the Corporation's Preferred Stock without par value (each
such series herein referred to as the "New Preferred
Stock"), including, without limitation, establishing the
purchase price therefor, and fixing the designations and any
of the preferences, powers, rights (other than voting powers
or voting rights which shall be fixed by the Board of
Directors) and relative, participating, optional or other
special rights and qualifications, limitations or
restrictions thereof, of such shares of each series of New
Preferred Stock, and fixing the number of shares of each
series of New Preferred Stock.
"FURTHER RESOLVED, that the Committee is authorized to
take such additional actions and adopt such additional
resolutions as it deems necessary or appropriate for the
purpose of authorizing and implementing the issuance, offer,
and sale for cash of New Preferred Stock, including, without
limiting the generality of the foregoing, the authorization
and execution of agreements (including underwriting
agreements) relating to the offer and sale of New Preferred
Stock, authorization and approval of listing applications
(including amendments or supplements thereto) for the
listing of such New Preferred Stock on a stock exchange,
approval of forms of stock certificates and authorization of
issuance of New Preferred Stock in uncertificated form, any
actions which may be necessary to qualify the offering and
sale of New Preferred Stock under Blue Sky Laws of the
various states, any necessary filings with the Secretary of
State of Delaware and other jurisdictions, and the
appointment of a transfer agent.
"FURTHER RESOLVED, that notwithstanding the foregoing
resolutions, the Preferred Stock Committee may not authorize
the sale of New Preferred Stock for more than $250 million
cash consideration in the aggregate, and the power and
authority of the Preferred Stock Committee set forth in the
preceding resolutions shall expire on September 12, 1991.
"FURTHER RESOLVED, that the members of the Preferred
Stock Committee shall be D. C. Clark, E. P. Hoffman, and
G. P. Osler. In the absence of Mr. Osler, A. E. Rasmussen
is designated as an alternate member of the Preferred Stock
Committee to serve in his place." <PAGE>
<PAGE> 68
2. The Board of Directors has adopted the following
resolution pertaining to the voting rights for series of
Preferred Stock authorized for issuance by the Preferred Stock
Committee of the Board of Directors:
"RESOLVED, that notwithstanding the resolution of the
Board of Directors adopted on October 17, 1989, the holders
of the Corporation's Flexible Rate Auction Preferred Stock,
Series A, and Flexible Rate Auction Preferred Stock, Series
B, and any other series of Preferred Stock which on or after
July 10, 1990, is authorized by the Preferred Stock
Committee of the Board of Directors to be issued and sold
pursuant to authority granted to the Preferred Stock
Committee by the Board of Directors (each such series herein
referred to as the "New Preferred Stock") shall have no
voting rights, and their consent shall not be required for
taking any corporate action, except as otherwise set forth
herein, except as otherwise required by law, and except as
otherwise provided by the Board of Directors with respect to
any particular series of New Preferred Stock.
The consent of the holders of the New Preferred Stock
with respect to the matters set forth in sub-sections (i)
and (iii) of paragraph (5) of Article IV of the
Corporation's Restated Certificate of Incorporation
("Paragraph (5)") shall not be required, except with respect
to the creation or issuance of any class of stock ranking
prior to or on a parity with the Preferred Stock, or any
series thereof, as to the payment of dividends or the
distribution of assets; but the other provisions of
Paragraph (5) shall be applicable to the New Preferred
Stock. The holders of the New Preferred Stock shall have no
right to elect directors pursuant to paragraph (6) of
Article IV of the Corporation's Restated Certificate of
Incorporation ("Paragraph (6)"), such right hereby being
expressly withheld.
In the event that any six quarterly cumulative
dividends (which shall be deemed to include dividends in
respect of a number of non-quarterly dividend periods
containing not less than 540 days), whether consecutive or
not, upon the New Preferred Stock shall be in arrears, the
holders of the New Preferred Stock shall have the right,
voting separately as a class with holders of shares of any
one or more other series of Preferred Stock ranking on a
parity with the New Preferred Stock either as to payment of
dividends or the distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and upon which like voting rights have been
conferred (which shall include the Corporation's 9-1/2%
Cumulative Preferred Stock, Series 1989-A) and are then
exercisable, at the next meeting of stockholders called for
the election of directors, to elect two members of the Board
of Directors. The right of such holders of such shares of
the New Preferred Stock, voting separately as a class, to
elect (together with the holders of shares of any one or
more other series of Preferred Stock ranking on such a
parity) members of the Board of Directors of the Corporation
as aforesaid shall continue until such time as all dividends
accumulated on such shares of the New Preferred Stock shall
have been paid in full, at which time such right shall
terminate, except as herein or by law expressly provided,
subject to revesting in the event of each and every
subsequent failure to pay dividends of the character above
mentioned.
Upon any termination of the right of the holders of the
New Preferred Stock as a class to elect directors as herein
provided, the term of office of all directors so elected
shall terminate immediately. If the office of any director
elected by such holders voting as a class becomes vacant by
reason of death, resignation, retirement, disqualification,
removal from office or otherwise, the remaining director
elected by such holders voting as a class may choose a
successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. Whenever the term
of office of the directors elected by such holders voting as
a class shall end and the special voting powers vested in<PAGE>
<PAGE> 69
such holders as provided in this resolution shall have
expired, the number of directors shall thereupon be such
number as may be provided for in the Corporation's Bylaws
irrespective of any increase made pursuant to the provisions
of this resolution.
Until all unpaid dividends on the New Preferred Stock
shall have been paid in full, and in order to permit the
holders of the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, and any other series of Preferred
Stock issued by the Corporation having the voting rights set
forth in Paragraph (6) to exercise fully the right to elect
directors as granted by and provided in paragraph (6), the
number of directors constituting the whole Board of
Directors of the Corporation shall not be less than seven.
If, upon any such arrearage in dividends, the number of
directors constituting the whole Board of Directors shall be
less than seven, the size of the Board of Directors shall,
immediately prior to the next meeting of stockholders called
for the election of directors, automatically be increased by
such number as shall be necessary to cause the number of
directors constituting the whole Board of Directors to be no
less than seven.
To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof in
respect of additional series of Preferred Stock, none of the
preferences or rights of any such additional series as fixed
by the Board of Directors shall rank prior to the New
Preferred Stock as to payment of dividends or the
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, without the
consent of the holders of two-thirds of the outstanding
shares of such series of New Preferred Stock voting as a
class.
The foregoing voting provisions shall not apply to any
series of New Preferred Stock if, at or prior to the time
when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of
such series of New Preferred Stock shall have been redeemed
or sufficient funds shall have been deposited in trust to
effect such redemption.
On any item in which the holders of New Preferred Stock
are entitled to vote, such holders shall be entitled to one
vote for each share held."
3. The Preferred Stock Committee of the Board of Directors
has adopted the following resolution pursuant to authority
conferred upon the Preferred Stock Committee of the Board of
Directors by the resolution of the Board of Directors set forth
in paragraph 1 above of this Certificate of Designation,
Preferences and Rights:
"RESOLVED, that the issue of a series of Preferred
Stock without par value of the Corporation is hereby
authorized and the designation, preferences and privileges,
relative, participating, optional and other special rights,
and qualifications, limitations and restrictions thereof, in
addition to those set forth in the Restated Certificate of
Incorporation, as amended, of the Corporation, are hereby
fixed as follows:
11-1/4% ENHANCED RATE CUMULATIVE PREFERRED STOCK
(1) Number of Shares and Designation. 450,000 shares
of Preferred Stock without par value of the Corporation are
hereby constituted as a series of Preferred Stock without
par value and designated as 11-1/4% Enhanced Rate Cumulative
Preferred Stock (hereinafter called the "Enhanced Rate
Preferred Stock").
