<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1996.
REGISTRATION NOS. 333-03337 AND 333-03337-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
HOUSEHOLD INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT)
DELAWARE 36-3121988
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
HOUSEHOLD CAPITAL TRUST II
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT)
DELAWARE APPLIED FOR
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
847-564-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
PATRICK D. SCHWARTZ, ASSOCIATE GENERAL COUNSEL--CORPORATE FINANCE
HOUSEHOLD INTERNATIONAL, INC.
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
847-564-6301
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
WITH A COPY TO:
(UNDERWRITERS' COUNSEL) JOHN W. BLENKE
SCOTT N. GIERKE VICE PRESIDENT--CORPORATE LAW
MCDERMOTT, WILL & EMERY HOUSEHOLD INTERNATIONAL, INC.
227 WEST MONROE STREET 2700 SANDERS ROAD
CHICAGO, ILLINOIS 60606 PROSPECT HEIGHTS, ILLINOIS 60070
312-984-7521 847-564-6150
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement, as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(2)(3) PRICE(2)(3) FEE(5)
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<S> <C> <C> <C> <C>
Trust Preferred
Securities of Household
Capital Trust II and
Junior Subordinated
Deferrable Interest
Notes of Household
International,
Inc.(1).............. 4,000,000 $25.00 $100,000,000 $34,483.00
Guarantee of Trust
Preferred Securities by
Household
International, Inc. and
certain back-up Preferred
obligations(4) Securities
</TABLE>
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(1) The Junior Subordinated Deferrable Interest Notes will be purchased by and
constitute assets of Household Capital Trust II. No separate consideration
therefor will be received.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(i) and Rule 457(n).
(3) Exclusive of accrued interest and distributions, if any.
(4) Includes the rights of holders of the Preferred Securities under the
Preferred Securities Guarantee and certain back-up undertakings, comprised
of the obligations of Household International to provide certain
indemnities in respect of, and pay and be responsible for certain costs,
expenses, debts and liabilities of the Trust (other than with respect to
the Preferred Securities) and such obligations of Household International
as set forth in the Declaration and the Indenture, in each case as further
described in the Registration Statement. The Preferred Securities
Guarantee, when taken together with Household International's obligations
under the Junior Subordinated Deferrable Interest Notes, the Indenture and
the Declaration, will provide a full and unconditional guarantee on a
subordinated basis by Household International of payments due on the
Preferred Securities. The Guarantee of Trust Preferred Securities referred
to in this table is the Preferred Securities Guarantee described in the
Registration Statement. No separate consideration will be received for the
Guarantee or such back-up obligations.
(5) $344.83 of the filing fee was previously paid.
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 24, 1996
PROSPECTUS
4,000,000 PREFERRED SECURITIES
HOUSEHOLD CAPITAL TRUST II
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
HOUSEHOLD INTERNATIONAL, INC.
-----------
The % Trust Preferred Securities (the "Preferred Securities") offered
hereby evidence preferred undivided beneficial interests in the assets of
Household Capital Trust II, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"). Household International, Inc., a Delaware
corporation ("Household International" or the "Company"), will own all the
common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of the Trust. The Trust exists for the sole purpose of issuing
the Preferred Securities and Common Securities and investing the proceeds
thereof in an equivalent
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES
DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED SECURITIES
MAY BE DEFERRED AND THE RELATED UNITES STATES FEDERAL INCOME TAX CONSEQUENCES
OF SUCH DEFERRAL.
Application will be made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "New York Stock Exchange"). If approved, trading of
the Preferred Securities on the New York Stock Exchange is expected to commence
within a 30 day period after the initial delivery of the Preferred Securities.
See "Underwriting."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSIONS(2) TRUST(3)(4)
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<S> <C> <C> <C>
Per Preferred Security................ $25.00 (3) $25.00
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Total................................. $100,000,000 (3) $100,000,000
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</TABLE>
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(1) Plus accrued distributions, if any, from , 1996.
(2) Household International and the Trust have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in Junior Subordinated Notes, Household
International has agreed to pay to the Underwriters as compensation (the
"Underwriters' Compensation") for their arranging the investment therein of
such proceeds, $ per Preferred Security (or $ in the
aggregate); provided, that such compensation for sales of 10,000 or more
Preferred Securities to a single purchaser will be $ per Preferred
Security. Therefore, to the extent of such sales, the actual amount of
Underwriters Compensation will be less than the aggregate amount specified
in the preceding sentence. See "Underwriting."
(4) Expenses of the offering which are payable by Household International are
estimated to be $275,000.
-----------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in book-
entry form through the facilities of The Depository Trust Company on or about
, 1996.
-----------
SMITH BARNEY INC.
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
, 1996
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
(continued from previous page)
amount of % Junior Subordinated Deferrable Interest Notes due 2036 (the
"Junior Subordinated Notes") of Household International. The Junior
Subordinated Notes will be the unsecured obligations of Household International
and will be
subordinate and junior in right of payment to certain other indebtedness of
Household International, as described herein. In addition, because Household
International is a holding company, its obligations under the Junior
Subordinated Notes will be effectively subordinated to all existing and future
liabilities of its subsidiaries, as described herein. Upon an event of
default under the Declaration (as defined herein), the holders of the Preferred
Securities will have a preference over the holders of the Common Securities
with respect to payments in respect of distributions and payments upon
liquidation, redemption and otherwise.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year commencing September 30, 1996 (the "distributions"). The payment of
distributions out of moneys held by the Trust, and payments on liquidation of
the Trust or the redemption of Preferred Securities, as set forth below, are
guaranteed by Household International (the "Preferred Securities Guarantee") to
the extent the Trust has funds available therefor as described under
"Description of the Preferred Securities Guarantee." The Preferred Securities
Guarantee, when taken together with Household International's obligations under
the Junior Subordinated Notes, the Indenture and the Declaration (each as
defined herein), including its obligations under the Indenture to pay costs,
expenses, debts and liabilities of the Trust (other than with respect to the
Trust Securities), will provide a full and unconditional guarantee of amounts
due on the Preferred Securities. The obligations of Household International
under the Preferred Securities Guarantee are subordinate and junior in right of
payment to all other liabilities of Household International and will be pari
passu with the most senior preferred stock now or hereafter issued by Household
International and with any guarantee now or hereafter issued by Household
International in respect of any preferred security of any affiliate of
Household International. In addition, because Household International is a
holding company, its obligations under the Preferred Securities Guarantee are
effectively subordinated to all existing and future liabilities of its
subsidiaries.
The distribution rate and the distribution and other payment dates for the
Preferred Securities will correspond to the interest rate and interest and
other payment dates on the Junior Subordinated Notes, which will be the sole
assets of the Trust. As a result, if principal or interest is not paid on the
Junior Subordinated Notes, no amounts will be paid on the Preferred Securities.
If Household International does not make principal or interest payments on the
Junior Subordinated Notes, the Trust will not have sufficient funds to make
distributions on the Preferred Securities. In such event the Preferred
Securities Guarantee will not apply to such distributions until the Trust has
sufficient funds available therefor.
Household International has the right to defer payments of interest on the
Junior Subordinated Notes by extending the interest payment period on the
Junior Subordinated Notes, at any time, for up to 20 consecutive quarters
(each, an "Extension Period"), provided that no Extension Period may extend
beyond the maturity of the Junior Subordinated Notes. If interest payments are
so deferred, distributions will also be deferred. Despite such deferral,
distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at an annual rate of % per annum, compounded
quarterly, and during any Extension Period, holders of Preferred Securities
will be required to include deferred interest income in their gross income for
United States federal income tax purposes in advance of receipt of the cash
distributions with respect to such deferred interest payments. There could be
multiple Extension Periods of varying lengths throughout the term of the Junior
Subordinated Notes. See "Description of the Junior Subordinated Notes--Option
to Extend Interest Payment Period," "Investment Considerations--Option to
Extend Interest Payment Period" and "Certain Federal Income Tax Consequences--
Original Issue Discount, Premium and Market Discount."
The Junior Subordinated Notes are redeemable by Household International (in
whole or in part) from time to time, on or after , 2001 or at any time
in certain circumstances upon the occurrence of a Tax Event (as defined
herein). If Household International redeems the Junior Subordinated Notes, the
Trust must redeem Trust Securities having an aggregate liquidation amount equal
to the aggregate principal amount of the Junior Subordinated Notes so redeemed
at $25 per Preferred Security plus accrued and unpaid distributions thereon
(the "Redemption Price") to the date fixed for redemption. See "Description of
the Preferred Securities--Mandatory Redemption." The Preferred Securities will
be redeemed upon maturity of the Junior Subordinated Notes. The Junior
Subordinated Notes mature on , 2036. In addition, upon the occurrence of
a Special Event (as defined herein) arising from a change in law or a change in
legal interpretation, unless the Junior Subordinated Notes are redeemed in the
limited circumstances described herein, the Trust shall be dissolved with the
result that the Junior Subordinated Notes will be distributed to the holders of
the Trust Securities, on a pro rata basis, in lieu of any cash distribution. In
the case of a Special Event that is a Tax Event, Household International will
have the right in certain circumstances to redeem the Junior Subordinated
Notes, which would result in the redemption by the Trust of the Trust
Securities in the same amount on a pro rata basis. If the Junior Subordinated
Notes are distributed to the holders of the Preferred Securities, Household
International will use its best efforts to have the Junior Subordinated Notes
listed on the New York Stock Exchange or on such other exchange as the
Preferred Securities are then listed. See "Description of the Preferred
Securities--Special Event Redemption or Distribution" and "Description of the
Junior Subordinated Notes."
(continued on next page)
--------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
<PAGE>
In the event of the voluntary or involuntary dissolution, winding up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive, for each Preferred Security, a liquidation amount of $25
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless in connection with such dissolution, the Junior
Subordinated Notes are distributed to the holders of the Preferred Securities.
See "Description of the Preferred Securities--Liquidation Distribution Upon
Dissolution."
AVAILABLE INFORMATION
Household International and the Trust have filed with the Securities and
Exchange Commission (the "Commission") a combined registration statement on
Form S-3 (the "Registration Statement", which term encompasses any amendments
thereof) under the Securities Act of 1933, as amended, with respect to the
Junior Subordinated Notes, Preferred Securities and Preferred Securities
Guarantee offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information set forth
in the Registration Statement and the exhibits and schedules thereto to which
reference is hereby made. Statements or extracts presented in this Prospectus
from financial statements, contracts, agreements or other documents included as
an exhibit to the Registration Statement are not necessarily complete. With
respect to each such financial statement, contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is hereby made to
the exhibit for a more complete description of the matter involved.
Household International is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can also be obtained at prescribed rates by writing to
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, reports, proxy statements and other
material concerning Household International can be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005, and the
Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois, 60605 or
by reference to the Web site maintained by the Commission at
(http://www.sec.gov). Although Household International is not required to send
a copy of its latest Annual Report to Shareholders to holders of the Junior
Subordinated Notes, Preferred Securities or Preferred Securities Guarantee,
Household International will, upon request, send to any holder of such
securities a copy of its latest Annual Report to Shareholders, as filed with
the Commission, which contains financial information that has been examined and
reported upon, with an opinion expressed, by independent certified public
accountants.
No separate financial statements of the Trust are included herein as such
statements are not material to holders of the Preferred Securities. The Trust
is currently not subject to the informational reporting requirements of the
Exchange Act. The Trust will become subject to such requirements upon
effectiveness of the Registration Statement of which this Prospectus forms a
part, although it intends to seek and expects to receive an exemption
therefrom.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission (File No. 1-8198)
pursuant to the Exchange Act and are incorporated herein by reference and made
a part of this Prospectus: (a) Household International's Annual Report on Form
10-K for the fiscal year ended December 31, 1995; (b) Household International's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; and (c) Two
Household International Current Reports on Form 8-K, each dated January 25,
1996 and Current Reports on Forms 8-K, dated June 3, June 17 and June 21, 1996.
All documents filed by Household International or the Trust, as the case may
be, with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Junior Subordinated Notes, Preferred
Securities or Preferred Securities Guarantee shall be deemed to be incorporated
herein by reference and made a part of this Prospectus from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
HOUSEHOLD INTERNATIONAL WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM
THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY OR ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE
(WITHOUT EXHIBITS OTHER THAN EXHIBITS SPECIFICALLY INCORPORATED BY REFERENCE).
REQUESTS SHOULD BE DIRECTED TO: HOUSEHOLD INTERNATIONAL, INC., 2700 SANDERS
ROAD, PROSPECT HEIGHTS, ILLINOIS 60070, ATTENTION: OFFICE OF THE SECRETARY,
TELEPHONE: 847-564-6989.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Reference is made
to "Definitions" herein for the location herein of the definitions of certain
capitalized terms used herein.
PREFERRED SECURITIES OFFERED. 4,000,000 % Trust Preferred Securities
evidencing preferred undivided beneficial interests in the assets of the Trust.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year commencing on September 30, 1996. The distribution rate and the
distribution and other payment dates for the Preferred Securities will
correspond to the interest rate and interest and other payment dates on the
Junior Subordinated Notes, which will be the sole assets of the Trust. As a
result, if principal or interest is not paid on the Junior Subordinated Notes,
no amounts will be paid on the Preferred Securities. See "Description of the
Preferred Securities" herein.
JUNIOR SUBORDINATED NOTES. The Trust will invest the proceeds from the
issuance of the Preferred Securities and Common Securities in an equivalent
amount of % Junior Subordinated Deferrable Interest Notes due 2036 of
Household International. The Junior Subordinated Notes will be subordinate and
junior in right of payment to all Senior Indebtedness of Household
International. In addition, because Household International is a holding
company, its obligations under the Junior Subordinated Notes will be
effectively subordinated to all existing and future liabilities of its
subsidiaries. See "Description of the Junior Subordinated Notes--Subordination"
herein.
PREFERRED SECURITIES GUARANTEE. Payment of distributions out of moneys held
by the Trust, and payments on liquidation of the Trust or the redemption of
Preferred Securities are guaranteed by Household International to the extent
the Trust has funds available therefor. If Household International does not
make principal or interest payments on the Junior Subordinated Notes, the Trust
will not have sufficient funds to make distributions on the Preferred
Securities, in which event the Preferred Securities Guarantee will not apply to
such distributions until the Trust has sufficient funds available therefor. See
"Description of the Preferred Securities Guarantee" and "Effect of Obligations
under the Junior Subordinated Notes and the Preferred Securities Guarantee"
herein. The obligations of Household International under the Preferred
Securities Guarantee are subordinate and junior in right of payment to all
other liabilities of Household International and will be pari passu with the
most senior preferred stock now or hereafter issued by Household International
and with any guarantee now or hereafter issued by Household International in
respect of any preferred security of any affiliate of Household International.
In addition, because Household International is a holding company, its
obligations under the Preferred Securities Guarantee are effectively
subordinated to all existing and future liabilities of its subsidiaries. The
Preferred Securities Guarantee, when taken together with Household
International's obligations under the Junior Subordinated Notes, the Indenture
and the Declaration, including its obligations to pay costs, expenses, debts
and liabilities of the Trust (other than with respect to the Trust Securities),
will provide a full and unconditional guarantee of amounts due on the Preferred
Securities. See "Risk Factors--Ranking of Preferred Securities Guarantee and
Junior Subordinated Notes" and "Description of the Preferred Securities
Guarantee" herein.
OPTION TO EXTEND INTEREST PAYMENT PERIOD. Household International has the
right to defer payments of interest on the Junior Subordinated Notes by
extending the interest payment period on the Junior Subordinated Notes, at any
time, for up to 20 consecutive quarters. If interest payments on the Junior
Subordinated Notes are so deferred, distributions on the Preferred Securities
will also be deferred. During any deferral, distributions will continue to
accrue with interest thereon (to the extent permitted by law) as described
herein. There could be multiple Extension Periods of varying lengths throughout
the term of the Junior Subordinated Notes. During an Extension Period, holders
of Preferred Securities will be required to include deferred interest income in
their gross income in advance of receipt of the cash distributions attributable
thereto. See "Description of the Junior Subordinated Notes--Option to Extend
Interest Payment Period" and "Certain Federal Income Tax Consequences--Original
Issue Discount Premium and Market Discount."
4
<PAGE>
REDEMPTION. The Junior Subordinated Notes are redeemable by Household
International (in whole or in part) from time to time, on or after ,
2001, or at any time upon the occurrence of a Tax Event. If the Junior
Subordinated Notes are redeemed, the Trust must redeem Trust Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Notes so redeemed. The Preferred Securities will be
redeemed upon maturity of the Junior Subordinated Notes which will occur on
, 2036. See "Description of the Preferred Securities--Mandatory
Redemption."
VOTING RIGHTS. Generally, the holders of the Preferred Securities will not
have any voting rights. Subject to certain conditions, the holders of a
majority in aggregate liquidation amount of the Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee, or to direct the exercise of any
trust or power conferred upon the Property Trustee under the Declaration
including the right to direct the Property Trustee, as holder of the Junior
Subordinated Notes, to (i) direct the time, method or place of conducting any
proceeding for any remedy available to the Indenture Trustee or exercise any
trust or power conferred on the Debt Trustee with respect to the Junior
Subordinated Notes, (ii) waive any past Indenture Event of Default that is
available under the Indenture (as defined herein), (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior
Subordinated Notes shall be due any payable, or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated Notes
where such consent shall be required; provided, however, that, where a consent
or action under the Indenture would require the consent or act of a Super
Majority (as defined herein) of holders of the Junior Subordinated Notes
affected thereby, only the holders of at least such Super Majority in aggregate
liquidation amount of the Preferred Securities may direct the Property Trustee
to give such consent or take such action. See "Description of the Preferred
Securities--Voting Rights."
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters:
SUBORDINATION OF PREFERRED SECURITIES GUARANTEE AND JUNIOR SUBORDINATED NOTES
Household International's obligations under the Preferred Securities
Guarantee are subordinate and junior in right of payment to all liabilities of
Household International and will be pari passu with the most senior preferred
stock now or hereafter issued by Household International and with any guarantee
now or hereafter issued by Household International in respect of any preferred
securities of any affiliate of Household International. The obligations of
Household International under the Junior Subordinated Notes are subordinate and
junior in right of payment to all present and future Senior Indebtedness (as
defined herein) of Household International. At March 31, 1996 Senior
Indebtedness of Household International aggregated approximately $2.4 billion.
In addition, because Household International is a holding company, its
obligations under the Preferred Securities Guarantee and the Junior
Subordinated Notes will be effectively subordinated to all existing and future
liabilities of its subsidiaries. At March 31, 1996, such subsidiaries had total
liabilities of approximately $22.6 billion. There are no terms in the Preferred
Securities, the Junior Subordinated Notes or the Preferred Securities Guarantee
that limit Household International's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Junior Subordinated Notes or
the Preferred Securities Guarantee. See "Description of the Preferred
Securities Guarantee" and "Description of the Junior Subordinated Notes--
Subordination."
LIMITATION OF RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee guarantees to the holders of the Preferred
Securities the payment of (i) any accrued and unpaid distributions which are
required to be paid on the Preferred Securities, to the extent the Trust shall
have funds available therefor, (ii) the Redemption Price, including all accrued
and unpaid distributions with respect to Preferred Securities called for
redemption by the Trust, to the extent the Trust has funds available therefor
and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (other than in connection with the distribution of
Junior Subordinated Notes to the
5
<PAGE>
holders of Preferred Securities or a redemption of all of the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds available therefor and (b) the
amount of assets of the Trust remaining available for distribution to holders
of the Preferred Securities in liquidation of the Trust. The holders of a
majority in liquidation amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee (as defined herein) or to direct
the exercise of any trust or power conferred upon the Preferred Guarantee
Trustee under the Preferred Securities Guarantee. Any holder of Preferred
Securities may institute a legal proceeding directly against Household
International to enforce such holder's rights under the Preferred Securities
Guarantee, without first instituting a legal proceeding against the Trust, the
Preferred Guarantee Trustee or any other person or entity. If Household
International were to default in its obligation to pay amounts payable on the
Junior Subordinated Notes, the Trust would lack available funds for the payment
of distributions or amounts payable on redemption of the Preferred Securities
or otherwise, and in such event holders of the Preferred Securities would not
be able to rely upon the Preferred Securities Guarantee for payment of such
amounts. Instead, holders of the Preferred Securities would rely on the
enforcement by the Property Trustee (as defined herein) of its rights as
registered holder of the Junior Subordinated Notes against Household
International pursuant to the terms of the Junior Subordinated Notes and may
also vote to appoint a Special Regular Trustee (as defined herein), who shall
have the same rights, powers and privileges as the other Regular Trustees (as
defined herein). If the Property Trustee fails to enforce its rights under the
Junior Subordinated Notes, a holder of Preferred Securities may institute a
legal proceeding directly against Household International to enforce the
Property Trustee's rights under the Junior Subordinated Notes without first
instituting any legal proceeding against the Property Trustee or any other
person or entity, including the Trust. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of Household International to pay interest or
principal on the Junior Subordinated Notes on the date such interest or
principal is otherwise payable (or in the case of redemption, the redemption
date), then a holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
interest on the Junior Subordinated Notes having a principal amount equal to
the aggregate liquidation amount of the Preferred Securities of such holder on
or after the respective due date specified in the Junior Subordinated Notes.
See "Description of the Preferred Securities Guarantee--Events of Default" and
"--Status of the Preferred Securities Guarantee" and "Description of the Junior
Subordinated Notes--Subordination." The Declaration (as defined herein)
provides that each holder of Preferred Securities by acceptance thereof agrees
to the provisions of the Preferred Securities Guarantee and the Indenture (as
defined herein).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If (i) the Trust fails to pay distributions in full on the Preferred
Securities for six consecutive quarterly distribution periods, or (ii) a
Declaration Event of Default (as defined herein) occurs and is continuing, then
the holders of Preferred Securities would rely on the enforcement by the
Property Trustee of its rights as a holder of the Junior Subordinated Notes
against Household International. In addition, the holders of a majority in
aggregate liquidation amount of the Preferred Securities will have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including the
right to direct the Property Trustee to exercise the remedies available to it
as a holder of the Junior Subordinated Notes. If the Property Trustee fails to
enforce its rights under the Junior Subordinated Notes, a holder of Preferred
Securities may institute a legal proceeding directly against Household
International to enforce the Property Trustee's rights under the Junior
Subordinated Notes without first instituting any legal proceeding against the
Property Trustee or any other person or entity, including the Trust.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Household
International to pay interest or principal on the Junior Subordinated Notes on
the date such interest or principal is otherwise payable (or in the case of
redemption, the redemption date), then a holder of Preferred Securities may
directly institute a proceeding for enforcement of payment to such
6
<PAGE>
holder of the principal of or interest on the Junior Subordinated Notes having
a principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Notes. Upon the occurrence of any of the events described
in clauses (i) or (ii) above, the holders of the Preferred Securities also will
be entitled, by majority vote, to appoint a Special Regular Trustee, who shall
have the same rights, powers and privileges as the other Regular Trustees.
POSSIBLE ADVERSE EFFECTS FROM EXTENSION OF INTEREST PAYMENT PERIOD
Household International has the right under the Indenture to defer payments
of interest on the Junior Subordinated Notes by extending the interest payment
period at any time, and from time to time, on the Junior Subordinated Notes. As
a consequence of such an extension, quarterly distributions on the Preferred
Securities would be deferred (but despite such deferral would continue to
accrue with interest thereon compounded quarterly) by the Trust during any such
extended interest payment period. Such right to extend the interest payment
period for the Junior Subordinated Notes is limited to a period not exceeding
20 consecutive quarters. In the event that Household International exercises
this right to defer payments of interest, then (a) Household International
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
its capital stock (other than (i) repurchases, redemptions or other
acquisitions of shares of capital stock of Household International in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of Household International's capital stock for any other class or series
of Household International's capital stock, or (iii) the purchase of fractional
interests in shares of Household International's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) Household International shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by Household
International which rank pari passu with or junior to the Junior Subordinated
Notes. The foregoing, however, will not apply to any stock dividends paid by
Household International where the dividend stock is the same stock as that on
which the dividend is being paid. Prior to the termination of any such
Extension Period, Household International may further defer payments of
interest by extending the interest payment period, provided that such Extension
Period, together with all such previous and further extensions thereof, may not
exceed 20 consecutive quarters and provided further that no Extension Period
may extend beyond the maturity of the Junior Subordinated Notes. Upon the
termination of any Extension Period and the payment of all amounts then due,
Household International may select a new Extension Period, subject to the above
requirements. See "Description of the Preferred Securities--Distributions" and
"Description of the Junior Subordinated Notes--Option to Extend Interest
Payment Period."
Should Household International exercise its rights to defer payments of
interest by extending the interest payment period, each holder of Preferred
Securities will continue to accrue income (as original issue discount) for
United States federal income tax purposes in respect of the deferred interest
allocable to its Preferred Securities, which will be allocated but not
distributed, to holders of record of Preferred Securities. As a result, holders
of Preferred Securities will recognize income for United States federal income
tax purposes in advance of the receipt of cash and will not receive the cash
from the Trust related to such income if such holder disposes of its Preferred
Securities prior to the record date for the date on which distributions of such
amounts are made. Household International has no current intention of
exercising its right to defer payments of interest by extending the interest
payment period on the Junior Subordinated Notes. However, should Household
International determine to exercise such right in the future, the market price
of the Preferred Securities is likely to be affected. A holder that disposes of
its Preferred Securities during an Extension Period, therefore, might not
receive the same return on its investment as a holder that continues to hold
its Preferred Securities. In addition, as a result of the existence of
Household International's right to defer interest payments, the market price of
the Preferred Securities (which represent an undivided beneficial interest in
the Junior Subordinated Notes) may be more volatile than other securities on
which original issue discount accrues that do not have such rights. See
"Certain Federal Income Tax Consequences--Original Issue Discount, Premium and
Market Discount."
7
<PAGE>
EFFECT OF SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event, the Trust shall be dissolved, except
in the limited circumstances described below, with the result that the Junior
Subordinated Notes would be distributed to the holders of the Trust Securities
in connection with the liquidation of the Trust. In the case of a Special Event
that is a Tax Event, in certain circumstances Household International shall
have the right to redeem the Junior Subordinated Notes, in whole or in part, in
which event the Trust will redeem the Trust Securities on a pro rata basis to
the same extent as the Junior Subordinated Notes are redeemed. See "Description
of the Preferred Securities--Special Event Redemption or Distribution" and
"Certain Federal Income Tax Consequences."
Under current United States federal income tax law, a distribution of Junior
Subordinated Notes upon the dissolution of the Trust would not be a taxable
event to holders of the Preferred Securities. Upon the occurrence of a Tax
Event, however, a dissolution of the Trust in which holders of the Preferred
Securities receive cash would be a taxable event to such holders. See "Certain
Federal Income Tax Consequences--Receipt of Junior Subordinated Notes Upon
Liquidation of the Trust."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Notes that may be distributed in exchange
for Preferred Securities if a dissolution or liquidation of the Trust were to
occur. Accordingly, the Preferred Securities that an investor may purchase, or
the Junior Subordinated Notes that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Junior Subordinated Notes upon the
occurrence of a Special Event, prospective purchasers of Preferred Securities
are also making an investment decision with regard to the Junior Subordinated
Notes and should carefully review all the information regarding the Junior
Subordinated Notes contained herein. See "Description of the Preferred
Securities--Special Event Redemption or Distribution" and "Description of the
Junior Subordinated Notes."
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes (the
"Proposed Legislation") that would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain debt
obligations, such as the Junior Subordinated Notes, issued on or after December
7, 1995. On March 29, 1996, Senate Finance Committee Chairman William V. Roth,
Jr. and House Ways and Means Committee Chairman Bill Archer issued a joint
statement (the "Joint Statement") indicating their intent that the Proposed
Legislation, if adopted by either of the tax-writing committees of Congress,
would have an effective date that is no earlier than the date of "appropriate
congressional action." Based upon the Joint Statement, it is expected that if
the Proposed Legislation were to be enacted, such legislation would not apply
to the Junior Subordinated Notes. There can be no assurance, however, that the
effective date guidance contained in the Joint Statement will be incorporated
into the Proposed Legislation, if enacted, or that other legislation enacted
after the date hereof will not otherwise adversely affect the ability of
Household International to deduct the interest payable on the Junior
Subordinated Notes. Accordingly, there can be no assurance that a Tax Event
will not occur. The occurrence of a Tax Event may, among other things, result
in a dissolution of the Trust in which holders of the Preferred Securities may
receive cash, which would be a taxable event to such holders. See "--Special
Event Redemption or Distribution" and "Description of the Preferred
Securities--Special Event Redemption or Distribution."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, except
for the rights of holders of Preferred Securities to appoint a Special Regular
Trustee upon the occurrence of certain events described herein, will not be
entitled to vote to appoint, remove or replace, or to increase or decrease the
number of, Household International Trustees (as defined herein), which voting
rights are vested exclusively in the holder of the Common Securities. See
"Description of the Preferred Securities--Voting Rights."
8
<PAGE>
TRADING PRICE OF PREFERRED SECURITIES--TAX CONSEQUENCES UPON DISPOSITION
The Preferred Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Notes. A holder who disposes of his Preferred Securities between
record dates for payments of distributions thereon will be required to include
accrued but unpaid interest on the Junior Subordinated Notes through the date
of disposition in income as ordinary income (i.e., OID, as defined herein), and
to add such amount to his adjusted tax basis in his pro rata share of the
underlying Junior Subordinated Notes deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences--Original Issue
Discount, Premium and Market Discount" and "--Sales of Preferred Securities."
HOUSEHOLD INTERNATIONAL
Household International was formed in 1981 as a holding company for various
subsidiaries which operated in the financial services, manufacturing,
transportation and merchandising industries. In 1985 the Company initiated a
restructuring program that has resulted in the disposition of its
merchandising, transportation and manufacturing businesses. This has enabled
the Company to focus its resources in the financial services industry. The
Company's principal executive office is located at 2700 Sanders Road, Prospect
Heights, Illinois 60070 (telephone: 847-564-5000).
Through subsidiaries, such as Household Finance Corporation ("HFC"),
Household Bank, f.s.b., Household Retail Services, Inc., Household Bank
(Nevada), National Association, Household Financial Corporation Limited, and
HFC Bank plc, the Company offers numerous consumer finance products, including
home equity credit lines, revolving and closed-end unsecured personal loans,
private label credit cards, and VISA* and MasterCard* credit cards. Also, in
conjunction with its consumer finance business, and where applicable laws
permit, the Company makes credit life, credit accident and health, and
household
contents insurance available to its customers. This insurance is generally
directly written by or reinsured with one of its insurance subsidiaries.
The Company has included its ongoing commercial finance operations in the
finance and banking segment. These operations are generally administered by
Household Commercial Financial Services, Inc. ("Household Commercial"), a
subsidiary of HFC. Products offered by Household Commercial include loan and
lease financing to businesses for capital equipment, including aircraft and
other transportation equipment, and specialized secured corporate loans. In
addition, Household Commercial also invests in publicly issued or privately
placed term preferred stocks of unaffiliated entities.
Household International is principally a holding company whose primary source
of funds is dividends from its subsidiaries. Dividend distributions to the
Company from its savings and loan, banking and insurance subsidiaries may be
restricted by federal and state laws and regulations. Dividend distributions
from its foreign subsidiaries may also be restricted by exchange controls of
the country in which the subsidiary is located. Also, as a holding company the
rights of any creditors or stockholders of Household International to
participate in the assets of any subsidiary upon the latter's liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors, except to the extent that the Company may itself be a creditor with
recognized claims against the subsidiary. Nevertheless, there are no
restrictions that currently materially limit the Company's ability to make
payments to its creditors or to pay dividends on its preferred stock or common
stock at current levels nor are there any restrictions which Household
International reasonably believes are likely to limit materially such payments
in the future.
- --------
*VISA and MasterCard are registered trademarks of VISA, USA, Inc. and
MasterCard International Incorporated, respectively.
9
<PAGE>
HOUSEHOLD CAPITAL TRUST II
The Trust is a statutory business trust formed under Delaware law pursuant to
the filing of a certificate of trust with the Delaware Secretary of State on
May 7, 1996. The Trust's business is defined in a Declaration of Trust,
executed by Household International, as Sponsor (the "Sponsor") and the
Household International Trustees (as defined herein). The Declaration of Trust
will be amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The Declaration
will be qualified as an indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Upon issuance of the Preferred Securities,
the purchasers thereof will own all of the Preferred Securities. Household
International will acquire all of the Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Trust. The Trust
exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in the Junior Subordinated
Notes and (iii) engaging in only those other activities necessary or incidental
thereto. The Trust has a term of approximately 55 years, but may terminate
earlier as provided in the Declaration.
The Trust's business and affairs will be conducted by the trustees (the
"Household International Trustees") appointed by Household International, as
holder of the Common Securities. The duties and obligations of the Household
International Trustees shall be governed by the Declaration. Pursuant to the
Declaration, the number of Household International Trustees will initially be
three. Two of the Household International Trustees (the "Regular Trustees")
will be persons who are employees or officers of, or affiliated with Household
International. The third trustee will be a financial institution which
maintains a principal place of business in the State of Delaware which is
unaffiliated with Household International that will serve as property trustee
under the Declaration and as indenture trustee for purposes of the Trust
Indenture Act (the "Property Trustee"). Wilmington Trust Company will act as
the Property Trustee until removed or replaced by the holder of the Common
Securities. Wilmington Trust Company will also act as indenture trustee under
the Preferred Securities Guarantee (the "Preferred Guarantee Trustee"). See
"Description of the Preferred Securities Guarantee." In certain circumstances,
the holders of a majority of the Preferred Securities will be entitled to
appoint one Regular Trustee (a "Special Regular Trustee"), who need not be an
officer or employee of, or otherwise affiliated with, Household International.
See "Description of the Preferred Securities--Voting Rights."
The Property Trustee will hold title to the Junior Subordinated Notes for the
benefit of the holders of the Trust Securities and will have the power to
exercise all rights, powers and privileges under the Indenture (as defined
herein) as the holder of the Junior Subordinated Notes. In addition, the
Property Trustee will maintain exclusive control of a segregated non-interest
bearing bank account (the "Property Account") to hold all payments made in
respect of the Junior Subordinated Notes for the benefit of the holders of
Trust Securities. The Property Trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Account. The Preferred Guarantee
Trustee will hold the Preferred Securities Guarantee for the benefit of the
holders of the Preferred Securities. Subject to the right of the holders of the
Preferred Securities to appoint a Special Regular Trustee, Household
International, as the holder of all the Common Securities, will have the right
to appoint, remove or replace any Household International Trustee and to
increase the number of Household International Trustees, provided that the
number of Household International Trustees shall be at least three, a majority
of which shall be Regular Trustees. Household International will pay all fees
and expenses related to the Trust and the offering of the Trust Securities. See
"Description of the Junior Subordinated Notes--Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are as set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
The Trust's registered office in the State of Delaware is c/o Wilmington
Trust Company, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890. The principal place of business of the Trust shall be c/o
Household International, 2700 Sanders Road, Prospect Heights, Illinois 60070
(telephone number (847) 564-6150).
10
<PAGE>
SELECTED FINANCIAL INFORMATION
The financial information which is set forth below for the three years ended
December 31, 1995 has been derived from the financial statements of Household
International which have been audited by Arthur Andersen LLP, independent
certified public accountants. All financial information of Household
International and subsidiaries presented below should be read in conjunction
with the detailed financial statements included in documents on file with the
Commission and listed under "Incorporation of Certain Documents by Reference"
in this Prospectus. The results of operations of Household International and
subsidiaries for the three month period ended March 31, 1996 and 1995 reflect
all adjustments of a normal recurring nature which are, in the opinion of
Household International's management, necessary for a fair statement of the
results for the interim period and such results are not necessarily indicative
of the results of operations that may be expected for the entire year. In
addition, certain prior period amounts have been reclassified to conform with
the current period's presentation. All dollar amounts stated below are in
millions.
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------- --------------------------
1996 1995 1995 1994 1993
------ ------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Finance income...................... $679.5 $681.7 $2,878.8 $2,642.3 $2,561.4
Interest income from noninsurance
investment securities.............. 20.3 36.3 123.4 131.9 129.3
Interest expense.................... 353.4 377.4 1,557.1 1,242.7 1,149.5
------ ------ -------- -------- --------
Net interest margin................. 346.4 340.6 1,445.1 1,531.5 1,541.2
Provision for credit losses on owned
receivables........................ 191.3 164.3 761.3 606.8 735.8
------ ------ -------- -------- --------
Net interest margin after provision
for credit losses.................. 155.1 176.3 683.8 924.7 805.4
------ ------ -------- -------- --------
Securitization income............... 279.4 212.8 873.6 655.5 436.0
Insurance premiums and contract
revenues........................... 63.9 87.7 322.1 282.0 288.3
Investment income................... 56.9 139.8 470.2 514.4 574.0
Fee income.......................... 49.9 46.8 196.4 250.5 292.6
Other income........................ 25.3 40.9 279.9 126.7 172.9
------ ------ -------- -------- --------
Total other revenues................ 475.4 528.0 2,142.2 1,829.1 1,763.8
------ ------ -------- -------- --------
Salaries and fringe benefits........ 131.7 145.8 545.6 656.6 615.4
Occupancy and equipment expense..... 52.4 59.6 222.1 243.4 225.3
Other marketing expenses............ 100.4 91.8 359.5 327.4 228.5
Other servicing and administrative
expenses........................... 110.8 123.3 470.6 533.7 510.2
Policyholders' benefits............. 73.2 140.2 474.5 464.4 539.1
------ ------ -------- -------- --------
Total costs and expenses............ 468.5 560.7 2,072.3 2,225.5 2,118.5
------ ------ -------- -------- --------
Income before income taxes.......... 162.0 143.6 753.7 528.3 450.7
Income taxes........................ 51.5 47.6 300.5 160.7 152.0
------ ------ -------- -------- --------
Net income.......................... $110.5 $ 96.0 $ 453.2 $ 367.6 $ 298.7
====== ====== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(UNAUDITED) -----------------------------
MARCH 31, 1996 1995 1994 1993
-------------- --------- --------- ---------
<S> <C> <C> <C> <C>
PERIOD END BALANCE SHEET DATA:
Total assets.................... $27,892.2 $29,218.8 $34,338.4 $32,961.5
Total debt...................... 21,002.5 22,596.1 23,085.2 22,272.0
Deposits(1)..................... 4,766.5 4,708.8 8,439.0 7,516.1
Company obligated mandatorily
redeemable preferred securities
of subsidiary trust............ 75.0 75.0 -- --
Convertible preferred stock
subject to mandatory
redemption..................... -- -- 2.6 19.3
Preferred stock................. 205.0 205.0 320.0 320.0
Common shareholders' equity..... 2,700.9 2,690.9 2,200.4 2,078.3
</TABLE>
- --------
(1) On April 15, 1996 Household Bank, f.s.b. agreed to sell its remaining
retail branch network and related deposits. This sale is expected to be
consummated in the third quarter of 1996. As a result of this transaction,
approximately $2.9 billion of deposit liabilities will be replaced with an
increase in short- and long-term borrowings.
11
<PAGE>
CAPITALIZATION OF HOUSEHOLD INTERNATIONAL
The following table sets forth the unaudited consolidated capitalization of
Household International at March 31, 1996, and as adjusted to reflect the
application of the estimated net proceeds from the sale of the Preferred
Securities. See "Use of Proceeds." The table should be read in conjunction with
Household International's consolidated financial statements and notes thereto
included in the documents incorporated by reference herein. See "Incorporation
of Certain Documents by Reference."
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------
ACTUAL PRO FORMA
--------- ---------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Short-term borrowings...................................... $ 4,616.5 $ 4,516.5
========= =========
Deposits(1)................................................ $ 4,766.5 $ 4,766.5
========= =========
Long-term borrowings....................................... $11,619.5 $11,619.5
Company obligated mandatorily redeemable preferred
securities of subsidiary trust(2)......................... 75.0 175.0
Preferred stock............................................ 205.0 205.0
Common shareholders' equity................................ 2,700.9 2,700.9
--------- ---------
Common and preferred shareholders' equity.................. $ 2,905.9 $ 2,905.9
--------- ---------
Total capitalization....................................... $14,600.4 $14,700.4
========= =========
</TABLE>
- --------
(1) On April 15, 1996 Household Bank, f.s.b. agreed to sell its remaining
retail branch network and related deposits. This sale is expected to be
consummated in the second quarter of 1996. As a result of this transaction,
approximately $2.9 billion of deposit liabilities will be replaced with an
increase in short- and long-term borrowings.