(2) Dividends. The holders of shares of the Enhanced
Rate Preferred Stock shall be entitled to receive cash
dividends, when and as declared by the Board of Directors of<PAGE>
<PAGE> 70
the Corporation, out of assets legally available for such
purpose, at the rate determined as provided below. Such
dividends shall be cumulative from the date of original
issue of such shares and shall be payable quarterly in
arrears, when and as declared by the Board of Directors of
the Corporation, on the fifteenth day of January, April,
July and October in each year to holders of record on the
respective business days next preceding the first days of
those months (and the quarterly dividend periods shall
commence on the first days of those months).
Dividends on the Enhanced Rate Preferred Stock for
quarterly dividend periods will be payable at the rate of
11-1/4% per annum from the date of original issue through
September 30, 1994, 11-1/2% per annum from October 1, 1994
through September 30, 1995, 11-3/4% per annum from
October 1, 1995 through September 30, 1996, 12% per annum
from October 1, 1996 through September 30, 1997, and 12-1/8%
per annum on or after October 1, 1997, in each case applied
to the amount of $100 per share of Enhanced Rate Preferred
Stock. The amount of dividends payable on each share of
Enhanced Rate Preferred Stock for each full quarterly
dividend period shall be computed by dividing the dividend
rate by four and applying the dividend rate to the amount of
$100 per share. The amount of dividends payable for any
dividend period shorter or longer than a full quarterly
dividend period shall be computed on the basis of 30-day
months and a 360-day year.
(3) Liquidation Preference. The amount to which shares
of Enhanced Rate Preferred Stock shall be entitled upon
liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, shall be $100 per share,
plus an amount equal to all accrued and unpaid dividends, if
any, thereon to the date fixed for payment, and no more.
(4) Redemption. The shares of Enhanced Rate Preferred
Stock shall be subject to redemption in whole or in part at
the option of the Corporation on or after October 1, 1993,
at the following redemption prices, plus an amount equal to
all accrued and unpaid dividends, if any, thereon to the
date fixed for redemption, and no more:
$102.50 per share if redeemed on or before
September 30, 1994;
$101.25 per share if redeemed thereafter and on or
before September 30, 1995;
$100.00 per share if redeemed thereafter.
(5) Shares to be Retired. All shares of Enhanced Rate
Preferred Stock purchased or redeemed by the Corporation
shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of the class of
Preferred Stock without par value, without designation as to
series, and may thereafter be issued, but not as shares of
Enhanced Rate Preferred Stock.
(6) Conversion or Exchange. The holders of shares of
Enhanced Rate Preferred Stock shall not have any rights
herein to convert such shares into or exchange such shares
for shares of any other series of any class or classes of
capital stock (or any other security) of the Corporation.
(7) Ranking. The Enhanced Rate Preferred Stock shall
rank on a parity with the Corporation's $6.25 Cumulative
Convertible Voting Preferred Stock, 9-1/2% Cumulative
Preferred Stock, Series 1989-A, Flexible Rate Auction
Preferred Stock, Series A, and Flexible Rate Auction
Preferred Stock, Series B as to payment of dividends and
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and shall rank
prior to the Corporation's Common Stock and Series A Junior
Participating Preferred Stock as to payment of dividends and
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and prior to
any other series of stock authorized to be issued by the
Corporation which ranks junior to the $6.25 Cumulative
Convertible Voting Preferred Stock, 9-1/2% Cumulative<PAGE>
<PAGE> 71
Preferred Stock, Series 1989-A, Flexible Rate Auction
Preferred Stock, Series A, and Flexible Rate Auction
Preferred Stock, Series B as to payment of dividends and
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by David D. Wesselink, Vice President and Treasurer of the
Corporation, and attested by Ronald C. Roselli, Assistant
Secretary, this 9th day of November, 1990.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ D. D. Wesselink
----------------------------
Vice President and Treasurer
Attest:
/s/ R. C. Roselli
- -----------------
Assistant Secretary
A:\WP51\IC11990.WP<PAGE>
<PAGE> 72
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
9-1/2% Cumulative Preferred Stock, Series 1991-A
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolutions
were duly adopted by the Board of Directors of the Corporation
and by the Preferred Stock Committee of the Board of Directors,
pursuant to authority conferred upon the Board of Directors by
the provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and pursuant to authority conferred
upon the Preferred Stock Committee by the resolutions of the
Board of Directors set forth herein and in accordance with
Section 141(c) of the General Corporation Law of the State of
Delaware.
1. The Board of Directors has adopted the following
resolutions designating a Preferred Stock Committee of the Board
of Directors and authorizing the Preferred Stock Committee to act
on behalf of the Board of Directors (within certain limitations)
in connection with the designation, issuance and sale of shares
in one or more series of Preferred Stock of the Corporation:
"RESOLVED, that a Preferred Stock Committee of the
Board of Directors is hereby designated which shall have and
may exercise, to the fullest extent permitted by law, the
full power and authority of the Board of Directors with
respect to the issuance and sale of one or more new series
of the Corporation's Preferred Stock without par value (each
such series herein referred to as the "New Preferred
Stock"), including, without limitation, establishing the
purchase price therefor, and fixing the designations and any
of the preferences, powers, rights (other than voting powers
or voting rights which shall be fixed by the Board of
Directors) and relative, participating, optional or other
special rights and qualifications, limitations or
restrictions thereof, of such shares of each series of New
Preferred Stock, and fixing the number of shares of each
series of New Preferred Stock.
"FURTHER RESOLVED, that the Committee is authorized to
take such additional actions and adopt such additional
resolutions as it deems necessary or appropriate for the
purpose of authorizing and implementing the issuance, offer,
and sale for cash of New Preferred Stock, including, without
limiting the generality of the foregoing, the authorization
and execution of agreements (including underwriting
agreements) relating to the offer and sale of New Preferred
Stock, authorization and approval of listing applications
(including amendments or supplements thereto) for the
listing of such New Preferred Stock on a stock exchange,
approval of forms of stock certificates and authorization of
issuance of New Preferred Stock in uncertificated form, any
actions which may be necessary to qualify the offering and
sale of New Preferred Stock under Blue Sky Laws of the
various states, any necessary filings with the Secretary of
State of Delaware and other jurisdictions, and the
appointment of a transfer agent.
"FURTHER RESOLVED, that notwithstanding the foregoing
resolutions, the Preferred Stock Committee may not authorize
the sale of New Preferred Stock for more than $250 million
cash consideration in the aggregate, and the power and
authority of the Preferred Stock Committee set forth in the
preceding resolutions shall expire on September 12, 1991.
"FURTHER RESOLVED, that the members of the Preferred
Stock Committee shall be D. C. Clark, E. P. Hoffman, and
G. P. Osler. In the absence of Mr. Osler, A. E. Rasmussen
is designated as an alternate member of the Preferred Stock
Committee to serve in his place." <PAGE>
<PAGE> 73
2. The Board of Directors has adopted the following
resolution pertaining to the voting rights for series of
Preferred Stock authorized for issuance by the Preferred Stock
Committee of the Board of Directors:
"RESOLVED, that notwithstanding the resolution of the
Board of Directors adopted on October 17, 1989, the holders
of the Corporation's Flexible Rate Auction Preferred Stock,
Series A, and Flexible Rate Auction Preferred Stock, Series
B, and any other series of Preferred Stock which on or after
July 10, 1990, is authorized by the Preferred Stock
Committee of the Board of Directors to be issued and sold
pursuant to authority granted to the Preferred Stock
Committee by the Board of Directors (each such series herein
referred to as the "New Preferred Stock") shall have no
voting rights, and their consent shall not be required for
taking any corporate action, except as otherwise set forth
herein, except as otherwise required by law, and except as
otherwise provided by the Board of Directors with respect to
any particular series of New Preferred Stock.
The consent of the holders of the New Preferred Stock
with respect to the matters set forth in sub-sections (i)
and (iii) of paragraph (5) of Article IV of the
Corporation's Restated Certificate of Incorporation
("Paragraph (5)") shall not be required, except with respect
to the creation or issuance of any class of stock ranking
prior to or on a parity with the Preferred Stock, or any
series thereof, as to the payment of dividends or the
distribution of assets; but the other provisions of
Paragraph (5) shall be applicable to the New Preferred
Stock. The holders of the New Preferred Stock shall have no
right to elect directors pursuant to paragraph (6) of
Article IV of the Corporation's Restated Certificate of
Incorporation ("Paragraph (6)"), such right hereby being
expressly withheld.
In the event that any six quarterly cumulative
dividends (which shall be deemed to include dividends in
respect of a number of non-quarterly dividend periods
containing not less than 540 days), whether consecutive or
not, upon the New Preferred Stock shall be in arrears, the
holders of the New Preferred Stock shall have the right,
voting separately as a class with holders of shares of any
one or more other series of Preferred Stock ranking on a
parity with the New Preferred Stock either as to payment of
dividends or the distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and upon which like voting rights have been
conferred (which shall include the Corporation's 9-1/2%
Cumulative Preferred Stock, Series 1989-A) and are then
exercisable, at the next meeting of stockholders called for
the election of directors, to elect two members of the Board
of Directors. The right of such holders of such shares of
the New Preferred Stock, voting separately as a class, to
elect (together with the holders of shares of any one or
more other series of Preferred Stock ranking on such a
parity) members of the Board of Directors of the Corporation
as aforesaid shall continue until such time as all dividends
accumulated on such shares of the New Preferred Stock shall
have been paid in full, at which time such right shall
terminate, except as herein or by law expressly provided,
subject to revesting in the event of each and every
subsequent failure to pay dividends of the character above
mentioned.
Upon any termination of the right of the holders of the
New Preferred Stock as a class to elect directors as herein
provided, the term of office of all directors so elected
shall terminate immediately. If the office of any director
elected by such holders voting as a class becomes vacant by
reason of death, resignation, retirement, disqualification,
removal from office or otherwise, the remaining director
elected by such holders voting as a class may choose a
successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. Whenever the term
of office of the directors elected by such holders voting as
a class shall end and the special voting powers vested in<PAGE>
<PAGE> 74
such holders as provided in this resolution shall have
expired, the number of directors shall thereupon be such
number as may be provided for in the Corporation's Bylaws
irrespective of any increase made pursuant to the provisions
of this resolution.
Until all unpaid dividends on the New Preferred Stock
shall have been paid in full, and in order to permit the
holders of the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, and any other series of Preferred
Stock issued by the Corporation having the voting rights set
forth in Paragraph (6) to exercise fully the right to elect
directors as granted by and provided in paragraph (6), the
number of directors constituting the whole Board of
Directors of the Corporation shall not be less than seven.
If, upon any such arrearage in dividends, the number of
directors constituting the whole Board of Directors shall be
less than seven, the size of the Board of Directors shall,
immediately prior to the next meeting of stockholders called
for the election of directors, automatically be increased by
such number as shall be necessary to cause the number of
directors constituting the whole Board of Directors to be no
less than seven.
To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof in
respect of additional series of Preferred Stock, none of the
preferences or rights of any such additional series as fixed
by the Board of Directors shall rank prior to the New
Preferred Stock as to payment of dividends or the
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, without the
consent of the holders of two-thirds of the outstanding
shares of such series of New Preferred Stock voting as a
class.
The foregoing voting provisions shall not apply to any
series of New Preferred Stock if, at or prior to the time
when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of
such series of New Preferred Stock shall have been redeemed
or sufficient funds shall have been deposited in trust to
effect such redemption.
On any item in which the holders of New Preferred Stock
are entitled to vote, such holders shall be entitled to one
vote for each share held."
3. The Preferred Stock Committee of the Board of Directors
has adopted the following resolution pursuant to authority
conferred upon the Preferred Stock Committee of the Board of
Directors by the resolution of the Board of Directors set forth
in paragraph 1 above of this Certificate of Designation,
Preferences and Rights:
"RESOLVED, that the issue of a series of Preferred
Stock without par value of the Corporation is hereby
authorized and the designation, preferences and privileges,
relative, participating, optional and other special rights,
and qualifications, limitations and restrictions thereof, in
addition to those set forth in the Restated Certificate of
Incorporation, as amended, of the Corporation, are hereby
fixed as follows:
9-1/2% Cumulative Preferred Stock, Series 1991-A
(1) Number of Shares and Designation. 550,000 shares
of Preferred Stock without par value of the Corporation are
hereby constituted as a series of Preferred Stock without
par value and designated as 9-1/2% Cumulative Preferred
Stock, Series 1991-A (hereinafter called the "9-1/2%
Preferred Stock").
(2) Dividends. The holders of shares of the 9-1/2%
Preferred Stock shall be entitled to receive cash dividends,
when and as declared by the Board of Directors of the<PAGE>
<PAGE> 75
Corporation, out of assets legally available for such
purpose, at the rate determined as provided below. Such
dividends shall be cumulative from the date of original
issue of such shares and shall be payable quarterly in
arrears, when and as declared by the Board of Directors of
the Corporation, on the fifteenth day of January, April,
July and October in each year to holders of record on the
respective business days next preceding the first days of
those months (and the quarterly dividend periods shall
commence on the first days of those months).
Dividends on the 9-1/2% Preferred Stock for quarterly
dividend periods will be payable at the rate of 9-1/2% per
annum from the date of original issue applied to the amount
of $100 per share of 9-1/2% Preferred Stock. The amount of
dividends payable on each share of 9-1/2% Preferred Stock
for each full quarterly dividend period shall be computed by
dividing the dividend rate by four and applying the dividend
rate to the amount of $100 per share. The amount of
dividends payable for any dividend period shorter or longer
than a full quarterly dividend period shall be computed on
the basis of 30-day months, a 360-day year and the actual
number of days elapsed in the period.
(3) Liquidation Preference. The amount to which shares
of 9-1/2% Preferred Stock shall be entitled upon
liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, shall be $100 per share,
plus an amount equal to all accrued and unpaid dividends, if
any, thereon to the date fixed for payment, and no more.
(4) Redemption. The shares of 9-1/2% Preferred Stock
shall be subject to redemption in whole or in part at the
option of the Corporation on or after August 13, 1996, at
$100 per share, plus an amount equal to all accrued and
unpaid dividends, if any, thereon to the date fixed for
redemption, and no more.
(5) Shares to be Retired. All shares of 9-1/2%
Preferred Stock purchased or redeemed by the Corporation
shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of the class of
Preferred Stock without par value, without designation as to
series, and may thereafter be issued, but not as shares of
9-1/2% Preferred Stock.
(6) Conversion or Exchange. The holders of shares of
9-1/2% Preferred Stock shall not have any rights herein to
convert such shares into or exchange such shares for shares
of any other series of any class or classes of capital stock
(or any other security) of the Corporation.