(2) As described in this Prospectus, the sole asset of the Trust will be the
$ of % Junior Subordinated Deferrable Interest Notes due 2036
issued by Household International.
RATIOS OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for Household International and
subsidiaries for the periods indicated below was as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------- ------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges....... 1.45 1.37 1.47 1.41 1.38 1.19 1.10
</TABLE>
For purposes of calculating the above ratios, earnings consist of income from
continuing operations to which has been added income taxes and fixed charges.
Fixed charges consist of interest on all indebtedness (including capitalized
interest) and one-third of rental expense (approximate portion representing
interest).
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with Household
International's financial statements, with the Preferred Securities shown as
"Company obligated mandatorily redeemable preferred securities of subsidiary
trust."
USE OF PROCEEDS
The proceeds of the sale of the Preferred Securities will be invested by the
Trust in the Junior Subordinated Notes of Household International. Household
International will use the net proceeds from the sale of such Junior
Subordinated Notes for the reduction of short-term indebtedness incurred in the
normal and ordinary course of its business, and for other general corporate
purposes.
12
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee will act as the indenture trustee for
purposes of compliance with the provisions of the Trust Indenture Act. The
terms of the Preferred Securities will include those stated in the Declaration
and those made part of the Declaration by the Trust Indenture Act. The
following summary of the principal terms and provisions of the Preferred
Securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Declaration, a copy of which is filed as an
exhibit to the Registration Statement, of which this Prospectus is a part, the
Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees, on behalf of the Trust, to
issue the Preferred Securities, which represent preferred undivided beneficial
interests in the assets of the Trust, and the Common Securities, which
represent common undivided beneficial interests in the assets of the Trust. All
of the Common Securities will be owned by Household International. The Common
Securities rank pari passu, and payments will be made thereon on a pro rata
basis with the Preferred Securities, except that upon the occurrence of a
Declaration Event of Default, the rights of the holders of the Common
Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Preferred Securities. The Declaration does not permit the
issuance by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Pursuant to the Declaration, the
Property Trustee will own and hold the Junior Subordinated Notes for the
benefit of the holders of the Trust Securities. The payment of distributions
out of money held by the Trust, and payments upon redemption of the Preferred
Securities or liquidation of the Trust, are guaranteed by Household
International on a subordinated basis as and to the extent described under
"Description of the Preferred Securities Guarantee." The Preferred Guarantee
Trustee will hold the Preferred Securities Guarantee for the benefit of the
holders of the Preferred Securities. The Preferred Securities Guarantee does
not cover payment of distributions on the Preferred Securities when the Trust
does not have sufficient available funds in the Property Account to make such
distributions. In such event, the remedy of a holder of Preferred Securities is
to (i) vote to appoint a Special Regular Trustee, (ii) to direct the Property
Trustee to enforce its rights under the Junior Subordinated Notes or (iii) if
the failure of the Trust to pay distributions is attributable to the failure of
Household International to pay interest or principal on the Junior Subordinated
Notes, institute a proceeding directly against Household International for
enforcement of payment to such holder of the principal or interest on the
Junior Subordinated Notes having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder on or after the
respective due date specified in the Junior Subordinated Notes. See
"'Description of the Preferred Securities--Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon
at the rate per annum of % thereof. The term "distributions" as used herein
includes any such interest payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1996 and will be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year to the holders of record on the
applicable record date, commencing September 30, 1996 when, as and if available
for payment by the Property Trustee, except as otherwise described below.
Household International has the right under the Indenture to defer payments
of interest on the Junior Subordinated Notes by extending the interest payment
period from time to time on the Junior Subordinated Notes (each, an "Extension
Period") which, if exercised, would defer quarterly distributions on the
Preferred Securities (though such distributions would continue to accrue
interest since interest would continue to accrue
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on the Junior Subordinated Notes) during any such extended interest payment
period. In the event that Household International exercises this right, then
(a) Household International shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock (other than (i) repurchases,
redemptions or other acquisitions of shares of capital stock of Household
International in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors
or consultants, (ii) as a result of an exchange or conversion of any class or
series of Household International's capital stock for any other class or series
of Household International's capital stock, or (iii) the purchase of fractional
interests in shares of Household International's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) Household International shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by Household
International which rank pari passu with or junior to the Junior Subordinated
Notes. The foregoing, however, will not apply to any stock dividends paid by
Household International where the dividend stock is the same stock as that on
which the dividend is being paid. Prior to the termination of any such
Extension Period, Household International may further extend the interest
payment period, provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive quarters
and provided further that no Extension Period may extend beyond the maturity of
the Junior Subordinated Notes. Upon the termination of any Extension Period and
the payment of all amounts then due, Household International may select a new
Extension Period as if no Extension Period had previously been declared,
subject to the above requirements. See "Description of the Junior Subordinated
Notes--Interest" and "--Option to Extend Interest Payment Period." If
distributions are deferred, the deferred distributions and accrued interest
thereon shall be paid to holders of record of the Preferred Securities, if
funds are available therefor, as they appear on the books and records of the
Trust on the record date next following the termination of such Extension
Period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Junior Subordinated Notes. See "Description of the
Junior Subordinated Notes." The payment of distributions out of moneys held by
the Trust is guaranteed by Household International to the extent set forth
under "Description of the Preferred Securities Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day (as defined herein) prior to the relevant
payment dates. Such distributions will be paid through the Property Trustee,
who will hold amounts received in respect of the Junior Subordinated Notes in
the Property Account for the benefit of the holders of the Trust Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment will be made as described under "--Book-Entry
Only Issuance--The Depository Trust Company" below. In the event the Preferred
Securities shall not continue to remain in book-entry only form, the Regular
Trustees shall have the right to select record dates which shall be more than
one Business Day, but less than 30 Business Days prior to the relevant payment
dates. In the event that any date on which distributions are to be made on the
Preferred Securities is not a Business Day, then payment of the distributions
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. A "Business
Day" shall mean any day other than Saturday, Sunday or any day on which banking
institutions in Chicago, Illinois, New York, New York, or the State of Delaware
are authorized or required by law to close.
MANDATORY REDEMPTION
The Junior Subordinated Notes will mature on , 2036, and may be
redeemed, in whole or in part, at any time on or after , 2001, or at any
time, in whole or in part, in certain circumstances upon the
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occurrence of a Tax Event. Upon the repayment of the Junior Subordinated Notes,
whether at maturity or upon redemption, the proceeds from such repayment or
payment shall simultaneously be applied to redeem Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Notes so repaid or redeemed at the Redemption Price;
provided that holders of Trust Securities shall be given not less than 30 nor
more than 60 days notice of such redemption. See "Description of the Junior
Subordinated Notes." In the event that fewer than all of the outstanding
Preferred Securities are to be redeemed, the Preferred Securities will be
redeemed as described under "--Book-Entry Only Issuance--The Depository Trust
Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
from independent tax counsel experienced in such matters (a "Dissolution Tax
Opinion") to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations, there is more than
an insubstantial risk that (i) the Trust would be subject to United States
federal income tax with respect to income accrued or received on the Junior
Subordinated Notes, (ii) interest payable to the Trust on the Junior
Subordinated Notes would not be deductible, in whole or in part, by Household
International for United States federal income tax purposes or (iii) the Trust
would be subject to more than a de minimis amount of other taxes, duties or
other governmental charges, which change or amendment becomes effective on or
after the date of this Prospectus.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel to the effect that, as a result of
the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" which is required to be registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus.
If, at any time, a Tax Event or an Investment Company Event (each, as defined
above, a "Special Event") shall occur and be continuing, the Trust shall,
except in the circumstances described below, be dissolved with the result that
Junior Subordinated Notes with an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Trust Securities would be distributed to the
holders of the Trust Securities, in liquidation of such holders' interests in
the Trust on a pro rata basis, within 90 days following the occurrence of such
Special Event; provided, however, that in the case of the occurrence of a Tax
Event, as a condition of such dissolution and distribution, the Regular
Trustees shall have received an opinion from independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may
rely on published revenue rulings of the Internal Revenue Service, to the
effect that the holders of the Trust Securities will not recognize any gain or
loss for United States federal income tax purposes as a result of such
dissolution and distribution of Junior Subordinated Notes; and, provided,
further, that, if at the time there is available to the Trust the opportunity
to eliminate, within such 90 day period, the Special Event by taking some
ministerial action, such as filing a form or making an election, or pursuing
some other similar reasonable measure, which has no adverse effect on the
Trust, Household International or the holders of the Trust Securities, the
Trust will pursue such measure in lieu of dissolution. Furthermore, if in the
case of the occurrence of a Tax Event, (i) Household International has received
an opinion (a "Redemption Tax Opinion") from independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more
than an insubstantial risk that Household International would be precluded from
deducting the interest on the Junior Subordinated Notes for United States
federal income tax purposes even after the Junior Subordinated Notes were
distributed to the holders of Trust Securities in liquidation of such holders'
interests
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in the Trust as described above or (ii) the Regular Trustees shall have been
informed by such tax counsel that a No Recognition Opinion cannot be delivered,
Household International shall have the right, upon not less than 30 nor more
than 60 days notice, to redeem the Junior Subordinated Notes in whole or in
part for cash within 90 days following the occurrence of such Tax Event, and,
following such redemption, Trust Securities with an aggregate liquidation
amount equal to the aggregate principal amount of the Junior Subordinated Notes
so redeemed shall be redeemed by the Trust at the Redemption Price on a pro
rata basis; provided, however, that, if at the time there is available to
Household International or the Trust the opportunity to eliminate, within such
90 day period, the Tax Event by taking some ministerial action, such as filing
a form or making an election, or pursuing some other similar reasonable measure
which has no adverse effect on the Trust, the holders of the Trust Securities
or Household International, the Trust will pursue such measure in lieu of
redemption.
If Junior Subordinated Notes are distributed to the holders of the Preferred
Securities, Household International will use its best efforts to have the
Junior Subordinated Notes listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Notes upon
dissolution of the Trust, (i) the Preferred Securities and Preferred Securities
Guarantee will no longer be deemed to be outstanding, (ii) the depositary or
its nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Notes to be delivered upon such distribution and (iii) any
certificates representing Preferred Securities and the Preferred Securities
Guarantee not held by the depositary or its nominee will be deemed to represent
Junior Subordinated Notes having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distribution on, such Preferred Securities, until such certificates are
presented to Household International or its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Notes that may be distributed in exchange
for the Preferred Securities if a dissolution and liquidation of the Trust were
to occur. Accordingly, the Preferred Securities that an investor may purchase,
or the Junior Subordinated Notes that the investor may receive on dissolution
and liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred Securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time, on
the redemption date, provided that Household International has paid to the
Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Junior Subordinated Notes, the Property Trustee
will irrevocably deposit with the depositary funds sufficient to pay the
applicable Redemption Price and will give the depositary irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Preferred Securities. See "--Book-Entry Only Issuance--The Depository Trust
Company." If notice of redemption shall have been given and funds deposited as
required, then immediately prior to the close of business on the date of such
deposit, distributions will cease to accrue and all rights of holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in
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respect of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of Preferred
Securities is improperly withheld or refused and not paid either by the Trust
or by Household International pursuant to the Preferred Securities Guarantee,
distributions on such Preferred Securities will continue to accrue from the
original redemption date to the actual date of payment, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed as described under
"--Book-Entry Only Issuance--The Depository Trust Company" below.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Household International or
its affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, the holders of the Preferred Securities
at that time will be entitled to receive out of the assets of the Trust, after
satisfaction of liabilities to creditors, distributions in an amount equal to
the aggregate of the stated liquidation amount of $25 per Preferred Security
plus accrued and unpaid distributions thereon to the date of payment (the
"Liquidation Distribution"), unless, in connection with such liquidation,
dissolution, winding-up or termination, Junior Subordinated Notes in an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, the Preferred
Securities have been distributed on a pro rata basis to the holders of
Preferred Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such dissolution pro rata with the holders of the Preferred Securities,
except that if a Declaration Event of Default has occurred and is continuing,
the Preferred Securities shall have a preference over the Common Securities
with respect to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on ,
2051, the expiration of the term of the Trust, (ii) upon the bankruptcy of
Household International, (iii) upon the filing of a certificate of dissolution
or its equivalent with respect to Household International (except for permitted
mergers, consolidations or reorganizations of Household International), the
filing of a certificate of cancellation with respect to the Trust, or the
revocation of the charter of Household International and the expiration of 90
days after the date of revocation without a reinstatement thereof, (iv) upon
the distribution of the Junior Subordinated Notes following the occurrence of a
Special Event, (v) upon the redemption of all of the Trust Securities or (vi)
upon the entry of a decree of a judicial dissolution of Household International
or the Trust.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"), provided that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until
all Declaration Events of Default with respect to the Preferred Securities have
been cured, waived or otherwise eliminated. Until such Declaration Events of
Default with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the holders of the Preferred
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Securities and only the holders of the Preferred Securities will have the right
to direct the Property Trustee with respect to certain matters under the
Declaration, and therefore the Indenture. In the event that any Declaration
Event of Default with respect to the Preferred Securities is waived by the
holders of the Preferred Securities as provided in the Declaration, the holders
of Common Securities pursuant to the Declaration have agreed that such waiver
also constitutes a waiver of such Declaration Event of Default with respect to
the Common Securities for all purposes under the Declaration without any
further act, vote or consent of the holders of Common Securities. See "--Voting
Rights."
If the Property Trustee fails to enforce its rights under the Junior
Subordinated Notes, any holder of Preferred Securities may directly institute a
legal proceeding against Household International to enforce the Property
Trustee's rights under the Junior Subordinated Notes, without first instituting
any legal proceeding against the Property Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of
Household International to pay interest or principal on the Junior Subordinated
Notes on the date such interest or principal is otherwise payable (or in the
case of redemption, the redemption date), then a holder of Preferred Securities
may directly institute a proceeding for enforcement of payment to such holder
of the principal of or interest on the Junior Subordinated Notes having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Notes. In connection with such action, Household
International will be subrogated to the rights of such holder of Preferred
Securities under the Declaration to the extent of any payment made by Household
International to such holder of Preferred Securities in such action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Notes.
Upon the occurrence of a Declaration Event of Default, the Property Trustee,
as the sole holder of the Junior Subordinated Notes, will have the right under
the Indenture to declare the principal of and interest on the Junior
Subordinated Notes to be immediately due and payable.
VOTING RIGHTS
Except as provided below, under the Trust Act, the Trust Indenture Act and
"Description of the Preferred Securities Guarantee--Amendments and Assignment"
and as otherwise required by law and the Declaration, the holders of the
Preferred Securities will have no voting rights.
If (i) the Trust fails to pay distributions in full on the Preferred
Securities for six consecutive quarterly distribution periods, or (ii) a
Declaration Event of Default occurs and is continuing (each, an "Appointment
Event"), then the holders of the Preferred Securities, acting as a single
class, will be entitled by the majority vote of such holders to appoint a
Special Regular Trustee. For purposes of determining whether the Trust has
failed to pay distributions in full for six consecutive quarterly distribution
periods, distributions shall be deemed to remain in arrears, notwithstanding
any payments in respect thereof, until full cumulative distributions have been
or contemporaneously are paid with respect to all quarterly distribution
periods terminating on or prior to the date of payment of such cumulative
distributions. Any holder of Preferred Securities (other than Household
International or any of its affiliates) shall be entitled to nominate any
person to be appointed as Special Regular Trustee. Not later than 30 days after
such right to appoint a Special Regular Trustee arises, the Regular Trustees
shall convene a meeting of the holders of Preferred Securities for the purpose
of appointing a Special Regular Trustee. If the Regular Trustees fail to
convene such meeting within such 30-day period, the holders of not less than
10% of the aggregate stated liquidation amount of the outstanding Preferred
Securities will be entitled to convene such meeting. The provisions of the
Declaration relating to the convening and conduct of the meetings of the
holders will apply with respect to any such meeting. Any Special Regular
Trustee so appointed shall cease to be a Special Regular Trustee if the
Appointment Event pursuant to which the Special Regular Trustee was appointed
and all other Appointment Events cease to be continuing. Notwithstanding the
appointment of any Special Regular Trustee, Household International shall
retain all rights under the Indenture, including the right to declare an
Extension Period as provided under "Description of the Junior Subordinated
Notes--Option to Extend Interest Payment Period."
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If such an Extension Period occurs, there will be no Indenture Event of
Default, and therefore no Declaration Event of Default, for failure to make any
scheduled interest payment during the Extension Period on the date originally
scheduled.
The holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee, or to direct
the exercise of any trust or power conferred upon the Property Trustee under
the Declaration, including the right to direct the Property Trustee, as the
holder of the Junior Subordinated Notes, to (i) direct the time, method or
place of conducting any proceeding for any remedy available to the Debt Trustee
or exercise any trust or power conferred on the Debt Trustee with respect to
the Junior Subordinated Notes, (ii) waive any past Indenture Event of Default
which is waivable under the Indenture (as defined herein), (iii) exercise any
right to rescind or annul a declaration that the principal of all Junior
Subordinated Notes shall be due and payable, or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated Notes
where such consent shall be required; provided that where a consent or action
under the Indenture would require the consent or action of the holders of more
than a majority in principal amount of the Junior Subordinated Notes (a "Super-
Majority") affected thereby, only the holders of at least such Super-Majority
in aggregate liquidation amount of the Preferred Securities may direct the
Property Trustee to give such consent or take such action. If the Property
Trustee fails to enforce its rights under the Junior Subordinated Notes, a
holder of Preferred Securities may institute a legal proceeding directly
against Household International to enforce the Property Trustee's rights under
the Junior Subordinated Notes without first instituting any legal proceeding
against the Property Trustee or any other person or entity. The Property
Trustee shall notify all holders of the Preferred Securities of any notice of
default received from the Debt Trustee (as defined herein) with respect to the
Junior Subordinated Notes. Such notice shall state that such Indenture Event of
Default also constitutes a Declaration Event of Default. Except with respect to
directing the time, method and place of conducting a proceeding for a remedy,
the Property Trustee shall not take any action described in clauses (i), (ii),
(iii) or (iv) above unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that, as a result of such action, the
Trust will not be classified as other than a grantor trust for United States
federal income tax purposes.
In the event the consent of the Property Trustee, as the holder of the Junior
Subordinated Notes, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Property Trustee
shall request the direction of the holders of the Trust Securities with respect
to such amendment, modification or termination and shall vote with respect to
such amendment, modification or termination as directed by a majority in
liquidation amount of the Trust Securities voting together as a single class,
provided that where a consent under the Indenture would require the consent of
a Super-Majority, the Property Trustee may only give such consent at the
direction of the holders of at least the proportion in liquidation amount of
the Trust Securities which the relevant Super-Majority represents of the
aggregate principal amount of the Junior Subordinated Notes outstanding. The
Property Trustee shall not take any such action in accordance with the
directions of the holders of the Trust Securities unless the Property Trustee
has obtained an opinion of independent tax counsel to the effect that, as a
result of such action, the Trust will not be classified as other than a grantor
trust for United States federal income tax purposes.
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of the holders of the Preferred Securities will constitute a waiver
of the corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be mailed to each holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such holders are
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entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Trust to redeem
and cancel Preferred Securities or distribute Junior Subordinated Notes in
accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by Household International or any entity
directly or indirectly controlling or controlled by, or under direct or
indirect common control with Household International, shall not be entitled to
vote or consent and shall, for purposes of such vote or consent, be treated as
if they were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "--Book-Entry Only Issuance--The
Depository Trust Company."
Except in the limited circumstances described above in connection with the
appointment of a Special Regular Trustee, holders of the Preferred Securities
will have no rights to appoint or remove the Household International Trustees,
who may be appointed, removed or replaced solely by Household International, as
the direct or indirect holder of all the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be amended or modified if approved and executed by a
majority of the Regular Trustees, provided that if any proposed amendment
provides for, or the Regular Trustees otherwise propose to effect, (i) any
action that would materially adversely affect the powers, preferences or
special rights of the Trust Securities, whether by way of amendment to the
Declaration or otherwise or (ii) the dissolution, winding-up or termination of
the Trust other than pursuant to the terms of the Declaration, then the holders
of the Trust Securities voting together as a single class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of at least 66 2/3% in liquidation amount of
the Trust Securities affected thereby, provided that (a) any modification of
the right of holders of Preferred Securities to appoint a Special Regular
Trustee or (b) a reduction of the principal amount or the distribution rate, or
a change in the payment dates or maturity dates of the Preferred Securities,
shall not be permitted without the consent of each holder of Preferred
Securities. In the event any amendment or proposal referred to in clause (i)
above would materially adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of 66 2/3% in liquidation amount of such
class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Property Trustee or (iii) cause the Trust to be deemed to be an "investment
company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other body, except as described below. The Trust
may, with the consent of a majority of the Regular Trustees and without the
consent of the holders of the Trust Securities, consolidate, amalgamate, merge
with or into, or be replaced by a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (x) expressly assumes
all of the obligations of the Trust with respect to the Trust Securities or (y)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Trust Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Trust Securities rank in priority
with respect to distributions and payments upon liquidation, redemption and
otherwise, (ii)
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Household International expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee as the holder of
the Junior Subordinated Notes, (iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, (iv) such
merger, consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (vi) such
successor entity has a purpose identical to that of the Trust, (vii) prior to
such merger, consolidation, amalgamation or replacement, Household
International has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (A) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), and (B) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such
successor entity will be required to register as an investment company under
the 1940 Act and (viii) Household International guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee. Notwithstanding the foregoing,
the Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified for United States federal income tax purposes as other
than a grantor trust. In addition, so long as any Preferred Securities are
outstanding and are not held entirely by Household International, the Trust may
not voluntarily liquidate, dissolve, wind-up or terminate except as described
above under "--Special Event Redemption or Distribution."
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as fully
registered securities registered in the name of Cede & Co. (DTC's nominee). One
or more fully registered global Preferred Securities certificates will be
issued, representing in the aggregate the total number of Preferred Securities,
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a global Preferred Security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
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Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased
Preferred Securities. Transfers of ownership interests in the Preferred
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Preferred Securities,
except in the event that use of the book-entry system for the Preferred
Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited by
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will use a lottery to select
certain of the Preferred Securities to be redeemed in accordance with its
procedures.
Although voting with respect to the Preferred Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to Preferred Securities. Under its usual procedures, DTC
would mail an Omnibus Proxy to the Trust as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Preferred Securities are
credited on the record date (identified in a listing attached to the Omnibus
Proxy). Household International and the Trust believe the arrangements among
DTC, Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights that
can be directly exercised by a holder of a beneficial interest in the Trust.
Distribution payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payments on such payment
date. Payments by participants to Beneficial Owners will be governed by
standing instructions and customary practices, as in the case with securities
held for the account of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC, the
Trust, any trustee or Household International, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Trust, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred Security
will not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates are required to
be printed and
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delivered. Additionally, the Regular Trustees (with consent of Household
International) may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor depositary) with respect to the Preferred
Securities. In that event, certificates for the Preferred Securities will be
printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
have been obtained from sources that Household International and the Trust
believe to be reliable, but Household International and the Trust take no
responsibility for the accuracy thereof.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after default, shall exercise
the same degree of care as a prudent individual would exercise in the conduct
of his or her own affairs. Subject to such provisions, the Property Trustee is
under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The holders of Preferred
Securities will not be required to offer such indemnity in the event such
holders, by exercising their voting rights, direct the Property Trustee to take
any action following a Declaration Event of Default. The Property Trustee also
serves as trustee under the Preferred Securities Guarantee.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the Property Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time. Registration of transfers of
Preferred Securities will be effected without charge by or on behalf of the
Trust, but upon payment (with the giving of such indemnity as the Trust or
Household International may require) in respect of any tax or other government
charges which may be imposed in relation to it. The Trust will not be required
to register or cause to be registered the transfer of Preferred Securities
after such Preferred Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in such
a way so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United States
federal income tax purposes as other than a grantor trust. Household
International is authorized and directed to conduct its affairs so that the
Junior Subordinated Notes will be treated as indebtedness of Household
International for United States federal income tax purposes. In this
connection, the Regular Trustees and Household International are authorized to
take any action, not inconsistent with applicable law, the Declaration or the
amended and restated certificate of incorporation of Household International,
that each of the Regular Trustees and Household International determines in
their discretion to be necessary or desirable for such purposes, as long as
such action does not materially and adversely affect the interests of the
holders of the Preferred Securities.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by Household
International for the benefit of the holders from time to time of Preferred
Securities. The Preferred Securities Guarantee will be qualified as an
indenture under the Trust
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Indenture Act. Wilmington Trust Company will act as indenture trustee under the
Preferred Securities Guarantee (the "Preferred Guarantee Trustee") including
for purposes of the Trust Indenture Act. The terms of the Preferred Securities
Guarantee will be those set forth therein and those made part thereof by the
Trust Indenture Act. The summary does not purport to be complete and is subject
in all respects to the provisions of, and is qualified in its entirety by
reference to the Preferred Securities Guarantee, which is filed as an exhibit
to the Registration Statement of which this Prospectus forms a part, and the
Trust Indenture Act. The Preferred Securities Guarantee will be held by the
Preferred Guarantee Trustee for the benefit of holders of the Preferred
Securities.
GENERAL
Pursuant to the Preferred Securities Guarantee, Household International will
irrevocably agree, to the extent set forth therein, to pay in full to the
holders of the Preferred Securities, the Guarantee Payments (as defined below)
(without duplication of amounts theretofore paid by the Trust), to the extent
not paid by the Trust, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The following payments or
distributions with respect to the Preferred Securities to the extent not paid
or made by the Trust (the "Guarantee Payments") will be subject to the
Preferred Securities Guarantee (without duplication): (i) any accrued and
unpaid distributions on the Preferred Securities where Household International
has made a payment of principal, premium or interest on the Junior Subordinated
Notes held by the Property Trustee, (ii) the Redemption Price, including all
accrued and unpaid dividends to the date of the redemption, to the extent the
Trust has funds available therefor with respect to the Preferred Securities
called for redemption by the Trust and (iii) upon a liquidation of the Trust
(other than in connection with the distribution of Junior Subordinated Notes to
the holders of Trust Securities or the redemption of all of the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds available therefor, and (b) the
amount of assets of the Trust remaining available for distribution to holders
of Preferred Securities in liquidation of the Trust. Household International's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by Household International to the holders of Preferred
Securities or by causing the Trust to pay such amounts to such holders.
If Household International does not make interest payments on the Junior
Subordinated Notes held by the Property Trustee, the Trust will not make
distributions on the Preferred Securities. The Preferred Securities Guarantee
will guarantee, on a subordinated basis, the Guarantee Payments with respect to
the Preferred Securities from the time of issuance of the Preferred Securities,
but will not apply to the payment of distributions and other payments on the
Preferred Securities when the Property Trustee does not have sufficient funds
in the Property Account to make such distributions or other payments. The
Preferred Securities Guarantee, when taken together with Household
International's obligations under the Junior Subordinated Notes, the Indenture
and the Declaration, including its obligations to pay costs, expenses, debts
and liabilities of the Trust (other than with respect to the Trust Securities),
will provide a full and unconditional guarantee on a subordinated basis by
Household International of amounts due on the Preferred Securities.
CERTAIN COVENANTS OF HOUSEHOLD INTERNATIONAL
In the Preferred Securities Guarantee, Household International will covenant
that, so long as the Preferred Securities remain outstanding, if there shall
have occurred and is continuing any event that would constitute an event of
default under the Preferred Securities Guarantee or the Declaration, then (a)
Household International will not declare or pay any dividends on, or purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its capital stock (other than (i) repurchases, redemptions or other
acquisitions of shares of capital stock of Household International in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of Household International's capital stock for any other class or series
of Household International's capital stock, or (iii) the purchase of fractional
interests in shares of Household International's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) Household
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International shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by Household International which rank pari passu with or
junior to such Junior Subordinated Notes. The foregoing, however, will not
apply to any stock dividends paid by Household International where the dividend
stock is the same stock as that on which the dividend is being paid.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Preferred Securities (in which case no consent will be
required), the Preferred Securities Guarantee may be amended only with the
prior approval of the holders of not less than 66 2/3% in aggregate liquidation
amount of the outstanding Preferred Securities. The manner of obtaining any
such approval of holders of the Preferred Securities is set forth under
"Description of the Preferred Securities--Voting Rights." All guarantees and
agreements contained in the Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of Household
International and shall inure to the benefit of the holders of the Preferred
Securities then outstanding.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will terminate and be of no further force
and effect as to the Preferred Securities upon full payment of the Redemption
Price of all Preferred Securities, upon distribution of the Junior Subordinated
Notes to the holders of Preferred Securities, or upon full payment of the
amounts payable upon liquidation of the Trust. See "Description of the Junior
Subordinated Notes--Events of Default" for a description of the events of
default and enforcement rights of the holders of Junior Subordinated Notes. The
Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Preferred
Securities must repay to the Trust or Household International, or their
respective successors, any sums paid to them under the Preferred Securities or
the Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of Household International to perform any of its payment or other
obligations thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee in respect of Preferred Securities Guarantee or
to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred Securities Guarantee. Any holder of
Preferred Securities may institute a legal proceeding directly against
Household International to enforce such holder's rights under such Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Household
International to pay interest or principal on the Junior Subordinated Notes on
the date such interest or principal is otherwise payable (or in the case of
redemption, the redemption date), then a holder of Preferred Securities may
directly institute a proceeding for enforcement of payment to such holder of
the principal of or interest on the Junior Subordinated Notes having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Notes. In connection with such action, Household
International will be subrogated to the rights of such holder of Preferred
Securities under the Declaration to the extent of any payment made by Household
International to such holder of Preferred Securities in such action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Notes.
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STATUS OF THE PREFERRED SECURITIES GUARANTEE
Household International's obligations under the Preferred Securities
Guarantee to make the Guarantee Payments will constitute an unsecured
obligation of Household International and will rank (i) subordinate and junior
in right of payment to all other liabilities of Household International,
including the Junior Subordinated Notes, except those made pari passu or
subordinate by their terms, and (ii) pari passu with the most senior preferred
stock now or hereafter issued by Household International and with any guarantee
now or hereafter entered into by Household International in respect of any
preferred security of any affiliate of Household International. The terms of
the Preferred Securities provide that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of
the Preferred Securities Guarantee. In addition, because Household
International is a holding company, its obligations under the Preferred
Securities Guarantee are effectively subordinated to all existing and future
liabilities of its subsidiaries.
The Preferred Securities Guarantee will constitute a guarantee of payment and
not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity). The Preferred Securities Guarantee will be deposited with the
Property Trustee to be held for the benefit of the holders of the Preferred
Securities. Except as otherwise noted herein, the Property Trustee has the
right to enforce the Preferred Securities Guarantee on behalf of the holders of
the Preferred Securities. The Preferred Securities Guarantee will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Trust).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee
and, after default, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provisions, the Preferred Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by the Preferred Securities Guarantee
at the request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby. The Preferred Guarantee Trustee also serves as Property Trustee.
GOVERNING LAW
The Preferred Securities Guarantee will be governed by and construed in
accordance with the laws of the State of Illinois.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the terms of the Junior Subordinated
Notes. The following description does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the Indenture (the "Base
Indenture"), dated as of May 15, 1995, among Household International, the Trust
and The First National Bank of Chicago, as trustee (the "Debt Trustee"), as
supplemented by a Second Supplemental Indenture, dated as of , 1996
(the Base Indenture, as so supplemented, is hereinafter referred to as the
"Indenture"), the forms of which are filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The terms of the Junior
Subordinated Notes will include those stated in the Indenture and those made a
part of the Indenture by reference to the Trust Indenture Act. Certain
capitalized terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of the Trust following
the occurrence of a Special Event, Junior Subordinated Notes may be distributed
to the holders of Trust Securities in liquidation of the Trust. See
"Description of the Preferred Securities--Special Event Redemption or
Distribution."
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If the Junior Subordinated Notes are distributed to the holders of the Trust
Securities, Household International will use its best efforts to have the
Junior Subordinated Notes listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
GENERAL
The Junior Subordinated Notes will be issued as unsecured junior subordinated
debt securities under the Indenture. The Junior Subordinated Notes will be
limited in aggregate principal amount to approximately $ , such amount
being the sum of the aggregate stated liquidation amount of the Preferred
Securities and the capital contributed by Household International in exchange
for the Common Securities (the "Payment").
The Junior Subordinated Notes are not subject to a sinking fund provision.
The entire principal amount of the Junior Subordinated Notes will mature and
become due and payable, together with any accrued and unpaid interest thereon,
including Additional Interest (as defined herein), if any, on , 2036.
If Junior Subordinated Notes are distributed to holders of the Preferred
Securities in liquidation of such holders' interests in the Trust, such Junior
Subordinated Notes will initially be issued as a Global Security (as defined
below). As described herein, under certain limited circumstances, Junior
Subordinated Notes may be issued in certificated form in exchange for a Global
Security. See "--Book-Entry and Settlement." In the event Junior Subordinated
Notes are issued in certificated form, the Junior Subordinated Notes will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below. Payments on Junior Subordinated Notes
issued as Global Securities will be made to the depositary for the Junior
Subordinated Notes. In the event Junior Subordinated Notes are issued in
certificated form, principal and interest will be payable, the transfer of the
Junior Subordinated Notes will be registrable and Junior Subordinated Notes
will be exchangeable for Junior Subordinated Notes of other denominations of a
like aggregate principal amount at the corporate trust office of the Debt
Trustee in New York, New York; provided, that payment of interest may be made
at the option of Household International by check mailed to the address of the
persons entitled thereto.
The Indenture does not contain provisions that afford holders of Junior
Subordinated Notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving
Household International.
SUBORDINATION
The Indenture provides that the Junior Subordinated Notes are subordinated
and junior in right of payment to all Senior Indebtedness of Household
International. No payment of principal of (including redemption payments, if
any), premium, if any, or interest on, the Junior Subordinated Notes may be
made if (a) any Senior Indebtedness is not paid when due and any applicable
grace period with respect to such default has ended with such default not being
cured or waived or ceasing to exist, or (b) the maturity of any Senior
Indebtedness has been accelerated because of a default. Upon any distribution
of assets of Household International to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all principal of,
premium, if any, and interest due or to become due on, all Senior Indebtedness
must be paid in full before the holders of Junior Subordinated Notes are
entitled to receive or retain any payment. The rights of the holders of the
Junior Subordinated Notes will be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions applicable to such
Senior Indebtedness until all amounts owing on the Junior Subordinated Notes
are paid in full.
The term "Senior Indebtedness" means, with respect to Household
International, (i) any payment in respect of (a) indebtedness of such obligor
for money borrowed (including any financial derivative, hedging
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or futures contract or similar instrument) and (b) indebtedness evidenced by
securities, debentures, bonds, notes or other similar instruments issued by
Household International which, by their terms, are senior or senior
subordinated debt securities including, without limitation, all obligations
under its indentures with various trustees; (ii) all capital lease obligations;
(iii) all obligations issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations of Household
International under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) all obligations for
the reimbursement on any letter of credit, banker's acceptance, security
purchase facility or similar credit transaction; (v) all obligations of the
type referred to in clauses (i) through (iv) above of other persons the payment
of which Household International is responsible or liable as obligor, guarantor
or otherwise; and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other persons secured by any lien on any property or asset
of Household International (whether or not such obligation is assumed by
Household International), except for (1) any such indebtedness that is by its
terms subordinated to or pari passu with the Junior Subordinated Notes and (2)
any unsecured indebtedness between or among Household International or its
affiliates including all other debt securities and guarantees in respect of
these debt securities, issued to (a) any other trust or a trustee of such trust
and (b) any other partnership or other entity affiliated with Household
International that is a financing vehicle of Household International or its
subsidiaries in connection with the issuance by such financing vehicle of
preferred securities or other securities that rank pari passu with, or junior
to, the Preferred Securities. Such Senior Indebtedness shall continue to be
Senior Indebtedness and be entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term of
such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
which may be issued by Household International. As of March 31, 1996, Senior
Indebtedness of Household International aggregated approximately $2.4 billion.
In addition, because Household International is a holding company, its
obligations under the Junior Subordinated Notes will be effectively
subordinated to all existing and future liabilities of its subsidiaries. At
March 31, 1996, such subsidiaries had total liabilities of approximately $22.6
billion.
CERTAIN COVENANTS
If (i) there shall have occurred any event that would constitute an Event of
Default under the Indenture, (ii) Household International shall be in default
with respect to its payment of any obligations under the Preferred Securities
Guarantee, or (iii) Household International shall have given notice of its
election of an Extension Period as provided in the Indenture and such period,
or any extension thereof, shall be continuing, then (a) Household International
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
its capital stock, other than (x) repurchases, redemptions or other
acquisitions of shares of capital stock of Household International in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of employees, officers, directors or
consultants, (y) as a result of an exchange or conversion of any class or
series of Household International's capital stock for any other class or series
of Household International's capital stock, or (z) the purchase of fractional
interests in shares of Household International's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, and (b) Household International shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by Household
International which rank pari passu with or junior to the Junior Subordinated
Notes.
For so long as the Trust Securities remain outstanding, Household
International will covenant (i) to directly or indirectly maintain 100%
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of Household International under the Indenture may succeed
to Household International's ownership of such Common Securities, and (ii) to
use its reasonable efforts to cause the Trust (a) to remain a statutory
business trust, except in connection with the distribution of Junior
Subordinated Notes to the holders of Trust Securities in liquidation of the
Trust, the redemption of all of the Trust Securities of the Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the Declaration,
and (b) to otherwise continue to be classified as a grantor trust for United
States federal income tax purposes.
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OPTIONAL REDEMPTION
Household International shall have the right to redeem the Junior
Subordinated Notes, in whole or in part, from time to time, on or after
, 2001, or at any time in certain circumstances upon the occurrence of a Tax
Event as described under "Description of the Preferred Securities--Special
Event Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice, at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest
(as defined herein), if any, to the redemption date. If a partial redemption of
the Preferred Securities resulting from a partial redemption of the Junior
Subordinated Notes would result in the delisting of the Preferred Securities,
Household International may only redeem the Junior Subordinated Notes in whole.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes (the
"Proposed Legislation") that would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain debt
obligations, such as the Junior Subordinated Notes, issued on or after December
7, 1995. On March 29, 1996, Senate Finance Committee Chairman William V. Roth,
Jr. and House Ways and Means Committee Chairman Bill Archer issued a joint
statement (the "Joint Statement") indicating their intent that the Proposed
Legislation, if adopted by either of the tax-writing committees of Congress,
would have an effective date that is no earlier than the date of "appropriate
congressional action." Based upon the Joint Statement, it is expected that if
the Proposed Legislation were to be enacted, such legislation would not apply
to the Junior Subordinated Notes. There can be no assurance, however, that the
effective date guidance contained in the Joint Statement will be incorporated
into the Proposed Legislation, if enacted, or that other legislation enacted
after the date hereof will not otherwise adversely affect the ability of
Household International to deduct the interest payable on the Junior
Subordinated Notes. Accordingly, there can be no assurance that a Tax Event
will not occur. The occurrence of a Tax Event may, among other things, result
in a dissolution of the Trust in which holders of the Preferred Securities may
receive cash, which would be a taxable event to such holders. See "--Special
Event Redemption or Distribution" and "Description of the Preferred
Securities--Special Event Redemption or Distribution."