(7) Ranking. The 9-1/2% Preferred Stock shall rank on
a parity with the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, 9-1/2% Cumulative Preferred Stock,
Series 1989-A, Flexible Rate Auction Preferred Stock, Series
A, Flexible Rate Auction Preferred Stock, Series B, and 11-
1/4% Enhanced Rate Cumulative Preferred Stock as to payment
of dividends and distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and shall rank prior to the Corporation's
Common Stock and Series A Junior Participating Preferred
Stock as to payment of dividends and distribution of assets
upon liquidation, dissolution, or winding up, whether
voluntary or involuntary, and prior to any other series of
stock authorized to be issued by the Corporation which ranks
junior to the $6.25 Cumulative Convertible Voting Preferred
Stock, 9-1/2% Cumulative Preferred Stock, Series 1989-A,
Flexible Rate Auction Preferred Stock, Series A, Flexible
Rate Auction Preferred Stock, Series B and 11-1/4% Enhanced
Rate Cumulative Preferred Stock as to payment of dividends
and distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by David D. Wesselink, Vice President and Treasurer of the<PAGE>
<PAGE> 76
Corporation, and attested by Susan Casey, Assistant Secretary,
this 5th day of August, 1991.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ D. D. Wesselink
----------------------------
Vice President and Treasurer
Attest:
/s/ S. E. Casey
- -------------------
Assistant Secretary
A:\WP51\IC8591.WP<PAGE>
<PAGE> 77
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
8-1/4% Cumulative Preferred Stock, Series 1992-A
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolutions
were duly adopted by the Board of Directors of the Corporation
and by the Preferred Stock Committee of the Board of Directors,
pursuant to authority conferred upon the Board of Directors by
the provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and pursuant to authority conferred
upon the Preferred Stock Committee by the resolutions of the
Board of Directors set forth herein and in accordance with
Section 141(c) of the General Corporation Law of the State of
Delaware.
1. The Board of Directors has adopted the following
resolutions designating a Preferred Stock Committee of the Board
of Directors and authorizing the Preferred Stock Committee to act
on behalf of the Board of Directors (within certain limitations)
in connection with the designation, issuance and sale of shares
in one or more series of Preferred Stock of the Corporation:
"RESOLVED, that a Preferred Stock Committee of the
Board of Directors is hereby designated which shall have and
may exercise, to the fullest extent permitted by law, the
full power and authority of the Board of Directors with
respect to the issuance and sale of one or more new series
of the Corporation's Preferred Stock without par value (each
such series herein referred to as the "New Preferred
Stock"), including, without limitation, establishing the
purchase price therefor, and fixing the designations and any
of the preferences, powers, rights (other than voting powers
or voting rights which shall be fixed by the Board of
Directors) and relative, participating, optional or other
special rights and qualifications, limitations or
restrictions thereof, of such shares of each series of New
Preferred Stock, and fixing the number of shares of each
series of New Preferred Stock.
"FURTHER RESOLVED, that the Preferred Stock Committee
is authorized to take such additional actions and adopt such
additional resolutions as it deems necessary or appropriate
for the purpose of authorizing and implementing the
issuance, offer, and sale for cash of New Preferred Stock,
including, without limiting the generality of the foregoing,
the authorization and execution of agreements (including
underwriting agreements) relating to the offer and sale of
New Preferred Stock, authorization and approval of listing
applications (including amendments or supplements thereto)
for the listing of such New Preferred Stock on a stock
exchange, approval of forms of stock certificates and
authorization of issuance of New Preferred Stock in
uncertificated form, any actions which may be necessary to
qualify the offering and sale of New Preferred Stock under
Blue Sky Laws of the various states, any necessary filings
with the Secretary of State of Delaware and other
jurisdictions, and the appointment of a transfer agent.
"FURTHER RESOLVED, that notwithstanding the foregoing
resolutions, the Preferred Stock Committee may not authorize
the sale of New Preferred Stock for more than $150 million
cash consideration in the aggregate, and the power and
authority of the Preferred Stock Committee set forth in the
preceding resolutions shall expire on December 31, 1994,
unless extended by further action of the Board of Directors
of the Corporation.
"FURTHER RESOLVED, that the members of the Preferred
Stock Committee shall be D. C. Clark, E. P. Hoffman, and<PAGE>
<PAGE> 78
G. P. Osler. In the absence of Mr. Osler, A. E. Rasmussen
is designated as an alternate member of the Preferred Stock
Committee to serve in his place."
2. The Board of Directors has adopted the following
resolution pertaining to the voting rights for series of
Preferred Stock authorized for issuance by the Preferred Stock
Committee of the Board of Directors:
"RESOLVED, that holders of each series of the
Corporation's New Preferred Stock which is authorized by the
Preferred Stock Committee of the Board of Directors shall
have no voting rights, and their consent shall not be
required for taking any corporate action, except as
otherwise set forth herein, or as otherwise required by law,
and except as otherwise provided by the Board of Directors
with respect to any particular series of New Preferred
Stock.
The consent of the holders of the New Preferred Stock
with respect to the matters set forth in sub-sections (i)
and (iii) of paragraph (5) of Article IV of the
Corporation's Restated Certificate of Incorporation
("Paragraph (5)") shall not be required, except with respect
to the creation or issuance of any class of stock ranking
prior to or on a parity with the New Preferred Stock, or
any series thereof, as to the payment of dividends or the
distribution of assets; but the other provisions of
Paragraph (5) shall be applicable to the New Preferred
Stock. The holders of the New Preferred Stock shall have no
right to elect directors pursuant to paragraph (6) of
Article IV of the Corporation's Restated Certificate of
Incorporation ("Paragraph (6)"), such right hereby being
expressly withheld.
In the event that any six quarterly cumulative
dividends, whether consecutive or not, upon the New
Preferred Stock shall be in arrears, the holders of the New
Preferred Stock shall have the right, voting separately as a
class with holders of shares of any one or more other series
of Preferred Stock of the Corporation ranking on a parity
with the New Preferred Stock either as to payment of
dividends or the distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and upon which like voting rights have been
conferred and are then exercisable, at the next meeting of
stockholders called for the election of directors, to elect
two members of the Board of Directors. The right of such
holders of such shares of the New Preferred Stock, voting
separately as a class, to elect (together with the holders
of shares of any one or more other series of Preferred Stock
of the Corporation ranking on such a parity) members of the
Board of Directors of the Corporation as aforesaid shall
continue until such time as all dividends accumulated on
such shares of the New Preferred Stock shall have been paid
in full, at which time such right shall terminate, except as
herein or by law expressly provided, subject to revesting in
the event of each and every subsequent failure to pay
dividends of the character above mentioned.
Upon any termination of the right of the holders of the
New Preferred Stock as a class to elect directors as herein
provided, the term of office of all directors so elected
shall terminate immediately. If the office of any director
elected by such holders voting as a class becomes vacant by
reason of death, resignation, retirement, disqualification,
removal from office or otherwise, the remaining director
elected by such holders voting as a class may choose a
successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. Whenever the term
of office of the directors elected by such holders voting as
a class shall end and the special voting powers vested in
such holders as provided in this resolution shall have
expired, the number of directors shall thereupon be such
number as may be provided for in the Corporation's Bylaws
irrespective of any increase made pursuant to the provisions
of this resolution.
<PAGE>
<PAGE> 79
Until all unpaid dividends on the New Preferred Stock
shall have been paid in full, and in order to permit the
holders of the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, and any other series of Preferred
Stock issued by the Corporation having the voting rights set
forth in Paragraph (6) to exercise fully the right to elect
directors as granted by and provided in Paragraph (6), the
number of directors constituting the whole Board of
Directors of the Corporation shall not be less than seven.
If, upon any such arrearage in dividends, the number of
directors constituting the whole Board of Directors shall be
less than seven, the size of the Board of Directors shall,
immediately prior to the next meeting of stockholders called
for the election of directors, automatically be increased by
such number as shall be necessary to cause the number of
directors constituting the whole Board of Directors to be no
less than seven.
To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof in
respect of additional series of Preferred Stock, none of the
preferences or rights of any such additional series as fixed
by the Board of Directors shall rank prior to the New
Preferred Stock as to payment of dividends or the
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, without the
consent of the holders of two-thirds of the outstanding
shares of such series of New Preferred Stock voting as a
class.