INTEREST
Each Junior Subordinated Note shall bear interest at the rate of % per
annum from the original date of issuance, payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year (each, an "Interest
Payment Date"), commencing , 1996, to the person in whose name such
Junior Subordinated Note is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment
Date. In the event the Junior Subordinated Notes shall not continue to remain
in book-entry only form, Household International shall have the right to select
such record dates which shall be not less than fifteen days prior to each
Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period will be computed on the basis
of the actual number of days elapsed per 30-day month. In the event that any
date on which interest is payable on the Junior Subordinated Notes is not a
Business Day, then payment of the interest payable on such date will be made on
the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Household International shall have the right at any time, and from time to
time, during the term of the Junior Subordinated Notes to defer payments of
interest by extending the interest payment period for a period not exceeding 20
consecutive quarters, provided, that no Extension Period may extend beyond the
maturity
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of the Junior Subordinated Notes, at the end of which Extension Period,
Household International shall pay all interest then accrued and unpaid
(including any Additional Interest) (together with interest thereon at the rate
specified for the Junior Subordinated Notes to the extent permitted by
applicable law); provided further that, during any such Extension Period, (a)
Household International shall not declare or pay any dividend or make any
distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock (other than (i) repurchases,
redemptions or other acquisitions of shares of capital stock of Household
International in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors
or consultants, (ii) as a result of an exchange or conversion of any class or
series of Household International's capital stock for any other class or series
of Household International's capital stock, or (iii) the purchase of fractional
interests in shares of Household International's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) Household International shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by Household
International which rank pari passu with or junior to the Junior Subordinated
Notes. The foregoing, however, will not apply to any stock dividends paid by
Household International where the dividend stock is the same stock as that on
which the dividend is being paid. Prior to the termination of any such
Extension Period, Household International may further defer payments of
interest by extending the interest payment period, provided that such Extension
Period together with all such previous and further extensions thereof may not
exceed 20 consecutive quarters and no Extension Period may extend beyond the
maturity of the Junior Subordinated Notes. Upon the termination of any
Extension Period and the payment of all amounts then due, Household
International may select a new Extension Period, as if no Extension Period had
previously been declared, subject to the above requirements. No interest during
an Extension Period, except at the end thereof, shall be due and payable.
Household International has no present intention of exercising its rights to
defer payments of interest by extending the interest payment period on the
Junior Subordinated Notes. If the Property Trustee shall be the sole holder of
the Junior Subordinated Notes, Household International shall give the Regular
Trustees and the Property Trustee notice of its selection of such Extension
Period one Business Day prior to the earlier of (i) the date distributions on
the Preferred Securities are payable or (ii) the date the Regular Trustees are
required to give notice to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Preferred Securities of the
record date or the date such distribution is payable, but in any event not less
than one Business Day prior to such record date. The Regular Trustees shall
give notice of Household International's selection of such Extension Period to
the holders of the Preferred Securities. If the Property Trustee shall not be
the sole holder of the Junior Subordinated Notes, Household International shall
give the holders of the Junior Subordinated Notes notice of its selection of
such Extension Period ten Business Days prior to the earlier of (i) the next
Interest Payment Date or (ii) the date Household International is required to
give notice to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Junior Subordinated Notes of the record or
payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in
any such case, Household International will pay as additional interest
("Additional Interest") such additional amounts as shall be required so that
the net amounts received and retained by the Trust after paying such taxes,
duties, assessments or other governmental charges will be not less than the
amounts the Trust would have received had no such taxes, duties, assessments or
other governmental changes been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the Property
Trustee, as the holder of the Junior Subordinated Notes, will have the right to
declare the principal of and the interest on the Junior Subordinated Notes
(including Additional Interest, if any) and any other amounts payable under the
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Indenture to be forthwith due and payable and to enforce its other rights as a
creditor with respect to the Junior Subordinated Notes.
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Junior Subordinated Notes:
(a) failure for 60 days to pay interest on the Junior Subordinated Notes,
including any Additional Interest in respect thereof, when due; provided,
however, that a valid extension of the interest payment period by Household
International shall not constitute a default in the payment of interest for
this purpose; or
(b) failure to pay principal or premium, if any, on the Junior
Subordinated Notes when due whether at maturity or upon earlier redemption;
(c) failure to observe or perform any other covenant (other than those
specifically relating to another series of junior subordinated notes)
contained in the Indenture for 90 days after written notice to Household
International from the Debt Trustee or the holders of at least 25% in
principal amount of the outstanding Junior Subordinated Notes; or
(d) certain events of bankruptcy, insolvency, or reorganization of
Household International; or
(e) the voluntary or involuntary dissolution, winding-up or termination
of the Trust, except in connection with the distribution of Junior
Subordinated Notes to the holders of Preferred Securities in liquidation of
the Trust and in connection with certain mergers, consolidations or
amalgamation permitted by the Declaration.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Notes have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Debt Trustee. The
Debt Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Notes may declare the principal due
and payable immediately on default, but the holders of a majority in aggregate
outstanding principal amount may annul such declaration and waive the default
if the default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration and
any applicable premium has been deposited with the Debt Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Notes affected thereby may, on behalf of the holders of all
the Junior Subordinated Notes, waive any past default, except (i) a default in
the payment of principal, premium, if any, or interest (unless such default
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and any applicable premium has
been deposited with the Debt Trustee) or (ii) a default in the covenant of
Household International not to declare or pay dividends on, or redeem, purchase
or acquire any of its capital stock during an Extension Period. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders
of Preferred Securities in certain circumstances have the right to direct the
Property Trustee to exercise its rights as the holder of the Junior
Subordinated Notes. See "Description of the Preferred Securities--Declaration
Events of Default" and "--Voting Rights."
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Household
International to pay interest or principal on the Junior Subordinated Notes on
the date such interest or principal is otherwise payable, Household
International acknowledges that, in such event, a holder of Preferred
Securities may institute a direct action for payment on or after the respective
due date specified in the Junior Subordinated Notes. Household International
may not amend the Indenture to remove the foregoing right to bring a direct
action without the prior written consent of all of the holders of Preferred
Securities of the Trust. Notwithstanding any payment made to such holder of
Preferred Securities by Household International in connection with such a
direct action, Household International shall remain obligated to pay the
principal of or interest on the Junior Subordinated Notes held by the Trust or
Property Trustee, and Household International shall be subrogated to the rights
of the holder
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of such Preferred Securities with respect to payments on the Preferred
Securities to the extent of any payments made by Household International to
such holder in any such direct action. The holders of Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Junior Subordinated Notes.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of the Trust as
a result of the occurrence of a Special Event, the Junior Subordinated Notes
will be issued in the form of one or more global certificates (each, a "Global
Security") registered in the name of the depositary or its nominee. Except
under the limited circumstances described below, Junior Subordinated Notes
represented by the Global Security will not be exchangeable for, and will not
otherwise be issuable as, Junior Subordinated Notes in definitive form. The
Global Securities described above may not be transferred except by the
depositary to a nominee of the depositary or by a nominee of the depositary to
the depositary or another nominee of the depositary or to a successor
depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Notes in definitive form and will not be considered the holders
(as defined in the Indenture) thereof for any purpose under the Indenture, and
no Global Security representing Junior Subordinated Notes shall be
exchangeable, except for another Global Security of like denomination and tenor
to be registered in the name of the depositary or its nominee or to a successor
depositary or its nominee. Accordingly, each beneficial owner must rely on the
procedures of the depositary and, if such person is not a Participant, on the
procedures of the Participant through which such person owns its interest, to
exercise any rights of a Holder under the Indenture.
If Junior Subordinated Notes are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities depositary for the Junior Subordinated Notes. For a description
of DTC and the specific terms of the depository arrangements, see "Description
of the Preferred Securities--Book-Entry Only Issuance--The Depository Trust
Company." The description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. Household
International may appoint a successor to DTC or any successor depositary in the
event DTC or such successor depositary is unable or unwilling to continue as
depositary.
None of Household International, the Trust, the Debt Trustee, any paying
agent and any other agent of Household International or the Debt Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security for such Junior Subordinated Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
A Global Security shall be exchangeable for Junior Subordinated Notes
registered in the names of persons other than the depositary or its nominee
only if (i) the depositary notifies Household International that it is
unwilling or unable to continue as a depositary for such Global Security and no
successor depositary shall have been appointed, or if at any time the
depositary ceases to be a clearing agency registered under the Exchange Act at
a time when the depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, (ii)
Household International in its sole discretion determines that such Global
Security shall be so exchangeable or (iii) there shall have occurred an Event
of Default with respect to the Junior Subordinated Notes. Any Global Security
that is exchangeable pursuant to the preceding
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sentence shall be exchangeable for Junior Subordinated Notes registered in such
names as the depositary shall direct. It is expected that such instructions
will be based upon directions received by the depositary from its Participants
with respect to ownership of beneficial interests in such Global Security.
In the event the Junior Subordinated Notes are not represented by one or more
Global Securities, certificates evidencing Junior Subordinated Notes may be
presented for registration of transfer (with the form of transfer endorsed
thereon duly executed) or exchange, at the office of the Note Registrar or at
the office of any transfer agent designated by Household International for such
purpose with respect to the Junior Subordinated Notes, without service charge
and upon payment of any taxes and other governmental charges as described in
the Indenture. Such transfer or exchange will be effected upon the Note
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. Household
International has appointed the Debt Trustee as Note Registrar with respect to
the Junior Subordinated Notes. Household International may at any time rescind
the designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that Household International
will be required to maintain a transfer agent at the place of payment.
Household International may at any time designate additional transfer agents
with respect to the Junior Subordinated Notes.
In the event of any redemption in part, Household International shall not be
required to (i) issue, register the transfer of or exchange Junior Subordinated
Notes during a period beginning at the opening of business 15 days before any
selection for redemption of Junior Subordinated Notes and ending at the close
of business on the earliest date on which the relevant notice of redemption is
deemed to have been given to all holders of the Junior Subordinated Notes and
(ii) register the transfer of or exchange any Junior Subordinated Notes so
selected for redemption, in whole or in part, except the unredeemed portion of
any Junior Subordinated Notes being redeemed in part.
PAYMENT AND PAYING AGENTS
Payment of principal of and premium (if any) on the Junior Subordinated Notes
will be made only against surrender to the Paying Agent of the Junior
Subordinated Notes. Principal of and any premium and interest, if any, on
Junior Subordinated Notes will be payable, subject to any applicable laws and
regulations, at the office of such Paying Agent or Paying Agents as Household
International may designate from time to time, except that at the option of
Household International payment of any interest may be made by check mailed to
the address of the person entitled thereto as such address shall appear in the
Note Register with respect to the Junior Subordinated Notes. Payment of
interest on Junior Subordinated Notes on any Interest Payment Date will be made
to the person in whose name the Junior Subordinated Notes (or predecessor
security) is registered at the close of business on the Regular Record Date for
such interest payment.
The Indenture Trustee will act as Paying Agent with respect to the Junior
Subordinated Notes. Household International may at any time designate
additional Paying Agents or rescind the designation of any Paying Agents or
approve a change in the office through which any Paying Agent acts, except that
Household International will be required to maintain a Paying Agent at the
place of payment.
All moneys paid by Household International to a Paying Agent for the payment
of the principal of or premium or interest, if any, on the Junior Subordinated
Notes which remain unclaimed at the end of two years after such principal,
premium, if any, or interest shall have become due and payable will be repaid
to Household International and the holder of such Junior Subordinated Notes
will thereafter look only to Household International for payment thereof.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting Household International and the
Debt Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Notes, to modify the Indenture or
any supplemental indenture affecting that series or the rights of the holders
of the
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Junior Subordinated Notes; provided, that no such modification may, without the
consent of the holder of each outstanding Junior Subordinated Note affected
thereby, (i) extend the fixed maturity of the Junior Subordinated Notes, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any premium payable upon the redemption
thereof, without the consent of the holder of Junior Subordinated Notes so
affected or (ii) reduce the percentage of Junior Subordinated Notes, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Junior Subordinated Note then
outstanding and affected thereby.
In addition, Household International and the Debt Trustee may execute,
without the consent of holders of the Junior Subordinated Notes, any
supplemental indenture for certain other usual purposes including the creation
of any new series of junior subordinated notes.
CONSOLIDATION, MERGER AND SALE
The Indenture provides that Household International will not consolidate with
or merge into any other corporation or convey, transfer or lease its assets
substantially as an entirety unless (a) the successor is a corporation
organized in the United States and expressly assumes the due and punctual
payment of the principal of (and premium, if any) and interest on all Junior
Subordinated Notes issued thereunder and the performance of every other
covenant of the Indenture on the part of Household International and (b)
immediately thereafter no Event of Default and no event which, after notice or
lapse of time, or both, would become an Event of Default, shall have happened
and be continuing. Upon any such consolidation, merger, conveyance or transfer,
the successor corporation shall succeed to and be substituted for Household
International under the Indenture and thereafter the predecessor corporation
shall be relieved of all obligations and covenants under the Indenture and the
Junior Subordinated Notes.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, Household International will be discharged
from any and all obligations in respect of the Junior Subordinated Notes
(except in each case for certain obligations to register the transfer or
exchange of Junior Subordinated Notes, replace stolen, lost or mutilated Junior
Subordinated Notes, maintain paying agencies and hold moneys for payment in
trust) if Household International deposits with the Debt Trustee, in trust,
moneys or government obligations, in an amount sufficient to pay all the
principal of, and interest on, the Junior Subordinated Notes on the dates such
payments are due in accordance with the terms of the Junior Subordinated Notes.
For federal income tax purposes, any such defeasance of the Junior
Subordinated Notes will be treated as a taxable exchange of the Junior
Subordinated Notes for an issue of obligations of the trust or a direct
interest in the cash or government securities held in the trust. In that case,
holders of the Preferred Securities would recognize gain or loss as if the
trust obligations or the cash or government obligations deposited, as the case
may be, had actually been received by them in exchange for their Preferred
Securities. Such holders thereafter would be required to include in income a
share of the income, gain or loss of the trust. The amount so required to be
included in income could be a different amount than would be includable in the
absence of defeasance. Holders of the Preferred Securities should consult their
own tax advisors as to the specific consequences of defeasance.
GOVERNING LAW
The Indenture and the Junior Subordinated Notes will be governed by, and
construed in accordance with, the internal laws of the State of Illinois.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, undertakes to perform only such duties as
are specifically set forth in the Indenture and, after default, shall exercise
the same degree of care as a prudent individual would exercise in the conduct
of his or her own affairs. Subject to such provision, the Debt Trustee is under
no obligation to
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exercise any of the powers vested in it by the Indenture at the request of any
holder of Junior Subordinated Notes, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The Debt Trustee is not required to expand or risk its own funds or
otherwise incur personal financial liability in the performance of its duties
if the Debt Trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
Household International and certain of its affiliates maintain a deposit
account and a banking relationship with the Debt Trustee. The Debt Trustee
serves as trustee under other indentures pursuant to which debt securities of
an affiliate of Household International are outstanding.
MISCELLANEOUS
Household International will have the right at all times to assign any of its
rights or obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of Household International; provided, that, in the event of any such
assignment, Household International will remain liable for all of their
respective obligations. Subject to the foregoing, the Indenture will be binding
upon and inure to the benefit of the parties thereto and their respective
successors and assigns. The Indenture provides that it may not otherwise be
assigned by the parties thereto.
The Indenture will also provide that Household International will pay all
fees and expenses related to (i) the offering of the Trust Securities and the
Junior Subordinated Notes, (ii) the organization, maintenance and dissolution
of the Trust, (iii) the retention of the Household International Trustees and
(iv) the enforcement by the Property Trustee of the rights of holders of
Preferred Securities.
EFFECT OF OBLIGATIONS UNDER THE JUNIOR SUBORDINATED NOTES
AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
Trust Securities and invest the proceeds thereof in the Junior Subordinated
Notes.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Notes, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i)
the aggregate principal amount of Junior Subordinated Notes will be equal to
the sum of the aggregate stated liquidation amount of the Trust Securities;
(ii) the interest rate and interest and other payment dates on the Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the Preferred Securities; (iii) Household International shall
pay for all costs and expenses of the Trust; and (iv) the Declaration provides
that the Household International Trustees shall not cause or permit the Trust
to, among other things, engage in any activity that is not consistent with the
purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor
are available) are guaranteed by Household International as and to the extent
set forth under "Description of the Preferred Securities Guarantee." If
Household International does not make interest payments on the Junior
Subordinated Notes purchased by the Trust, it is expected that the Trust will
not have sufficient funds to pay distributions on the Preferred Securities. The
Preferred Securities Guarantee is a guarantee on a subordinated basis from the
time of its issuance, but does not apply to any payment of distributions unless
and until the Trust has sufficient funds for the payment of such distributions.
If Household International fails to make interest or other payments on the
Junior Subordinated Notes when due (taking into account any Extension Period),
the Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities--Voting Rights," may (i) appoint a Special Regular Trustee and (ii)
direct the Property Trustee to enforce its rights under the Junior Subordinated
Notes, including proceeding directly against Household International to enforce
the Junior Subordinated Notes. If the Property Trustee fails to enforce its
rights under the Junior
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Subordinated Notes, a holder of Preferred Securities may institute a legal
proceeding directly against Household International to enforce the Property
Trustee's rights under the Junior Subordinated Notes without first instituting
any legal proceeding against the Property Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of
Household International to pay interest or principal on the Junior Subordinated
Notes on the date such interest or principal is otherwise payable (or in the
case of redemption, on the redemption date), then a holder of Preferred
Securities may institute an action for payment on or after the respective due
date specified in the Junior Subordinated Notes. In connection with such
action, Household International will be subrogated to the rights of such holder
of Preferred Securities under the Declaration to the extent of any payment made
by Household International to such holder of Preferred Securities in such
Action. Household International, under the Preferred Securities Guarantee,
acknowledges that the Preferred Guarantee Trustee shall enforce the Preferred
Securities Guarantee on behalf of the holders of the Preferred Securities.
If Household International fails to make payments under the Preferred
Securities Guarantee, the Preferred Securities Guarantee provides a mechanism
whereby the holders of the Preferred Securities may direct the Preferred
Guarantee Trustee to enforce its rights thereunder. If the Preferred Guarantee
Trustee fails to enforce the Preferred Securities Guarantee, any holder of
Preferred Securities may institute a legal proceeding directly against
Household International to enforce the Preferred Guarantee Trustee's rights
under the Preferred Securities Guarantee, without first instituting a legal
proceeding against the Trust, the Preferred Guarantee Trustee or any other
person or entity.
The Preferred Securities Guarantee, when taken together with Household
International's obligations under the Junior Subordinated Notes, the Indenture
and the Declaration, including its obligations under the Indenture to pay
costs, expenses, debts and liabilities of the Trust (other than with respect to
the Trust Securities), will provide a full and unconditional guarantee of
amounts due on the Preferred Securities. See "Description of the Preferred
Securities Guarantee--General."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the principal United States federal
income tax consequences of the purchase, ownership and disposition of the
Preferred Securities to a holder that is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized under
the laws of the United States or any state thereof or the District of Columbia
or an estate or trust the income of which is subject to United States federal
income taxation regardless of source (a "Holder"). Except as set forth below,
this summary does not address the United States federal income tax consequences
to persons other than Holders.
This summary is based on the United States federal income tax laws,
regulations and rulings and decisions now in effect, all of which are subject
to change, possibly on a retroactive basis. This summary does not address the
tax consequences applicable to investors that may be subject to special tax
rules such as banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors or persons that will hold the Preferred Securities as a
position in a "straddle," as part of a "synthetic security" or "hedge," as part
of a "conversion transaction" or other integrated investment or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a Holder. Further,
it does not include any description of any alternative minimum tax consequences
or the tax laws of any state or local government or of any foreign government
that may be applicable to a Holder.
CLASSIFICATION OF HOUSEHOLD CAPITAL TRUST II
Sidley & Austin, special counsel to Household International and the Trust, is
of the opinion that, under current law and assuming full compliance with the
terms of the Indenture and the Declaration (and certain other documents),
Household Capital Trust II will be classified as a "grantor trust" for federal
income tax
36
<PAGE>
purposes and will not be classified as an association taxable as a corporation
or a partnership. Each Holder will be treated as owning an undivided beneficial
interest in the Junior Subordinated Notes. Accordingly, each Holder will be
required to include in its gross income the original issue discount ("OID")
accrued with respect to its allocable share of Junior Subordinated Notes.
Investors should be aware that the opinion of Sidley & Austin does not address
any other issue and is not binding on the Internal Revenue Service (the
"Service") or the courts.
ORIGINAL ISSUE DISCOUNT, ACQUISITION PREMIUM AND MARKET DISCOUNT
Because of the option that Household International has, under the terms of
the Junior Subordinated Notes, to defer payments of interest by extending
interest payment periods for up to 20 quarters, the Junior Subordinated Notes
will be treated as issued with OID in an amount equal to all of the stated
interest payments on the Junior Subordinated Notes. Holders must include the
OID attributable to the Junior Subordinated Notes in income on an economic
accrual basis before the receipt of cash attributable to the interest,
regardless of their method of tax accounting. The amount of OID that accrues in
any month will approximately equal the amount of the interest that accrues in
that month at the stated interest rate. In the event that the interest payment
period is extended, Holders will continue to accrue OID approximately equal to
the amount of the interest payment due at the end of the extended interest
payment period on an economic accrual basis over the length of the extended
interest period. Corporate Holders of Preferred Securities will not be entitled
to a dividends-received deduction with respect to any income earned with
respect to the Preferred Securities.
To the extent a Holder acquires its Preferred Securities at a price that is
greater or less than the adjusted issue price of such Holder's share of Junior
Subordinated Notes (which generally should approximate par plus accrued but
unpaid interest), the Holder will be deemed to have acquired its interest in
the Preferred Securities with acquisition premium or with market discount, as
the case may be. A Holder acquiring Preferred Securities at a premium will be
permitted to reduce the amount of OID required to be included in income to
reflect the acquisition premium. A Holder acquiring Preferred Securities at a
market discount will also include the amount of such discount in income in
accordance with the market discount rules described below.
A Holder acquiring Preferred Securities at a market discount generally will
be required to recognize ordinary income to the extent of accrued market
discount upon the retirement of the underlying Junior Subordinated Notes or, to
the extent of any gain, upon the disposition of the Preferred Securities. Such
market discount would accrue ratably, or, at the election of the Holder, under
a constant yield method over the remaining term of the Junior Subordinated
Notes. A Holder will also be required to defer the deduction of a portion of
the interest paid or accrued on indebtedness incurred to purchase or carry
Preferred Securities acquired with market discount. In lieu of the foregoing, a
Holder may elect to include market discount in income currently as it accrues
on all market discount instruments acquired by such Holder in the taxable year
of the election or thereafter, in which case the interest deferral rule will
not apply. A Holder may elect, in lieu of applying the market discount or
premium rules described above, to account for all income under the Preferred
Securities as if it were OID.
RECEIPT OF JUNIOR SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Preferred Securities--Special Event Redemption or Distribution," Junior
Subordinated Notes may be distributed to Holders in exchange for the Preferred
Securities and in liquidation of the Trust. Under current law, such a
distribution would be treated as a non-taxable event to each Holder, and each
Holder would receive an aggregate tax basis in the Junior Subordinated Notes
equal to such Holder's aggregate tax basis in its Preferred Securities. A
Holder's holding period in the Junior Subordinated Notes so received in
liquidation of the Trust would include the period for which the Preferred
Securities were held by such Holder.
37
<PAGE>
SALE OF PREFERRED SECURITIES AND REDEMPTION OF JUNIOR SUBORDINATED NOTES
A Holder that sells Preferred Securities, or whose Preferred Securities or
Junior Subordinated Notes (which shall have been distributed to Holders upon
liquidation of the Trust) are redeemed, will recognize gain or loss equal to
the difference between its adjusted tax basis in the Preferred Securities or
Junior Subordinated Notes and the amount realized on the sale or redemption. A
Holder's adjusted tax basis in the Preferred Securities or Junior Subordinated
Notes generally will be its initial purchase price increased by original issue
discount previously includible in such Holder's gross income to the date of
disposition (and the accrual of market discount, if any) and decreased by
payments received on the Preferred Securities and/or Junior Subordinated Notes.
Subject to the market discount rules described above, any such gain or loss
generally will be capital gain or loss.
A Holder disposing of its Preferred Securities or Junior Subordinated Notes
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest through the date of disposition in income
as ordinary income (i.e. OID), and to add such amount to its adjusted tax basis
in its Preferred Securities or Junior Subordinated Notes. To the extent the
selling price is less than the Holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), a Holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax
purposes.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes (the
"Proposed Legislation") that would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain debt
obligations, such as the Junior Subordinated Notes, issued on or after December
7, 1995. On March 29, 1996, Senate Finance Committee Chairman William V. Roth,
Jr. and House Ways and Means Committee Chairman Bill Archer issued a joint
statement (the "Joint Statement") indicating their intent that the Proposed
Legislation, if adopted by either of the tax-writing committees of Congress,
would have an effective date that is no earlier than the date of "appropriate
congressional action." Based upon the Joint Statement, it is expected that if
the Proposed Legislation were to be enacted, such legislation would not apply
to the Junior Subordinated Notes. There can be no assurance, however, that the
effective date guidance contained in the Joint Statement will be incorporated
into the Proposed Legislation, if enacted, or that other legislation enacted
after the date hereof will not otherwise adversely affect the ability of
Household International to deduct the interest payable on the Junior
Subordinated Notes. Accordingly, there can be no assurance that a Tax Event
will not occur. See "Description of the Preferred Securities--Special Event
Redemption or Distribution."
FOREIGN INVESTORS
Subject to the discussion of backup withholding below, interest (including
OID) with respect to the Preferred Securities paid to a nonresident alien
individual, foreign corporation, foreign partnership or non-resident alien or
foreign fiduciary of an estate or trust will be exempt from U.S. withholding
tax, provided that the holder complies with applicable certification
requirements (and does not actually or constructively own ten percent or more
of the voting stock of the Company and is not a controlled foreign corporation
related to the Company or its affiliates).
Under regulations proposed by the Service on April 15, 1996, payments of
interest to a foreign partnership made after December 31, 1997 would generally
be treated for purposes of the withholding tax rules as made to the partners
rather than to the partnership.
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Preferred
Securities will be reported to Holders on Form 1099, which forms should be
mailed to Holders of Preferred Securities by January 31 following each calendar
year.
38
<PAGE>
The Trust will be obligated to report annually to Cede & Co., as Holder of
record of the Preferred Securities, the OID with respect to the Preferred
Securities that accrued during that year. The Trust currently intends to report
such information on Form 1099 prior to January 31 following each calendar year
even though the Trust is not legally required to report to record Holders until
April 15 following each calendar year. The Underwriters have indicated to the
Trust that, to the extent that they hold Preferred Securities as nominees for
beneficial Holders, they currently expect to report to such beneficial Holders
on Forms 1099 by January 31 following each calendar year. Under current law,
Holders of Preferred Securities who hold as nominees for beneficial Holders
will not have any obligation to report information regarding the beneficial
Holders to the Trust. The Trust, moreover, will not have any obligation to
report to beneficial Holders who are not also record Holders. Thus, beneficial
Holders of Preferred Securities who hold their Preferred Securities through the
Underwriters will receive Forms 1099 reflecting the income on their Preferred
Securities from such nominee Holders rather than the Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities may
be subject to a "backup" withholding tax of 31% unless the Holder complies with
certain identification requirements. Any withheld amounts will be allowed as a
credit against the Holder's federal income tax, provided the required
information is provided to the Service.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
39
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Smith Barney
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co.,
PaineWebber Incorporated and Prudential Securities Incorporated are acting as
representatives (the "Representatives"), has severally agreed to purchase the
number of Preferred Securities set forth opposite its name below. In the
Underwriting Agreement, the several Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Preferred
Securities offered hereby if any of the Preferred Securities are purchased. In
the event of default by an Underwriter, the Underwriting Agreement provides
that, in certain circumstances, the purchase commitments of the nondefaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Smith Barney Inc..............................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................................
Goldman, Sachs & Co...........................................
PaineWebber Incorporated......................................
Prudential Securities Incorporated............................
---------
Total.................................................... 4,000,000
=========
</TABLE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus, and in part to certain securities dealers at such
price less a concession of $ per Preferred Security. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Preferred Securities
will be used to purchase the Junior Subordinated Notes of Household
International, the Underwriting Agreement provides that Household International
will agree to pay as compensation ("Underwriters' Compensation") for the
40
<PAGE>
Underwriters' arranging the investment therein of such proceeds, an amount in
same day funds of $ per Preferred Security (or $ in the aggregate)
for the accounts of the several Underwriters, provided that such compensation
for sales of 10,000 or more Preferred Securities to any single purchaser will
be $ per Preferred Security. Therefore, to the extent of such sales, the
actual amount of Underwriters' Compensation will be less than the aggregate
amount specified in the preceding sentence.
During a period of 30 days from the date of the Prospectus, neither the
Trust, nor Household International will, without the prior written consent of
the Underwriters, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any Preferred Securities, any
security convertible into or exchangeable into or exercisable for Preferred
Securities or any equity securities substantially similar to the Preferred
Securities (except for any series of subordinated debt securities and the
Preferred Securities offered hereby).
The Preferred Securities have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance. Trading of the Preferred
Securities on the New York Stock Exchange is expected to commence within a 30
day period after the initial delivery of the Preferred Securities. The
Representatives have advised the Trust that they intend to make a market in the
Preferred Securities prior to the commencement of trading on the New York Stock
Exchange. The Representatives will have no obligation to make a market in the
Preferred Securities, however, and may cease market making activities, if
commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
Household International and the Trust have agreed to indemnify the
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Household International and its subsidiaries
in the ordinary course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Trust by Morris, Nichols, Arsht
and Tunnell, Wilmington, Delaware, special Delaware counsel to the Trust. The
validity of the Junior Subordinated Notes, the Preferred Securities Guarantee
and certain matters relating thereto will be passed upon on behalf of Household
International by John W. Blenke, Vice President--Corporate Law and Assistant
Secretary of Household International. Certain legal matters will be passed upon
for the Underwriters by McDermott, Will & Emery, Chicago, Illinois. Certain
United States federal income taxation matters will be passed upon for Household
International and the Trust by Sidley & Austin, Chicago, Illinois.
EXPERTS
The financial statements and schedules of Household International and its
subsidiaries incorporated by reference in this Prospectus, to the extent and
for the periods indicated in its reports, have been audited by Arthur Andersen
LLP, independent public accountants, and are incorporated by reference herein
in reliance upon the authority of said firm as experts in giving said reports.
41
<PAGE>
DEFINITIONS
<TABLE>
<CAPTION>
TERM PAGE(S)
- ---- -------
<S> <C>
Additional Interest..................................................... 30
Appointment Event....................................................... 18
Base Indenture.......................................................... 26
Beneficial Owner........................................................ 22
Business Day............................................................ 14
Change in 1940 Act Law.................................................. 15
Commission.............................................................. 3
Common Securities....................................................... 1
Company................................................................. 1
DTC..................................................................... 21
Debt Trustee............................................................ 26
Declaration............................................................. 10
Declaration Event of Default............................................ 17
Direct Participants..................................................... 21
Dissolution Tax Opinion................................................. 15
Distributions........................................................... 2, 13
Event of Default........................................................ 31
Exchange Act............................................................ 3
Extension Period........................................................ 2, 13
Global Security......................................................... 32
Guarantee Payments...................................................... 24
Holder.................................................................. 36
HFC..................................................................... 9
Household Commercial.................................................... 9
Household International................................................. 1
Household International Trustees........................................ 9
Indenture............................................................... 26
Indenture Event of Default.............................................. 17
Indirect Participants................................................... 21
Interest Payment Date................................................... 29
Investment Company Event................................................ 15
Junior Subordinated Notes............................................... 2
Liquidation Distribution................................................ 17
MasterCard.............................................................. 9
New York Stock Exchange................................................. 1
1940 Act................................................................ 15
No Recognition Opinion.................................................. 15
OID..................................................................... 37
Participants............................................................ 21
Payment................................................................. 27
Preferred Guarantee Trustee............................................. 10, 24
Preferred Securities.................................................... 1
Preferred Securities Guarantee.......................................... 2
Property Account........................................................ 10
Property Trustee........................................................ 10
Redemption Price........................................................ 2
Redemption Tax Opinion.................................................. 15
Registration Statement.................................................. 3
Regular Trustees........................................................ 9
Representatives......................................................... 40
Senior Indebtedness..................................................... 27
Special Event........................................................... 15
Special Regular Trustee................................................. 10
Sponsor................................................................. 10
Successor Securities.................................................... 20
Super-Majority.......................................................... 19
Tax Event............................................................... 15
Trust................................................................... 1
Trust Act............................................................... 10
Trust Indenture Act..................................................... 9
Trust Securities........................................................ 1
Underwriters............................................................ 39
Underwriters' Compensation.............................................. 1, 40
Underwriting Agreement.................................................. 40
VISA.................................................................... 9
</TABLE>
42
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HOUSEHOLD INTERNATIONAL,
INC., HOUSEHOLD CAPITAL TRUST II OR THE UNDERWRITERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CRE-
ATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF HOUSEHOLD
INTERNATIONAL, INC. OR HOUSEHOLD CAPITAL TRUST II, SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-----------
TABLE OF CONTENTS
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
Prospectus Summary........................................................ 4
Risk Factors.............................................................. 5
Household International................................................... 9
Household Capital Trust II................................................ 10
Selected Financial Information............................................ 11
Capitalization of Household International................................. 12
Ratios of Earnings to Fixed Charges....................................... 12
Accounting Treatment...................................................... 12
Use of Proceeds........................................................... 12
Description of the Preferred Securities................................... 13
Description of the Preferred Securities Guarantee......................... 23
Description of the Junior Subordinated Notes.............................. 26
Effect of Obligations Under the Junior Subordinated Notes and the
Guarantee................................................................ 35
Certain Federal Income Tax Consequences................................... 36
Underwriting.............................................................. 40
Legal Matters............................................................. 41
Experts................................................................... 41
Definitions............................................................... 42
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4,000,000
PREFERRED SECURITIES
HOUSEHOLD CAPITAL TRUST II
% TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
HOUSEHOLD INTERNATIONAL, INC.
-------
PROSPECTUS
, 1996
-------
SMITH BARNEY INC.
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated Expenses:
<TABLE>
<S> <C>
Printing and Engraving....................................... $ 40,000.00
Fees of Trustees/Transfer Agents/Registrars.................. 20,000.00
Accountants' Fees............................................ 20,000.00
Blue Sky Qualifications Fees................................. 15,000.00
SEC Filing Fee*.............................................. 34,483.00
Rating Service Fees.......................................... 23,000.00
Stock Exchange Listing Fees.................................. 80,000.00
Legal Fees and Expenses...................................... 40,000.00
Miscellaneous................................................ 2,517.00
-----------
Total.................................................... $275,000.00
===========
</TABLE>
- --------
*Actual
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
1 Form of Underwriting Agreement for Preferred Securities.
4.1 Indenture between Household International, Inc. and The First National
Bank of Chicago, as Trustee dated as of May 15, 1995.
4.2 Form of Supplemental Indenture between Household International, Inc. and
The First National Bank of Chicago, as Trustee.
4.3+ Declaration of Trust of Household Capital Trust II.
4.4 Form of Amended and Restated Declaration of Trust.
4.5 Form of Preferred Security (included in Exhibit 4.4 above).
4.6 Form of Junior Subordinated Notes (included in Exhibit 4.2 above).
4.7 Form of Guarantee with respect to Preferred Securities.
4.8+ Certificate of Trust
5.1 Opinion and Consent of Mr. John W. Blenke, Vice President--Corporate Law
and Assistant Secretary of Household International, Inc.
5.2 Opinion and Consent of Morris, Nichols, Arsht and Tunnell.
8 Tax opinion of Sidley & Austin.
12 Statement on the Computation of Ratio of Earnings to Fixed Charges and to
Combined Fixed Charges and Preferred Stock Dividends (incorporated herein
by reference from Exhibit 12 to the Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 and from Exhibit 12 to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996 of Household
International, Inc. (File No. 1-8198)).
23.1 Consent of Arthur Andersen LLP, Certified Public Accountants.
23.2 Consent of Mr. John W. Blenke, Vice President--Corporate Law and Assistant
Secretary of Household International, Inc. is contained in his opinion
(Exhibit 5.1).
23.3 Consent of Sidley & Austin is contained in their opinion (Exhibit 8).
23.4 Consent of Morris, Nichols, Arsht and Tunnell is contained in their
opinion (Exhibit 5.2).
24.1+ Powers of Attorney with respect to Household International officers and
directors (filed previously).
24.2+ Powers of Attorney with respect to Household Capital Trust II trustees
(included in Exhibit 4.3 filed previously).
25.1 Statement of eligibility and qualification of Wilmington Trust Company
with respect to (i) the Declaration and (ii) the Preferred Securities
Guarantee.
25.2 Statement of eligibility and qualification of The First National Bank of
Chicago with respect to the Indenture.
</TABLE>
- --------
+Previously filed.
II-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO
THE REGISTRATION STATEMENT ON FORM S-3 TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PROSPECT HEIGHTS, AND
STATE OF ILLINOIS, ON THE 21ST DAY OF JUNE, 1996.
Household International, Inc.
*
By: _________________________________
William F. Aldinger
Chairman and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED AND ON THE 21ST DAY OF JUNE, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Chairman, Chief Executive Officer, and
___________________________________________ Director (as Principal Executive Officer)
(William F. Aldinger)
* Director
___________________________________________
(Robert J. Darnall)
* Director
___________________________________________
(Gary G. Dillon)
* Director
___________________________________________
(John A. Edwardson)
* Director
___________________________________________
(Mary Johnston Evans)
* Director
___________________________________________
(Dudley Fishburn, M.P.)
* Director
___________________________________________
(Cyrus F. Freidheim, Jr.)
* Director
___________________________________________
(Louis E. Levy)
* Director
___________________________________________
(George A. Lorch)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Director
___________________________________________
(John D. Nichols)
* Director
___________________________________________
(James B. Pitblado)
* Director
___________________________________________
(S. Jay Stewart)
* Director
___________________________________________
(Louis W. Sullivan, M.D.)
* Director
___________________________________________
(Raymond C. Tower)
* Executive Vice President-Chief Financial
___________________________________________ Officer (as Principal Accounting and
(David A. Schoenholz) Financial Officer)
</TABLE>
Patrick D. Schwartz
*By: ___________________________
(Patrick D. Schwartz)
Attorney-in-fact
The Registrant reasonably believes that the security rating to be assigned to
the Securities registered hereunder will make the Securities "investment grade
securities" pursuant to Transaction Requirement B.2 of Form S-3.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, HOUSEHOLD CAPITAL
TRUST II CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT ON FORM S-3 TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PROSPECT HEIGHTS,
STATE OF ILLINOIS, ON THIS 21ST DAY OF JUNE, 1996.
Household Capital Trust II
*
By: _________________________________
Name: Edgar Ancona
Title: Trustee
*
By: _________________________________
Name: B. B. Moss, Jr.
Title: Trustee
Patrick D. Schwartz
*By: ___________________________
(Patrick D. Schwartz)
Attorney-in-fact
The Registrant reasonably believes that the security rating to be assigned to
the Securities registered hereunder will make the Securities "investment grade
securities" pursuant to Transaction Requirement B.2 of Form S-3.
II-4
<PAGE>
Exhibit 1
---------
Household Capital Trust II
and
Household International, Inc.
4,000,000
Trust Preferred Securities
UNDERWRITING AGREEMENT
----------------------
_____________, 1996
Smith Barney Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Goldman, Sachs & Co.
PaineWebber Incorporated
Prudential Securities Incorporated
As Representatives of the Underwriters
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Household Capital Trust II (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. (S)(S) 3801 et
seq.), proposes, upon the terms and conditions set forth herein, to issue and
sell 4,000,000 ___% Trust Preferred Securities with an aggregate liquidation
amount equal to $100,000,000 (the "Preferred Securities") to the several
Underwriters named in Schedule I hereto (the "Underwriters").
The Preferred Securities will be guaranteed by Household International,
Inc., a Delaware corporation (the "Company"), with respect to distributions and
payments upon liquidation, redemption and otherwise (the "Preferred Securities
Guarantee") pursuant to the Preferred Securities Guarantee Agreement (the
"Preferred Securities Guarantee Agreement"), dated as of _________, 1996,
between the Company and Wilmington Trust Company, as trustee (the "Guarantee
Trustee"). The entire proceeds from the sale of the Preferred Securities will be
combined with the entire proceeds from the sale by the Trust to the Company of
its common securities (the "Common Securities"), as guaranteed by the Company,
to the extent set forth in the Prospectus, with respect to distributions and
payments upon liquidation and redemption (the "Common Securities Guarantee" and
together with the Preferred Securities Guarantee, the "Guarantees") pursuant to
the Common Securities Guarantee Agreement (the "Common Securities Guarantee
Agreement" and, together with the Preferred Securities Guarantee Agreement, the
"Guarantee Agreements"), dated as of __________, 1996, between the Company and
the Guarantee Trustee, as trustee, and will be used by the Trust to purchase the
$_______________ of _____% Junior Subordinated Deferable Interest Notes (the
"Junior Subordinated Notes") issued by the Company. The Preferred Securities and
the Common Securities will be issued pursuant to the amended and restated
declaration of trust of the Trust, dated as of _________, 1996 (the
"Declaration"),
<PAGE>
among the Company, as Sponsor, Edgar Ancona and B. B. Moss, Jr. (the "Regular
Trustees") and Wilmington Trust Company, a Delaware banking corporation, as
property trustee (the "Property Trustee" and together with the Regular Trustees,
the "Trustees"), and the holders from time to time of undivided beneficial
interests in the assets of the Trust. The Junior Subordinated Notes will be
issued pursuant to an indenture, dated as of May 15, 1995 (the "Base
Indenture"), between the Company and The First National Bank of Chicago, as
trustee (the "Debt Trustee"), and a supplement to the Base Indenture, dated as
of __________, 1996 (the "Supplemental Indenture" and together with the Base
Indenture and any other amendments or supplements thereto, the "Indenture"),
between the Company and the Debt Trustee.
The Trust and the Company (together, the "Offerors") wish to confirm as
follows their agreement with you and the other several Underwriters on whose
behalf you are acting as representatives (the "Representatives") in connection
with the several purchases of the Preferred Securities by the Underwriters.
1. Registration Statement and Prospectus. The Offerors have filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-3 (No. 333-_______) and a related preliminary prospectus for the
registration under the Securities Act of 1933 (the "1933 Act") of (i) the
Preferred Securities, (ii) the Preferred Securities Guarantee, and (iii) the
Junior Subordinated Notes to be issued and sold to the Trust by the Company,
have filed such amendments thereto, if any, and such amended preliminary
prospectuses as may have been required to the date hereof, and will file such
additional amendments thereto and such amended prospectuses as may hereafter be
required. Such registration statement (as amended) and the prospectus
constituting a part thereof (including, in each case, all documents incorporated
or deemed to be incorporated by reference therein pursuant to Item 12 of Form
S-3 under the 1933 Act and the information, if any, deemed to be part thereof
pursuant to Rule 430A(b) of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations")), as from time to time amended or
supplemented pursuant to the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or otherwise, are hereinafter referred to as the
"Registration Statement" and the "Prospectus", respectively, except that, if any
revised prospectus shall be provided to the Underwriters by the Offerors for use
in connection with the offering of the Preferred Securities which differs from
the Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Offerors pursuant to Rule 424(b) of the 1933 Act Regulations), the
term "Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Underwriters for such use. All references in this
Agreement to financial statements and schedules and other information that is
"contained," "included" or "stated" in the Registration Statement or the
Prospectus (and all other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information that
are or are deemed to be incorporated by reference in the Registration Statement
or the Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the Prospectus shall
be deemed to mean and include the filing of any document under the 1934 Act that
is or is deemed to be incorporated by reference in the Registration Statement or
the Prospectus, as the case may be.
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2. Agreements to Sell and Purchase. The Trust hereby agrees, subject to
all the terms and conditions set forth herein, to issue and sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Offerors herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Trust, at a purchase price of $____________ per Preferred
Security, plus accrued distributions, if any, from ____________, 1996, to the
Closing Time (as hereinafter defined), the number of Preferred Securities set
forth opposite the name of such Underwriter in Schedule I hereto (or such number
of Preferred Securities increased as set forth in Section 10 hereof).
In consideration of such purchases at the Closing Time (as defined below),
the Company shall pay to the Underwriters as compensation (in immediately
available funds), at the Closing Time, $______ per Preferred Security, provided,
however, that such compensation shall be $______ per Preferred Security for each
sale of 10,000 or more Preferred Securities to a single purchaser. The
Underwriters shall inform the Company in writing at the Closing Time of the
number of Preferred Securities so sold.
3. Terms of Public Offering. The Offerors have been advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Preferred Securities as soon as the Underwriters deem advisable after the
Registration Statement has become effective, this Agreement has been executed
and delivered, and the Declaration, the Preferred Securities Guarantee Agreement
and the Indenture have been qualified under the Trust Indenture Act of 1939 (the
"1939 Act").
4. Delivery of the Preferred Securities and Payment Therefor. Delivery to
the Underwriters of and payment for the Preferred Securities shall be made at
the office of McDermott, Will & Emery, 227 W. Monroe, Chicago, Illinois 60606,
at 9:00 A.M., Central Time, on ____________, 1996 (the "Closing Time"). The
place of closing for the Preferred Securities and the Closing Time may be varied
by agreement between you and the Company.
The Preferred Securities shall be delivered to you for the accounts of the
several Underwriters against payment of the purchase price therefor in
immediately available funds and registered in the name of CEDE & Co., as nominee
for the Depository Trust Company. The Preferred Securities to be delivered to
the Underwriters shall be made available to you in New York City for inspection
and packaging not later than 9:30 A.M., Eastern Time, on the business day next
preceding the Closing Time.
5. Agreements of Offerors. The Offerors jointly and severally agree with
the several Underwriters as follows:
(a) The Offerors will notify the Representatives promptly, and
confirm the notice in writing, (i) of the effectiveness of the Registration
Statement and any amendment thereto (including any post-effective
amendment), (ii) of the receipt of any comments from the Commission, (iii)
of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and
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(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose. The Offerors will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Offerors will give the Representatives notice of their
intention to file or prepare (i) any amendment to the Registration
Statement (including any post-effective amendment), (ii) any amendment or
supplement to the Prospectus (including any revised prospectus which the
Offerors propose for use by the Underwriters in connection with the
offering of the Preferred Securities which differs from the prospectus on
file at the Commission at the time the Registration Statement becomes
effective, whether or not such revised prospectus is required to be filed
pursuant to Rule 424(b) of the 1933 Act Regulations), or (iii) any document
that would as a result thereof be incorporated by reference in the
Prospectus whether pursuant to the 1933 Act, the 1934 Act or otherwise,
will furnish the Representatives with copies of any such amendment,
supplement or other document within a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file any such
amendment, supplement or other document or use any such prospectus to which
the Representatives or counsel for the Underwriters shall reasonably
object. Subject to the foregoing, the Offerors will file the Prospectus
pursuant to Rule 424(b) and Rule 430A under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement.
(c) The Offerors will deliver to the Representatives signed copies of
the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference
therein and documents incorporated or deemed to be incorporated by
reference therein) as the Representatives may reasonably request and will
also deliver to the Representatives as many conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters.
(d) The Offerors will furnish to each Underwriter, from time to time
during the period when the Prospectus is required to be delivered under the
1933 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request for the purposes
contemplated by the 1933 Act or the respective applicable rules and
regulations of the Commission thereunder.
(e) If at any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Preferred Securities, any
event shall occur as a result of which it is necessary, in the opinion of
counsel for the Underwriters or counsel to the Company and the Trust, to
amend or supplement
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the Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is to be delivered to a
purchaser, or if it shall be necessary at any such time, to amend the
Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations,
the Offerors will promptly prepare and file with the Commission, subject to
paragraph (b) above, such amendment or supplement as may be necessary to
correct such untrue statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements; and the Offerors
will furnish to the Underwriters a reasonable number of copies of such
amendment or supplement.
(f) The Offerors will endeavor, in cooperation with the Underwriters,
to qualify the Preferred Securities, the Preferred Securities Guarantee and
the Junior Subordinated Notes for offering and sale under the applicable
securities laws of such states and the other jurisdictions of the United
States as the Representatives may designate; provided, however, that none
of the Offerors shall be obligated to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified.
(g) The Trust will make generally available to its security holders
as soon as practicable but not later than 45 days after the close of the
period covered thereby, an earnings statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day of
the Trust's fiscal quarter next following the "effective date" (as defined
in said Rule 158) of the Registration Statement.
(h) The Offerors will use best efforts to effect the listing of the
Preferred Securities (including the Preferred Securities Guarantee with
respect thereto) on the New York Stock Exchange; if the Preferred
Securities are exchanged for Junior Subordinated Notes, the Company will
use its best efforts to effect the listing of the Junior Subordinated Notes
on the exchange on which the Preferred Securities were then listed.
(i) During a period of 30 days from the date of this Agreement,
neither the Trust nor the Company will, without the prior written consent
of the Representatives, directly or indirectly, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, any Preferred
Securities, any security convertible into or exchangeable into or
exercisable for Preferred Securities or the Junior Subordinated Notes or
any debt securities substantially similar to the Junior Subordinated Notes
or equity securities substantially similar to the Preferred Securities
(except for the Junior Subordinated Notes and the Preferred Securities
issued pursuant to this Agreement).
6. Representations and Warranties of the Offerors. The Offers jointly and
severally represent and warrant to, and agree with, each Underwriter that:
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(a) At the time the Registration Statement became or becomes
effective, the Registration Statement complied or will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations and
the 1939 Act and the rule and regulations of the Commission under the 1939 Act
(the "1939 Act Regulations"), and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, at the
date hereof (unless the term "Prospectus" refers to a prospectus that has been
provided to the Underwriters by the Trust for use in connection with the
offering of the Preferred Securities and that differs from the Prospectus on
file at the Commission at the time the Registration Statement becomes effective,
in which case, at the time it is first provided to the Underwriters for such
use) and at Closing Time referred to in Section 2 hereof, will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statement therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Offerors in writing by
any Underwriter through the Representatives expressly for use in the
Registration Statement or Prospectus.
(b) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement or Prospectus, at the time they were or
hereafter are filed with the Commission complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the Commission under the 1934 Act (the "1934 Act Regulations"), and, when read
together with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto become effective and at the
Closing Time, will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(c) To the best of the Company's knowledge, Arthur Andersen LLP, the
accountants who certified the financial statements and supporting schedules
included in the Registration Statement, are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(d) The financial statements included in the Registration Statement
and the Prospectus present fairly the financial position of the Company and its
consolidated subsidiaries as at the dates indicated and the results of their
operations for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
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consistent basis; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein.
(e) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, financial position or business
affairs of the Company and its subsidiaries, considered as one enterprise, or
the Trust, whether or not arising in the ordinary course of business, and (B)
there have been no transactions entered into by the Trust or by the Company or
any of its subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Trust or the Company and its
subsidiaries, considered as one enterprise.
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus, to enter into and perform
its obligations under this Agreement, the Declaration, the Indenture and each of
the Guarantees and to purchase, own, and hold the Common Securities issued by
the Trust; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
character or location of its properties or the nature or the conduct of its
business requires such qualification, except for any failures to be so qualified
or in good standing which, taken as a whole, are not material to the Company and
its subsidiaries considered as one enterprise.
(g) Each subsidiary of the Company which is a significant subsidiary
(a "Subsidiary") as defined in Rule 405 of the 1933 Act Regulations has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
character or location of its properties or the nature or the conduct of its
business requires such qualification, except for any failures to be so qualified
or in good standing which, taken as a whole, are not material to the Company and
its subsidiaries considered as one enterprise; all of the issued and outstanding
capital stock of each such Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable; and the capital stock of each such
Subsidiary owned by the Company, directly or through subsidiaries, is owned free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(h) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus (except for subsequent issuances, if
any, pursuant to reservations, agreements, employee benefit plans or the
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exercise of convertible securities referred to in the Prospectus); and all of
the issued and outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable.
(i) The Trust has been duly created and is validly existing and in
good standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement, the Preferred Securities, the Common
Securities and the Declaration; the Trust is duly qualified to transact business
as a foreign company and is in good standing in any other jurisdiction in which
such qualification is necessary, except to the extent that the failure to so
qualify or be in good standing would not have a material adverse effect on the
Trust; the Trust is not a party to or otherwise bound by any agreement other
than those described in the Prospectus; the Trust is and will be classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation; and the Trust is and will be treated as a
consolidated subsidiary of the Company pursuant to generally accepted accounting
principles.
(j) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement and Prospectus, will
be validly issued and (subject to the terms of the Declaration) fully paid and
non-assessable undivided beneficial interests in the assets of the Trust and
will conform to all statements relating thereto contained in the Prospectus; the
issuance of the Common Securities is not subject to preemptive or other similar
rights: and at the Closing Time all of the issued and outstanding Common
Securities of the Trust will be directly owned by the Company free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(k) This Agreement has been duly authorized, executed and delivered
by each of the Offerors.
(l) The Declaration has been duly authorized by the Company and, at
the Closing Time, will have been duly executed and delivered by the Company and
the Trustees, and assuming due authorization, execution and delivery of the
Declaration by the Property Trustee, the Declaration will, at the Closing Time,
be a valid and binding obligation of the Company and the Regular Trustees,
enforceable against the Company and the Regular Trustees in accordance with its
terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors rights generally or by general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity) (the "Bankruptcy Exceptions") and will conform to all statements
relating thereto in
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the Prospectus; and at the Closing Time, the Declaration will have been
duly qualified under the 1939 Act.
(m) Each of the Guarantee Agreements has been duly authorized by the
Company and, when validly executed and delivered by the Company, and, in
the case of the Preferred Securities Guarantee Agreement, assuming due
authorization, execution and delivery of the Preferred Securities Guarantee
by the Guarantee Trustee, will constitute a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions, and each of the Guarantees and the Guarantee
Agreements will conform to all statements relating thereto contained in the
Prospectus; and the Preferred Securities Guarantee Agreement, at the
Closing Time, will have been duly qualified under the 1939 Act.
(n) The Preferred Securities have been duly authorized by the
Declaration and, when issued and delivered pursuant to this Agreement
against payment of the consideration set forth herein, will be validly
issued and (subject to the terms of the Declaration) fully paid and non-
assessable undivided beneficial interests in the Trust, will be entitled to
the benefits of the Declaration and will conform to all statements relating
thereto contained in the Prospectus; the issuance of the Preferred
Securities is not subject to preemptive or other similar rights; and
(subject to the terms of the Declaration) holders of Preferred Securities
will be entitled to the same limitation of personal liability under
Delaware law as extended to stockholders of private corporations for
profit.
(o) The Indenture has been duly authorized by the Company and, when
validly executed and delivered by the Company, will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms except to the extent that enforcement thereof may
be limited by the Bankruptcy Exceptions; the Indenture will conform to all
statements relating thereto contained in the Prospectus; and at the Closing
Time, the Indenture will have been duly qualified under the 1939 Act.
(p) The Junior Subordinated Notes have been duly authorized by the
Company and, at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture
and delivered against payment therefor as described in the Prospectus, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except to the extent
that enforcement thereof may be limited by the Bankruptcy Exceptions, will
be in the form contemplated by, and entitled to the benefits of, the
Indenture and will conform to all statements relating thereto in the
Prospectus.
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(q) The Company's obligations under the Guarantees are subordinate
and junior in right of payment to all liabilities of the Company and are
pari passu with the preferred stock issued by the Company.
(r) The Junior Subordinated Notes are subordinated and junior in
right of payment to all "senior indebtedness" (as defined in the Indenture)
of the Company.
(s) Each of the Regular Trustees of the Trust is an employee of the
Company and has been duly authorized by the Company to execute and deliver
the Declaration; the Declaration has been duly executed and delivered by
the Regular Trustees and is a valid and binding obligation of each Regular
Trustee, enforceable against such Regular Trustee in accordance with its
terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(t) None of the Offerors is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act").
(u) The execution, delivery and performance of this Agreement, the
Declaration, the Preferred Securities, the Common Securities, the
Indenture, the Junior Subordinated Notes , the Guarantee Agreements and the
Guarantees and the consummation of the transactions contemplated herein and
therein and compliance by the Offerors with their respective obligations
hereunder and thereunder have been duly authorized by all necessary action
(corporate or otherwise) on the part of the Offerors and do not and will
not result in any violation of the charter or by-laws of the Company or any
Subsidiary, or the Declaration or Certificate of Trust and do not and will
not conflict with, or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Trust, the Company or any Subsidiary under (A) any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to
which the Trust, the Company or any Subsidiary is a party or by which it
may be bound or to which any of its properties may be subject (except for
conflicts, breaches or defaults which would not, individually or in the
aggregate, be materially adverse to the Trust or the Company and its
subsidiaries considered as one enterprise, or materially adverse to the
transactions contemplated by this Agreement), or (B) any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign, or
any regulatory body or administrative agency or other governmental body
having jurisdiction over the Trust, the Company, or any Subsidiary or any
of their respective properties.
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(v) Except as disclosed in the Prospectus, there is no action, suit
or proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge of the Trust
or the Company, threatened, against or affecting the Trust, the Company or
any of its subsidiaries that is required to be disclosed in the Prospectus,
other than actions, suits or proceedings which are not reasonably expected,
individually or in the aggregate, to have a material effect on the
condition, financial or otherwise, of the Trust or the Company and its
subsidiaries considered as one enterprise, or on the earnings, financial
position or business affairs of the Trust or the Company and its
subsidiaries considered as one enterprise; and there are no contracts or
documents of the Company, any of its subsidiaries or the Trust that are
required to be filed as exhibits to the Registration Statement by the 1933
Act or by the 1933 Act Regulations that have not been so filed.
(w) No authorization, approval, consent or order of any court or
governmental authority or agency is necessary in connection with the
issuance and sale of the Common Securities or the offering of the Preferred
Securities, the Junior Subordinated Notes or the Guarantees hereunder,
except such as may be required under the 1933 Act or the 1933 Act
Regulations, the 1934 Act or the 1934 Act Regulations or state securities
laws and the qualification of the Declaration, the Preferred Securities
Guarantee Agreement and the Indenture under the 1939 Act.
(x) The Company and the Subsidiaries and the Trust possess adequate
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies to conduct the business
now operated by them, and neither the Company nor any of the Subsidiaries
nor the Trust has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding would materially and adversely affect the
condition, financial or otherwise, or the earnings or business affairs of
the Company and its subsidiaries considered as one enterprise or of the
Trust.
(y) Each of the Offerors is in compliance with all provisions of
Section 1 of the Laws of Florida, Chapter 92-198, An Act Relating to
Disclosure of Doing Business With Cuba.
7. Indemnification and Contribution. (a) Each of the Trust and the
Company jointly and severally (subject to the provisions of subsection (f)
below) agrees to indemnify and hold harmless the Representatives and each other
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act from and
against any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) arising out of our based upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or in the Registration Statement or the Prospectus or in
any amendment or
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supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with information relating to such Underwriter furnished in writing to the
Offerors by or on behalf of any Underwriter through you expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any preliminary prospectus shall not inure to
the benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Preferred Securities by such Underwriter to any
person if a copy of the Prospectus shall not have been delivered or sent to such
person within the time required by the 1933 Act and the 1933 Act Regulations,
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such preliminary prospectus was
corrected in the Prospectus, provided that the Offerors have delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending. The foregoing indemnity agreement shall be
in addition to any liability which the Trust and the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Trust or the Company (subject to the
provisions of subsection (f) below), such Underwriter or such controlling person
shall promptly notify the Trust and the Company, and the Trust and the Company
shall assume the defense thereof, including the employment of counsel and
payment of all fees and expenses. Such Underwriter or any such controlling
person shall have the right to employ separate counsel in any such action, suit
or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the Trust or the Company has agreed in writing to
pay such fees and expenses, (ii) the Trust or the Company (subject to the
provisions of subsection (f) below) has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action, suit or proceeding
including any impleaded parties) include both such Underwriter or such
controlling person and the Trust or the Company and such Underwriter or such
controlling person shall have been advised by its counsel that representation of
such indemnified party and the Trust or the Company by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Trust or the
Company (subject to the provisions of subsection (f) below) shall not have the
right to assume the defense of such action, suit or proceeding on behalf of such
Underwriter or such controlling person). It is understood, however, that the
Trust and the Company together shall, in connection with any one such action,
suit or proceeding or separate but substantially similar or related actions,
suits or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys (in addition to any local counsel) at any
time for all such Underwriters and controlling persons not having actual or
potential differing interests with you or among themselves, which firm shall be
designated in writing by Smith Barney Inc., and that all such
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fees and expenses shall be reimbursed as they are incurred. The Trust and the
Company shall not be liable for any settlement of any such action, suit or
proceeding effected without the Company's written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the Trust and the Company agree to indemnify
and hold harmless any Underwriter, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss, claim,
damage, liability or expenses by reason of such settlement or judgement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Offerors, the Company's directors, the trustees of the Trust
and each officer of the Company who signed the Registration Statement, and any
person who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act, to the same extent as the foregoing indemnities
from the Trust and the Company to each Underwriter, but only with respect to
information relating to such Underwriter furnished in writing by or on behalf of
such Underwriter through you expressly for use in the Registration Statement,
the Prospectus or any preliminary prospectus, or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the Trust or
the Company, any of the Company's directors, any such officer or trustee, or any
such controlling person, based on the Registration Statement, the Prospectus or
any preliminary prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any Underwriter pursuant to
this paragraph (c), such Underwriter shall have the rights and duties given to
the Trust or the Company by paragraph (b) above (except that if the Trust or the
Company shall have assumed the defense thereof, such Underwriter shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the trust, the Company, the Company's directors, any
such officer or trustee, and any such controlling person shall have the rights
and duties given to the Underwriters by paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which the Underwriters
may otherwise have.
(d) If the indemnification provided for in this Section 7 is unavailable
to an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Trust and the
Company on the one hand and the Underwriters on the other hand from the offering
of the Preferred Securities, or (ii) if the allocations provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Trust and the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Trust and the Company on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Trust bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as
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set forth in the table on the cover page of the Prospectus. The relative fault
of the Trust and the Company on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Offerors on the one hand or by the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Trust, the Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
a pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the Preferred
Securities underwritten by it and distributed to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 7 are several
in proportion to the respective numbers of Preferred Securities set forth
opposite their names in Schedule I hereto (or such numbers of Preferred
Securities increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement incudes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Trust and the Company set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Trust, the Company, the Company's directors or
officers, the Trustees of the Trust, or any person controlling the Company, (ii)
acceptance of any Preferred Securities and payment therefor hereunder, and (iii)
any termination of this Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or to the Trust, the Company, the
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Company's directors or officers, the Trustees of the Trust, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution, and reimbursement agreements contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters to purchase the Preferred Securities hereunder are subject to the
following conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or at such later time and date as may be
approved in writing by the Representatives; and at Closing Time no stop
order suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission. The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the 1933 Regulations and in accordance with
Section 3(b) and prior to Closing Time the Offerors shall have provided
evidence satisfactory to the Representatives of such timely filing.
(b) At Closing Time the Representatives shall have received:
(1) The favorable opinion, dated as of Closing Time, of John W.
Blenke, Vice President-Corporate Law and Assistant Secretary of the
Company, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement and to enter into and perform
its obligations under this Agreement, except where the failure to have
such power and authority would not be material to the Company and its
subsidiaries considered as one enterprise.
(iii) To the best of his knowledge and information, the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, except where the failure to so qualify or
be in good standing would not be material to the Company and its
subsidiaries considered as one enterprise.
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(iv) Each Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and, to the best
of his knowledge and information, is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which the character or location of its properties or
the nature or conduct of its business requires such qualification,
except where the failure to have such power and authority or to so
qualify or be in good standing would not be material to the Company
and its subsidiaries considered as one enterprise; all of the issued
and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and,
to the best of his knowledge and information, the capital stock of
each such Subsidiary owned by the Company, directly or through
subsidiaries, is owned free and clear of any perfected security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(v) The Company has an authorized capitalization as set
forth in the Prospectus and all outstanding shares of its common and
preferred stock have been duly and validly authorized and issued and
are fully paid and nonassessable.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company.
(vii) The Registration Statement is effective under the 1933
Act and, and to the best of his knowledge and information, no stop
order suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceeding therefor initiated or
threatened by the Commission.
(viii) At the time the Registration Statement became
effective and at the Closing Time, the Registration Statement (other
than the financial statements and supporting schedules and other
financial or statistical data included therein, as to which no opinion
need be rendered) complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations.
(ix) To the best of his knowledge and information, there
are no contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other
than those described or referred to therein or filed or incorporated
by reference as exhibits thereto.
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(x) No authorization, approval, consent or order of any
court or governmental authority or agency is required in connection
with the offering, issuance or sale of the Preferred Securities, the
Preferred Securities Guarantee and the Junior Subordinated Notes to
the Underwriters, except (a) such as may be required under the 1933
Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations or state securities laws and (b) the qualification of the
Declaration, the Preferred Securities Guarantee Agreement and the
Indenture under the 1939 Act; and, to the best of his knowledge and
information, the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein and
compliance by the Company and the Trust with their obligations
hereunder and will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of the Subsidiaries or the Trust pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or any of the Subsidiaries or the Trust is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any of the Subsidiaries or
the Trust is subject (except for conflicts, breaches and defaults
which would not, individually or in the aggregate, be materially
adverse to the Company and its subsidiaries taken as a whole or the
Trust or materially adverse to the transactions contemplated by this
Agreement), nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the
Company, or any applicable law, administrative regulation or
administrative or court decree.
(xi) Each document filed pursuant to the 1934 Act (other
than the financial statements and supporting schedules and other
financial or statistical data included therein, as to which no opinion
need be rendered) and incorporated or deemed to be incorporated by
reference in the Prospectus complied when so filed as to form in all
material respects with the 1934 Act and the 1934 Act Regulations.
(xii) To the best of his knowledge and information and other
than as disclosed in the Registration Statement, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which individually or in the
aggregate is material, and, to the best of his knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(xiii) The Declaration has been duly qualified under the
1939 Act.
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(xiv) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Company; the Preferred
Securities Guarantee Agreement, assuming it is duly authorized,
executed and delivered by the Guarantee Trustee, constitutes a valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except to the extent that enforcement
thereof may be limited by Bankruptcy Exceptions; and the Preferred
Securities Guarantee Agreement has been duly qualified under the 1939
Act.
(xv) The Indenture has been duly executed and delivered by
the Company and, assuming due authorization, execution, and delivery
thereof by the Debt Trustee, is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions; the Indenture has been duly qualified under the
1939 Act; and the Indenture conforms to the description thereof in the
Prospectus.
(xvi) The Junior Subordinated Notes have been duly
authorized and executed by the Company and, when authenticated by the
Trustee in the manner provided in the Indenture and delivered against
payment therefor, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except to the extent that enforcement thereof may be limited by
the Bankruptcy Exception; and the Junior Subordinated Notes conform to
the description thereof in the Prospectus.
(xvii) Neither the Company nor the Trust is an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the 1940 Act.
(2) The favorable opinion of Morris, Nichols, Arsht and Tunnell,
Special Delaware counsel to the Offerors, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act;
all filings required under the laws of the State of Delaware with
respect to the formation and valid existence of the Trust as a
business trust have been made; the Trust has all necessary power and
authority to own property and to conduct its business as described in
the Registration Statement and the Prospectus and to enter into and
perform its obligations under this Agreement, the Preferred Securities
and the Common Securities; the Trust is duly qualified and in good
standing as a foreign company in any other jurisdiction in which such
qualification is necessary, except to the extent that the failure to
so qualify or be in
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good standing would not have a material adverse effect on the Trust;
and the Trust is not a party to or otherwise bound by any agreement
other than those described in the Prospectus.
(ii) The Declaration has been duly authorized, executed and
delivered by the Company and the Trustees and is a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be
limited by the Bankruptcy Exceptions.
(iii) The Common Securities have been duly authorized by
the Declaration and are validly issued and (subject to the terms of
the Declaration) fully paid and non-assessable beneficial interests in
the assets of the Trust, and the issuance of the Common Securities is
not subject to preemptive or other similar rights.
(iv) The Preferred Securities have been duly authorized by
the Declaration and are validly issued and (subject to the terms of
the Declaration), when delivered to and paid for by the Underwriters
pursuant to this Agreement, will be validly issued, fully paid and
non-assessable beneficial interests in the assets of the Trust; the
holders of the Preferred Securities will (subject to the terms of the
Declaration) be entitled to the same limitation of personal liability
under Delaware law as is extended to stockholders of private
corporations for profit; and the issuance of the Preferred Securities
is not subject to preemptive or other similar rights.
(v) The Common Securities, the Preferred Securities and the
Declaration conform in all material respects to all statements
relating thereto contained in the Prospectus.
(vi) All of the issued and outstanding Common Securities of
the Trust are directly owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equitable right.
(vii) This Agreement has been duly authorized, executed and
delivered by the Trust.
(viii) The execution, delivery and performance of this
Agreement, the Declaration, the Preferred Securities and the Common
Securities; the consummation of the transactions contemplated herein
and therein; and the compliance by the Trust with its obligations
hereunder and thereunder do not and will not result in any violation
of the Declaration or Certificate of Trust, and do not and will not
conflict with, or result in, a breach of
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any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Trust under (A) any
contract, indenture, mortgage, loan agreement, note, lease or any
other agreement or instrument known to such counsel to which the Trust
is a party or by which it may be bound or to which any of its
properties may be subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a
material adverse effect on the condition (financial or otherwise) or
business affairs of the Trust, (B) any existing applicable law, rule
or regulation (other than the securities or blue sky laws of the
various states, as to which such counsel need express no opinion) or
(C) any judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, or any regulatory body
or administrative agency or other governmental body having
jurisdiction over the Trust or any of its properties.
(3) The favorable opinion, dated as of Closing Time, of Morris,
Nichols, Arsht and Tunnell, counsel for Wilmington Trust Company, as
Property Trustee under the Declaration, and Guarantee Trustee under the
Preferred Securities Guarantee Agreement, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) Wilmington Trust Company is a Delaware banking
corporation with trust powers, duly organized, validly existing and in
good standing under the laws of the State of Delaware with all
necessary power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of the Declaration and the
Preferred Securities Guarantee Agreement.
(ii) The execution, delivery and performance by the
Property Trustee of the Declaration and the execution, delivery and
performance by the Guarantee Trustee of the Preferred Securities
Guarantee Agreement have been duly authorized by all necessary
corporate action on the part of the Property Trustee and the Guarantee
Trustee, respectively. The Declaration and the Guarantee Agreements
have been duly executed and delivered by the Property Trustee and the
Guarantee Trustee, respectively, and constitute the legal, valid and
binding obligations of the Property Trustee and the Guarantee Trustee,
respectively, enforceable against the Property Trustee and the
Guarantee Trustee, respectively, in accordance with their terms,
except as enforcement thereof may be limited by the Bankruptcy
Exceptions.
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(iii) The execution, delivery and performance of the
Declaration and the Guarantee Agreements by the Property Trustee and
the Guarantee Trustee, respectively, does not conflict with or
constitute a breach of the Articles of Organization or Bylaws of the
Property Trustee and the Guarantee Trustee, respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any Delaware or federal banking
authority is required for the execution, delivery or performance by
the Property Trustee and the Guarantee Trustee of the Declaration and
the Guarantee Agreements.
(4) The favorable opinion, dated as of Closing Time, of
McDermott, Will & Emery, counsel for the Underwriters, in form and
substance satisfactory to the Underwriters with respect to the legal
existence of the Company, the Preferred Securities, the Indenture, the
Junior Subordinated Notes, the Preferred Securities Guarantee Agreement,
this Agreement, the Registration Statement, the Prospectus and other
related matters as the Representatives may require.
In giving its opinion, McDermott Will & Emery may rely as to
certain matters of Delaware law upon the opinion of Morris, Nichols, Arsht
and Tunnell, counsel for the Offerors, which shall be delivered in
accordance with Section 8(b)(1) hereto.
(5) The favorable opinion of Sidley & Austin, special tax
counsel to the Company and the Trust, as to certain Federal tax matters set
forth in the Prospectus under "United States Income Taxation", in form and
substance satisfactory to the Representatives.
(6) In giving their opinions required by subsections (b) (1) and
(b)(4), respectively, of this Section, Mr. Blenke and McDermott, Will &
Emery shall each additionally state that nothing has come to their
attention that has caused them to believe that the Registration Statement
(except for financial statements and schedules and other financial or
statistical data included or incorporated by reference, therein, as to
which counsel need make no statement), at the time it became effective or
at the Closing Time, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus
(except for financial statements and schedules and other financial or
statistical data included or incorporated by reference therein, as to which
counsel need make no statement), at the date thereof or at Closing Time,
included an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
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(7) At Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change
in the condition, financial or otherwise, or in the earnings or business
affairs of the Trust or the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Representatives shall have received a certificate of a Vice President
of the Company and of the chief financial or chief accounting officer of
the Company and a certificate of a Trustee of the Trust, and dated as of
Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 6 hereof
are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) the Trust and the Company have
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been initiated or threatened by
the Commission.
(8) At Closing Time, the Representatives shall have received
from Arthur Andersen LLP, a letter dated such date, in form and substance
satisfactory to the Representatives.
(9) At Closing Time, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the
Preferred Securities as herein contemplated and related proceedings, or in
order to evidence the accuracy of any of the representations or warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Offerors, in connection with the issuance and sale
of the Preferred Securities as herein contemplated shall be satisfactory in
form and substance to the Representatives and McDermott, Will & Emery,
counsel for the Underwriters.
(10) At Closing Time, there shall not have occurred any decrease
in the ratings of any of the debt securities of the Company or of the
Preferred Securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act).
(11) At Closing Time, the Preferred Securities shall have been
approved for listing on the New York Stock Exchange upon notice of
issuance.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Offerors at any time at
or prior to Closing Time, and such termination shall be without liability
of any party to any other party except as provided in Section 9 hereof.
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9. Expenses. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it and by the
Trust of its and the Trust's respective and joint obligations hereunder: (i)
the preparation, printing (or reproduction), and filing with the Commission of
the Registration Statement (including financial statements and exhibits
thereto), each preliminary prospectus, the Prospectus, each amendment or
supplement to any of them, this Agreement, the Declaration, the Preferred
Securities Guarantee, the Indenture and the Statement of Eligibility and
Qualification of each of the Property Trustee, the Guarantee Trustee and the
Debt Trustee; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the Registration Statement, each preliminary prospectus, the
Prospectus, the documents incorporated therein by reference, and all amendments
or supplements to any of them, as may be reasonably requested for use in
connection with the offering and sale of the Preferred Securities; (iii) the
preparation, printing (or reproduction), execution and delivery of the
Declaration, the Preferred Securities Guarantee and the Indenture and the
preparation, printing, authentication, issuance and delivery of the Preferred
Securities, including any stamp taxes in connection with the original issuance
of the Preferred Securities; (iv) the printing (or reproduction) and delivery of
this Agreement, the preliminary and supplemental Blue Sky Memoranda and all
other agreements or documents printed (or reproduced) and delivered in
connection with the offering the Preferred Securities; (v) the registration of
the Securities under the Exchange Act and the listing of the Securities on the
New York Stock Exchange; (vi) the registration or qualification of the
Securities for offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 5(g) hereof (including the reasonable
fees, expenses and disbursements of counsel for the Underwriters relating to the
preparation, printing (or reproduction), and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification); (vii)
the filing fees and the fees and expenses of counsel for the Underwriters in
connection with any filing required to be made with the National Association of
Securities Dealers, Inc.; (viii) the fees and expenses of the Property Trustee,
the Guarantee Trustee and the Debt Trustee; (ix) the fees and expenses
associated with obtaining ratings for the Preferred Securities and the Junior
Subordinated Notes from nationally recognized statistical rating organizations;
and (x) the fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the Offerors.
10. Effective Date of Agreement. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Preferred Securities may commence, when
notification of the effectiveness of the registration statement or such post-
effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the Company
or the Trust, by notifying you, or by you, as Representatives of the several
Underwriters, by notifying the Offerors.
If any one or more of the Underwriters shall fail or refuse to purchase
Preferred Securities which it or they are obligated to purchase hereunder, and
the aggregate number of Preferred Securities which such defaulting Underwriter
or Underwriters are obligated but fail
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or refuse to purchase is not more than one-tenth of the aggregate number of the
Preferred Securities, each non-defaulting Underwriter shall be obligated,
severally, in the proportion which the number of Preferred Securities set forth
opposite its name in Schedule I hereto bears to the aggregate number of
Preferred Securities set forth opposite the names of all non-defaulting
Underwrites, to purchase the Preferred Securities which such defaulting
Underwriter or Underwriters are obligated, but failed or refused, to purchase.
If any Underwriter or Underwriters shall fail or refuse to purchase Preferred
Securities and the aggregate number of Preferred Securities with respect to
which such default occurs is more than one-tenth of the aggregate number of the
Preferred Securities and arrangements satisfactory to you and the Offerors for
the purchase of such Preferred Securities by one or more non-defaulting
Underwriters or other party or parties approved by you and the Offerors are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Offerors. In any
such case which does not result in termination of this Agreement, either you or
the Offerors shall have the right to postpone the Closing Time, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with your approval and the approval of the Offerors,
purchases Preferred Securities which a defaulting Underwriter is obligated, but
fail or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Offerors, by notice to the Offerors, if prior to the Closing
Time: (i) trading in securities generally on the New York Stock Exchange shall
have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York or Delaware shall have been declared
by either federal or state authorities, or (iii) there shall have occurred any
outbreak or escalation of hostilities or other international or domestic
calamity, crisis or change in political, financial or economic conditions, the
effect of which on the financial markets of the United States is such as to make
it, in your judgment, impracticable or inadvisable to commence or continue the
offering of the Preferred Securities on the terms set forth on the cover page of
the Prospectus or to enforce contracts for the resale of the Preferred
Securities by the Underwriters. Notice of such termination may be given to the
Company by telegram, telecopy or telephone and shall be subsequently confirmed
by letter.
12. Information Furnished by the Underwriters. The statements set forth
in the last paragraph on the cover page, the stabilization legend on the second
page, and the statements in the second paragraph under the caption
"Underwriting" in any preliminary prospectus and the Prospectus, constitute the
only information furnished by or on behalf of the Underwriters through you as
such information is referred to in Sections 6(b) and 7 hereof.
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13. Miscellaneous. Except as otherwise provided in Sections 5, 10 and 11
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Offerors, to the Company, or to the
Trust, care of the Company, at the office of the Company at the address
specified in the Prospectus, Attention: Secretary; or (ii) if to you, as
Representatives of the several Underwriters, care of Smith Barney Inc., 388
Greenwich Street, New York, New York 10013, Attention: Manager, Investment
Banking Division, with a copy to McDermott, Will & Emery, 227 W. Monroe,
Chicago, IL 60606, Attention: Scott N. Gierke.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Trust, the Company, the Company's directors and officers, the
Trustees, and the other controlling persons referred to in Section 7 hereof and
their respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns"
as used in this Agreement shall include a purchaser from any Underwriter of any
of the Preferred Securities in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
-25-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement among
the Trust, the Company and the several Underwriters.
Very truly yours,
HOUSEHOLD CAPITAL TRUST II
By: _______________________________
as Regular Trustee
By: _______________________________
as Regular Trustee
HOUSEHOLD INTERNATIONAL, INC.
By: _______________________________
Name:
Title:
Confirmed as of the date first above
mentioned on behalf of themselves
and the other several Underwriters
named in Schedule I hereto.
Smith Barney Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Goldman, Sachs & Co.
PaineWebber Incorporated
Prudential Securities Incorporated
By: SMITH BARNEY INC.
By: ________________________________
Managing Director
-26-
<PAGE>
SCHEDULE I
NAME OF TRUST
_____% Trust Preferred Securities
Number of
Underwriter Preferred Securities
----------- --------------------
Smith Barney Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Goldman, Sachs & Co.
PaineWebber Incorporated
Prudential Securities Incorporated
Total ................................ 4,000,000
=========
-27-
<PAGE>
Exhibit 4.1
================================================================================
HOUSEHOLD INTERNATIONAL, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE.