The foregoing voting provisions shall not apply to any
series of New Preferred Stock if, at or prior to the time
when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of
such series of New Preferred Stock shall have been redeemed
or sufficient funds shall have been deposited in trust to
effect such redemption.
On any item in which the holders of New Preferred Stock
are entitled to vote, such holders shall be entitled to one
vote for each share held."
3. The Preferred Stock Committee of the Board of Directors
has adopted the following resolution pursuant to authority
conferred upon the Preferred Stock Committee of the Board of
Directors by the resolution of the Board of Directors set forth
in paragraph 1 above of this Certificate of Designation,
Preferences and Rights:
"RESOLVED, that the issue of a series of Preferred
Stock without par value of the Corporation is hereby
authorized and the designation, preferences and privileges,
relative, participating, optional and other special rights,
and qualifications, limitations and restrictions thereof, in
addition to those set forth in the Restated Certificate of
Incorporation, as amended, of the Corporation, are hereby
fixed as follows:
8-1/4% Cumulative Preferred Stock, Series 1992-A
(1) Number of Shares and Designation. 50,000 shares of
Preferred Stock without par value of the Corporation are
hereby constituted as a series of Preferred Stock without
par value and designated as 8-1/4% Cumulative Preferred
Stock, Series 1992-A (hereinafter called the "8-1/4%
Preferred Stock").
(2) Dividends. The holders of shares of the 8-1/4%
Preferred Stock shall be entitled to receive cash dividends,
when and as declared by the Board of Directors of the
Corporation, out of assets legally available for such
purpose, at the rate determined as provided below. Such
dividends shall be cumulative from the date of original
issue of such shares and shall be payable quarterly in
arrears, when and as declared by the Board of Directors of
the Corporation, on the fifteenth day of January, April,<PAGE>
<PAGE> 80
July and October in each year to holders of record on the
respective business days next preceding the first days of
those months (and the quarterly dividend periods shall
commence on the first days of those months).
Dividends on the 8-1/4% Preferred Stock for quarterly
dividend periods will be payable at the rate of 8-1/4% per
annum from the date of original issue applied to the amount
of $1,000 per share of 8-1/4% Preferred Stock. The amount
of dividends payable on each share of 8-1/4% Preferred Stock
for each full quarterly dividend period shall be computed by
dividing the dividend rate by four and applying the dividend
rate to the amount of $1,000 per share. The amount of
dividends payable for any dividend period shorter or longer
than a full quarterly dividend period shall be computed on
the basis of 30-day months, a 360-day year and the actual
number of days elapsed in the period.
(3) Liquidation Preference. The amount to which shares
of 8-1/4% Preferred Stock shall be entitled upon
liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, shall be $1,000 per share,
plus an amount equal to all accrued and unpaid dividends, if
any, thereon to the date fixed for payment, and no more.
(4) Redemption. The shares of 8-1/4% Preferred Stock
shall be subject to redemption in whole or in part at the
option of the Corporation on or after October 15, 2002, at
$1,000 per share, plus an amount equal to all accrued and
unpaid dividends, if any, thereon to the date fixed for
redemption, and no more.
(5) Shares to be Retired. All shares of 8-1/4%
Preferred Stock purchased or redeemed by the Corporation
shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of the class of
Preferred Stock without par value, without designation as to
series, and may thereafter be issued, but not as shares of
8-1/4% Preferred Stock.
(6) Conversion or Exchange. The holders of shares of
8-1/4% Preferred Stock shall not have any rights herein to
convert such shares into or exchange such shares for shares
of any other series of any class or classes of capital stock
(or any other security) of the Corporation.
(7) Ranking. The 8-1/4% Preferred Stock shall rank on
a parity with the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, 9-1/2% Cumulative Preferred Stock,
Series 1989-A, Flexible Rate Auction Preferred Stock, Series
A, Flexible Rate Auction Preferred Stock, Series B, 11-1/4%
Enhanced Rate Cumulative Preferred Stock and 9-1/2%
Cumulative Preferred Stock, Series 1991-A as to payment of
dividends and distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and shall rank prior to the Corporation's
Common Stock and Series A Junior Participating Preferred
Stock as to payment of dividends and distribution of assets
upon liquidation, dissolution, or winding up, whether
voluntary or involuntary, and prior to any other series of
stock authorized to be issued by the Corporation which ranks
junior to the $6.25 Cumulative Convertible Voting Preferred
Stock, 9-1/2% Cumulative Preferred Stock, Series 1989-A,
Flexible Rate Auction Preferred Stock, Series A, Flexible
Rate Auction Preferred Stock, Series B, 11-1/4% Enhanced
Rate Cumulative Preferred Stock and 9-1/2% Cumulative
Preferred Stock, Series 1991-A as to payment of dividends
and distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by J. Richard Hull, Senior Vice President-Secretary of the<PAGE>
<PAGE> 81
Corporation, and attested by John W. Blenke, Assistant Secretary,
this 14th day of October, 1992.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. Richard Hull
----------------------
Senior Vice President-
Secretary
Attest:
/s/ John W. Blenke
- -------------------
Assistant Secretary
A:\WP51\IC101492.WP<PAGE>
<PAGE> 82
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Household International, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Restated Certificate of Incorporation, as
heretofore amended, of said Corporation has been further amended
by deleting, in its entirety, the first paragraph of Article IV
thereof and inserting the following as the new first paragraph of
Article IV:
The total number of shares that may be issued by
the Corporation is 158,155,004 of which 8,155,004
shares shall be Preferred Stock without par value and
150,000,000 shares shall be Common Stock of the par
value of $1 per share.
SECOND: That the aforesaid amendment of the Restated
Certificate of Incorporation of said Corporation, set forth in
Paragraph FIRST hereinabove, has been duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by
D. C. Clark, its Chairman of the Board and Chief Executive
Officer and J. W. Blenke, Assistant General Counsel and Assistant
Secretary, this 12th day of May, 1993.
HOUSEHOLD INTERNATIONAL, INC.
[SEAL]
By: /s/ D. C. Clark
-------------------------
Chairman of the Board and
Chief Executive Officer
Attest:
/s/ J. W. Blenke
- -----------------------------
Assistant General Counsel and
Assistant Secretary
A:\WP51\IC51293.WP
<PAGE>
<PAGE> 83
HOUSEHOLD INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
7.35% Cumulative Preferred Stock, Series 1993-A
(Without Par Value)
HOUSEHOLD INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Corporation"), HEREBY CERTIFIES that the following resolutions
were duly adopted by the Board of Directors of the Corporation
and by the Offering Committee of the Board of Directors, pursuant
to authority conferred upon the Board of Directors by the
provisions of the Restated Certificate of Incorporation, as
amended, of the Corporation, and pursuant to authority conferred
upon the Offering Committee by the resolutions of the Board of
Directors set forth herein and in accordance with Section 141(c)
of the General Corporation Law of the State of Delaware.
1. The Board of Directors on May 12, 1993 has adopted the
following resolutions designating an Offering Committee of the
Board of Directors and authorizing the Offering Committee to act
on behalf of the Board of Directors (within certain limitations)
in connection with the designation, issuance and sale of shares
in one or more series of Preferred Stock, without par value, of
the Corporation:
"FURTHER RESOLVED, that an Offering Committee of the
Board of Directors is hereby designated which shall have and
may exercise, to the fullest extent permitted by law, the
full power and authority of the Board of Directors with
respect to the issuance and sale of (i) the Common Stock,
(ii) the Debt Securities or (iii) one or more new series of
the Corporation's Preferred Stock, including, without
limitation, establishing the purchase price therefore, and
fixing the designations and any of the preferences, powers,
rights (other than voting powers or voting rights which
shall be fixed by the Board of Directors) and relative,
participating, optional or other special rights and
qualifications, limitations or restrictions thereof, of such
shares of each series of Preferred Stock; and
"FURTHER RESOLVED, that notwithstanding the foregoing
resolutions, the power and authority of the Offering
Committee set forth in the preceding resolution shall expire
on June 30, 1995, unless extended by further action of the
Board of Directors of the Corporation; and
"FURTHER RESOLVED, that the members of the Offering
Committee shall be D. C. Clark, A. E. Rasmussen and G. P.
Osler. In the absence of any of the named directors, any
current director of the Corporation is designated as an
alternate member of the Offering Committee to serve in such
named director's place; and
"FURTHER RESOLVED, that the Offering Committee is
authorized to take such additional actions and adopt such
additional resolutions as it deems necessary or appropriate
for the purpose of authorizing and implementing the
issuance, offer, and sale for cash of Preferred Stock,
including, without limiting the generality of the foregoing,
the authorization and execution of agreements (including
underwriting agreements) relating to the offer and sale of
Preferred Stock, approval of forms of stock certificates and
authorization of issuance of Preferred Stock in
uncertificated form, any actions which may be necessary to
qualify the offering and sale of Preferred Stock under Blue
Sky Laws of the various states, any necessary filings with
the Secretary of State of Delaware and other jurisdictions,
and the appointment of a transfer agent; and
"FURTHER RESOLVED, that the Offering Committee is
hereby empowered, in connection with the issuance and sale
of any new series of the Corporation's Preferred Stock, to<PAGE>
<PAGE> 84
authorize the issuance and sale of depositary shares and
depositary receipts for such depositary shares with respect
to any such series of Preferred Stock, and to authorize the
appointment of a depositary, registrar, and transfer agent
for such depositary shares and depositary receipts, the
execution of a depositary agreement, and any additional
agreements or actions in connection therewith as the
Offering Committee deems necessary or appropriate."
2. The Board of Directors, on May 12, 1993, has adopted
the following resolution pertaining to the voting rights for
series of Preferred Stock, without par value, authorized for
issuance by the Offering Committee of the Board of Directors:
"FURTHER RESOLVED, that holders of each series of the
Corporation's Preferred Stock which is authorized by the
Offering Committee of the Board of Directors shall have no
voting rights, and their consent shall not be required for
taking any corporate action, except as otherwise set forth
herein or as otherwise required by law, and except as
otherwise provided by the Board of Directors with respect to
any particular series of Preferred Stock:
The consent of the holders of the Preferred Stock with
respect to the matters set forth in sub-sections (i) and
(iii) of paragraph (5) of Article IV of the Corporation's
Restated Certificate of Incorporation ("Paragraph (5)")
shall not be required, except with respect to the creation
or issuance of any class of stock ranking prior to or on a
parity with the Preferred Stock, or any series thereof, as
to the payment of dividends or the distribution of assets;
but the other provisions of Paragraph (5) shall be
applicable to the Preferred Stock. The holders of the
Preferred Stock shall have no right to elect directors
pursuant to paragraph (6) of Article IV of the Corporation's
Restated Certificate of Incorporation ("Paragraph (6)"),
such right hereby being expressly withheld.
In the event that any six quarterly cumulative
dividends, whether consecutive or not, upon the Preferred
Stock shall be in arrears, the holders of the Preferred
Stock shall have the right, voting separately as a class
with holders of shares of any one or more other series of
preferred stock of the Corporation ranking on a parity with
the Preferred Stock either as to payment of dividends or the
distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary, and upon which
like voting rights have been conferred and are then
exercisable, at the next meeting of stockholders called for
the election of directors, to elect two members of the Board
of Directors. The right of such holders of such shares of
the Preferred Stock, voting separately as a class, to elect
(together with the holders of shares of any one or more
other series of preferred stock of the Corporation ranking
on such a parity) members of the Board of Directors of the
Corporation as aforesaid shall continue until such time as
all dividends accumulated on such shares of the Preferred
Stock shall have been paid in full, at which time such right
shall terminate, except as herein or by law expressly
provided, subject to revesting in the event of each and
every subsequent failure to pay dividends of the character
above mentioned.
Upon any termination of the right of the holders of the
Preferred Stock as a class to elect directors as herein
provided, the term of office of all directors so elected
shall terminate immediately. If the office of any director
elected by such holders voting as a class becomes vacant by
reason of death, resignation, retirement, disqualification,
removal from office or otherwise, the remaining director
elected by such holders voting as a class may choose a
successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. Whenever the term
of office of the directors elected by such holders voting as
a class shall end and the special voting powers vested in
such holders as provided in this resolution shall have
expired, the number of directors shall thereupon be such
number as may be provided for in the Corporation's Bylaws<PAGE>
<PAGE> 85
irrespective of any increase made pursuant to the provisions
of this resolution.
Until all unpaid dividends on the Preferred Stock shall
have been paid in full, and in order to permit the holders
of the Corporation's $6.25 Cumulative Convertible Voting
Preferred Stock, and any other series of preferred stock
issued by the Corporation having the voting rights set forth
in Paragraph (6) to exercise fully the right to elect
directors as granted by and provided in Paragraph (6), the
number of directors constituting the whole Board of
Directors of the Corporation shall not be less than seven.
If, upon any such arrearage in dividends the number of
directors constituting the whole Board of Directors shall be
less than seven, the size of the Board of Directors shall,
immediately prior to the next meeting of stockholders called
for the election of directors, automatically be increased by
such number as shall be necessary to cause the number of
directors constituting the whole Board of Directors to be no
less than seven.
To the extent that the Board of Directors is authorized
to fix the designations, powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof in
respect of additional series of preferred stock, none of the
preferences or rights of any such additional series as fixed
by the Board of Directors shall rank prior to the Preferred
Stock as to payment of dividends or the distribution of
assets upon liquidation, dissolution, or winding up, whether
voluntary or involuntary, without the consent of the holders
of two-thirds of the outstanding shares of such series of
Preferred Stock voting as a class.
The foregoing voting provisions shall not apply to any
series of Preferred Stock, if at or prior to the time when
the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of such
series of Preferred Stock shall have been redeemed or
sufficient funds shall have been deposited in trust to
effect such redemption.
On any item in which the holders of Preferred Stock are
entitled to vote, such holders shall be entitled to one vote
for each share held."
3. The Offering Committee of the Board of Directors has on
August 30, 1993 adopted the following resolution pursuant to
authority conferred upon the Offering Committee of the Board of
Directors by the resolutions of the Board of Directors set forth
in paragraph 1 above of this Certificate of Designation,
Preferences and Rights:
"RESOLVED, that the issue of a series of Preferred
Stock without par value of the Corporation is hereby
authorized and the designation, preferences and privileges,
relative, participating, optional and other special rights,
and qualifications, limitations and restrictions thereof, in
addition to those set forth in the Restated Certificate of
Incorporation, as amended, of the Corporation, are hereby
fixed as follows:
7.35% Cumulative Preferred Stock, Series 1993-A
(1) Number of Shares and Designation. 100,000 shares
of Preferred Stock without par value of the Corporation are
hereby constituted as a series of Preferred Stock without
par value and designated as 7.35% Cumulative Preferred
Stock, Series 1993-A (hereinafter called the "7.35%
Preferred Stock").
(2) Dividends. The holders of shares of the 7.35%
Preferred Stock shall be entitled to receive cash dividends,
when and as declared by the Board of Directors of the
Corporation, out of assets legally available for such
purpose, at the rate determined as provided below. Such
dividends shall be cumulative from the date of original
issue of such shares and shall be payable quarterly in<PAGE>
<PAGE> 86
arrears, when and as declared by the Board of Directors of
the Corporation, on the fifteenth day of January, April,
July and October in each year to holders of record on the
respective business days next preceding the first days of
those months (and the quarterly dividend periods shall
commence on the first days of those months).