---------------
INDENTURE
Dated as of May 15, 1995
---------------
Providing for issuance of Subordinated Debt Securities in Series
================================================================================
<PAGE>
Tie of certain provisions of Trust Indenture Act of 1939, as amended with
Indenture, dated as of May 15, 1995, between Household International, Inc. and
The First National Bank of Chicago, as Trustee*
<TABLE>
<CAPTION>
SECTION OF
SECTION OF ACT INDENTURE
- -------------- ----------
<S> <C>
310 (a) (1)............................................... 8.08
(a) (2)............................................... 8.08
Not
(a) (3)............................................... Applicable
Not
(a) (4)............................................... Applicable
(b)................................................... 8.08, 8.10
311 (a)................................................... 8.09
(b)................................................... 8.09
312 (a)................................................... 9.01
9.02(a)
(b)................................................... 9.02(b)
(c)................................................... 9.02(b)
313 (a)................................................... 9.03(a)
(b)................................................... 9.03(a)
(c)................................................... 9.03(a)
9.03(b)
(d)................................................... 9.03(c)
314 (a)................................................... 3.07
Not
(b)................................................... Applicable
(c) (1)............................................... 1.02
(c) (2)............................................... 1.02
Not
(c) (3) .............................................. Applicable
Not
(d) .................................................. Applicable
(e) .................................................. 1.02
315 (a) .................................................. 8.01(a)
8.01(c)
(b) .................................................. 8.02
9.03(a)
(c) .................................................. 8.01(b)
(d) .................................................. 8.01(c)
(d) (1) .............................................. 8.01(c)(1)
(d) (2) .............................................. 8.01(c)(2)
(d) (3) .............................................. 8.01(c)(3)
</TABLE>
- ----------------
* This tie of provisions does not constitute a part of the Indenture and is
for convenience of reference only.
<PAGE>
<TABLE>
<CAPTION>
SECTION OF
SECTION OF ACT INDENTURE
- -------------- ----------
<S> <C>
315 (e)................................................... 7.14
316 (a)................................................... 1.01
(a) (1) (A)........................................... 7.02
7.12
(a) (1) (B)........................................... 7.13
Not
(a) (2)............................................... Applicable
(b)................................................... 7.08
317 (a) (1)............................................... 7.03
(a) (2)............................................... 7.04
(b)................................................... 3.03
318 (a)................................................... 1.07
</TABLE>
<PAGE>
HOUSEHOLD INTERNATIONAL, INC.
Indenture dated as of May 15, 1995
---------------
TABLE OF CONTENTS**
---------------
<TABLE>
<CAPTION>
Page
<S> <C>
Parties ......................................................... 1
Recitals ........................................................ 1
</TABLE>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<TABLE>
<CAPTION>
SECTION 1.01 Definitions
<S> <C> <C>
Act........................................... 2
Affiliate; Control............................ 2
Authenticating Agent.......................... 2
Authorized Newspaper.......................... 2
Board of Directors............................ 2
Board Resolution.............................. 2
Business Day.................................. 2
Commission; SEC............................... 3
Company....................................... 3
Company Request; Company Order;
Company Consent............................. 3
Corporate Trust Office........................ 3
Depository.................................... 3
Depository Note............................... 3
Event of Default.............................. 3
Holder........................................ 4
Indenture..................................... 4
Independent................................... 4
Interest...................................... 4
Interest Payment Date......................... 4
Maturity...................................... 4
Notes......................................... 4
</TABLE>
**This Table of Contents does not constitute a part of the Indenture and is for
convenience of reference only.
i
<PAGE>
<TABLE>
<S> <C> <C>
Note Register; Note Registrar................. 4
Officers' Certificate......................... 4
Opinion of Counsel............................ 5
Original Issue Discount Note.................. 5
Outstanding................................... 5
Paying Agent.................................. 6
Person........................................ 6
Predecessor Notes............................. 6
Redemption Date............................... 6
Redemption Price.............................. 6
Regular Record Date........................... 6
Responsible Officer........................... 6
Senior Indebtedness........................... 7
Special Record Date........................... 7
Stated Maturity............................... 7
Subsidiary.................................... 7
Trustee....................................... 7
Trust Indenture Act; TIA...................... 8
Voting Stock.................................. 8
Section 1.02 Compliance Certificates and Opinions.......... 8
Section 1.03 Form of Documents Delivered to Trustee........ 8
Section 1.04 Acts of Holders............................... 9
Section 1.05 Notices, etc., to Trustee and Company......... 11
Section 1.06 Notices to Holders; Waiver.................... 10
Section 1.07 Conflict with Trust Indenture Act............. 11
Section 1.08 Effect of Headings and Table of Contents...... 11
Section 1.09 Successors and Assigns........................ 11
Section 1.10 Separability Clause........................... 12
Section 1.11 Benefits of Indenture......................... 12
Section 1.12 Governing Law................................. 11
Section 1.13 Payment on Business Day....................... 12
Section 1.14 Incorporation by Reference of Trust
Indenture Act............................... 12
ARTICLE II
ISSUE, EXECUTION AND REGISTRATION OF NOTES
Section 2.01 Issuance of Notes in Series................... 13
Section 2.02 Form, Authentication and Delivery
of Notes.................................... 14
Section 2.03 Execution of Notes............................ 16
Section 2.04 Temporary Notes............................... 16
Section 2.05 Exchange and Transfers of Notes............... 17
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 2.06 Mutilated, Destroyed, Lost or Stolen
Notes.......................................... 18
Section 2.07 Payment of Interest; Interest Rights
Preserved...................................... 19
Section 2.08 Persons Deemed Owners............................ 20
Section 2.09 Cancellation of Notes............................ 21
Section 2.10 Appointment of Authenticating Agent.............. 21
Section 2.11 Notes Issuable in the Form of a
Depository Note................................ 22
ARTICLE III
COVENANTS
Section 3.01 Payment of Principal, Premium and
Interest....................................... 23
Section 3.02 Maintenance of Office or Agency.................. 23
Section 3.03 Money for Note Payments to be Held in
Trust.......................................... 23
Section 3.04 Payment of Taxes and Other Claims................ 25
Section 3.05 Statement as to Compliance....................... 25
Section 3.06 Corporate Existence.............................. 25
Section 3.07 Filing of Reports................................ 25
ARTICLE IV
REPAYMENT AT OPTION OF HOLDERS
Section 4.01 Optional Repayment of Notes ...................... 25
Section 4.02 Repayment Procedure for Notes .................... 26
ARTICLE V
REDEMPTION OF NOTES; SINKING FUNDS
Section 5.01 Applicability of Redemption Provisions........... 26
Section 5.02 Election to Redeem; Notice to Trustee............ 26
Section 5.03 Selection by Trustee of Notes to be
Redeemed....................................... 27
Section 5.04 Notice of Redemption............................. 27
Section 5.05 Deposit of Redemption Price...................... 28
Section 5.06 Notes Payable on Redemption Date................. 28
Section 5.07 Notes Redeemed in Part........................... 28
Section 5.08 Sinking Funds.................................... 29
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
Section 5.09 Satisfaction of Sinking Fund Payments
with Notes.................................. 29
Section 5.10 Redemption of Notes for Sinking Fund........ 29
ARTICLE VI
SATISFACTION AND DISCHARGE
Section 6.01 Satisfaction and Discharge of Indenture...... 30
Section 6.02 Application of Trust Money................... 31
Section 6.03 Satisfaction, Discharge, and Defeasance
of Notes of any Series....................... 31
Section 6.04 Subordination not Effective.................. 33
ARTICLE VII
REMEDIES
Section 7.01 Events of Default............................ 33
Section 7.02 Acceleration of Maturity; Rescission and
Annulment.................................... 35
Section 7.03 Collection of Indebtedness and Suits for
Enforcement by Trustee....................... 36
Section 7.04 Trustee May File Proofs of Claim............. 37
Section 7.05 Trustee May Enforce Claims Without Possession
of Notes..................................... 37
Section 7.06 Application of Money Collected............... 38
Section 7.07 Limitation on Suits.......................... 38
Section 7.08 Unconditional Right of Holders to Receive
Principal, Premium and Interest.............. 39
Section 7.09 Restoration of Rights and Remedies........... 39
Section 7.10 Rights and Remedies Cumulative............... 39
Section 7.11 Delay or Omission Not Waiver................. 39
Section 7.12 Control by Holders........................... 40
Section 7.13 Waiver of Past Defaults...................... 40
Section 7.14 Undertaking for Costs........................ 40
Section 7.15 Waiver of Stay or Extension Laws............. 41
ARTICLE VIII
THE TRUSTEE
Section 8.01 Certain Duties and Responsibilities............ 41
Section 8.02 Notice of Defaults............................. 42
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C> <C>
Section 8.03 Certain Rights of Trustee................... 43
Section 8.04 Not Responsible for Recitals or Issuance
of Notes.................................. 44
Section 8.05 May Hold Notes.............................. 44
Section 8.06 Money Held in Trust......................... 44
Section 8.07 Compensation and Reimbursement.............. 44
Section 8.08 Corporate Trustee Required; Eligibility;
Disqualification; Conflicting Interests... 45
Section 8.09 Preferential Collection of Claims Against
Company................................... 45
Section 8.10 Resignation and Removal; Appointment of
Successor................................. 45
Section 8.11 Acceptance of Appointment by Successor...... 47
Section 8.12 Merger, Conversion, Consolidation or
Succession to Business.................... 47
ARTICLE IX
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 9.01 Company to Furnish Trustee Names and
Addresses of Holders...................... 47
Section 9.02 Preservation of Information; Communications
to Holders................................ 48
Section 9.03 Reports by Trustee.......................... 48
ARTICLE X
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01 Company May Consolidate, etc. only on
Certain Terms ............................. 49
Section 10.02 Successor Corporation Substituted ........... 49
ARTICLE XI
SUPPLEMENTAL INDENTURE
Section 11.01 Supplemental Indentures Without Consent
of Holders............................... 50
Section 11.02 Supplemental Indentures With Consent of
Holders.................................. 51
Section 11.03 Execution of Supplemental Indentures....... 52
Section 11.04 Effect of Supplemental Indentures.......... 52
</TABLE>
v
<PAGE>
<TABLE>
<S> <C> <C>
Section 11.05 Conformity with Trust Indenture Act....... 52
Section 11.06 Reference in Notes to Supplemental
Indentures................................ 52
ARTICLE XII
SUBORDINATION
Section 12.01 Subordination of Notes ................... 52
ARTICLE XIII
Section 13.01 Assignment................................ 53
</TABLE>
vi
<PAGE>
THIS INDENTURE, dated as of the 15th day of May, 1995, between Household
International, Inc., a corporation duly organized and validly existing under the
laws of the State of Delaware (hereinafter sometimes called the "Company"),
having its principal office at 2700 Sanders Road, Prospect Heights, IL 60070,
and The First National Bank of Chicago, a national banking association
(hereinafter called the "Trustee").
WITNESSETH:
WHEREAS, the Company deems it necessary from time to time to borrow money
for its corporate purposes and to issue its debt securities therefor, and to
that end has duly authorized and directed the execution and delivery of this
Indenture to provide for one or more series of its unsecured junior subordinated
debentures, subordinated notes, subordinated debt securities or other evidences
of subordinated indebtedness (hereinafter called "Notes"), issuable as in this
Indenture provided; and
WHEREAS, all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of Notes to be
issued hereunder by Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and
<PAGE>
(4) all other terms used herein which are defined in the TIA, either
directly or by reference therein, has the meanings assigned to them
therein.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.04.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Notes.
"Authorized Newspaper" when used in connection with the name of a
particular city, means a newspaper, printed in an official language of the
country of publication, of general circulation and customarily published in such
city on each Business Day, whether or not published on Saturdays, Sundays or
holidays. Whenever successive weekly publications in an Authorized Newspaper
are required hereunder they may be made (unless otherwise expressly provided
herein) on the same or different days of the week and in the same or in
different Authorized Newspapers.
"Board of Directors" means either the board of directors of the Company,
any duly authorized committee of that board, or any officer of the Company duly
authorized by the board of directors of the Company or a duly authorized
committee of that board.
"Board Resolution" means an instrument delivered to the Trustee by the
Company which is a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors, or action taken by any officer of the Company duly authorized by the
Board of Directors as certified to by the Secretary or an Assistant Secretary,
which resolution or action is to be in full force and effect on the date of such
certification.
"Business Day" means any day on which federal or state banking institutions
in either Chicago, Illinois or New York, New York are authorized or obligated by
law, executive order or regulation to close.
2
<PAGE>
"Commission" or "SEC" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
"Company" means the Person named as the Company in the first paragraph of
this Indenture until a successor entity shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter Company shall mean such
successor entity.
"Company Request", "Company Order" and "Company Consent" means,
respectively, a written request, order or consent signed in the name of the
Company by its President, a Vice President, or its Treasurer and by an Assistant
Treasurer, Controller, an Assistant Controller, Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall be
administered, which office at the date hereof is located at One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust
Services Division, except that for purposes of Section 3.02, such term shall
mean the office or agency of the Trustee in the Borough of Manhattan, the City
of New York, which office at the date hereof is located at 14 Wall Street,
Eighth Floor, New York, New York 10005.
"Depository" shall mean, with respect to Notes of any series for which the
Company shall determine that such Notes will be issued as a Depository Note, The
Depository Trust Company, New York, New York, another clearing agency or any
successor registered under the Securities Exchange Act of 1934, or other
applicable statute or regulation, which, in each case, shall be designated by
the Company pursuant to either Section 2.01 or 2.11.
"Depository Note" shall mean, with respect to any series of Notes, a Note
executed by the Company and authenticated and delivered by the Trustee to the
Depository or pursuant to the Depository's instruction, all in accordance with
this Indenture and pursuant to a Company Order, which (i) shall be registered as
to principal and interest in the name of the Depository or its nominee and (ii)
shall represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all of the Outstanding Notes of such series.
"Event of Default" has the meaning specified in Section 7.01.
3
<PAGE>
"Holder" means a Person in whose name a Note is registered in the Note
Register.
"Indenture" means this Indenture dated as of May 15, 1995 and, unless the
context otherwise indicates, all Board Resolutions or indentures supplementing
and amending this Indenture.
"Independent" when used with respect to any specified Person means such a
Person who (1) is in fact independent, (2) does not have any material direct or
indirect financial interest in the Company or in any other obligor upon the
Notes or in any Affiliate of the Company or of such other obligor, and (3) is
not connected with the Company or such other obligor or any Affiliate of the
Company or of such other obligor, as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Whenever it is herein provided that any Independent Person's opinion or
certificate shall be furnished to the Trustee, such Person shall be appointed by
a Company Order, and such opinion or certificate shall state that the signer has
read this definition and that the signer is Independent within the meaning
hereof.
"Interest", when used with respect to an Original Issue Discount Note which
by its terms bears interest only after Maturity, means interest payable after
Maturity.
"Interest Payment Date" means the Stated Maturity of interest on Notes of a
particular series.
"Maturity" when used with respect to Notes of a particular series means the
date on which the principal or any installment of principal of such Notes
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Notes" means all unsecured junior subordinated debt securities issued
under this Indenture, regardless of series.
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.05.
"Officers' Certificate" means a certificate signed by the President, a Vice
President or the Treasurer, and by an Assistant Treasurer, the Controller, an
Assistant Controller, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee. Wherever this Indenture requires that an
Officers' Certificate be signed also by an accountant or other expert, such
accountant or other expert (except as otherwise expressly provided in this
Indenture) may be in the employ of the Company.
4
<PAGE>
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company or other counsel reasonably satisfactory to the Trustee.
"Original Issue Discount Note" means any Note which provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant to Section 7.02.
"Outstanding" when used with respect to Notes means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore canceled by the Trustee, or delivered to the
Trustee or any agent of the Trustee for cancellation;
(ii) Notes or portions thereof for whose payment or redemption money
in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent, other than the Company, in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes, provided that, if such Notes
or any portions thereof are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Notes which have been paid pursuant to Section 2.06 or in
exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture other than any such Notes in respect
of which there shall have been presented to the Trustee proof satisfactory
to it that such Notes are held by a bona fide purchaser in whose hands such
Notes are valid obligations of the Company; and
(iv) any such Notes which have been defeased pursuant to Section 6.03.
provided, however, that in determining whether the Holders of the requisite
principal amount of Notes Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, or for any other
purpose, (i) Notes owned by the Company or any other obligor upon the Notes or
any Affiliate of the Company or such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which the Trustee knows to be
so owned shall be so disregarded, and Notes so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
5
<PAGE>
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or such other obligor, and (ii) the
principal amount of an Original Issue Discount Note that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration pursuant to Section 7.02.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Notes on behalf of the
Company.
"Person" means any individual, corporation, bank, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Notes" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for purposes of this definition, any Note authenticated
and delivered under Section 2.06 in exchange for or in lieu of a mutilated,
destroyed, lost, or stolen Note shall be deemed to be evidence the same debt as
the mutilated, destroyed, lost, or stolen Note.
"Redemption Date" when used with respect to any Note to be redeemed means
the date fixed for such redemption by or pursuant to this Indenture, any
indenture supplemental hereto, or Board Resolution as provided in Section 2.01
of this Indenture.
"Redemption Price" when used with respect to any Note to be redeemed means
the price at which it is to be redeemed pursuant to this Indenture, any
indenture supplemental hereto, or Board Resolution as provided in Section 2.01
of this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
means, with respect to Notes of any series, the date specified as the Regular
Record Date therefor in the relevant supplemental indenture or Board Resolution
authorizing such series of Notes.
"Responsible Officer" when used with respect to the Trustee means an
officer of the Trustee assigned to the Corporate Trust Office, including any
vice president or assistant vice president, any trust officer or assistant trust
officer, or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other
6
<PAGE>
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Senior Indebtedness" means with respect to the Company, (i) any payment in
respect of (a) indebtedness of such obligor for money borrowed (including any
financial derivative, hedging or futures contract or similar instrument) and (b)
indebtedness evidenced by securities, debentures, bonds, notes or other similar
instruments issued by the Company which, by their terms, are senior or senior
subordinated debt securities including, without limitation, all obligations
under its indentures with various trustees; (ii) all capital lease obligations;
(iii) all obligations issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations of the Company
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business); (iv) all obligations for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type referred
to in clauses (i) through (v) above of other persons the payment of which the
Company is responsible or liable as obligor, guarantor or otherwise; and (vi)
all obligations of the type referred to in clauses (i) through (v) above of
other persons secured by any lien on any property or asset of the Company
(whether or not such obligation is assumed by the Company), except for (1) any
such indebtedness that is by its terms subordinated to or pari passu with the
Notes and (2) any unsecured indebtedness between or among the Company or its
affiliates.
"Special Record Date" for the payment of any Defaulted Interest (as defined
in Section 2.07) means a date fixed by the Trustee pursuant to Section 2.07.
"Stated Maturity" when used with respect to any Note or any installment of
principal thereof or any installment of interest thereon means the date
specified in such Note as the fixed date on which the principal of such Note or
such installment of principal or interest is due and payable.
"Subsidiary" of the Company means any corporation at least a majority of
the shares of the Voting Stock (or the equivalent thereof, in the case of
corporations organized outside the United States of America) of which shall at
the time be owned, directly or indirectly, by the Company or by one or more
Subsidiaries or by the Company and one or more Subsidiaries.
"Trustee" means the Person named as the Trustee in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this
7
<PAGE>
Indenture, and thereafter Trustee shall mean such successor Trustee.
"Trust Indenture Act" or "TIA", means the Trust Indenture Act of 1939, as
it may be amended from time to time.
"Voting Stock", as applied to the stock of any corporation, means stock of
any class or classes (however designated) having ordinary voting power for the
election of a majority of the directors of such corporation, other than stock
having such power only by reason of the happening of a contingency.
SECTION 1.02. Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.03. In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by,
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or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Person as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it related to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, in so far
as it relates to factual matters, upon a certificate or opinion of, or
representations by, any officer or officers of the Company stating that the
information with respect to such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.04. (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 8.01) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by an officer of a corporation, bank, savings
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association or a member of a partnership, on behalf of such corporation or
partnership, such certificate or affidavit shall also constitute sufficient
proof of his authority. The fact and date of the execution of any such
instrument or writing, or the authority of the person executing the same, may
also be proved in any other manner which the Trustee deems sufficient, and the
Trustee may in any instance require proof with respect to any of the matters
referred to in this Section 1.04.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Note shall bind the Holder of every Note
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done or suffered to be done by the Trustee
or the Company in reliance thereon, whether or not notation of such action is
made upon such Note.
(e) In determining whether the Holders of the requisite principal amount
of Outstanding Notes of any series have given any request, demand,
authorization, direction, notice, consent or waiver under this Indenture, the
principal amount of an Original Issue Discount Note that may be counted in
making such determination and that shall be deemed to be Outstanding for such
purposes shall be equal to the amount of the principal thereof that would be due
and payable pursuant to the terms of such Original Issue Discount Note upon a
declaration of acceleration pursuant to Section 7.02 at the time the taking of
such action by the Holders of such requisite principal amount of Outstanding
Notes is evidenced to the Trustee, as provided in Subsection (a) of this
Section.
SECTION 1.05. Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first
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paragraph of this instrument or at any other address previously furnished
in writing to the Trustee by the Company.
SECTION 1.06. Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his address as it appears in the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders and any notice which is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made that is satisfactory to the Trustee shall
constitute a sufficient notification for every purpose hereunder.
In case, by reason of the suspension of publication of any Authorized
Newspaper, or by reason of any other cause, it shall be impossible to make
publication of any notice in an Authorized Newspaper or Authorized Newspapers as
required by this Indenture, then such method of publication or notification as
shall be made with the approval of the Trustee shall constitute a sufficient
publication of such notice.
SECTION 1.07. If any provision hereof limits, qualifies or conflicts with
another provision hereof which is required to be included in this Indenture by
any of the provisions of TIA, such required provision shall control.
SECTION 1.08. The Article headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.09. All covenants and agreements in this Indenture by the
Company shall bind its successors and assigns, whether so expressed or not.
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SECTION 1.10. In case any provision in this Indenture or in the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 1.11. Nothing in this Indenture or in the Notes, expressed or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. This Indenture and each Note issued hereunder shall be
construed in accordance with and governed by the laws of the State of Illinois.
SECTION 1.13. In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture) payment of interest or
principal (and premium, if any), as the case may be, need not be made on such
date but may be made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date, or Stated Maturity, as the
case may be.
SECTION 1.14. Whenever this Indenture refers to a section of the TIA, that
section, as in effect on any particular date, is incorporated by reference in
and made a part of this Indenture. If the numerical designation of a section of
the TIA is changed subsequent to the date of this Indenture as a result of an
amendment to the TIA, then the reference in this Indenture to such section shall
be deemed to refer to the numerical designation of such section as amended.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
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All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by the TIA or such statute or rule.
ARTICLE II
ISSUE, EXECUTION AND REGISTRATION OF NOTES
SECTION 2.01. At the option of the Company, the Notes issued hereunder,
which are unlimited in aggregate principal amount except as may be otherwise
provided in respect of the Notes of a particular series, may be issued in one or
more series. The Notes of each series may be issued as established in
compliance with the provisions of this Indenture by a Board Resolution and set
forth in an Officers' Certificate, or in one or more supplemental indentures
approved by the Board of Directors. Such Board Resolution and Officer's
Certificate or supplemental indenture shall set forth:
(1) the title of the Notes of the series (which shall distinguish the
Notes of the series from all other Notes);
(2) any limit upon the aggregate principal amount of the Notes of
that series that may be authenticated and delivered under this Indenture
(except for Notes authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Notes of that series);
(3) the date or dates on which the principal of the Notes of the
series is payable;
(4) the rate or rates at which the Notes of the series shall bear
interest or the manner of calculation of such rate or rates, if any;
(5) the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest will be payable or the manner
of determination of such Interest Payment Dates and the record date for the
determination of holders to whom interest is payable on any such Interest
Payment Dates;
(6) the right, if any, to extend the interest payment periods and the
duration of such extension;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which, Notes
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of the series may be redeemed, in whole or in part, at the option of the
Company;
(8) the obligation, if any, of the Company to redeem or purchase
Notes of the series pursuant to any sinking fund or analogous provisions
(including payments made in cash in participation of future sinking fund
obligations) or at the option of a holder thereof and the period or periods
within which, the price or prices at which, and the terms and conditions
upon which, Debt Securities of the series shall be redeemed or purchased,
in whole or in part, pursuant to such obligation;
(9) the subordination terms of the Notes of the series;
(10) the form of the Notes of the series including the form of the
Certificate of Authentication for such series;
(11) the denominations in which the Notes of the series shall be
issuable;
(12) any and all other terms with respect to such series (which terms
shall not be inconsistent with the terms of this Indenture) including any
terms which may be required by or advisable under United States laws or
regulations or advisable in connection with the marketing of Notes of that
series; and
(13) whether the Notes are issuable as a Depository Note and, in such
case, the identity for the Depositary for such series.
All Notes of any one series shall be substantially identical except as to
denomination and except as may otherwise be provided in or pursuant to such
Board Resolution and (subject to Section 2.02) set forth in such Officers'
Certificate or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 2.02. The Notes of any series and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially of the form as
set forth in one or more indentures supplemental hereto or as provided in a
Board Resolution and as set forth in an Officers' Certificate, and may have such
letters, numbers or other marks of identification or designation and such
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legends or endorsements printed, lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which Notes of that series may be listed, or to conform to usage.
From time to time the Company may execute and deliver to the Trustee, and
the Trustee shall thereupon authenticate and deliver to or upon a Company Order,
Notes of any series duly established pursuant to Section 2.01, upon receipt by
the Trustee of:
(a) (i) the Board Resolution authorizing the execution and requesting the
authentication and delivery of the Notes applied for in the principal amount
therein specified, designating the series of such Notes and specifying the
officer or officers of the Company to whom or upon whose order such Notes shall
be delivered; and which, as permitted by Section 2.01, establishes the terms of
such series of Notes and which, if applicable, authorizes the execution of an
indenture supplemental hereto creating such series of Notes or, (ii) an
Officer's Certificate with respect to the foregoing if such officer delivering
such certificate has been provided with such authority and a Board Resolution
evidencing such authorization;
(b) an Officers' Certificate pursuant to Section 2.01 or if the Notes of
such series are to be issued pursuant to a supplemental indenture, a
supplemental indenture duly executed on behalf of the Company, in form
satisfactory to the Trustee, creating such series of Notes;
(c) an Officers' Certificate pursuant to Section 1.02; and
(d) an Opinion of Counsel pursuant to Section 1.02 substantially to the
effect that:
(i) the form and terms of such Notes have been established in
conformity with the provisions of this Indenture;
(ii) all conditions precedent to the authentication and delivery of
such Notes have been complied with and that such Notes, when authenticated
and delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, and other laws of general applicability
relating to or affecting the enforcement of creditors' rights and to
general equity principles;
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(iii) all laws and requirements in respect of the execution and
delivery by the Company of such Notes have been complied with;
(iv) the Company is not in default in any of its obligations under
this Indenture, and the issuance of such Notes will not result in any such
default;
and (if applicable)
(v) the supplemental indenture is a legal, valid, and binding
obligation of the Company, complies with and is authorized by the
applicable provisions of the Indenture, and its execution and delivery has
been duly authorized by the Company.
If all Notes of a series are not to be originally issued at one time, it
shall not be necessary to deliver the documents described in this Section 2.20
at or prior to the time of authentication of each Note of such series if such
documents are delivered at or prior to the authentication upon original issuance
of the first Note of such series to be issued.
SECTION 2.03. The Notes shall be executed on behalf of the Company by its
President or one of its Vice Presidents under its corporate seal reproduced
thereon and attested by its Secretary or one of its Assistant Secretaries. The
signature of any of such officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
All Notes shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by
manual signature, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.04. Pending the preparation of definitive Notes of any series,
the Company may execute, and upon Company Order the Trustee shall authenticate
and deliver, or cause to be delivered, temporary Notes of such series which are
printed, lithographed,
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typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Notes may determine, as evidenced by
their signing of such Notes.
If temporary Notes of any series are issued, the Company will cause
definitive Notes of such series to be prepared without unreasonable delay.
After the preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary Notes at the
office or agency of the Company without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Notes of any series the Company
shall execute and the Trustee shall authenticate and deliver, or cause to be
delivered, in exchange therefor a like principal amount of definitive Notes of
such series, of authorized denominations. Until so exchanged the temporary
Notes shall in all respects be entitled to the same benefits under this
Indenture as the definitive Notes.
SECTION 2.05. The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a Note Register in which, subject to such reasonable
regulations as the Company may prescribe, the Company shall, subject to Section
2.11, provide for the registration of Notes and for registrations of transfer of
Notes. The Trustee is hereby appointed Note Registrar for the purpose of
registering Notes and registering transfers of Notes as herein provided.
Subject to the provisions of Section 2.11, upon surrender for registration
of transfer of any Note at any office or agency of the Company maintained for
that purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Notes of the same series containing identical terms and provisions, of any
authorized denominations and for a like aggregate principal amount.
Subject to the provisions of Section 2.11, at the option of the Holder,
Notes may be exchanged for other Notes of the same series containing identical
terms and provisions, of any authorized denominations and for a like aggregate
principal amount, upon surrender of the Notes to be exchanged at any such office
or agency. Whenever any Notes are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Notes which
the Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing
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the same debt, and entitled to the same benefits under this Indenture, as the
Notes surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Note Registrar duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 2.04, Section 5.07 or Section 11.06 not involving any
registration of transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange any Note of any series during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Notes of such series selected for redemption under Section 5.04 and ending at
the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or in part.
SECTION 2.06. A mutilated Note may be surrendered to the Company or the
Trustee and thereupon the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Note of the same series and
of like tenor and principal amount, bearing a number not contemporaneously
outstanding.
If there be delivered to the Company and to the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft
of any Note of any series, and
(ii) such security or indemnity as may be required by them to save
each of them harmless,
then, in the absence of notice to the Company or the Trustee that such Note has
been acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of such series and of like tenor and
principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 2.06, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
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Every new Note issued pursuant to this Section 2.06 in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes of the same series containing identical terms and provisions duly
issued hereunder.
The provisions of this Section 2.06 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.07. Interest on any Note which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest; provided,
however, interest payable at Maturity may be paid to the same Person to whom
principal of the Notes is payable if so stated in the Note. Notwithstanding the
foregoing, however, interest that is payable on Notes registered in the name of
the company at the close of business on any Regular Record Date may be withheld
at the option of the Company; provided, however, the Notes are continuously held
by the Company through the relevant Interest Payment Date. Interest on any Note
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease
to be payable to the Holder on the relevant Regular Record Date by virtue of
having been such Holder; and such Defaulted Interest may be paid by the Company,
at its election in each case, as provided in Clause (1) or Clause (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of
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the amount of Defaulted Interest proposed to be paid on each Note and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
Clause (1) provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15
nor less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the Notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first class postage prepaid,
to each Holder at his address as it appears in the Note Register, not less
than 10 days prior to such Special Record Date. The Trustee shall, upon a
Company Request and in the name and at the expense of the Company, cause a
similar notice to be published at least once in an Authorized Newspaper in
New York City but such publication shall not be a condition precedent to
the establishment of such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to
the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this Clause (2), such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.07, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
SECTION 2.08. The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered in the Note
Register as the owner of such Note for
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the purpose of receiving payment of principal of (and premium, if any) and
(subject to Section 2.07) interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
SECTION 2.09. All Notes surrendered for payment, redemption, registration
of transfer or exchange or for credit against any present or future sinking or
purchase fund payment provided in respect of any series of Notes shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to
the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 2.09, except as expressly permitted by this Indenture. All
canceled Notes held by the Trustee shall be destroyed by the Trustee, unless
otherwise prohibited by law, and the Trustee shall deliver to the Company a
certificate of such destruction.
SECTION 2.10. The Trustee shall, if requested in writing so to do by the
Company, promptly appoint an Authenticating Agent or Agents of the Trustee who
shall have authority to authenticate Notes of any series in the name and on
behalf of the Trustee. Such appointment by the Trustee shall be evidenced by a
certificate executed by a Responsible Officer of the Trustee delivered to the
Company prior to the effectiveness of such appointment designating such agent or
agents and stating that all appropriate corporate action has been taken by the
Trustee in connection with such appointment.
Any such Authenticating Agent shall be an agent acceptable to the Company
and shall at all times be a corporation which is organized and doing business
under the laws of the United States or of any State, is authorized under such
laws to act as authenticating agent, has a combined capital and surplus of at
least $5,000,000, and is subject to supervision or examination by federal or
state authority.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time, and
upon written request of the Company to the Trustee shall, terminate the agency
of any Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company.
Any such Authenticating Agent shall have the rights and immunities of the
Trustee set forth in Sections 2.08, 8.03, 8.04
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and 8.05 to the same extent and as fully to all intents and purposes as though
such authenticating agent had been expressly named in place of the Trustee.
SECTION 2.11. (a) If the Company shall establish pursuant to Section 2.01
that the Notes of a particular series are to be issued as a Depository Note,
then the Company shall execute and the Trustee shall, in accordance with
Sections 2.02 and 2.03 and the Company Order delivered to the Trustee
thereunder, authenticate and deliver, a Depository Note which (i) shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all of the Outstanding Notes of such series, (ii) shall be
registered in the name of the Depository or its nominee, (iii) shall be
delivered by the Trustee to the Depository or pursuant to the Depository's
instruction and (iv) shall bear a legend substantially to the following effect:
"Except as otherwise provided in Section 2.11 of the Indenture, this Note may be
transferred, in whole but not in part, only to another nominee of the Depository
or to a successor Depository or to a nominee of such successor Depository."
(b) Notwithstanding any other provision of this Section 2.11 or of Section
2.05, the Depository Note of a series may be transferred, in whole but not in
part and in the manner provided in Section 2.05, only to another nominee of the
Depository for such series, or to a successor Depository for such series
selected or approved by the Company or to a nominee of such successor
Depository.
(c) If at any time the Depository for a series of Notes notifies the
Company that it is unwilling or unable to continue as Depository for such series
or if at any time the Depository for such series shall no longer be registered
or in good standing under the Securities Exchange Act of 1934, as amended, or
other applicable statute or regulation and a successor Depository for such
series is not appointed by the Company within 90 days after the Company receives
such notice or becomes aware of such condition, as the case may be, this Section
2.11 shall no longer be applicable to the Notes of such series and the Company
will execute, and the Trustee will authenticate and deliver, Notes of such
series in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Depository Note of such series then Outstanding in exchange for
such Depository Note. In addition, the Company may at any time determine that
the Notes of any series shall no longer be represented by a Depository Note and
that the provisions of this Section 2.11 shall no longer apply to the Notes of
such series. In such event the Company will execute and the Trustee, upon
receipt of an Officers' Certificate evidencing such determination by the
Company, will authenticate and
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deliver Notes of such series in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Depository Note of such series in exchange for such
Depository Note. Upon the exchange of the Depository Note for such Notes in
definitive registered form without coupons, in authorized denominations, the
Depository Note shall be canceled by the Trustee. Such Notes in definitive
registered form issued in exchange for the Depository Note pursuant to this
Section 2.11(c) shall be registered in such names and in such authorized
denominations as the Depository, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee.
ARTICLE III
COVENANTS
SECTION 3.01. The Company will duly and punctually pay the principal of
(and premium, if any) and interest on the Notes in accordance with the terms of
the Notes and this Indenture.
SECTION 3.02. The Company will maintain an office or agency at each place
at which the principal of (and premium, if any) or interest on any of the Notes
is payable, where Notes may be presented or surrendered for payment, where Notes
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Notes and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and of any change in the location, of each such office or agency. If
at any time the Company shall fail to maintain any such office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee its agent to
receive all such presentations, surrenders, notices and demands.
SECTION 3.03. If the Company shall at any time act as its own Paying Agent,
it will, on or before each due date of the principal of (and premium, if any) or
interest on, any of the Notes, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal (and premium,
if any) or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify the
Trustee of its action or failure so to act.
If the Company shall have one or more Paying Agents, it will, on or before
each due date of the principal of (and premium, if
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any) or interest on, any of the Notes, deposit with a Paying Agent a sum
sufficient to pay the principal (and premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section 3.03, that such
Paying Agent will
(1) hold all sums held by it for the payment of principal of (and premium,
if any) or interest on Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Notes) in the making of any such payment of principal
(and premium, if any) or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Note and remaining unclaimed for three years after such
principal (and premium, if any) or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided,
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however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in an Authorized Newspaper in New York City, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Company.
SECTION 3.04. The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon it or upon its income, profits
or property, and (2) all lawful claims for labor, materials and supplied which,
if unpaid, might by law become a lien upon its property; provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
SECTION 3.05. The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate (which need not
comply with Section 1.02) stating, as to each signer thereof, whether or not to
the best of his knowledge, the Company is in default in the performance of any
of its obligations under this Indenture, and, if there is a default in the
fulfillment of any such obligation, specifying each such default known to him
and the nature and status thereof.
SECTION 3.06. Subject to Article X, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve or cause to be preserved any
right or franchise if the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and that
the loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 3.07. The Company shall file with the Trustee within 15 days after
it files them with the SEC copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. The Company shall also comply with the provisions of TIA Section
314(a).
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ARTICLE IV
REPAYMENT AT OPTION OF HOLDERS
SECTION 4.01. If the Board Resolution or supplemental indenture, as the
case may be, with respect to the Notes of any particular series so provides,
such Notes shall be subject to repayment at the option of the Holder prior to
their Stated Maturity, on such terms as set forth in the Board Resolution or
supplemental indenture pertaining to such Notes, upon the receipt by the company
of the form entitled, "Option to Elect Repayment" as specified in Section 4.02
(as provided for in such Board Resolution or supplemental indenture).
SECTION 4.02. To be repaid at the option of the Holder, Notes must be
received, with the form entitled "Option to Elect Repayment" on the reverse of
the Notes duly completed, by the Trustee at its offices in New York, New York
(or at such other place of which the Company shall from time to time notify the
Holders of the Notes) within the periods specified by the terms of the Notes.
Effective exercise of the repayment option by the Holder shall be irrevocable.
Upon such completion and receipt of such form, Notes for which the option has
been exercised become due and payable on the repayment date at the repayment
price plus accrued interest (if any), except that interest, the Stated Maturity
of which is on or prior to such repayment date, shall be payable to the Holders
of such Notes of record on the relevant Record Date according to their terms and
the provisions of Section 2.07. From and after such repayment date (unless the
Company shall default in the payment of the repayment price) such Notes shall
cease to bear interest.
ARTICLE V
REDEMPTION OF NOTES; SINKING FUNDS
SECTION 5.01. Notes of any series which are redeemable before their Stated
Maturity at the option of the Company or otherwise shall be redeemable in
accordance with their terms and in accordance with the following provisions of
this Article V.
SECTION 5.02. The election of the Company to redeem Notes of any series
shall be evidenced by a Board Resolution or, if an officer of the Company has
been duly authorized with respect to the redemption of Notes, a certificate from
such officer to the Trustee authorizing such actions as are necessary or
appropriate to effect the redemption and a Board Resolution evidencing such
officer's
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authority. In case of any redemption at the option of the Company of less than
all of the Notes of any series the Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee by Company Order of such
Redemption Date and of the principal amount of Notes to be redeemed.
SECTION 5.03. If less than all the Notes of any series are to be redeemed,
and unless otherwise provided with respect to the Notes of any particular
series, the particular Notes to be redeemed shall be selected by the Trustee
from the Outstanding Notes of such series not previously called for redemption,
by lot or by such other method as the Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions of the
principal of Notes, provided, however, that except with respect to Notes being
redeemed pursuant to the operation of a sinking fund, no such partial redemption
shall reduce the portion of the principal amount of a Note of such series not
redeemed to less than the minimum denomination for a Note of that series. The
portions of the principal of Notes so selected for partial redemption shall be
equal to the smallest authorized denomination of the Notes of such series or an
integral multiple thereof.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Notes shall relate, in the case of
any Note redeemed or to be redeemed only in part, to the portion of the
principal of such Note which has been or is to be redeemed.
SECTION 5.04. Notice of redemption shall be given not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Notes to be
redeemed, at his address appearing in the Note Register.
All notices of redemption shall state:
(1) the series designation of the Notes to be redeemed,
(2) the Redemption Date,
(3) the Redemption Price,
(4) if less than all Outstanding Notes of such series are to be
redeemed, the identification (and, in the case of
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partial redemption, the respective principal amounts) of the Notes of such
Holder to be redeemed,
(5) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note, and that, if applicable, interest thereof
shall cease to accrue from and after said date,
(6) the place where such Notes are to be surrendered for payment of
the Redemption Price, which shall be the office or agency of the Company at
any place at which the principal of such Notes is payable, and
(7) if Notes are to be redeemed pursuant to any sinking or purchase
fund established for any series of Notes, that the redemption is being made
for the purposes of such sinking or purchase fund.
Notice of redemption of Notes to be redeemed at the option of the Company
shall be given by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company.
SECTION 5.05. On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 3.03) an amount
of money sufficient to pay the Redemption Price plus accrued interest of all the
Notes which are to be redeemed on that date.
SECTION 5.06. Notice of redemption having been given as aforesaid, the
Notes so to be redeemed shall, on the Redemption Date, become due and payable at
the Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of such Notes for redemption in
accordance with such notice, such Notes shall be paid by the Company at the
Redemption Price. Interest, the Stated Maturity of which is on or prior to the
Redemption Date, shall be payable to the Holders of such Notes of record on the
relevant Record Dates according to their terms and the provisions of Section
2.07.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Note.
SECTION 5.07. Any Note which is to be redeemed only in part shall be
surrendered to the Trustee or Paying Agent (with, if the
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Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing) and the
Company shall execute and the Trustee shall authenticate and deliver to such
Holder, without service charge, a new Note or Notes of the same series, of any
authorized denominations as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
SECTION 5.08. The provisions of this Article V shall be applicable to any
sinking fund for the retirement of Notes of any series except as otherwise
specified in such Notes.
The minimum amount of any sinking fund payment provided for by the terms of
Notes of any series is herein referred to as a "mandatory sinking fund payment",
and any payment in excess of such minimum amount provided for by the terms of
Notes of any series is herein referred to as an "optional sinking fund payment".
If provided for the by the terms of Notes of any series, the cash amount of any
sinking fund payment may be subject to reduction as provided in Section 5.09.
Each sinking fund payment shall be applied to the redemption of Notes of any
series as provided for by the terms of Notes of such series.
SECTION 5.09. The Company (1) may deliver to the Trustee for cancellation
Outstanding Notes of a series (other than any previously called for redemption),
(2) may credit Notes previously delivered to the Trustee for cancellation
pursuant to Section 2.09 and (3) may apply as a credit Notes of a series
containing identical terms and provisions which have been redeemed either at the
election of the Company pursuant to the terms of such Notes or through the
application of permitted optional sinking fund payments pursuant to the terms of
such Notes, in each case in satisfaction of all or any part of any mandatory
sinking fund payment with respect to the Notes of such series required to be
made pursuant to the terms of such Notes as provided for by the terms of such
Notes; provided that such Notes shall not have been previously so credited. The
face value of such Notes shall be received and credited for such purpose by the
Trustee at the Redemption Price specified in such Notes for redemption through
operation of the mandatory sinking fund and the amount of such mandatory sinking
fund payment shall be reduced accordingly.
SECTION 5.10. Not less than 45 days prior to each sinking fund payment
date for Notes of any series, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing mandatory
sinking fund payment and optional sinking fund payment, if any, for that series
of Notes pursuant to the terms thereof, the portion thereof, if any, which is to
be
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satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Notes of that series pursuant to Section
5.09 and will also deliver to the Trustee any Notes to be so delivered if not
theretofore delivered. Not less than 30 days before each such sinking fund
payment date the Company shall cause to be selected the Notes to be redeemed
upon such sinking fund payment in the manner specified in Section 5.03 and shall
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 5.04. The Company
shall deposit the amount of cash, if any, required for such sinking fund payment
with the Trustee in the manner provided in Section 5.05. Such notice having
been duly given, the redemption of such Notes shall be made upon the terms and
in the manner stated in Sections 5.06 and 5.07.
ARTICLE VI
SATISFACTION AND DISCHARGE
SECTION 6.01. This Indenture shall cease to be of further effect (except
as to any surviving rights of registration of transfer or exchange of Notes if
herein or in any supplemental indenture expressly provided for), and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Notes theretofore authenticated and delivered (other than
(i) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.06, and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section
3.03) have been delivered to the Trustee for cancellation; or
(B) all such Notes not heretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the
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Trustee for the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company,
and the Company, in the case of (B)(i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Notes which have
become due and payable), or to their Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 8.07, the obligations of
the Trustee to any authenticating agent under Section 2.10 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (i) of
this Section, the obligations of the Trustee under Section 6.02 and the last
paragraph of Section 3.03 shall survive.
SECTION 6.02. Subject to the provisions of the last paragraph of Section
3.03, all money deposited with the Trustee pursuant to Section 6.01 shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
SECTION 6.03. Unless this Section 6.03 shall be deemed inapplicable to a
series of Notes pursuant to the Board Resolution or supplemental indenture
creating such series, the Company shall be deemed to have paid and discharged
the entire indebtedness on all the Outstanding Notes of any such series and the
Trustee, at the demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of such
indebtedness, when
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(1) either
(A) with respect to all Outstanding Notes of such series,
(i) the Company has deposited or caused to be deposited with
the Trustee as trust funds in trust for the purpose of
discharging such indebtedness an amount sufficient to pay and
discharge the entire indebtedness on all Outstanding Notes of
such series for principal (and premium, if any) and interest to
the Stated Maturity or any Redemption Date as contemplated by the
penultimate paragraph of this Section 6.03, as the case may be;
or
(ii) the Company has deposited or caused to be deposited
with the Trustee as obligations in trust for the purpose of
discharging such indebtedness such amount of direct obligations
of, or obligations the principal of and interest on which are
full guaranteed by, the United States of America and which are
not callable at the option of the issuer thereof as will,
together with the income to accrue thereon without consideration
of any reinvestment thereof, be sufficient to pay and discharge
the entire indebtedness on all Outstanding Notes of such series
for principal (and premium, if any) and interest to the Stated
Maturity or any Redemption Date as contemplated by the
penultimate paragraph of this Section 6.03, as the case may be;
or
(B) the Company has properly fulfilled such other means of
satisfaction and discharge as is specified in the Board Resolution or
supplemental indenture applicable to the Notes of such series; and
(2) the Company has paid or caused to be paid all other sums payable
with respect to the Outstanding Notes of such series; and
(3) the Company has delivered to the Trustee a certificate of a firm
of independent public accountants certifying as to the sufficiency of the
amounts deposited pursuant to subsections (A)(i) or (ii) of this Section
for payment of the principal (and premium, if any) and interest on the
dates such payments are due, an Officers' Certificate and an Opinion of
Counsel, each such certificate and Opinion stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
the entire
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indebtedness on all Outstanding Notes of any such series have been complied
with.
Any deposits with the Trustee referred to in Section 6.03(1)(A) above shall
be irrevocable and shall be made under the terms of an escrow trust agreement in
form and substance satisfactory to the Trustee. If any Outstanding Notes of
such series are to be redeemed prior to their Stated Maturity, whether pursuant
to any optional redemption provisions or in accordance with any mandatory
sinking fund requirement, the Company shall make such arrangements as are
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company.
Upon the satisfaction of the conditions set forth in this Section 6.03 with
respect to all the Outstanding Notes of any series, the terms and conditions of
such series, including the terms and conditions with respect thereto set forth
in this Indenture, shall no longer be binding upon, or applicable to, the
Company, other than the provisions of Sections 2.06, 2.07 and 3.02 and other
than the right of Holders of Notes of such series to receive, from the trust
fund described in this Section, payment of the principal of and the interest on
such Notes when such payments are due and other than the rights, powers, duties
and immunities of the Trustee hereunder (including the obligations of the
Company to the Trustee under Section 8.07).
SECTION 6.04. The provisions for subordination of the Notes set forth in
Article XII are hereby expressly made subject to the provisions for defeasance
in this Article VI and anything herein to the contrary notwithstanding, upon the
effectiveness of such defeasance with respect to the Outstanding Notes, such
Notes shall thereupon cease to be so subordinated.
ARTICLE VII
REMEDIES
SECTION 7.01. "Event of Default", wherever used herein with respect to
Notes of any series, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
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(1) default in the payment (whether or not payment is prohibited under
Article XII) of any interest upon any Note of that series when it becomes
due and payable, and continuance of such default for a period of 60 days;
or
(2) default in the payment (whether or not payment is prohibited under
Article XII) of the principal of (or premium, if any,) on any Note of that
series at its Maturity; or
(3) default in the deposit under Section 5.10 of any installment of
any sinking fund or similar payment with respect to Notes of that series
when and as payable by the terms of the Board Resolution or supplemental
indenture establishing such series, and continuance of such default for a
period of 30 days; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
7.01 specifically dealt with or which has expressly been included in the
Indenture solely for the benefit of Notes of a series other than that
series to which the default relates), and continuance of such default or
breach for the period of time and after the notice specified below;
(5) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment
or composition of or in respect of the Company under the Federal Bankruptcy
Code, or any other applicable federal or state law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance
of any such decree or order unstayed and in effect for a period of 60
consecutive days; or
(6) the institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under the
Federal Bankruptcy Code, or any other applicable federal or state law, or
the consent by it to the filing of any such petition or to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission
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by it in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company in furtherance of any
such action.
A default with respect to any series of Notes under clause (4) is not an
Event of Default until the Trustee notifies the Company, or the Holders of at
least 25% in principal amount of the outstanding Notes of that series notify the
Company and the Trustee of the default and the Company does not cure the default
within 90 days after receipt of the notice. The notice must specify the
default, demand that it be remedied and state that the notice is a "Notice of
Default".
SECTION 7.02. If an Event of Default occurs with respect to Notes of any
series at the time Outstanding and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Notes of that series may declare the principal of all the Notes of
that series (or, if the Notes of that series are Original Issue Discount Notes,
such portion of the principal amount thereof as may be specified in the terms of
such Notes) to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal shall become immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article VII provided, the Holders of a
majority in principal amount of the Notes then Outstanding of that series, by
written notice to the Company and the Trustee, may rescind and annual such
declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue installments of interest, if any, on all Notes of
that series,
(B) the principal of (and premium, if any, on) any Notes of that
series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or the respective rates
borne by the Notes of that series,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest, if any, at the rate or
the respective rates borne by the Notes of that series or at a rate
otherwise specified therein, and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the principal
of Notes of that series which have become due solely by such acceleration,
have been cured or waived as provided in Section 7.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 7.03. The Company covenants that if
(1) any Event of Default occurs from Company's failure to pay any
installment of interest on any Notes when such interest becomes due and
payable and such default continues for a period of 30 days, or
(2) any Event of Default occurs from Company's failure to pay (i) the
principal of (or premium, if any) or, (ii) any sinking fund installment
when due and payable on any Notes at the Maturity thereof,
the Company will, upon demand of the Trustee or the Holders of not less than 25%
in principal amount of such Outstanding Notes, pay to it, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes for
principal (and premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of such interest
shall be legally enforceable, upon overdue installments of interest, at the rate
or respective rates borne by such Notes or at the rate or respective rates
specified therein; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amount forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Notes, wherever situated.
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If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 7.04. In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Notes or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due
to it for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 8.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 7.05. All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the
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Trustee without the possession of any of the Notes or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Notes in respect
of which such judgment has been recovered.
SECTION 7.06. Any money collected by the Trustee pursuant to this Article
VII shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
(or premium, if any) or interest, upon presentation of the Notes, and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
8.07;
SECOND: To the payment of the amounts then due and unpaid upon the
Notes for principal (and premium, if any) and interest, in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal (and premium, if any) and interest,
respectively; and
THIRD: To the payment of the remainder, if any, to the Company or any
other Person lawfully entitled thereto.
SECTION 7.07. No Holder of any Note of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Notes of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Notes of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
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(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60 day period by the Holders of a majority in
principal amount of the Outstanding Notes of such series;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 7.08. Notwithstanding any other provision in this Indenture, the
Holder of any Note shall have the right which is absolute and unconditional to
receive payment of the principal of (and premium, if any) and (subject to
Section 2.07) interest on such Note on the respective Stated Maturities
expressed in such Note (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Holder.
SECTION 7.09. If the Trustee or any Holder has instituted any proceeding
to enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 7.10. No right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 7.11. No delay or omission of the Trustee or of any Holder to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a
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waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article VII or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 7.12. The Holders of a majority in principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 7.13. The Holders of a majority in principal amount of the
Outstanding Notes of any series affected by an Event of Default may on behalf of
the Holders of such series of Notes waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Note of such series which cannot be waived without the
consent of the Holder of each Outstanding Note affected, or
(2) in respect of a covenant or provision hereof which under Section
11.02 cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 7.14. All parties to this Indenture agree, and each Holder of any
Note by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered, or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 7.14 shall not apply to any suit
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instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of any
series of the Outstanding Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Note on or after the respective Stated Maturities expressed in such Note
for such interest (or, in the case of redemption, on or after the Redemption
Date).
SECTION 7.15. The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
ARTICLE VIII
THE TRUSTEE
SECTION 8.01. (a) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of
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care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
(1) this Subsection (c) shall not be construed to limit the effect of
Subsection (a) of this Section 8.01;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in principal amount of the Outstanding Notes
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
8.01.
SECTION 8.02. Within 90 days after the occurrence of any default
hereunder, the Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Note Register, notice of such default hereunder known to
the Trustee, unless such default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the principal
of (or premium, if any) or interest on any Note or in the payment of any sinking
or purchase fund installment, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Holders; and provided, further, that in the case of any default of the character
specified in Section 7.01(4) no such notice to Holders shall be given until at
least 60 days after the occurrence thereof. For the purpose of this Section 8.02
the term
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"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default.
SECTION 8.03. Except as otherwise provided in Section 8.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney;
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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(h) the Trustee shall not be liable for any action taken by it in
good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture.
SECTION 8.04. The recitals contained herein and in the Notes, except the
certificate of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Notes. The Trustee shall not be accountable for the use or application by
the Company of Notes or the proceeds thereof.
SECTION 8.05. The Trustee, any Authenticating Agent, Paying Agent, Note
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes and, subject to Sections 8.08
and 8.09 may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Paying Agent, Note Registrar or such other agent.
SECTION 8.06. Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
SECTION 8.07. The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
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(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, cost, liability or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligations of the Company under this Section shall not be subordinated
to the payment of Senior Indebtedness pursuant to Article XII.
As security for the performance of the obligations of the Company under
this Section 8.07 the Trustee shall have a lien prior to the Notes upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any) or interest on
particular Notes.
SECTION 8.08. (a) This Indenture shall always have a Trustee with respect
to the Notes of each series which satisfies the requirements of TIA Section
310(a)(1). The Trustee shall always have a combined capital and surplus of at
least $5,000,000 as set forth in its most recent annual report of condition.
(b) The Trustee is subject to TIA Section 310(b), it being understood that
for the purposes of this Indenture, with respect to Notes of any series, the
provisions of TIA Section 310(b) with respect to conflicting interests relating
to "other securities" shall be interpreted to include Notes of each other series
and with respect to "other indentures" shall include the provisions of this
Indenture relating to the Notes of such other series.
SECTION 8.09. The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 8.10. (a) No registration or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 8.11.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
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(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 8.08(b) after
written request therefor by the Company or by any Holder who has been a
bona fide Holder for at least six months, or
(2) the Trustee shall cease to be eligible under Section 8.08(a) and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 7.14, any Holder who has been a bona fide
Holder for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Notes delivered to the Company
and the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to the Holders as their
names and addresses appear in the Note
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Register. Each notice shall include the name of the successor Trustee and the
address of its principal corporate trust office.
SECTION 8.11. Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder, subject nevertheless to its lien,
if any, provided for in Section 8.07. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article VIII.
SECTION 8.12. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee,shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article VIII, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes shall
have been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated such Notes.
ARTICLE IX
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 9.01. The Company covenants and agrees that it will furnish or
cause to be furnished to the Trustee, between May 1 and May 15 and between
November 1 and November 15 in each 12 months'
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period beginning with November 1, 1995, and at such other times as the Trustee
may request in writing, within 30 days after receipt by the Company of any such
request, a list in such form as the Trustee may reasonably require of the names
and addresses of the Holders as of a date not more than 15 days prior to the
time such information is furnished. so long as the Trustee is the Note Registrar
no such list need be furnished.
SECTION 9.02. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 9.01 and the names
and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 9.01 upon receipt of a new list so furnished.
(b) Holders of Notes may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Note Registrar, and anyone else shall have the
protection of TIA Section 312(c).
SECTION 9.03. (a) The term "reporting date", as used in this Section
9.03, means May 15. Within 60 days after the reporting date in each year, the
Trustee shall transmit by mail to all Holders, as there names and addresses
appear in the Note Register, a brief report dated as of such reporting date that
complies with TIA Section 313(a). The Trustee shall also comply with TIA Section
313(b).
(b) Reports pursuant to this Section 9.03 shall be transmitted by mail:
(1) to all Holders of Notes, as the names and addresses of such
Holders appear in the Note Register;
(2) to such Holders of Notes as have, within the 2 years preceding
such transmission, filed their names and addresses with the Trustee
for that purpose; and except in the case of reports pursuant to TIA
Section 313(b), to all Holders of Notes whose names and addresses have
been furnished to or received by the Trustee pursuant to Section 9.01.
(c) a copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which the Notes
are listed, and also with the Commission. The Company will notify the Trustee
when the Notes are listed on any stock exchange.
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ARTICLE X
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 10.01. The Company shall not consolidate with or merge into any
other corporation or convey, transfer, sell or lease its properties and assets
as, or substantially as, an entirety to any Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer,
sale or lease the properties and assets of the Company as, or substantially
as, an entirety shall be a corporation organized and existing under the
laws of the United States of America or any State or the District of
Columbia, and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
the due and punctual payment of the principal of (and premium, if any) and
interest on all the Notes and the performance of every covenant of this
Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance or transfer and such supplemental indenture comply with this
Section 10.01 and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 10.02. Upon any consolidation or merger, or any conveyance,
transfer, sale or lease of the properties and assets of the Company as, or
substantially as, an entirety in accordance with Section 10.01, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer, sale or lease is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein, and thereafter, except in the case of a lease, the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Notes.
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ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.01. Without the consent of any Holder, the Company and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to create a new series of Notes;
(2) to evidence the succession of another entity to the Company, and
the assumption by any such successor of the covenants of the Company herein
and in the Notes contained;
(3) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Notes (and if such covenants are to be for
the benefit of less than all series of Notes, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company;
(4) to add any additional Events of Default with respect to all or
any series of Notes;
(5) to cure any ambiguity, defect, or inconsistency or to correct or
supplement any provision contained hereunder or in any supplemental
indenture or in any Notes issued hereunder;
(6) to provide for uncertificated Notes in addition to certificated
Notes;
(7) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Notes in bearer form, registrable or not registrable as to principal, and
with or without interest coupons;
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes of one or more
series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Section 8.11; or
(9) to make any change that does not adversely affect the rights of
any Holder of Notes which are Outstanding.
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SECTION 11.02. Subject to the provisions of Section 7.12 and Section 7.13,
with the consent of the Holders of not less than a majority in principal amount
of the Outstanding Notes of each series which are affected, evidenced by Act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner the rights of the
Holders of the Notes of such series thereof under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Note affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the interest thereon or any premium payable upon the redemption
thereof, or reduce the principal amount of an Original Issue Discount Note
that would be due and payable upon a declaration of acceleration of the
Maturity thereof, or change the coin or currency in which any Note or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Notes of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture,
or
(3) modify any of the provisions of this Section 11.02 or Section
7.13, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Note affected thereby provided, however, that
this clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant
changes in this Section and Section 3.08, or the deletion of this proviso,
in accordance with the requirements of Sections 8.11 and 11.01(8).
It shall not be necessary for any Act of Holders under this Section 11.02
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
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SECTION 11.03. In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by this ARTICLE XI or the modification
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 8.01) shall be fully protected in relying
upon, an Opinion of Counsel, stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture and that such
supplemental indenture is a valid and binding obligation of the Company in
accordance with its terms. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
SECTION 11.04. Upon the execution of any supplemental indenture under this
Article XI, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 11.05. Every supplemental indenture executed pursuant to this
Article XI shall conform to the requirements of the TIA as then in effect.
SECTION 11.06. Notes authenticated and delivered after the execution of
any applicable supplemental indenture pursuant to this Article XI may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Board of Directors, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Notes.
ARTICLE XII
SUBORDINATION
SECTION 12.01. The payment by the Company of the principal of, premium, if
any, and interest on any series of Notes issued hereunder shall be subordinated
to the extent set forth in an indenture supplemental hereto relating to such
Notes.
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ARTICLE XIII
ASSIGNMENT
SECTION 13.01. The Company will have the right at all times to assign any
of its rights or obligations under this Indenture to a direct or indirect
wholly-owned Subsidiary that, in the event of any such assignment, the Company
will remain liable for all such obligations. Subject to the foregoing, the
Indenture is binding upon and inures to the benefit of the parties thereto and
their respective successors and assigns. This Indenture may not otherwise be
assigned by the parties thereto.
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TESTIMONIUM
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
HOUSEHOLD INTERNATIONAL, INC.
By /s/ Edgar Ancona
--------------------------------
Treasurer
ATTEST:
/s/ Patrick D. Schwartz
- -----------------------------------
Assistant Secretary
(CORPORATE SEAL)
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By /s/ Joseph Morand
--------------------------------
Vice President
ATTEST:
/s/ Steven M. Wagner
- -----------------------------------
Assistant Secretary
(CORPORATE SEAL)
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Exhibit 4.2
SECOND SUPPLEMENTAL INDENTURE, dated as of ___________, 1996 (the
"Supplemental Indenture"), between Household International, Inc., a Delaware
corporation (the "Company"), and The First National Bank of Chicago, a national
banking association, as trustee (the "Trustee") under the Indenture dated as of
May 15, 1995 between the Company and the Trustee (the "Indenture").
WHEREAS, the Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of the Company's unsecured junior subordinated
debt securities, to be issued from time to time in one or more series as might
be determined by the Company under the Indenture, in an unlimited aggregate
principal amount which may be authenticated and delivered as provided in the
Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its debt securities to be known
as its ____% Junior Subordinated Deferrable Interest Notes due 2036 (the
"Notes"), the form and substance of such Notes and the terms, provisions and
conditions thereof to be set forth as provided in the Indenture and this
Supplemental Indenture;
WHEREAS, Household Capital Trust II, a Delaware statutory business trust
(the "Trust"), intends to offer to the public $___________ aggregate liquidation
amount of its _____% Trust Preferred Securities (the "Preferred Securities") and
intends to issue to the Company, as sponsor, its _____% Trust Common Securities
(the "Common Securities", and together with the Preferred Securities, the "Trust
Securities"), representing undivided beneficial interests in the assets of the
Trust and proposes to invest the proceeds from such offering in $__________
aggregate principal amount of the Notes; and
WHEREAS, the Company has requested that the Trustee execute and deliver
this Supplemental Indenture, and all requirements necessary to make this
Supplemental Indenture a valid instrument, in accordance with its terms, and to
make the Notes, when executed by the Company and authenticated and delivered by
the Trustee, the valid obligations of the Company, have been performed, and the
execution and delivery of this Supplemental Indenture has been duly authorized
in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance of the Notes
by the holders thereof, and for the purpose of setting forth, as provided in the
Indenture, the form and substance of the Notes and the terms, provisions and
conditions thereof, the Company covenants and agrees with the Trustee as
follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used in this
Supplemental Indenture;
(b) a term defined anywhere in this Supplemental Indenture has the same
meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of this
Supplemental Indenture;
(e) headings are for convenience of reference only and do not affect
interpretation;
(f) the following terms have the meanings given to them in the
Declaration: (i) Clearing Agency (ii) Delaware Trustee; (iii)
Dissolution Tax Opinion; (iv) No Recognition Opinion; (v) Pricing
Agreement; (vi) Property Trustee; (vii) Preferred Security
Certificate; (viii) Redemption Tax Opinion; (ix) Regular Trustees;
(x) Special Event; (xi) Tax Event; and (xii) Underwriting Agreement);
and
(g) the following terms have the meanings given to them in this Section
l.l(g):
"Additional Interest" has the meaning set forth in Section 2.5(c).
"Compounded Interest" has the meaning set forth in Section 4.1.
"Coupon Rate" has the meaning set forth in Section 2.5(a).
"Declaration" means the Amended and Restated Declaration of Trust of
Household Capital Trust II, a Delaware business trust, dated as of __________,
1996.
"Deferred Interest" has the meaning set forth in Section 4.1.
"Dissolution Event" means that as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration and the Notes held by the
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Trustee are to be distributed to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Declaration.
"Extended Interest Payment Period" has the meaning set forth in Section
4.1.
"Interest Payment Date" has the meaning set forth in Section 2.5(a).
"Maturity Date" means, _______ _____, 2036, the date on which the Notes
mature and on which the principal (and premium, if any) shall be due and payable
together with all accrued and unpaid interest thereon.
"Ministerial Action" has the meaning set forth in Section 3.1.
"90 Day Period" has the meaning set forth in Section 3.1.
"Non Book Entry Preferred Securities" has the meaning set forth in Section
2.4(b).
"Paying Agent" means The First National Bank of Chicago, until a successor
paying agent has been appointed and has accepted such appointment.
"Redemption Price" has the meaning set forth in Section 3.2(a).
ARTICLE II
GENERAL TERMS AND CONDITIONS OF
THE NOTES
SECTION 2.1 Designation and Principal Amount.
There is hereby authorized a series of debt securities designated the
"_____% Junior Subordinated Deferrable Interest Notes due 2036", limited in
aggregate principal amount to $_____________, which amount shall be as set forth
in any written order of the Company for the authentication and delivery of Notes
pursuant to Section 2.02 of the Indenture.
SECTION 2.2 Maturity.
The Maturity Date will be ________ _____, 2036.
SECTION 2.3 Form and Payment.
Except as provided in Section 2.4, the Notes shall be issued in fully
registered certificated form without interest
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coupons. Principal and interest on the Notes issued in certificated form will be
payable, the transfer of such Notes will be registrable and such Notes will be
exchangeable for Notes bearing identical terms and provisions at the office or
agency of the Trustee; provided, however, that payment of interest may be made
at the option of the Company by check mailed to the registered Holder at such
address as shall appear in the Note Register. Notwithstanding the foregoing, so
long as the registered Holder of any Notes is the Property Trustee, the payment
of the principal of (and premium, if any) and interest on such Notes held by the
Property Trustee will be made by wire transfer at such place and to such account
as may be designated by the Property Trustee.
SECTION 2.4 Depository Note.
In connection with a Dissolution Event;
(a) the Notes in certificated form may be presented to the Trustee by the
Property Trustee in exchange for a Depository Note in an aggregate
principal amount equal to all Outstanding Notes, to be registered in
the name of the Depository, or its nominee, and delivered by the
Trustee to the Depository for crediting to the accounts of its
participants pursuant to the instructions of the Regular Trustees. The
Company upon any such presentation shall execute a Depository Note in
such aggregate principal amount and deliver the same to the Trustee
for authentication and delivery in accordance with the Indenture and
this Supplemental Indenture. Payments on the Notes issued as a
Depository Note will be made to the Depository; and
(b) if any Preferred Securities are held in non book-entry certificated
form, the Notes in certificated form may be presented to the Trustee
by the Property Trustee and any Preferred Security Certificate which
represents Preferred Securities other than Preferred Securities held
by the Clearing Agency or its nominee ("Non Book-Entry Preferred
Securities") will be deemed to represent beneficial interests in Notes
presented to the Trustee by the Property Trustee having an aggregate
principal amount equal to the aggregate liquidation amount of the Non
Book-Entry Preferred Securities until such Preferred Security
Certificates are presented to the Security Registrar for transfer or
reissuance at which time such Preferred Security Certificates will be
cancelled and a Note registered in the name of the holder of the
Preferred Security Certificate or the transferee of the holder of such
Preferred Security Certificate as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the
Preferred Security Certificate cancelled will be executed by the
Company and
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delivered to the Trustee for authentication and delivery in accordance
with the Indenture and this Supplemental Indenture. On issue of such
Notes, Notes with an equivalent aggregate principal amount that were
presented by the Property Trustee to the Trustee will be deemed to
have been cancelled.
SECTION 2.5 Interest.
(a) Each Note will bear interest at the rate of _____% per annum (the
"Coupon Rate") from the original date of issuance until the principal
thereof becomes due and payable, and on any overdue principal and (to
the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon
Rate, compounded quarterly and payable (subject to the provisions of
Article IV) quarterly in arrears on March 31, June 30, September 30
and December 31 of each year (each, an "Interest Payment Date",
commencing on _________ 30, 1996), to the person in whose name such
Note or any predecessor Note is registered, at the close of business
on the Regular Record Date for such interest installment, which shall
be the close of business on the Business Day next preceding that
Interest Payment Date. If pursuant to the provisions of Section
2.11(c) of the Indenture the Notes are no longer represented by a
Depository Note, the Company may select a Regular Record Date for such
interest installment which shall be any date at least fifteen days
before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Except as provided in
the following sentence, the amount of interest payable for any period
shorter than a full quarterly period for which interest in computed,
will be computed on the basis of the actual number of days elapsed in
such a 30-day month. In the event that any date on which interest is
payable on the Notes is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect
of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force
and effect as if made on such date.
(c) If at any time while the Property Trustee is the Holder of any Notes,
the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other
than
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withholding taxes) imposed by the United States, or any other taxing
authority, then, in any case, the Company will pay as additional
interest ("Additional Interest") on the Notes held by the Property
Trustee, such additional amounts as shall be required so that the net
amounts received and retained by the Trust and the Property Trustee
after paying such taxes, duties assessments or other governmental
charges will be equal to the amounts the Trust and the property
Trustee would have received had no such taxes, duties, assessments or
other government charges been imposed.
ARTICLE III
REDEMPTION OF THE NOTES
SECTION 3.1 Special Event Redemption.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular Trustees shall
have been informed by tax counsel rendering the Dissolution Tax
Opinion that a No Recognition Opinion cannot be delivered to the
Trust,
then, notwithstanding Section 3.2(a) but subject to Section 3.2(b), the
Company shall have the right upon not less than 30 days nor more than 60 days
notice to the registered Holders of the Notes to redeem the Notes in whole or in
part for cash within 90 days following the occurrence of such Tax Event (the "90
Day Period"), provided that, if at the time there is available to the Company
the opportunity to eliminate within the 90 Day Period, the Tax Event by taking
some ministerial action ("Ministerial Action"), such as filing a form or making
an election, or pursuing some other similar reasonable measure which has no
adverse effect on the Company, the Trust or the Holders of the Trust Securities
issued by the Trust, the Company shall pursue such Ministerial Action in lieu of
redemption; and provided, further, that the Company shall have no right to
redeem the Notes while the Trust is pursuing any Ministerial Action pursuant to
its obligations under the Declaration.
SECTION 3.2 Optional Redemption by Company.
(a) Subject to the provisions of Article III of the Indenture and to
Section 3.2(b) hereof, the Company shall have the right to redeem the
Notes, in whole or in part, from time to time, on or after ______
_____, 2001, at a redemption price equal to 100% of the principal
amount to be
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redeemed plus any accrued and unpaid interest thereon to the date of
such redemption (the "Redemption Price"). Any redemption pursuant to
this paragraph will be made upon not less than 30 nor more than 60
days' notice to the registered Holder of the Notes, at the Redemption
Price. If the Notes are only partially redeemed pursuant to this
Section 3.2, the Notes will be redeemed pro rata or by lot or by any
other method utilized by the Trustee; provided, that if at the time of
redemption, the Notes are registered as a Depository Note, the
Depository shall determine by lot the principal amount of such Notes
held by each Holder to be redeemed.
(b) If a partial redemption of the Notes would result in the delisting of
the Preferred Securities issued by the Trust from any national
securities exchange or other organization on which the Preferred
Securities are then listed, the Company shall not be permitted to
effect such partial redemption and may only redeem the Notes in whole.
SECTION 3.3 No Sinking Fund.
The Notes are not entitled to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 Extension of Interest Payment Period.
The Company shall have the right, at any time during the term of the
Notes, from time to time to defer the payment of interest by extending the
interest payment period of such Notes for up to 20 consecutive quarters (the
"Extended Interest Payment Period"), provided that no Extended Interest Payment
Period may extend beyond the Maturity Date of the Notes. To the extent permitted
by applicable law, interest, the payment of which has been deferred because of
the extension of the interest payment period pursuant to this Section 4.1, will
bear interest thereon at the Coupon Rate, compounded quarterly, for each quarter
of the Extended Interest Payment Period ("Compounded Interest"). At the end of
the Extended Interest Payment Period the Company shall pay all interest accrued
and unpaid on the Notes including any Additional Interest and Compounded
Interest ("Deferred Interest") which shall be payable to the Holders of the
Notes in whose names the Notes are registered in the Note Register on the first
record date after the end of the Extended Interest Payment Period. Before the
termination of any Extended Interest Payment Period, the Company may further
extend such period, provided that such period together with all such further
extensions thereof shall not exceed 20 consecutive quarters
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and provided further that no Extended Interest Payment Period may extend beyond
the Maturity Date of the Notes. Upon the termination of any Extended Interest
Payment Period and upon the payment of all Deferred Interest then due, the
Company may select a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable during an Extended
Interest Payment Period, except at the end thereof.
SECTION 4.2 Notice of Extension.
(a) If the Property Trustee is the only registered Holder of the Notes at
the time the Company selects an Extended Interest Payment Period, the
Company shall give written notice to both the Regular Trustees and the
Property Trustee of its selection of such Extended Interest Payment
Period one Business Day before the earlier of (i) the next succeeding
date on which Distributions on the Trust Securities issued by the
Trust are payable, or (ii) the date the Trust is required to give
notice of the record date or the date such Distributions are payable
to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Preferred Securities issued by the
Trust, but in any event at least one Business Day before such record
date.
(b) If the Property Trustee is not the only Holder of the Notes at the
time the Company selects an Extended Interest Payment Period, the
Company shall give the Holders of the Notes written notice of its
selection of such Extended Interest Payment Period 10 Business Days
before the earlier of (i) the next succeeding Interest Payment Date,
or (ii) the date the Company is required to give notice of the record
or payment date of such interest payment to the New York Stock
Exchange or other applicable self-regulatory organization or to
Holders of the Notes, but in any event at least two Business Days
before such record date.
(c) The quarter in which any notice is given pursuant to paragraphs (a) or
(b) of this Section 4.2 shall be counted as one of the 20 quarters
permitted in the maximum Extended Interest Payment Period permitted
under Section 4.1.
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ARTICLE V
EXPENSES AND GUARANTEE
SECTION 5.1 Payment of Expenses.
In connection with the offering, sale and issuance of the Notes to the
Property Trustee in connection with the sale of the Trust Securities by the
Trust, the Company shall:
(a) pay for all costs and expenses relating to the offering, sale and
issuance of the Note, including commissions to the underwriters
payable pursuant to the Underwriting Agreement and the Pricing
Agreement and compensation of the Trustee under the Indenture in
accordance with the provisions of Section 8.07 of the Indenture;
(b) pay for all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the
Trust, the offering, sale and issuance of the Trust Securities
(including commissions to the underwriters in connection therewith),
the fees and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of the
Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses
for printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), travel expenses and
costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets); and
(c) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs
and expenses with respect to such taxes of the Trust.
ARTICLE VI
SUBORDINATION
SECTION 6.1 Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Notes issued hereunder
by such Holder's acceptance thereof likewise covenants and agrees, that all
Notes shall be issued subject to the provisions of this Article VI; and each
Holder of a Note, whether
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upon original issue or upon transfer or assignment thereof, accepts and agrees
to be bound by such provisions.
The payment by the Company of the principal of, (premium, if any) and
interest on all Notes issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and junior in right of payment to the
prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article VI shall prevent the occurrence of any default
or Event of Default hereunder.
SECTION 6.2 Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company in
the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Company, or in the event that the maturity of any
Senior Indebtedness of the Company, has been accelerated because of a default,
then, in either case, no payment shall be made by the Company with respect to
the principal (including redemption payments) of, or premium, if any, or
interest on the Notes including payment with respect to any obligation due under
the Preferred Securities Guarantee.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by the
preceding paragraph of this Section 6.2, such payment shall be held in trust for
the benefit of, and shall be paid over or delivered to, the holders of such
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the holders of such Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee within 90 days of such payment
of the amounts then due and owing on such Senior Indebtedness and only the
amounts specified in such notice to the Trustee shall be paid to the holders of
such Senior Indebtedness.
SECTION 6.3 Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company, shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company,
as the case may be, on account of the
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principal (and premium, if any) or interest on the Notes; and upon any such
dissolution or winding-up or liquidation or reorganization any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the Notes or
the Trustee would be entitled to receive from the Company, except for the
provisions of this Article VI, shall be paid by the Company, or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Holders of the Notes or by the Trustee under
this Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Company, (pro rata to the holders of the respective amounts
of Senior Indebtedness, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness before any payment or distribution is made to the Holders of Notes
or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Notes before all Senior Indebtedness of the
Company is paid in full, or provision is made for such payment in money in
accordance with its terms, such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the holders such
Senior Indebtedness or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, as calculated by the Company, for application to the
payment of all Senior Indebtedness of the Company, as the case may be, remaining
unpaid to the extent necessary to pay such Senior Indebtedness in full in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
For purposes of this Article VI, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article VI with respect to
the Notes to the payment of all Senior Indebtedness of the Company that may at
the time be outstanding, provided that (i) such Senior Indebtedness is assumed
by the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of such Senior Indebtedness are
not, without the consent of such
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holders, altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article X of the
Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 6.3 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article X of the Indenture. Nothing in Section 6.2
or in this Section 6.3 shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 8.07 of the Indenture.
SECTION 6.4 Subordination.
Subject to the payment in full of all Senior Indebtedness of the Company,
the rights of the Holders of the Notes shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company applicable to such Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Notes shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Holders of the Notes or the Trustee
would be entitled except for the provisions of this Article VI, and no payment
over pursuant to the provisions of this Article VI, to or for the benefit of the
holders of such Senior Indebtedness by Holders of the Notes or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Indebtedness of the Company, and the Holders of the Notes, be deemed to be a
payment by the Company to or on account of such Senior Indebtedness. It is
understood that the provisions of this Article VI are and are intended solely
for the purposes of defining the relative rights of the Holders of the Notes, on
the one hand, and the holders of Senior Indebtedness of the Company on the other
hand.
Nothing contained in this Article VI or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness of the Company, and the Holders of
the Notes the obligation of the Company which is absolute and unconditional, to
pay to the Holders of the Notes the principal of (and premium, if any) and
interest on the Notes as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Notes and creditors of the Company other than the
holders of Senior Indebtedness of the Company, nor shall anything herein or
therein prevent the Trustee or the Holder of any Note from exercising all
remedies otherwise permitted by applicable law upon default under the Indenture,
subject to the rights, if any, under this Article VI
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of the holders of such Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article VI, the Trustee, subject to the provisions of Section 8.01 of the
Indenture, and the Holders of the Notes, shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Notes, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders of Senior
Indebtedness of the Company the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article VI.
SECTION 6.5 Trustee to Effectuate Subordination.
Each Holder of Notes by such Holder's acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article VI and appoints the Trustee such Holder's attorney-in-fact for any and
all such purposes.
SECTION 6.6 Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Notes pursuant to
the provisions of this Article VI. Notwithstanding the provisions of this
Article VI or any other provision of the Indenture and this Supplemental
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment of monies to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article VI,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office of the Trustee from the
Company or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Trustee,
subject to the provisions of Section 8.01 of the Indenture, shall be entitled in
all respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 6.6 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (or premium, if any) or interest on any Note), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money
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and to apply the same to the purposes for which they were received, and shall
not be affected by any notice to the contrary that may be received by it within
two Business Days prior to such date.