Dividends on the 7.35% Preferred Stock for quarterly
dividend periods will be payable at the rate of 7.35% per
annum from the date of original issue applied to the amount
of $1,000 per share of 7.35% Preferred Stock. The amount of
dividends payable on each share of 7.35% Preferred Stock for
each full quarterly dividend period shall be computed by
dividing the dividend rate by four and applying the dividend
rate to the amount of $1,000 per share. The amount of
dividends payable for any dividend period shorter or longer
than a full quarterly dividend period shall be computed on
the basis of 30-day months, a 360-day year and the actual
number of days elapsed in the period.
(3) Liquidation Preference. The amount to which shares
of 7.35% Preferred Stock shall be entitled upon liquidation,
dissolution, or winding up of the Corporation, whether
voluntary or involuntary, shall be $1,000 per share, plus an
amount equal to all accrued and unpaid dividends, if any,
thereon to the date fixed for payment, and no more.
(4) Redemption. The shares of 7.35% Preferred Stock
shall be subject to redemption in whole or in part at the
option of the Corporation on or after October 15, 1998 at
$1,000 per share, plus an amount equal to all accrued and
unpaid dividends, if any, thereon to the date fixed for
redemption, and no more.
(5) Shares to be Retired. All shares of 7.35%
Preferred Stock purchased or redeemed by the Corporation
shall be retired and cancelled and shall be restored to the
status of authorized but unissued shares of the class of
Preferred Stock without par value, without designation as to
series, and may thereafter be issued, but not as shares of
7.35% Preferred Stock.
(6) Conversion or Exchange. The holders of shares of
7.35% Preferred Stock shall not have any rights herein to
convert such shares into or exchange such shares for shares
of any other series of any class or classes of capital stock
(or any other security) of the Corporation.
(7) Ranking. The 7.35% Preferred Stock shall rank on a
parity with the Corporation's $6.25 Cumulative Convertible
Voting Preferred Stock, 9-1/2% Cumulative Preferred Stock,
Series 1989-A, Flexible Rate Auction Preferred Stock, Series
B, 11-1/4% Enhanced Rate Cumulative Preferred Stock, 9-1/2%
Cumulative Preferred Stock, Series 1991-A and 8-1/4%
Cumulative Preferred Stock, Series 1992-A as to payment of
dividends and distribution of assets upon liquidation,
dissolution, or winding up, whether voluntary or
involuntary, and shall rank prior to the Corporation's
Common Stock and Series A Junior Participating Preferred
Stock as to payment of dividends and distribution of assets
upon liquidation, dissolution, or winding up, whether
voluntary or involuntary, and prior to any other series of
stock authorized to be issued by the Corporation which ranks
junior to the $6.25 Cumulative Convertible Voting Preferred
Stock, 9-1/2% Cumulative Preferred Stock, Series 1989-A,
Flexible Rate Auction Preferred Stock, Series B, 11-1/4%
Enhanced Rate Cumulative Preferred Stock, 9-1/2% Cumulative
Preferred Stock, Series 1991-A and 8-1/4% Cumulative
Preferred Stock, Series 1992-A as to payment of dividends
and distribution of assets upon liquidation, dissolution, or
winding up, whether voluntary or involuntary."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be signed
by J. Richard Hull, Senior Vice President-Secretary and General
Counsel of the Corporation, and attested by John W. Blenke,<PAGE>
<PAGE> 87
Assistant General Counsel and Assistant Secretary, this 1st day
of September, 1993.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ J. Richard Hull
----------------------
Senior Vice President-
Secretary and General
Counsel
Attest:
/s/ John W. Blenke
- -----------------------------
Assistant General Counsel and
Assistant Secretary
<PAGE> 1
EXHIBIT 12
----------
HOUSEHOLD INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
- -----------------------------------------------------------------------------
All dollar amounts are stated in millions.
Six months ended June 30 1995 1994
- -----------------------------------------------------------------------------
Net income $ 202.3 $162.1
- -----------------------------------------------------------------------------
Income taxes 117.2 82.3
- -----------------------------------------------------------------------------
Fixed charges:
Interest expense (1) 780.7 555.1
Interest portion of rentals (2) 16.9 17.5
- -----------------------------------------------------------------------------
Total fixed charges 797.6 572.6
- -----------------------------------------------------------------------------
Total earnings as defined $1,117.1 $817.0
=============================================================================
Ratio of earnings to fixed charges 1.40 1.43
=============================================================================
Preferred stock dividends (3) $ 22.0 $ 21.9
=============================================================================
Ratio of earnings to combined fixed charges
and preferred stock dividends 1.36 1.37
=============================================================================
(1) For financial statement purposes, interest expense includes income earned
on temporary investment of excess funds, generally resulting from over-
subscriptions of commercial paper.
(2) Represents one-third of rentals, which approximates the portion
representing interest.
(3) Preferred stock dividends are grossed up to their pretax equivalent based
upon an effective tax rate of 36.7 and 33.7 percent for June 30, 1995 and
1994, respectively.
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF HOUSEHOLD INTERNATIONAL, INC.
- ---------------------------------------------
As of September 30, 1995, the following subsidiaries were
directly or indirectly owned by the Registrant. Certain
subsidiaries which in the aggregate do not constitute significant
subsidiaries may be omitted.
%
Voting
Stock
Organized Owned
Under By
Names of Subsidiaries Laws of: Parent
- --------------------- --------- ------
Hamilton Investments, Inc. Delaware 100%
Alpha Source Asset Management, Inc. Delaware 100%
Craig-Hallum Corporation Delaware 100%
Craig-Hallum, Inc. Minnesota 100%
ProValue Investments, Inc. Delaware 100%
Household Bank, f.s.b U.S. 100%
HHTS, Inc. Illinois 100%
Household Affinity Funding Corporation Delaware 100%
Household Bank (SB), N.A. U.S. 100%
Household Home Title Services, Inc. California 100%
Household Home Title Services, Inc. II Maryland 100%
Household Investment Services, Inc. California 100%
Household Insurance Services, Inc. Illinois 100%
Household Service Corporation of
Illinois, Inc. Illinois 100%
Housekey Financial Corporation California 100%
Associations Service Corporation Indiana 100%
Household Mortgage Services, Inc. Delaware 100%
Security Investment Corporation Maryland 100%
Housekey Financial Corporation Illinois 100%
Household Capital Corporation Delaware 100%
Household Commercial Canada Inc. Canada 100%
Household Capital Trust I Delaware 100%
Household Credit Services, Inc. Delaware 100%
Household Finance Corporation Delaware 100%
HFC Auto Credit Corp. Delaware 100%
HFC Funding Corporation Delaware 100%
HFC Revolving Corporation Delaware 100%
HFS Funding Corporation Delaware 100%
Household Bank (Nevada), N.A. U.S. 100%
Household Card Funding Corporation Delaware 100%
Household Receivables Funding Corporation Nevada 100%
Household Receivables Funding Delaware 100%
Corporation II
Household Receivables Funding, Inc. Delaware 100%
<PAGE>
%
Voting
Stock
Organized Owned
Under By
Names of Subsidiaries Laws of: Parent
- --------------------- --------- ------
Household Capital Markets, Inc. Delaware 100%
Household Card Services, Inc. Nevada 100%
Household Bank (Illinois), N.A. U.S. 100%
Household Consumer Loan Corporation Nevada 100%
Household Credit Services of Mexico, Inc. Delaware 100%
Household Finance Receivables Corporation IIDelaware 100%
Household Financial Services, Inc. Delaware 100%
Household Group, Inc. Delaware 100%
Alexander Hamilton Life Insurance Company Michigan 100%
of America
AHLIC Investment Holdings Corporation Delaware 100%
Alexander Hamilton Capital Management, Michigan 100%
Inc.
Alexander Hamilton Insurance Agency, Inc. Michigan 100%
Alexander Hamilton Life Insurance Co. Arizona 100%
of Arizona
First Alexander Hamilton Life New York 100%
Insurance Co.
Hamilton National Life Insurance Company Michigan 100%
Alexander Hamilton Insurance Company Michigan 100%
of America
Cal-Pacific Services, Inc. California 100%
Household Business Services, Inc. Delaware 100%
Household Commercial Financial Delaware 100%
Services, Inc.
Business Realty Inc. Delaware 100%
Business Lakeview, Inc. Delaware 100%
Capital Graphics, Inc. Delaware 100%
Color Prelude Inc. Delaware 100%
First Source Financial, Inc. Delaware 100%
HCFS Business Equipment Corporation Delaware 100%
HCFS Corp Finance Venture, Inc. Delaware 100%
HFC Commercial Realty, Inc. Delaware 100%
Cast Iron Building Corporation Delaware 100%
Center Realty, Inc. Delaware 100%
Com Realty, Inc. Delaware 100%
Lighthouse Property Corporation Delaware 100%
MRP General, Inc. Delaware 100%
G.C. Center, Inc. Delaware 100%
Household OPEB I, Inc. Illinois 100%
Land of Lincoln Builders, Inc. Illinois 100%
PPSG Corporation Delaware 100%
Steward's Glenn Corporation Delaware 100%<PAGE>
<PAGE> 2
%
Voting
Stock
Organized Owned
Under By
Names of Subsidiaries Laws of: Parent
- --------------------- --------- ------
HFC Leasing, Inc. Delaware 100%
First HFC Leasing Corporation Delaware 100%
Second HFC Leasing Corporation Delaware 100%
Valley Properties Corporation Tennessee 100%
Fifth HFC Leasing Corporation Delaware 100%
Sixth HFC Leasing Corporation Delaware 100%
Seventh HFC Leasing Corporation Delaware 100%
Eighth HFC Leasing Corporation Delaware 100%
Tenth HFC Leasing Corporation Delaware 100%
Eleventh HFC Leasing Corporation Delaware 100%
Thirteenth HFC Leasing Corporation Delaware 100%
Fourteenth HFC Leasing Corporation Delaware 100%
Seventeenth HFC Leasing Corporation Delaware 100%
Nineteenth HFC Leasing Corporation Delaware 100%
Twenty-second HFC Leasing Corporation Delaware 100%
Twenty-sixth HFC Leasing Corporation Delaware 100%
Beaver Valley, Inc. Delaware 100%
Hull 752 Corporation Delaware 100%
Hull 753 Corporation Delaware 100%
Third HFC Leasing Corporation Delaware 100%
Macray Corporation California 100%
Fourth HFC Leasing Corporation Delaware 100%
Pargen Corporation California 100%
Fifteenth HFC Leasing Corporation Delaware 100%
Hull Fifty Corporation Delaware 100%
Household Capital Investment Corporation Delaware 100%
B&K Corporation Michigan 94%
Household Commercial of California, Inc. California 100%
Household Real Estate Equities, Inc. Delaware 100%
SPG General, Inc. Delaware 100%
OLC, Inc. Rhode Island 100%
OPI, Inc. Virginia 100%
The Generra Company Delaware 100%
Household Finance Consumer Discount CompanyPennsylvania 100%
Overseas Leasing Two FSC, Ltd. Bermuda 99%
Household Finance Corporation II Delaware 100%
Household Finance Corporation of Alabama Alabama 100%
Household Finance Corporation of CaliforniaDelaware 100%
Household Finance Corporation of Nevada Delaware 100%
Household Finance Realty Corporation of Delaware 100%
New York
Household Finance Industrial Loan Company Iowa 100%
of Iowa<PAGE>
<PAGE> 3
%
Voting
Stock
Organized Owned
Under By
Names of Subsidiaries Laws of: Parent
- --------------------- --------- ------
Household Finance Realty Corporation of Delaware 100%
Nevada
Household Finance Corporation III Delaware 100%
Amstelveen FSC, Ltd. Bermuda 99%
HFC Agency of Connecticut, Inc. Connecticut 100%
HFC Agency of Michigan, Inc. Michigan 100%
Night Watch FSC, Ltd. Bermuda 99%
Household Realty Corporation Delaware 100%
Overseas Leasing One FSC, Ltd. Bermuda 100%
Overseas Leasing Four FSC, Ltd. Bermuda 99%
Overseas Leasing Five FSC, Ltd. Bermuda 99%
Household Retail Services, Inc. Delaware 100%
HRSI Funding, Inc. Nevada 100%
Household Financial Center Inc. Tennessee 100%
Household Industrial Finance Company Minnesota 100%
Household Industrial Loan Co. of Kentucky Kentucky 100%
Household Insurance Agency, Inc. Nevada 100%
Household Recovery Services Corporation Delaware 100%
Household Relocation Management, Inc. Illinois 100%
Mortgage One Corporation Delaware 100%
Mortgage Two Corporation Delaware 100%
Sixty-First HFC Leasing Corporation Delaware 100%
Household Bank (California), N.A. U.S. 100%
Household Financial Group, Ltd. Delaware 100%
Household Global Funding, Inc. Delaware 78%
Household International (U.K.) Limited England 100%
D.L.R.S. Limited Cheshire 100%
HFC Bank plc England 100%
Hamilton Life Assurance Co. Limited England 100%
Hamilton Insurance Company Limited England 100%
Hamilton Financial Planning Services England 100%
Limited
HFC Pension Plan Limited England 100%
Household Funding Limited England 100%
Household Investments Limited England/Wales 100%
Household Leasing Limited England 100%
Household Management Corporation Limited England/Wales 100%
Household Overseas Limited England 100%
Household International Netherlands, B.V. Netherlands 100%
Household Financial Corporation Limited Ontario 100%
Household Finance Corporation of Canada Canada 100%
Household Realty Corporation Limited Ontario 100%
Household Trust Company Canada 100%
Merchant Retail Services Limited Ontario 100%
Household Mexico, Inc. Delaware 100%
Household Reinsurance Ltd. Bermuda 100%
U:\WP\EMP819\EDGAR\IEX21.WP1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SUMMARY FINANCIAL INFORMATION OF THE COMPANY AND ITS
SUBSIDIARIES IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION
AND FINANCIAL STATEMENTS PREVIOUSLY FILED WITH THE SECURITIES &
EXCHANGE COMMISSION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 457,700
<SECURITIES> 8,693,300
<RECEIVABLES> 22,745,600
<ALLOWANCES> 1,017,000
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 941,700
<DEPRECIATION> 503,100
<TOTAL-ASSETS> 34,973,900
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,153,900
<COMMON> 115,900
0
205,000
<OTHER-SE> 2,515,600
<TOTAL-LIABILITY-AND-EQUITY> 34,973,900
<SALES> 0
<TOTAL-REVENUES> 3,899,800
<CGS> 0
<TOTAL-COSTS> 1,646,500
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 569,700
<INTEREST-EXPENSE> 1,181,600
<INCOME-PRETAX> 502,000
<INCOME-TAX> 181,100
<INCOME-CONTINUING> 320,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320,900
<EPS-PRIMARY> 3.02
<EPS-DILUTED> 3.01
<FN>
<F1>FINANCIAL STATEMENTS OF THE COMPANY WERE PREPARED IN ACCORDANCE WITH
FINANCIAL INSTITUTION INDUSTRY STANDARDS. ACCORDINGLY, THE COMPANY'S
BALANCE SHEETS WERE NON-CLASSIFIED.
</FN>
</TABLE>