The Trustee, subject to the provisions of Section 8.01 of the Indenture,
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness of the Company (or a
trustee on behalf of such holder) to establish that such notice has been given
by a holder of such Senior indebtedness or a trustee on behalf of any such
holder or holders. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of such Senior Indebtedness to participate in any payment or distribution
pursuant to this Article VI, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article VI, and if such
evidence is not furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 6.7 Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article VI in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article VI, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Section 8.01 of the Indenture, the Trustee shall
not be liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to Holders of Notes, the Company, or any other Person money or assets to
which any holder of such Senior Indebtedness shall be entitled by virtue of this
Article VI or otherwise.
SECTION 6.8 Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by
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any act or failure to act on the part of the Company, or by any act or failure
to act, in good faith, by any such holder, or by any noncompliance by the
Company with the terms, provisions and covenants of this Indenture, regardless
of any knowledge thereof that any such holder may have or otherwise be charged
with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Company, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Notes, without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article VI or the
obligations hereunder of the Holders of the Notes to the holders of such Senior
Indebtedness, do any one or more the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company, and any other Person.
ARTICLE VII
COVENANTS
SECTION 7.1 Listing on Exchanges.
If the Notes are to be issued as a Depository Note in connection with the
distribution of the Notes to the holders of the Preferred Securities issued by
the Trust upon a Dissolution Event, the Company will use its best efforts to
list such Notes on the New York Stock Exchange or on such other exchange as the
Preferred Securities are then listed.
SECTION 7.2 Limitation on Dividends; Transactions with Affiliates.
(a) If (i) there shall have occurred any event that would constitute an
Event of Default or (ii) the Company shall be in default with respect to its
payment of any obligations under the Preferred Securities Guarantee or Common
Securities Guarantee relating to the Trust, then (a) the Company shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock (other than (i) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other
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similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b) the
Company shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by the Company which
rank pari passu with or junior to the Notes. However, nothing herein will
limit the Company's ability to pay stock dividends where the dividend stock is
the same stock as that on which the dividend is being paid.
(b) If the Company shall have given notice of its election to defer
payments of interest on the Notes by extending the interest payment period as
provided in Article IV of this Supplemental Indenture and such period, or any
extension thereof, shall be continuing, then (i) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of its capital stock
(other than (x) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (y) as a result of an exchange or conversion
of any class or series of the Company's capital stock for any other class or
series of the Company's capital stock, or (z) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged), and (ii) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Company which rank pari passu with or junior to the
Notes. However, nothing herein will limit the Company's ability to pay stock
dividends where the dividend stock is the same stock as that on which the
dividend is being paid.
SECTION 7.3 Covenants as to the Trust.
For so long as such Trust Securities remain outstanding, the Company will
(i) maintain 100% direct or indirect ownership of the Common Securities of the
Trust; provided, however, that any permitted successor of the Company under the
Indenture may succeed to the Company's ownership of the Common Securities, (ii)
use its reasonable efforts to cause the Trust (a) to remain a statutory business
trust, except in connection with the distribution of Notes to the holders of
Trust Securities in liquidation of the Trust, the redemption of all of the Trust
Securities of the Trust, or certain mergers, consolidations or amalgamations,
each as permitted by the
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Declaration of the Trust, and (b) to otherwise continue to be classified as a
grantor trust for United States federal income tax purposes.
ARTICLE VIII
FORM OF NOTE
SECTION 8.1 Form of Note.
The Notes, and the Trustee's Certificate of Authentication to be endorsed
thereon are to be substantially in the following forms:
(FORM OF FACE OF NOTE)
[IF THE NOTE IS TO BE A Depository Note, INSERT - This Note is a
Depository Note within the meaning of the Indenture hereinafter referred to and
is registered in the name of a Depository or a nominee of a Depository. This
Note is exchangeable for Notes registered in the name of a person other than the
Depository or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Note (other than a transfer of this Note as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Note is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any Note issued
is registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment hereon
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
No. $
CUSIP No. 44180
HOUSEHOLD INTERNATIONAL, INC.
_____% JUNIOR SUBORDINATED DEFERRABLE INTEREST NOTE DUE 2036
Household International, Inc., a Delaware corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to or registered
assigns, the principal sum of
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$_____________ Dollars on _______ 30, 2036, and to pay interest on said
principal sum from ______ ____, 1996 or from the most recent interest payment
date (each such date, an "Interest Payment Date") to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears on March 31, June 30, September 30 and December 31 of each year
commencing ________ 30, 1996 at the rate of _____% per annum until the principal
hereof shall have become due and payable, and on any overdue principal and
premium, if any, and (without duplication and to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum, compounded quarterly. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on this Note is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. The interest installment
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the person in whose name
this Note (or one or more Predecessor Notes, as defined in said Indenture) is
registered at the close of business on the Regular Record Date for such interest
installment [which shall be the close of business on the business day next
preceding such Interest Payment Date]. [IF PURSUANT TO THE PROVISIONS OF SECTION
2.11(c) OF THE INDENTURE THE NOTES ARE NO LONGER REPRESENTED BY A Depository
Note -- which shall be the close of business on the business day next preceding
such Interest Payment Date.] Any such interest installment not punctually paid
or duly provided for shall forthwith cease to be payable to the registered
Holders on such Regular Record Date, and may be paid to the person in whose name
this Note (or one or more Predecessor Notes) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered Holders
of this series of Notes not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture. The principal of (and premium, if any) and the interest on
this Note shall be payable at the office or agency of the Trustee maintained for
that purpose in any coin or currency of the United States of America which at
the time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered Holder at such address as shall appear
in the Note Register. Notwithstanding the foregoing, so long as the Holder of
this Note is the Property
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Trustee, the payment of the principal of (and premium, if any) and interest on
this Note will be made at such place and to such account as may be designated by
the Property Trustee.
The indebtedness evidenced by this Note is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment in
full of all Senior Indebtedness, and this Note is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such Holder upon
said provisions.
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
Unless the Certificate of Authentication hereon has been executed by
the Trustee referred to on the reverse side hereof, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
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The provisions of this Note are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated___________
HOUSEHOLD INTERNATIONAL, INC.
By_____________________________________________
Attest:
By_____________________________________________
Secretary
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series of Notes described in the within-
mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO
_________________________________ _________________________________
as Trustee or as Authentication Agent
By_______________________________ By________________________________
Authorized Signatory Authorized Signatory
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(FORM OF REVERSE OF NOTE)
This Note is one of a duly authorized series of Notes of the Company
(herein sometimes referred to as the "Notes"), specified in the Indenture, all
issued or to be issued in one or more series under and pursuant to an Indenture
dated as of May 15, 1995 duly executed and delivered between the Company and The
First National Bank of Chicago, a national banking association, as Trustee (the
"Trustee"), as supplemented by the Second Supplemental Indenture dated as of
__________, 1996 between the Company and the Trustee (the Indenture as so
supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Notes. By the terms of the
Indenture, the Notes are issuable in series which may vary as to amount, date of
maturity, rate of interest and in other respects as in the Indenture provided.
This series of Notes is limited in aggregate principal amount as specified in
said Second Supplemental Indenture.
In the event of the occurrence and continuation of a Tax Event, in
certain circumstances this Note will become due and payable at the principal
amount together with any interest accrued thereon (the "Redemption Price"). The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or at such earlier time as the Company determines. The
Company shall have the right to redeem this Note at the option of the Company,
without premium or penalty, in whole or in part at any time on or after _____
____, 2001 (an "Optional Redemption"), at a redemption price equal to 100% of
the principal amount plus any accrued but unpaid interest, to the date of such
redemption (the "Redemption Price"). Any redemption pursuant to this paragraph
will be made upon not less than 30 nor more than 60 days' notice, at the
Redemption Price. If the Notes are only partially redeemed by the Company
pursuant to an Optional Redemption, the Notes will be redeemed pro rata or by
lot or by any other method utilized by the Trustee; provided that if, at the
time of redemption, the Notes are registered as a Depository Note, the
Depository shall determine by lot the principal amount of such Notes held by
each Holder to be redeemed.
In the event of redemption of this Note in part only, a new Note or
Notes of this series for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
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The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Notes; provided,
however, that no such supplemental indenture shall (i) extend the fixed maturity
of any Notes of any series, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, without the consent of the Holder
of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the
Holders of which are required to consent to any such supplemental indenture,
without the consent of the Holders of each Note then outstanding and affected
thereby. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Notes of any series at the time
outstanding affected thereby, on behalf of all of the Holders of the Notes of
such series, to waive any past default in the performance of any of the
covenants contained in the Indenture, or established pursuant to the Indenture
with respect to such series, and its consequences, except a default in the
payment of the principal of or premium, if any, or interest on any of the Notes
of such series. Any such consent or waiver by the registered Holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and of any
Note issued in exchange herefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the time and place and at the rate and in the money
herein prescribed.
The Company shall have the right at any time during the term of the
Notes from time to time to extend the interest payment period of such Notes to
up to 20 consecutive quarters (an "Extended Interest Payment Period"), at the
end of which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Notes to the
extent that payment of such interest is enforceable under applicable law),
provided that no Extended Interest Payment Period may extend beyond the Maturity
Date of the Notes. Before the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
provided that such Extended Interest Payment Period together with all such
further extensions
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thereof shall not exceed 20 consecutive quarters and provided further that no
Extended Interest Payment Period may extend beyond the Maturity Date of the
Notes. At the termination of any such Extended Interest Payment Period and upon
the payment of all accrued and unpaid interest and any additional amounts then
due, the Company may select a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable by the registered Holder hereof on
the Note Register of the Company, upon surrender of this Note for registration
of transfer at the office or agency of the Company in Chicago, Illinois
accompanied by written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the registered
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of authorized denominations and for the same aggregate principal
amount and series will be issued to the designated transferee or transferees. No
service charge will be made for any such transfer, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in relation thereto.
Prior to due presentment for registration of transfer of this Note,
the Company, the Trustee, any paying agent and any Note Registrar may deem and
treat the registered Holder hereof as the absolute owner hereof (whether or not
this Note shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Note Registrar) for the purpose of
receiving payment of or on account of the principal hereof and premium, if any,
and interest due hereon and for all other purposes, and neither the Company nor
the Trustee nor any paying agent nor any Note Registrar shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as such, of the
Company or of any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issuance hereof, expressly waived and
released.
The notes of this series are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. This
Depository Note is exchangeable for Notes in definitive form only under certain
limited circumstances set forth in the Indenture. Notes of this series so issued
are issuable only in registered form without coupons in denominations of $25 and
any integral multiple thereof. As provided in the Indenture and
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subject to certain limitations herein and therein set forth, Notes of this
series so issued are exchangeable for a like aggregate principal amount of Notes
of this series of a different authorized denomination, as requested by the
Holder surrendering the same.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
ARTICLE IX
ADDITIONAL EVENT OF DEFAULT; MODIFICATION AND WAIVER
SECTION 9.1 Additional Event of Default.
"Event of Default", wherever used in the Indenture or this
Supplemental Indenture with respect to the Notes, in addition to the Events of
Default set forth in Section 7.01 of the Indenture shall include the following
event:
the Trust shall have voluntarily or involuntarily dissolved, wound-up
its business or otherwise terminated its existence except in
connection with (i) the distribution of Notes to Holders of Trust
Securities in liquidation of their interests in the Trust, (ii) the
redemption of all of the outstanding Trust Securities of the Trust or
(iii) certain mergers, consolidations or amalgamations, each as
permitted by the Declaration of the Trust.
SECTION 9.2 MODIFICATION AND WAIVER.
The covenant set forth in Section 7.2 of this Supplemental Indenture shall
not be modified or waived without the consent of the Holders of each Note
affected thereby.
ARTICLE X
ORIGINAL ISSUE OF NOTES
SECTION 10.1 Original Issue of Notes.
Notes in the aggregate principal amount of $_____________ may, upon
execution of this Supplemental Indenture, be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the Company,
signed by its Chairman, its President, or any Vice President and its Treasurer
or an Assistant Treasurer, without any further action by the Company.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Ratification of Indenture.
The Indenture, as supplemented by this Supplemental Indenture, is in
all respects ratified and confirmed, and this Supplemental Indenture shall be
deemed part of the Indenture in the manner and to the extent herein and therein
provided.
SECTION 11.2 Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
Supplemental Indenture.
SECTION 11.3 Governing Law.
This Supplemental Indenture and each Note shall be deemed to be a
contract made under the internal laws of the State of Illinois, and for all
purposes shall be construed in accordance with the laws of said State.
SECTION 11.4 Separability.
In case any one or more of the provisions contained in this
Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Supplemental
Indenture or of the Notes, but Supplemental Indenture and the Notes shall be
construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.
SECTION 11.5 Counterparts.
This Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
HOUSEHOLD INTERNATIONAL, INC.
By______________________________
Edgar Ancona
Vice President-Treasurer
Attest:
_____________________________
Assistant Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By______________________________
Joseph Morand
Vice President
Attest:
_____________________________
Assistant Secretary
26
<PAGE>
Exhibit 4.4
============================================
AMENDED AND RESTATED
DECLARATION
OF TRUST
HOUSEHOLD CAPITAL TRUST II
Dated as of June 15, 1996
============================================
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- -------------------
<S> <C>
310(a)......................................... 5.3(a)
310(b)......................................... 5.3(c)
310(c)......................................... Inapplicable
311(a)......................................... 2.2(b)
311(b)......................................... 2.2(b)
311(c)......................................... Inapplicable
312(a)......................................... 2.2(a)
312(b)......................................... 2.2(b)
313............................................ 2.3
314(a)......................................... 2.4
314(b)......................................... Inapplicable
314(c)......................................... 2.5
314(d)......................................... Inapplicable
314(f)......................................... Inapplicable
315(a)......................................... 3.9(b)
315(b)......................................... 2.8
315(c)......................................... 3.9(a)
315(d)......................................... 3.9(a)
316(a)......................................... Exhibit At 2.6
316(c)......................................... 3.6(e)
</TABLE>
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
DECLARATION OF TRUST............................................. 1
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.................................. 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application............. 8
SECTION 2.2 Lists of Holders of Securities............... 8
SECTION 2.3 Reports by the Property Trustee.............. 9
SECTION 2.4 Periodic Reports to Property Trustee......... 9
SECTION 2.5 Evidence of Compliance with Conditions
Precedent.................................. 9
SECTION 2.6 Events of Default; Waiver.................... 9
SECTION 2.7 Event of Default; Notice..................... 11
ARTICLE III
ORGANIZATION
SECTION 3.1 Name......................................... 13
SECTION 3.2 Office....................................... 13
SECTION 3.3 Purpose...................................... 13
SECTION 3.4 Authority.................................... 13
SECTION 3.5 Title to Property of the Trust............... 14
SECTION 3.6 Powers and Duties of the Regular
Trustees................................... 14
SECTION 3.7 Prohibition of Actions by the Trust and
the Trustees............................... 17
SECTION 3.8 Powers and Duties of the Property
Trustee.................................... 18
SECTION 3.9 Certain Duties and Responsibilities
the Property Trustee of.................... 20
SECTION 3.10 Certain Rights of Property
Trustee.................................... 21
SECTION 3.11 Delaware Trustee............................. 24
SECTION 3.12 Execution of Documents....................... 24
SECTION 3.13 Not Responsible for Recitals or Issuance
of Securities.............................. 24
SECTION 3.14 Duration of Trust............................ 25
SECTION 3.15 Mergers...................................... 25
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities...... 27
SECTION 4.2 Responsibilities of the Sponsor.............. 27
</TABLE>
<PAGE>
ARTICLE V
TRUSTEES
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5.1 Number of Trustees........................... 28
SECTION 5.2 Delaware Trustee............................. 28
SECTION 5.3 Property Trustee; Eligibility................ 29
SECTION 5.4 Qualifications of Regular Trustees and
Delaware Trustee Generally................. 30
SECTION 5.5 Initial Trustees............................. 30
SECTION 5.6 Appointment, Removal and Resignation of
Trustees................................... 30
SECTION 5.7 Vacancies Among Trustees..................... 32
SECTION 5.8 Effect of Vacancies.......................... 33
SECTION 5.9 Meetings..................................... 33
SECTION 5.10 Delegation of Power.......................... 33
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions................................ 34
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding
Securities................................. 34
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust......................... 35
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities....................... 36
SECTION 9.2 Transfer of Certificates..................... 37
SECTION 9.3 Deemed Security Holders...................... 37
SECTION 9.4 Book Entry Interests......................... 38
SECTION 9.5 Notices to Clearing Agency................... 39
SECTION 9.6 Appointment of Successor Clearing Agency..... 39
SECTION 9.7 Definitive Preferred Security
Certificates.............................. 39
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen
Certificates.............................. 40
</TABLE>
<PAGE>
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 10.1 Liability.................................... 40
SECTION 10.2 Exculpation.................................. 41
SECTION 10.3 Fiduciary Duty............................... 42
SECTION 10.4 Indemnification.............................. 43
SECTION 10.5 Outside Businesses........................... 43
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.................................. 44
SECTION 11.2 Certain Accounting Matters................... 44
SECTION 11.3 Banking...................................... 45
SECTION 11.4 Withholding.................................. 45
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments................................... 46
SECTION 12.2 Meetings of the Holders of Securities;
Action by Written Consent.................. 47
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
SECTION 13.1 Representations and Warranties of
Property Trustee.......................... 49
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices...................................... 50
SECTION 14.2 Governing Law................................ 51
SECTION 14.3 Intention of the Parties..................... 52
SECTION 14.4 Headings..................................... 52
SECTION 14.5 Successors and Assigns....................... 52
SECTION 14.6 Partial Enforceability....................... 52
SECTION 14.7 Counterparts................................. 52
</TABLE>
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
HOUSEHOLD CAPITAL TRUST II
____________, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and effective as
of _________ 15, 1996 by the undersigned trustees (together with all other
Persons from time to time duly appointed and serving as trustees in accordance
with the provisions of this Declaration, the "Trustees"), Household
International, Inc., a Delaware corporation, as trust sponsor (the "Sponsor"),
and by the holders, from time to time, of undivided beneficial interests in the
Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established a trust (the "Trust") under
the Delaware Business Trust Act pursuant to a Declaration of Trust, dated as of
May 7, 1996 (the "Original Declaration") and a Certificate of Trust filed with
the Secretary of State of Delaware on May 7, 1996, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Junior Subordinated Debt Securities of the Sponsor;
NOW, THEREFORE, it being the intention of the parties hereto to continue the
Trust as a statutory business trust under the Business Trust Act and that this
Declaration constitutes the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to this
Declaration of Trust as modified, supplemented or amended from time to
time;
1
<PAGE>
(d) all references in this Declaration to Articles and Sections and
Exhibits are to Articles and Sections of and Exhibits to this
Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Appointment Event" means an event defined in the terms of the Preferred
Securities as set forth in Exhibit A which entitles the Holders of a Majority in
liquidation amount of the Preferred Securities to appoint a Special Regular
Trustee.
"Authorized Officer" of a Person means any Person that is authorized to bind
such Person.
"Book Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking institutions in
New York, New York, Chicago, Illinois, or the State of Delaware are authorized
or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del.
C. (S)(S) 3801 et seq., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred Security
Certificate.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depository for the
Preferred Securities and in whose name or in the name of a nominee of that
organization, shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
2
<PAGE>
"Closing Date" means ____________, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" has the meaning specified in Section 3.6.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement of the Sponsor in
respect of the Common Securities.
"Common Security Certificate means a definitive certificate in fully registered
form representing a Common Security substantially in the form of Annex II to
Exhibit A.
"Coupon Rate" has the meaning set forth in Section 2(a) of Exhibit A hereto.
"Covered Person" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust; or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.
"Debt Issuer" means Household International, Inc., a Delaware corporation.
"Debt Trustee" means The First National Bank of Chicago, a national banking
association, as trustee under the Indenture until a successor is appointed
thereunder and thereafter means such successor trustee.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Preferred Security Certificates" has the meaning set forth in
Section 9.4.
"Direction" by a Person means a written direction signed (a) if the Person is a
natural person, by that Person; or (b) in any other case, in the name of such
Person by one or more Authorized Officers of that Person.
"Dissolution Tax Opinion" has the meaning set forth in Section 4(c) of Exhibit A
hereto.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing Agency.
3
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time or any successor legislation.
"Event of Default" in respect of the Securities means an Event of Default (as
defined in the Indenture) has occurred and is continuing in respect of the
Notes.
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a Security is
registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.
"Indemnified Person" means any Trustee, any Affiliate of any Trustee, or any
officers, directors, shareholders, members, partners, employees, representatives
or agents of any Trustee, or any employee or agent of the Trust or its
Affiliates.
"Indenture" means the Indenture dated as of May 15, 1995 among the Debt Issuer,
and The First National Bank of Chicago, a national banking association, as
trustee and the indenture supplemental thereto pursuant to which the Notes are
to be issued.
"Investment Company" means an investment company as defined in the Investment
Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as amended
from time to time or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means, except as provided in
the terms of the Preferred Securities, Holder(s) of Securities voting together
as a single class or, as the context may require, Holder(s) of Preferred
Securities or Common Securities each, voting separately as a class, who vote
Securities of a relevant class, and the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or maturity,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of the Securities voted by such Holders represents
more than 50% of the above stated liquidation amount of all Securities of such
class.
"Ministerial Action" has the meaning set forth in the terms of the Securities as
set forth in Exhibit A.
"No Recognition Opinion" has the meaning set forth in Section 4(c) of Exhibit A
hereto.
"Notes" means the series of junior subordinated debt securities to be issued by
the Debt Issuer under the Indenture to the Property
4
<PAGE>
Trustee, a specimen certificate for such series of Notes being Exhibit B.
"Officers' Certificate" means, with respect to any Person, a certificate signed
by two Authorized Officers of such Person. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Person" means a legal entity, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability
company, trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement of the Sponsor in
respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a Preferred
Security substantially in the form of Annex I to Exhibit A.
5
<PAGE>
"Property Trustee" means the Trustee meeting the eligibility requirements set
forth in Section 5.3.
"Property Account" has the meaning set forth in Section 3.8(c).
"Quorum" means a majority of the Regular Trustees or if there are only two
Regular Trustees, both of them.
"Redemption Tax Opinion" has the meaning set forth in Section 4(c) of Exhibit A
hereto.
"Regular Trustee" means any Trustee other than the Property Trustee and the
Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person which owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, the chairman
of the board of directors, the president, any vice-president, any assistant
vice-president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any other
officer of the Property Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Guarantees" means the Common Securities Guarantee and the Preferred
Security Guarantee.
"66-2/3% in liquidation amount of the Securities" means, except as provided in
the terms of the Preferred Securities, Holder(s) of Securities voting together
as a single class or, as the context may require, Holder(s) of Preferred
Securities or Common Securities, each voting separately as a class, who vote
Securities of a relevant class, and the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or maturity,
plus accrued and unpaid Distributions, to the date upon which the voting
percentages are determined) of the Securities voted by such Holders represents
66-2/3% of the above-stated liquidation amount of all Securities of such class.
6
<PAGE>
"Special Event" has the meaning set forth in the terms of the Securities.
"Special Regular Trustee" means a Regular Trustee appointed by the Holders of a
Majority in liquidation amount of the Preferred Securities in accordance with
Section 5.6(a)(ii)(B).
"Sponsor" means Household International, Inc., a Delaware corporation or any
successor entity in a merger, in its capacity as sponsor of the Trust.
"Successor Entity" has the meaning set forth in Section 3.15(b).
"Successor Property Trustee" means a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.3(a).
"Successor Securities" has the meaning set forth in Section 3.15(b).
"Super Majority" means where consent under the Indenture would require the
consent of greater than a majority of the holders in principal amount of Notes
affected thereby.
"Tax Event" has the meaning set forth in Section 4(c) of Exhibit A hereto.
"10% in liquidation amount of the Securities" means, except as provided in the
terms of the Preferred Securities, Holder(s) of Securities voting together as a
single class or, as the context may require, Holder(s) of Preferred Securities
or Common Securities, each voting separately as a class, who vote Securities of
a relevant class, and the liquidation amount (including the stated amount that
would be paid on redemption, liquidation or maturity, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
the Securities voted by such Holders represents 10% of the above stated
liquidation amount of all Securities of such class.
"Treasury Regulations" means income tax regulations including temporary and
proposed regulations, promulgated under the Code by the United States Treasury,
as such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this Declaration as a
trustee, so long as such Person shall continue in office in accordance with the
terms hereof, and all other Persons who may from time to time be duly appointed,
qualified and serving as Trustees in accordance with the provisions hereof, and
references herein to a Trustee or the Trustees shall refer to such Person or
Persons solely in their capacity as trustees hereunder.
7
<PAGE>
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Underwriting Agreement" means the Underwriting Agreement for the offering and
sale of Preferred Securities in the form of Exhibit C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
--------------------------------
(a) This Declaration is subject to the provisions of the Trust Indenture
Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions;
(b) the Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act;
(c) if and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall
control; and
(d) the application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the
Trust.
SECTION 2.2 Lists of Holders of Securities.
------------------------------
(a) Each of the Sponsor, the Debt Issuer and the Regular Trustees on
behalf of the Trust shall provide the Property Trustee (i) within 14
days after each record date for payment of Distributions a list, in
such form as the Property Trustee may reasonably require, of the names
and addresses of the Holders of the Securities ("List of Holders") as
of such record date, provided that none of the Sponsor, the Debt
Issuer or the Regular Trustees on behalf of the Trust shall be
obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to
the Property Trustee by the Sponsor, the Debt Issuer and the Regular
Trustees on behalf of the Trust, and (ii) at any other time, within 30
days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders
is given to the Property Trustee. The Property Trustee shall preserve,
in as current a form as is reasonably practicable, all information
contained in Lists of
8
<PAGE>
Holders given to it or which it receives in its capacity as Paying
Agent (if acting in such capacity) provided that the Property Trustee
may destroy any List of Holders previously given to it on receipt of a
new List of Holders; and (b) the Property Trustee shall comply with
its obligations under (S)(S) 311(a), 311(b) and (S) 312(b) of the
Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
-------------------------------
Within 60 days after May 15 of each year, the Property Trustee shall provide to
the Holders of the Preferred Securities such reports as are required by (S) 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
(S) 313 of the Trust Indenture Act. The Property Trustee shall also comply with
the requirements of (S) 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
------------------------------------
Each of the Sponsor, the Debt Issuer and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as required by (S) 314 (if any) and the compliance certificate
required by (S) 314 of the Trust Indenture Act in the form, in the manner and at
the times required by (S)314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Sponsor, the Debt Issuer and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration which relate to
any of the matters set forth in (S) 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to (S)
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
-------------------------
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default in respect of
the Preferred Securities and its consequences provided that if the
Event of Default arises out of an Event of Default under the
Indenture:
(i) which is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
9
<PAGE>
(ii) which requires the consent or vote of all or a Super Majority of
the holders of the Notes to be waived under the Indenture, the
Event of Default under the Declaration may only be waived by the
vote of all of the Holders of the Preferred Securities or such
proportion thereof in liquidation amount as represents the
relevant Super Majority of the aggregate principal amount of
Notes outstanding.
Upon such waiver, any such default shall cease to exist, and any Event
of Default with respect to the Preferred Securities arising therefrom
shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or
other default or Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the
Holders of the Preferred Securities of an Event of Default with
respect to the Preferred Securities shall also be deemed to constitute
a waiver by the Holders of the Common Securities of any such Event of
Default with respect to the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the Event of
Default arises out of an Event of Default under the Indenture:
(i) which is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below, the
Event of Default under the Declaration is not waivable; or
(ii) which requires the consent or vote of all or a Super Majority of
the holders of the Notes to be waived under the Indenture, the
Event of Default under the Declaration may only be waived by the
vote of all of the Holders of the Preferred Securities or such
proportion thereof in liquidation amount as represents the
relevant Super Majority of the aggregate principal amount of the
Notes outstanding,
provided that, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with
respect to the Common Securities until all Events of Default with
respect to the Preferred Securities have been cured, waived or
otherwise eliminated and until such Events of Default have been so
10
<PAGE>
cured, waived or otherwise eliminated, the Property Trustee will be
deemed to be acting solely on behalf of the Holders of the Preferred
Securities and only the Holders of the Preferred Securities will have
the right to direct the Property Trustee in accordance with the terms
of the Securities. Subject to the foregoing proviso, upon such waiver,
any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to
have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of
Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an event of default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration.
SECTION 2.7 Event of Default; Notice
------------------------
(a) The Property Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to
the Holders of the Securities, notices of all defaults with respect to
the Securities known to the Property Trustee, unless such defaults
have been cured before the giving of such notice (the term "defaults"
for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any
periods of grace provided for therein and irrespective of the giving
of any notice provided therein); provided, that, except for a default
in the payment of principal of (or premium, if any) or interest on any
of the Notes or in the payment of any sinking fund installment
established for the Notes, the Property Trustee shall be protected in
withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or
Responsible Officers, of the Property Trustee in good faith determine
that the withholding of such notice is in the interests of the Holders
of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 6.01(a)(1) and 6.01(a)(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice or a Responsible
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Officer charged with the administration of the Declaration shall
have obtained written notice of.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
----
The Trust created hereby shall be known as "Household Capital Trust II", as such
name may be modified from time to time by the Regular Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 3.2 Office.
------
The address of the principal office of the Trust is c/o Household International,
Inc., 2700 Sanders Road, Prospect Heights, Illinois 60070. On ten Business Days
written notice to the Holders of Securities, the Regular Trustees may designate
another principal office.
SECTION 3.3 Purpose.
-------
The exclusive purposes and functions of the Trust are (a) to issue and sell
Securities and use the proceeds from such sale to acquire the Notes, and (b)
except as otherwise limited herein, to enter into such agreements and engage in
only those other activities necessary, or incidental thereto. The Trust shall
not borrow money, issue debt or reinvest proceeds derived from investments,
pledge any of its assets, or otherwise undertake (or permit to be undertaken)
any activity that would cause the Trust to be classified for United States
federal income tax purposes as other than grantor trust.
SECTION 3.4 Authority.
---------
Subject to the limitations provided in this Declaration and to the specific
duties of the Property Trustee, the Regular Trustees shall have exclusive and
complete authority to carry out the purposes of the Trust. An action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and serve to bind the Trust and an action taken by the Property Trustee in
accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration.
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SECTION 3.5 Title to Property of the Trust.
------------------------------
Except as provided in Section 3.8 with respect to the Notes and the Property
Account or as otherwise provided in this Declaration, legal title to all assets
of the Trust shall be vested in the Trust. The Holders shall not have legal
title of any part of the assets of the Trust, but shall have an undivided
beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
-----------------------------------------
The Regular Trustees shall have the exclusive power and authority and duty to
cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common Securities
in accordance with this Declaration; provided, however, that the Trust
may issue no more than one series of Preferred Securities and no more
than one series of Common Securities, and, provided further, there
shall be no interests in the Trust other than the Securities and the
issuance of Securities shall be limited to a one time, simultaneous
issuance of both Preferred Securities and Common Securities on the
Closing Date;
(b) in connection with the issue and sale of the Preferred Securities, at
the direction of the Sponsor, to:
(i) execute and file with the Securities and Exchange Commission
(the "Commission") the registration statement on Form S-3
prepared by the Sponsor in relation to the Preferred Securities,
including any amendments thereto prepared by the Sponsor;
(ii) execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor as necessary in order to
qualify or register all or part of the Preferred Securities in
any State in which the Sponsor has determined to qualify or
register such Preferred Securities for sale;
(iii) execute and file an application prepared by the Sponsor to the
New York Stock Exchange or any other national stock exchange or
the NASDAQ National Market for listing upon notice of issuance
of any Preferred Securities;
(iv) execute and file with the Commission a registration statement on
Form 8-A prepared by the Sponsor relating to the registration of
the Preferred Securities under Section 12(b) of the Exchange
Act,
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including any amendments thereto prepared by the Sponsor; and
(v) execute and enter into the Underwriting Agreement providing for
the sale of the Preferred Securities;
(c) to acquire the Notes with the proceeds of the sale of the Preferred
Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Notes to be held of
record in the name of the Property Trustee for the benefit of the
Holders of the Preferred Securities and the Common Securities;
(d) to give the Debt Issuer, the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event provided, that the
Regular Trustees shall consult with the Debt Issuer, the Sponsor and
the Property Trustee before taking or refraining from taking any
Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including for the
purposes of (S)316(c) of the Trust Indenture Act and with respect to
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Preferred Securities and Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of the
Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to 3.8(e), the Property
Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for such
services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate to the Property Trustee required by
(S)314(a)(4) of the Trust Indenture Act which certificate may be
executed by any Regular Trustee;
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(k) incur expenses which are necessary or incidental to carry out any of
the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and transfer
agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of any
notice received from the Debt Issuer of its election to defer payments
of interest on the Notes by extending the interest payment period
under the Indenture;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under
the laws of the State of Delaware and of each other jurisdiction in
which such existence is necessary to protect the limited liability of
the Holders of the Securities or to enable the Trust to effect the
purposes for which the Trust was created;
(p) to take any action, not inconsistent with this Declaration or with
applicable law, which the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities
of the Trust as set out in this Section 3.6 including, but not limited
to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be characterized for United States federal
income tax purposes as other than a grantor trust; and
(iii) cooperating with the Debt Issuer to ensure that the Notes will
be treated as indebtedness of the Debt Issuer for United States
federal income tax purposes, provided that such action does not
adversely affect the interests of Holders; and
(q) to take all action necessary to cause all applicable tax returns and
tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on
behalf of the Trust.
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The Regular Trustees must exercise the powers set forth in this Section 3.6 in a
manner which is consistent with the purposes and functions of the Trust set out
in Section 3.3 and the Regular Trustees shall not take any action which is
inconsistent with the purposes and functions of the Trust set forth in Section
3.3. Subject to this Section 3.6, the Regular Trustees shall have none of the
powers or the authority of the Property Trustee set forth in Section 3.8.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
----------------------------------------------------
(a) The Trust shall not, and the Trustees (including the Property Trustee)
shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust
shall not and the Trustees (including the Property Trustee) shall not:
(i) invest any proceeds received by the Trust from holding the Notes
but shall distribute all such proceeds to Holders of Securities
pursuant to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Notes;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the
Securities; or
(vii) (A) direct the time, method and place of exercising any trust or
power conferred upon the Debt Trustee with respect to the Notes,
(B) waive any past default that is waivable under Section 7.13
of the Indenture, (C) exercise any right to rescind or annul any
declaration that the principal of all the Notes shall be due and
payable or (D) consent to any amendment, modification or
termination of the Indenture or the Notes, where such consent
shall be required, unless the Trust shall have received an
opinion of counsel to the effect that such modification will not
cause more than an insubstantial risk that for United States
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federal income tax purposes the Trust will be characterized as
other than a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
-----------------------------------------
(a) The legal title to the Notes shall be owned by and held of record in
the name of the Property Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the
Property Trustee to the Notes shall vest automatically in each Person
who may hereafter be appointed as Property Trustee as set forth in
Section 5.6. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and
delivered.
(b) The Property Trustee shall not transfer its right, title and interest
in the Notes to the Regular Trustees or to the Delaware Trustee (if
the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing bank
account (the "Property Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the
Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Notes held by the Property Trustee,
deposit such funds into the Property Account and make payments
to the Holders of the Preferred Securities and the Common
Securities from the Property Account in accordance with Section
6.1. Funds in the Property Account shall be held uninvested
until disbursed in accordance with this Declaration. The
Property Account shall be an account which is maintained with a
banking institution the rating on whose long term unsecured
indebtedness is at least equal to the rating assigned to the
Preferred Securities by a "nationally recognized statistical
rating organization", as that term is defined for purposes of
Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Preferred Securities
and the Common Securities to the extent the Notes are redeemed
or mature; and
(iii) upon notice of distribution issued by the Regular Trustees in
accordance with the terms of the Preferred Securities and the
Common Securities,
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engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Notes to Holders
of Securities upon the occurrence of certain special events (as
may be defined in the terms of the Securities) arising from a
change in law or a change in legal interpretation or other
specified circumstances pursuant to the terms of the Securities;
(d) the Property Trustee shall take all actions and perform such duties as
may be specifically required of the Property Trustee pursuant to the
terms of the Securities;
(e) the Property Trustee shall take any Legal Action which arises out of
or in connection with an Event of Default or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture
Act;
(f) the Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and accepted
that appointment in accordance with Section 5.6;
(g) the Property Trustee shall have the legal power to exercise all of the
rights, powers and privileges of a holder of Notes under the Indenture
and, if an Event of Default occurs and is continuing, the Property
Trustee shall, for the benefit of Holders of the Securities, enforce
its rights as holder of the Notes subject to the rights of the Holders
pursuant to the terms of such Securities;
(h) the Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to either or
both of the Preferred Securities and the Common Securities and any
such Paying Agent shall comply with (S) 317(b) of the Trust Indenture
Act. Any Paying Agent may be removed by the Property Trustee at any
time and a successor Paying Agent or additional Paying Agents may be
appointed at any time by the Property Trustee; and
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(i) subject to this Section 3.8, the Property Trustee shall have none of
the powers or the authority of the Regular Trustees set forth in
Section 3.6.
The Property Trustee must exercise the powers set forth in this Section 3.8 in a
manner which is consistent with the purposes and functions of the Trust set
forth in Section 3.3 and the Property Trustee shall not take any action which is
inconsistent with the purposes and functions of the Trust set out in Section
3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee
-----------------------------------------------------------
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set
forth in this Declaration and in the terms of the Securities, and no
implied covenants shall be read into this Declaration against the
Property Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.6), the Property
Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs;
(b) no provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this
Declaration and in the terms of the Securities, and the
Property Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied
covenants or obligations shall be read into this
Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions
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expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; but in the case of any
such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform
to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities at the time
outstanding relating to the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property
Trustee under this Declaration; and
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it
shall have reasonable ground for believing that the repayment of
such funds or liability is not reasonably assured to it under
the terms of this Declaration or adequate indemnity against such
risk or liability is not reasonably assured to it.
SECTION 3.10 Certain Rights of Property Trustee.
----------------------------------
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document
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believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced
by a Direction or an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its
part and, if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-7, subject to the
requirements of Rule 3a-7, request and rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (or any rerecording,
refiling or registration thereof);
(v) the Property Trustee may consult with counsel and the written
advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court
of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall
have provided to the Property Trustee adequate security and
indemnity which would satisfy a reasonable person in the
position of the Property Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or
direction, including such reasonable advances as
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may be requested by the Property Trustee provided, that,
nothing contained in this Section 3.10 (a) (vi) shall be taken
to relieve the Property Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and
powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Property Trustee, in its discretion, may
make such further inquiry or investigation into such facts or
matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Property Trustee shall
not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the
Securities and the signature of the Property Trustee or its
agents alone shall be sufficient and effective to perform any
such action; and no third party shall be required to inquire as
to the authority of the Property Trustee to so act, or as to
its compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by
the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other
action hereunder the Property Trustee (i) may request
instructions from the Holders of the Securities, (ii) may
refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii)
shall be protected in acting in accordance with such
instructions; and
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(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this
Declaration except upon the Direction of the Sponsor or the
Regular Trustees as the case may be.
(b) No provision of this Declaration shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
SECTION 3.11 Delaware Trustee
----------------
Notwithstanding any other provision of this Declaration other than Section
5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees and the Property Trustee described in this Declaration. Except
as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of (S) 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents
----------------------
Unless otherwise determined by the Regular Trustees and except as otherwise
required by the Business Trust Act, a majority of, or if there are only two,
both of the Regular Trustees are authorized to execute on behalf of the Trust
any documents which the Regular Trustees have the power and authority to execute
pursuant to Section 3.6, provided that any listing application prepared by the
Sponsor referred to in Section 3.6(b)(iii) may be executed by any Regular
Trustee.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
-------------------------------------------------------
The recitals contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration or the
Securities.
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SECTION 3.14 Duration of Trust.
-----------------
The Trust, unless terminated pursuant to the provisions of Article VIII hereof,
shall have existence for 55 years from the Closing Date.
SECTION 3.15 Mergers.
-------
(a) The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except
as described in Section 3.15 (b) and (c).
(b) The Trust may, with the consent of a majority of the Regular Trustees
and without the consent of the Holders of the Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as
such under the laws of any state; provided, that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Preferred Securities; or
(B) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Preferred
Securities rank with respect to priority of Distributions
and payments upon liquidation, redemption and maturity;
(ii) the Debt Issuer expressly acknowledges a trustee of the Successor
Entity which possesses the same powers and duties as the Property
Trustee as the Holder of the Notes;
(iii) the Preferred Securities or any Successor Securities are listed,
or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed;
(iv) such merger, consolidation, amalgamation or replacement does not
cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized
statistical rating organization;
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(v) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the
Holders of the Preferred Securities (including any Successor
Securities) in any material respect (other than with respect to
any dilution of the Holders' interest in the new entity);
(vi) such successor entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or replacement,
the Sponsor has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to
the effect that:
(A) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges
of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect (other than
with respect to any dilution of the Holders' interest in the
new entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will
be required to register as an Investment Company; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee; and
(c) notwithstanding Section 3.15(b), the Trust shall not consolidate,
amalgamate, merge with or into, or be replaced by any other entity or
permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity for United
States federal income tax purposes to be classified as other than a
grantor trust, except with the consent of Holders of 100% in
liquidation amount of the Securities.
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ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
---------------------------------------
On the Closing Date the Sponsor will purchase all the Common Securities issued
by the Trust, at the same time as the Preferred Securities are sold, in an
amount equal to 3% of the capital of the Trust.
SECTION 4.2 Responsibilities of the Sponsor.
-------------------------------
In connection with the issue and sale of the Preferred Securities, the Sponsor
shall have the exclusive right and responsibility to engage in the following
activities:
(a) to prepare for filing by the Trust with the Commission a registration
statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;
(b) to determine the states in which to take appropriate action to qualify
or register for sale all or part of the Preferred Securities and to
take any and all such acts, other than actions which must be taken by
the Trust, and advise the Trust of actions it must take, and prepare
for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to comply
with the applicable laws of any such states;
(c) to prepare for filing by the Trust an application to the New York
Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a registration
statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing for the
sale of the Preferred Securities.
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ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
------------------
The number of Trustees shall initially be three (3), and:
(a) at any time before the issuance of any Securities, the Sponsor may, by
written instrument, increase the number of Trustees; and
(b) after the issuance of any Securities:
(i) and except as provided in Section 5.1 (b)(ii)and 5.6 (a) (ii) (B)
with respect to the Special Regular Trustee, the number of
Trustees may be increased or decreased by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting
as a class at a meeting of the Holders of the Common Securities;
and
(ii) the number of Trustees shall be increased automatically by one
(1) if an Appointment Event has occurred and is continuing and
the Holders of a Majority in liquidation amount of the Preferred
Securities appoint a Special Regular Trustee in accordance with
Section 5.6,
provided that in any case, the number of Trustees shall be at least three (3) so
long as the Trustee that acts as the Property Trustee also acts as the Delaware
Trustee pursuant to Section 5.2. In the event the Property Trustee is not also
acting as the Delaware Trustee, the number of Trustees shall be at least five
(5).
SECTION 5.2 Delaware Trustee.
----------------
If required by the Business Trust Act, one Trustee (the "Delaware Trustee")
shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware and otherwise meets the requirements
of applicable law,
provided that if the Property Trustee has its principal place of business
in the State of Delaware and otherwise meets the
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requirements of applicable law, then the Property Trustee shall also be the
Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
-----------------------------
(a) There shall at all times be one Trustee (which may be the Delaware
Trustee) which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of
the United States of America or any state or territory thereof or
of the District of Columbia, or a corporation or Person permitted
by the Commission to act as an institutional trustee under the
Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of
at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by federal, state, territorial or
District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred
to above, then for the purposes of this Section 5.3 (a) (ii), the
combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus asset forth in its most
recent report of condition so published; and
(iii) if the Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-7 and to the extent Rule 3a-7
requires a trustee having certain qualifications to hold title to
the "eligible assets" of the Trust, the Property Trustee shall
possess those qualifications.
(b) If at any time the Property Trustee shall cease to be eligible to so
act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set out in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act,
the Property Trustee and the Holder of the Common Securities (as if it
were the obligor referred to in (S) 310(b) of the Trust Indenture Act)
shall in all respects comply with the provisions of (S) 310(b) of the
Trust Indenture Act.
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(d) The Preferred Securities Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first
provision contained in Section 310(b) of the Trust Indenture Act.
SECTION 5.4 Qualifications of Regular Trustees and Delaware
Trustee Generally.
-----------------------------------------------
Each Regular Trustee and the Delaware Trustee (unless the Property Trustee also
acts as Delaware Trustee) shall be either a natural person who is at least 21
years of age or a legal entity which shall act through one or more Authorized
Officers.
SECTION 5.5 Initial Trustees.
----------------
The initial Regular Trustees shall be:
Edgar Ancona
2700 Sanders Road
Prospect Heights, Illinois 60070
and
B. B. Moss, Jr.
2700 Sanders Road
Prospect Heights, Illinois 60070
The initial Delaware Trustee and the initial Property Trustee shall be:
Wilmington Trust Company, a Delaware banking corporation.
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
-------------------------------------------------
(a) Subject to Section 5.6(b) Trustees may be appointed or removed without
cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities;
(A) other than in respect to a Special Regular Trustee, by vote
of the Holders of a Majority in liquidation amount of the
Common Securities voting as a class at a meeting of the
Holders of the Common Securities; and
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(B) if an Appointment Event has occurred and is continuing, one
(1) additional Regular Trustee (the "Special Regular
Trustee") may be appointed by vote of the Holders of a
Majority in liquidation amount of the Preferred Securities,
voting as a class at a meeting of the Holders of the
Preferred Securities and such Special Regular Trustee may
only be removed (otherwise than by the operation of Section
5.6(c)), by vote of the Holders of a Majority in liquidation
amount of the Preferred Securities voting as a class at a
meeting of the Holders of the Preferred Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.6(a) until Successor Property Trustee
has been appointed and has accepted such appointment by written
instrument executed by such Successor Property Trustee and
delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed in
accordance with this Section 5.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation,
provided that a Special Regular Trustee shall only hold office while
an Appointment Event is continuing and shall cease to hold office
immediately after the Appointment Event pursuant to which the Special
Regular Trustee was appointed and all other Appointment Events cease
to be continuing. Any Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later
date as is specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the Property
Trustee shall be effective until either:
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(A) a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the
Sponsor and the resigning Property Trustee; or
(B) the assets of the Trust have been completely liquidated and
the proceeds thereof distributed to the holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee; and
(iii) no such resignation of a Special Regular Trustee shall be
effective until the 60th day following delivery of the instrument
of resignation of the Special Regular Trustee to the Sponsor and
the Trust or such later date specified in such instrument during
which period the Holders of the Preferred Securities shall have
the right to appoint a successor Special Trustee as provided in
this Section 5.6.
(d) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Property Trustee or
Delaware Trustee may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware
Trustee. Such court may thereupon after such notice, if any, as it may
deem proper and prescribe, appoint a Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies Among Trustees.
------------------------
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Regular Trustees
shall be conclusive evidence of the existence of such vacancy. The vacancy shall
be filled with a Trustee appointed in accordance with Section 5.6.
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SECTION 5.8 Effect of Vacancies.
-------------------
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee, or
any one of them, shall not operate to annul the Trust. Whenever a vacancy in the
number of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.9 Meetings.
--------
Meetings of the Regular Trustees shall be held from time to time upon the
call of any Regular Trustee. Regular meetings of the Regular Trustees may be
held at a time and place fixed by resolution of the Regular Trustees. Notice of
any in-person meetings of the Regular Trustees shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting. Notice of any
telephonic meetings of the Regular Trustees or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a meeting. Notices
shall contain a brief statement of the time, place and anticipated purposes of
the meeting. The presence (whether in person or by telephone) of a Regular
Trustee at a meeting shall constitute a waiver of notice of such meeting except
where a Regular Trustee attends a meeting for the express purpose of objecting
to the transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration, any
action of the Regular Trustees may be taken at a meeting by vote of a majority
of the Regular Trustees present (whether in person or by telephone) and eligible
vote with respect to such matter, provided that a quorum is present, or without
a meeting by the unanimous written consent of the Regular Trustees.
SECTION 5.10 Delegation of Power.
-------------------
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of
21 his or her power for the purpose of executing any documents
contemplated in Section 3.6 including any registration statement or
amendment thereto filed with the Commission or making any other
governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to time to
such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the
Trust or the
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names of the Regular Trustees or otherwise as the Regular Trustees may
deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set
forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
Holders shall receive Distributions in accordance with the applicable terms of
the relevant Holder's Securities. Distributions shall be made on the Preferred
Securities and the Common Securities in accordance with the preferences set
forth in their respective terms. If and to the extent that the Debt Issuer makes
a payment of interest (including Compounded Interest (as defined in the
Indenture)), premium and principal on the Notes held by the Property Trustee
(the amount of any such payment being a "Payment Amount"), the Property Trustee
shall and is directed, to the extent funds are available for that purpose, to
make a Distribution of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
----------------------------------------
(a) The Regular Trustees shall, on behalf of the Trust, issue one class of
preferred securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Exhibit
A and incorporated herein by reference (the "Preferred Securities"),
and one class of common securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set
forth in Exhibit A and incorporated herein by reference (the "Common
Securities"). The Trust shall have no securities or other interests in
the assets of the Trust other than the Preferred Securities and the
Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by the Regular
Trustees (or if there are more than two Regular Trustees by any two of
the Regular Trustees). Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee. Typographical
and other minor errors or defects in any such reproduction of any such
signature shall not affect
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the validity of any Certificate. In case any Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be
such Regular Trustee before the Certificate so signed shall be
delivered by the Trust, such Certificate nevertheless may be delivered
as though the person who signed such Certificate had not ceased to be
such Regular Trustee; and any Certificate may be signed on behalf of
the Trust by such persons who shall at the actual date of execution of
such Security, shall be the Regular Trustees of the Trust, although at
the date of the execution and delivery of the Declaration any such
person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks
of identification or designation and such legends or endorsements as
the Regular Trustees may deem appropriate, or as may be required to
comply with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid
and nonassessable.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to
the terms of, and shall be bound by this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common Securities, the
Sponsor or the Debt Issuer;
(ii) upon the filing of a certificate of dissolution or its equivalent
with respect to the Holder of the Common Securities, the Sponsor
or the Debt Issuer,
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the filing of a certificate of cancellation with respect to the
Trust or the revocation of the Holder of the Common Securities,
the Sponsor's or the Debt Issuer's charter and the expiration of
90 days after the date of revocation without a reinstatement
thereof;
(iii) upon the entry of a decree of judicial dissolution of the Holder
of the Common Securities, the Sponsor, the Debt Issuer or the
Trust;
(iv) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the
Securities;
(v) upon the occurrence and continuation of a Special Event pursuant
to which the Trust shall have been dissolved in accordance with
the terms of the Securities and all of the Notes endorsed thereon
shall have been distributed to the Holders of Securities in
exchange for all of the Securities; or
(vi) before the issuance of any Securities, with the consent of all of
the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event referred to
in Section 8.1 (a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in accordance
with the terms and conditions set forth in this Declaration and in the
terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null
and void.
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(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may only
transfer Common Securities to the Sponsor or a Related Party of the
Sponsor, provided, that, any such transfer is subject to the condition
precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would be classified for United States federal income
tax purposes as an association taxable as a corporation or a
partnership and each Holder of Securities would not be treated as
owning an undivided beneficial interest in the Notes; and
(ii) the Trust would be an Investment Company, or would be controlled
by an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of Certificates and of
transfers of Certificates, which will be effected without charge but only upon
payment (with such indemnity as the Regular Trustees may require) in respect of
any tax or other government charges which may be imposed in relation to it. Upon
surrender for registration of transfer of any Certificate, the Regular Trustees
shall cause one or more new Certificates to be issued in the name of the
designated transferee or transferees. Every Certificate surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Certificate. By acceptance of a Certificate, each transferee
shall be deemed to have agreed to be bound by this Declaration and the documents
incorporated by reference herein.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall be
registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on
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the part of any Person, whether or not the Trustees shall have actual or other
notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities, the
Preferred Securities Certificates, on original issuance, will be issued in the
form of one or more, fully registered, global Preferred Security Certificates
(each a "Global Certificate"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co.,
the nominee of DTC, and no Preferred Security Beneficial Owner will receive a
definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
Section 9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal with the Clearing
Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificates and receiving approvals,
votes or consents hereunder) as the Holder of the Preferred Securities
and the sole holder of the Global Certificates and shall have no
obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with
any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Preferred
Security Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants. DTC will make book entry transfers among the
Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security Holders is
required under this Declaration, unless and until Definitive Preferred Security
Certificates shall have been issued
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to the Preferred Security Beneficial Owners pursuant to Section 9.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Preferred Security Holders to the Clearing Agency, and shall have
no notice obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities, the Regular Trustees may,
in their sole discretion, appoint a successor Clearing Agency with respect to
such Preferred Securities.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities, then:
(c) Definitive Preferred Security Certificates shall be prepared by the
Regular Trustees on behalf of the Trust with respect to such Preferred
Securities; and
(d) upon surrender of the Global Certificates by the Clearing Agency,
accompanied by registration instructions, the Regular Trustees shall
cause Definitive Certificates to be delivered to Preferred Security
Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any
delay in delivery of such instructions and each of them may
conclusively rely on and shall be protected in relying on, such
instructions. The Definitive Preferred Security Certificates shall be
printed, lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have such letters,
numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Preferred Securities may be listed, or to
conform to usage.
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SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them harmless,
then in the absence of notice that such Certificate shall have been
acquired by a bona fide purchaser, any two Regular Trustees on behalf of
the Trust shall execute and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under
this Section 9.8, the Regular Trustees may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant
to this Section shall constitute conclusive evidence of an ownership
interest in the relevant Securities, as if originally is sued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon)
of the Holders of the Securities which shall be made solely from
assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
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(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of
the Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of
Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to
be within the scope of the authority conferred on such Indemnified
Person by this Declaration or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by
reason of such Indemnified Person's gross negligence (or, in the case
of the Property Trustee, negligence) or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person
as to matters the Indemnified Person reasonably believes are within
such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Trust, including
information, opinions, reports or statements as to the value and
amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person
acting under this Declaration, subject to any duties or obligations
imposed on the Property Trustee under Rule 3a-7, shall not be liable
to the Trust or to any other Covered Person for
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its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the
duties and liabilities of an Indemnified Person otherwise existing at
law or in equity (other than duties imposed on the Property Trustee
under the Trust Indenture Act), are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided here in:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provide that an Indemnified Person shall act in
a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative
interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits and burdens relating
to such interests, any customary or accepted industry practices, and any
applicable generally accepted accounting practices or principles. In the
absence of bad faith by the Indemnified Person, the resolution, action or
term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated
herein or of any duty or obligation of the Indemnified Person at law or in
equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and shall
have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person;
or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this Declaration
or by applicable law.
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SECTION 10.4 Indemnification.
(a) To the fullest extent permitted by applicable law, the Sponsor shall
indemnify and hold harmless each Indemnified Person from and against
any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this Declaration,
except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of gross negligence (or, in the case of the Property
Trustee, negligence) or willful misconduct with respect to such acts
or omissions.
(b) To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be
advanced by the Sponsor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Sponsor of an
undertaking by or on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified as authorized in Section 10.4(a).
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Debt Issuer, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Debt
Issuer, the Delaware Trustee, or the Property Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Debt Issuer, the
Delaware Trustee and the Property Trustee shall have the right to take for its
own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any Covered Person,
the Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor
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or any Affiliate of the Sponsor, or may act as depository for, trustee or agent
for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or such
other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular Trustees
shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on
the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied. The Trust shall
use the accrual method of accounting for United States federal income
tax purposes. The books of account and the records of the Trust shall
be examined by and reported upon as of the end of each Fiscal Year by
a firm of independent certified public accountants selected by the
Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to each
of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal
Year, and the related statements of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and delivered to
each of the Holders of Securities, any annual United States federal
income tax information statement, required by the Code, containing
such information with regard to the Securities held by each Holder as
is required by the Code and the Treasury Regulations. Notwithstanding
any right under the Code to deliver any such statement at a later
date, the Regular Trustees shall endeavor to deliver all such
statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal
income tax return, on a Form
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1041 or such other form required by United States federal income tax
law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local
taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for the sole
benefit of the Trust; provided, however, that all payments of funds in respect
of the Notes held by the Property Trustee shall be made directly to the Property
Account and no other funds of the Trust shall be deposited in the Property
Account. The sole signatories for such accounts shall be designated by the
Regular Trustees; provided, however, that the Property Trustee shall designate
the sole signatories for the Property Account.
SECTION 11.4 Withholding.
The Trust and the Trustees shall comply with all withholding requirements under
United States federal, state and local law. The Trust shall request, and the
Holders shall provide to the Trust, such forms or certificates as are necessary
to establish an exemption from withholding with respect to each Holder, and any
representations and forms as shall reasonably be requested by the Trust to
assist it in determining the extent of, and in fulfilling, its withholding
obligations. The Trust shall file required forms with applicable jurisdictions
and, unless an exemption from withholding is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder, the amount withheld shall be deemed to be a distribution in the amount
of the withholding to the Holder. In the event of any claimed over withholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount withheld was not withheld from actual Distributions made, the Trust
may reduce subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any applicable
terms of the Securities, this Declaration may be amended by, and only
by, a written instrument approved and executed by the Regular Trustees
(or, if there are more than two Regular Trustees a majority of the
Regular Trustees); provided, however, that:
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(i) no amendment shall be made, and any such purported amendment
shall be void and ineffective, to the extent the result thereof
would be to:
(A) cause the Trust to be characterized for purposes of United
States federal income taxation as other than a grantor
trust;
(B) reduce or otherwise adversely affect the rights, powers,
obligations or liabilities of the Property Trustee or the
Delaware Trustee without the written consent of the affected
trustee; or
(C) cause the Trust to be deemed to be an Investment Company
which is required to be registered under the Investment
Company Act;
(ii) at such time after the Trust has issued any Securities which
remain outstanding, any amendment which would adversely affect
the rights, privileges or preferences of any Holder of Securities
may be effected only with such additional requirements as may be
set forth in the terms of such Securities;
(iii) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities;
(iv) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common
Securities; and
(v) the rights of the holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders
of a Majority in liquidation amount of the Common Securities.
(b) Notwithstanding Section 12.1(a)(ii), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this
Declaration;
(iii) to add to the covenants, restrictions or obligations of the
Sponsor; and
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(iv) to conform to any change in Rule 3a-7 or written change in
interpretation or application of Rule 3a-7 by any legislative
body, court, government agency or regulatory authority which
amendment does not have a material adverse effect on the right,
preferences or privileges of the Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock
exchange on which the Preferred Securities are listed or admitted for
trading. The Regular Trustees shall call a meeting of such class of
Holders, if directed to do so by the Holders of at least 10% in
liquidation amount of such class of Securities. Such direction shall
be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a
meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Holders of Securities calling a meeting
shall specify in writing the Security Certificates held by the Holders
of Securities exercising the right to call a meeting and only those
specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph
has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of
Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not
more than 60 days before the date of such meeting. Whenever a
vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any
stock exchange on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be given
at a meeting of the Holders of Securities. Any action that may be
taken at a meeting of the Holders of Securities may be taken
without a meeting if a consent in writing setting forth the
action so taken is signed by the Holders of Securities owning not
less than the minimum amount of Securities in liquidation
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amount that would be necessary to authorize or take such action
at a meeting at which all Holders of Securities having a right to
vote thereon were present and voting. Prompt notice of the taking
of action without a meeting shall be given to the Holders of
Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any
action without a meeting shall be returned to the Trust within
the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting,
or voting or participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the Holder of Securities executing it. Except
as otherwise provided here in, all matters relating to the
giving, voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the Trust
were a Delaware corporation and the Holders of the Securities
were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be conducted
by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of the
Securities or the listing rules of any stock exchange on which
the Preferred Securities are then listed or trading otherwise
provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without
a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter
with respect to the exercise of any such right to vote.
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ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee which acts as initial Property Trustee represents and warrants to
the Trust and to the Sponsor at the date of this Declaration, and each Successor
Property Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(a) The Property Trustee is a national banking association with trust
powers, duly organized, validly existing and in good standing under
the laws of the United States, with trust power and authority to
execute and deliver, and to carry out and perform its obligations
under the terms of, the Declaration.
(b) The execution, delivery and performance by the Property Trustee of the
Declaration has been duly authorized by all necessary corporate action
on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee, and it constitutes a
legal, valid and binding obligation of the Property Trustee,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by the
Property Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of the
Declaration.
(e) The Property Trustee, pursuant to the Declaration, shall hold legal
title and a valid ownership interest in the Notes under the law of its
place of incorporation and Delaware law.
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(f) The Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and the Declaration. The Declaration
under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of
the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing, duly signed by
the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the Trust's
mailing address set forth below (or such
other address as the Trust may give notice of to the Holders of the
Securities):
Household Capital Trust II
2700 Sanders Road
Prospect Heights, Illinois 60070
Attention: Treasurer
(b) if given to the Property Trustee, at the mailing address set forth
below (or such other address as the Property Trustee may give notice
of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(c) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
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Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
Attention: Treasurer
(d) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed, or mailed by first class mail, postage
prepaid except that if a notice or other document is refused delivery or cannot
be delivered because of a changed address of which no notice was given, such
notice or other document shall be deemed to have been delivered on the date of
such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be governed by
and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust not be characterized
for United States federal income tax purposes as an association taxable as a
corporation or a partnership but rather, the Trust be characterized as a grantor
trust or otherwise in a manner that each Holder of Securities be treated as
owning an undivided beneficial interest in the Notes. The provisions of this
undivided beneficial interest in the Notes. The provisions of this Declaration
shall be interpreted to further this intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience of reference
only and do not affect the interpretation of this Declaration or any provision
hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or referred to,
the successors and assigns of such party shall be deemed to be included, and all
covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective successors and assigns,
whether so expressed.
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SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such provision to
any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the signature page and
this Declaration may be executed by the affixing of the signature of each of the
Trustees to one of such counterpart signature pages. All of such counterpart
signature pages shall be read as though one, and they shall have the same force
and effect as though all of the signers had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as
of the day and year first above written.
-------------------------
Edgar Ancona,
as Trustee
-------------------------
B. B. Moss, Jr.,
as Trustee
Wilmington Trust Company,
as Trustee and as Property Trustee
By:________________________________
Name:
Title:
Household International, Inc.,
as Sponsor
By:______________________________
Name: John W. Blenke
Title: Vice President-Corporate
Law
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EXHIBIT A
TERMS OF
______% TRUST PREFERRED SECURITIES
______% TRUST COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated
as of June 15, 1996 (as amended from time to time, the "Declaration"), the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in
the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. Preferred Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust
of $_____,000,000 and a liquidation amount with respect to the assets
of the Trust of $25 per Preferred Security, are hereby designated for
the purposes of identification only as "___% Trust Preferred
Securities" (the "Preferred Securities"). The Preferred Security
Certificates evidencing the Preferred Securities shall be
substantially in the form attached hereto as Annex I, with such
changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to conform to the
rules of any stock exchange on which the Preferred Securities are
listed.
(b) Common Securities. Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of
$___,_____,000 and a liquidation amount with respect to the assets of
the Trust of $25 per Common Security, are hereby designated for the
purposes of identification only as "____% Trust Common Securities"
(the "Common Securities"). The Common Security Certificates evidencing
the Common Securities shall be substantially in the form attached
hereto as
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Annex II, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of _____% (the "Coupon Rate") of the stated liquidation amount
of $25 per Security, such rate being the rate of interest payable on
the Notes to be held by the Property Trustee. Distributions in arrears
for more than one quarter will bear interest thereon, compounded
quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in
respect of the Notes held by the Property Trustee. The amount of
Distributions payable for any period will be computed for any full
quarterly Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of
days elapsed in such a 30-day month.
(b) Distributions on the Securities will be cumulative, will accrue from
______ ____, 1996 and will be payable quarterly in arrears, on March
31, June 30, September 30, and December 31 of each year, commencing on
___________ 30, 1996, except as otherwise described below. The Debt
Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period from time to time on the
Notes for a period not exceeding 20 consecutive quarters (each, an
"Extension Period") and, as a consequence of such extension,
Distributions will also be deferred. No Extension Period will extend
beyond the maturity date for the Notes. Despite such deferral,
quarterly Distributions will continue to accrue with interest thereon
(to the extent permitted by applicable law) at the Coupon Rate during
any such Extension Period. Prior to the termination of any such
Extension Period, the Debt Issuer may further extend such Extension
Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive
quarters and provided further that no Extension Period may extend
beyond the maturity date for the Notes. Payments of accrued
Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date after the end of the
Extension Period. Upon the termination of any Extension
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Period and the payment of all amounts then due, the Debt Issuer may
commence a new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in book-entry only
form, the relevant record dates shall be one Business Day prior to the
relevant payment dates which payment dates correspond to the interest
payment dates on the Notes. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment
in respect of the Preferred Securities will be made as described under
the heading "Description of the Preferred Securities -- Book-Entry
Only Issuance - The Depository Trust Company" in the Prospectus dated
______ ___, 1996 (the "Prospectus"), included in the Registration
Statement on Form S-3 of the Sponsor, the Debt Issuer and the Trust.
The relevant record dates for the Common Securities, and if the
Preferred Securities shall not continue to remain in book-entry only
form, the relevant record dates for the Preferred Securities, shall
conform to the rules of any securities exchange on which the
securities are listed and, if none, shall be selected by the Regular
Trustees, which dates shall be at least one Business Day but less than
60 Business Days before the relevant payment dates which payment dates
correspond to the interest payment dates on the Notes. Distributions
payable on any Securities that are not punctually paid on any
Distribution payment date as a result of the Debt Issuer or the
Sponsor having failed to make a payment under the Notes, will cease to
be payable to the Person in whose name such Securities are registered
on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are
registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on
the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(d) In the event that there is any money or other property held by or for
the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the
Securities.
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3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination as the case may be, will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities after satisfaction of liabilities to creditors, an amount equal to
the aggregate of the stated liquidation amount of $25 per Security plus accrued
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"), unless, in connection with such dissolution,
winding-up or termination, Notes in an aggregate principal amount equal to the
aggregate stated liquidation amount of such Securities, with an interest rate
equal to the Coupon Rate of, and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Securities, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Notes in whole or in part, whether at
maturity or upon redemption, the proceeds from such repayment or
payment shall be simultaneously applied to redeem Securities having an
aggregate liquidation amount equal to the aggregate principal amount
of the Notes so repaid or redeemed at a redemption price of $25 per
Security plus an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption, payable in cash (the
"Redemption Price"). Holders will be given not less than 30 nor more
than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Preferred Securities will be redeemed
Pro Rata and the Preferred Securities to be redeemed will be as
described in Section 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company Event (each as
defined below, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall dissolve the Trust and, after
satisfaction of creditors, cause Notes held by the Property Trustee,
having an
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aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and
accrued and unpaid interest equal to accrued and unpaid Distributions
on and having the same record date for payment as the Securities to be
distributed to the Holders of the Securities in liquidation of such
Holders' interests in the Trust on a Pro Rata basis, within 90 days
following the occurrence of such Special Event (the "90 Day Period"),
provided, however, that in the case of the occurrence of a Tax Event,
as a condition of such dissolution and distribution, the Regular
Trustees shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on published revenue rulings of the
Internal Revenue Service, to the effect that the Holders of the
Securities will not recognize any gain or loss for United States
federal income tax purposes as a result of the dissolution of the
Trust and the distribution of Notes and provided, further, that, if at
the time there is available to the Trust the opportunity to eliminate,
within the 90 Day Period, the Special Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some
other similar reasonable measure that has no adverse effect on the
Trust, the Debt Issuer, the Sponsor or the Holders of the Securities
("Ministerial Action"), the Trust will pursue such Ministerial Action
in lieu of dissolution.
If, in the case of the occurrence of a Tax Event (i) the Debt Issuer
has received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that,
as a result of a Tax Event, there is more than an insubstantial risk
that the Debt Issuer would be precluded from deducting the interest on
the Notes for United States federal income tax purposes even if the
Notes were distributed to the Holders of Securities in liquidation of
such Holders' interests in the Trust as described in this Section
4(c), or (ii) the Regular Trustees shall have been informed by such
tax counsel that a No Recognition Opinion cannot be delivered to the
Trust, the Debt Issuer shall have the right at any time, upon not less
than 30 nor more than 60 days notice, to redeem the Notes in whole or
in part for cash within 90 days following the occurrence of such Tax
Event, and following such redemption, Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the
Notes so redeemed shall be redeemed by the Trust at the Redemption
Price on a Pro Rata basis; provided, however, that, if at the time
there is available to the Trust the opportunity to eliminate, within
such 90 day period, the Tax Event by taking some
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Ministerial Action, the Trust or the Debt Issuer will pursue such
Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced
in such matters (a "Dissolution Tax Opinion") to the effect that on or
after the date of the Prospectus, as a result of (a) any amendment to,
or change (including any announced prospective change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority therefore or therein, or (b) any
amendment to, or change in, an interpretation or application of any
such laws or regulations by any legislative body, court, governmental
agency or regulatory authority, which amendment or change is enacted,
promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each
case on or after the date of the Prospectus, there is more than an
insubstantial risk that (i) the Trust is or will be within 90 days of
the date thereof, subject to United States federal income tax with
respect to interest accrued or received on the Notes, (ii) the Trust
is, or will be within 90 days of the date thereof, subject to more
than a de minimis amount of taxes, duties or other governmental
charges, or (iii) interest payable by the Debt Issuer to the Trust on
the Notes is not, or within 90 days of the date thereof will not be,
deductible, in whole or in part, by the Debt Issuer for United States
federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act that, as a
result of the occurrence of a change in law or regulation or a written
change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority
(a "Change in 1940 Act Law"), the Trust is or will be considered an
Investment Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of the Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Notes and dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust
Company (the "Depository") or its nominee (or any successor Clearing
Agency or its nominee), as the record Holder of the
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Preferred Securities, will receive a registered global certificate or
certificates representing the Notes and the Note Guarantee to be
delivered upon such distribution and any certificates representing
Securities, except for certificates representing Preferred Securities
held by the Depository or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial
interests in the Notes having an aggregate principal amount equal to
the aggregate stated liquidation amount of, with an interest rate
identical to the Coupon Rate of, and accrued and unpaid interest equal
co accrued and unpaid Distributions on such Securities until such
certificates are presented to the Debt Issuer or its agent for
transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or
before the date of redemption.
(e) If the Notes are distributed to holders of the Securities, pursuant to
the terms of the Indenture, the Debt Issuer will use its best efforts
to have the Notes listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately
prior to the distribution of the Notes.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of distribution of Notes
in exchange for the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of
Securities to be redeemed or exchanged not fewer than 30 nor more
than 60 days before the date fixed for redemption or exchange
thereof which, in the case of a redemption, will be the date
fixed for redemption of the Notes. For purposes of the
calculation of the date of redemption or exchange and the dates
on which notices are given pursuant to this Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Securities. Each Redemption/Distribution
Notice shall be addressed to the Holders of Securities at the
address of each such Holder appearing in the books and records of
the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with
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respect to any Holder shall affect the validity of the redemption
or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed
Pro Rata from each Holder of Securities, it being understood that
in respect of Preferred Securities registered in the name of and
held of record by DTC (or a successor clearing agency) or any
other Nominee, the distribution of the proceeds of such
redemption will be made to each Clearing Agency Participant (or
person on whose behalf such nominee holds such securities) in
accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice which notice may only be issued if
the Notes are redeemed as set out in this Section 4 (which notice
will be irrevocable) then (A) while the Preferred Securities are
in book entry only form, with respect to the Preferred
Securities, by 12:00 noon, New York City time, on the redemption
date, provided that the Debt Issuer has paid the Property Trustee
a sufficient amount of cash in connection with the related
redemption or maturity of the Notes, the Property Trustee will
deposit irrevocably with the Depository (or successor Clearing
Agency) funds sufficient to pay the applicable Redemption Price
with respect to the Preferred Securities and will give the
Depository irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities, and
(B) if the Preferred Securities are issued in definitive form,
with respect to the Preferred Securities, and with respect to the
Common Securities, provided that the Debt Issuer has paid the
Property Trustee a sufficient amount of cash in connection with
the related redemption or maturity of the Notes, the Property
Trustee will pay the relevant Redemption Price to the Holders of
such Securities by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have
been given and funds deposited as required, if applicable, then
immediately prior to the close of business on the date of such
deposit, or on the redemption date, as applicable, Distributions
will cease to accrue on the Securities so called for
8
<PAGE>
redemption and all rights of Holders of such Securities so called
for redemption will cease, except the right of the Holders of
such Securities to receive the Redemption Price, but without
interest on such Redemption Price. Neither the Regular Trustees
nor the Trust shall be required to register or cause to be
registered the transfer of any Securities which have been so
called for redemption. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of
Securities is improperly withheld or refused and not paid either
by the Property Trustee or by the Sponsor as guarantor pursuant
to the relevant Securities Guarantee, Distributions on such
Securities will continue to accrue, from the original redemption
date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the
Preferred Securities, the Depository or its nominee (or any
successor Clearing Agency or its nominee) if the Global
Certificates have been issued or if Definitive Preferred Security
Certificates have been issued, to the Holder thereof, and (B) in
respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), provided the
acquirer is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any of its
subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or
by private agreement.
9
<PAGE>
5. Voting Rights - Preferred Securities.
(a) Except as provided under Section 5(b) and as otherwise required by law
and the Declaration, the Holders of the Preferred Securities will have no voting
rights.
(b) If (i) the Trust fails to make Distributions in full on the Preferred
Securities for six consecutive quarterly Distribution periods (other than during
an Extension Period), or (ii) an Event of Default occurs and is continuing (each
of (i) and (ii) being an "Appointment Event"), then the Holders of the Preferred
Securities, acting as a single class, will be entitled by the vote of a Majority
in liquidation amount of the Preferred Securities to appoint a Special Regular
Trustee in accordance with Section 5.6(a)(ii)(B) of the Declaration. Any Holder
of Preferred Securities (other than the Sponsor, or any entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Sponsor) will be entitled to nominate any person to be
appointed as Special Regular Trustee. For purposes of determining whether the
Trust has failed to make Distributions in full for six consecutive quarterly
Distribution periods, Distributions shall be deemed to remain in arrears,
notwithstanding any payments in respect thereof, until full cumulative
Distributions have been or contemporaneously are paid with respect to all
quarterly Distribution periods terminating on or prior to the date of payment of
such cumulative Distributions.
Not later than 30 days after such right to appoint a Special Regular
Trustee arises, the Regular Trustees will convene a meeting for the purpose of
appointing a Special Regular Trustee. If the Regular Trustees fail to convene
such meeting within such 30-day period, the Holders of 10% in liquidation amount
of the Preferred Securities will be entitled to convene such meeting in
accordance with Section 12.2 of the Declaration. The record date for such
meeting will be the close of business on the Business Day which is one Business
Day before the day on which notice of the meeting is sent to Holders. The
provisions of the Declaration relating to the convening and conduct of the
meetings of the Holders will apply with respect to any such meeting.
A Special Regular Trustee may be removed without cause at any time by vote
of the Holders of a Majority in liquidation amount of the Preferred Securities
at a meeting of the Holders of the Preferred Securities in accordance with
Section 5.6(a)(ii)(B) of the Declaration.
The Holders of 10% in liquidation amount of the Preferred Securities will
be entitled to convene such a meeting in accordance with Section 12.2 of the
Declaration. The record date for such meeting will be the close of business on
the Business Day which is one Business Day before the day on which the notice of
meeting is sent to Holders. Notwithstanding the appointment of a Special
10
<PAGE>
Regular Trustee, the Debt Issuer shall retain all rights under the Indenture,
including the right to extend the interest payment period on the Notes.
Subject to the requirements of the second to last sentence of this
paragraph, the Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class may direct the time, method, and place
of conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under the
Declaration, including (i) directing the time, method, place of conducting any
proceeding for any remedy available to the Note Trustee, or executing any trust
or power conferred on the Note Trustee with respect to the Notes, (ii) waive any
past default and its consequences that is waivable under Section 7.13 of the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Notes shall be due and payable, or (iv) consent to any
amendment, modification or termination of the Indenture or the Notes, where such
consent shall be required, provided, however, that where a Super Majority of the
holders of the Notes is required, the Property Trustee may only give such
consent at the direction of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the relevant Super Majority
represents of the aggregate principal amount of the Notes. The Property Trustee
shall not revoke any action previously authorized or approved by a vote of the
Holders of the Preferred Securities. Other than with respect to directing the
time, method and place of conducting any remedy available to the Property
Trustee or the Note Trustee as set forth above, the Property Trustee shall not
take any action in accordance with the directions of the Holders of the
Preferred Securities under this paragraph unless the Property Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust. If the Property Trustee fails to enforce its rights under the
Declaration, any Holder of Preferred Securities may, after a period of 30 days
has elapsed from such holder's written request to the Property Trustee to
enforce such rights, institute a legal proceeding directly against any Person to
enforce the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other Person.
Any approval or direction of Holders of Preferred Securities may be given
at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth
11
<PAGE>
(i) the date of such meeting or the date by which such action is to be taken,
(ii) a description of any resolution proposed for adoption at such meeting on
which such Holders are entitled to vote or of such matter upon which written
consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Notes in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Sponsor, or by any entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Sponsor shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Section 6(b), 6(c) and 7 as otherwise
required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with
Article V of the Declaration, to vote to appoint, remove or replace
any Trustee or to increase or decrease the number of Trustees, subject
to the exclusive right of the Holders of the Preferred Securities to
appoint, remove or replace a Special Regular Trustee.
(c) Subject to Section 2.6 of this Declaration and only after the Event of
Default with respect to the Preferred Securities have been cured,
waived, or otherwise eliminated, and subject to the requirements of
the second to last sentence of this paragraph, the Holders of a
Majority in liquidation amount of the Common Securities, voting
separately as a class may direct the time, method, and place of
conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the Property
Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to
the Note Trustee, or executing any trust or power conferred on the
Note Trustee with respect to the Notes, (ii) waive any past default
and its consequences that is waivable under Section 7.13 of the
Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Notes shall be
12
<PAGE>
due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or the Notes, where such consent shall be
required, provided, however, that where a consent under the Indenture
would require the consent of greater than a majority of the Holders in
principal amount of Notes affected thereby (a "Super Majority"),the
Property Trustee may only give such consent at the direction of the
Holders of at least the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the
aggregate principal amount of the Notes outstanding. The Property
Trustee shall not revoke any action previously authorized or approved
by a vote of the Holders of the Preferred Securities. Other than with
respect to directing the time, method and place of conducting any
remedy available to the Property Trustee or the Note Trustee as set
forth above, the Property Trustee shall not take any action in
accordance with the directions of the Holders of the Common Securities
under this paragraph unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other
than a grantor trust. If the Property Trustee fails to enforce its
rights under the Declaration, any Holder of Common Securities may,
after a period of 30 days has elapsed from such holder's written
request to the Property Trustee to enforce such rights, institute a
legal proceeding directly against any Person to enforce the Property
Trustee's rights under the Declaration, without first instituting a
legal proceeding against the Property Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of Securities in the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Common Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities will be required
for the Trust to redeem and cancel Common Securities or to distribute the Notes
in accordance with the Declaration and the terms of the Securities.
13
<PAGE>
7. Amendments to Declaration and Indenture.
(a) If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that
would adversely affect the powers, preferences or special rights of
the Securities, whether by way of amendment to the Declaration or
otherwise, or (ii) the dissolution, winding-up or termination of the
Trust, other than as described in Section 8.1 of the Declaration, then
the Holders of outstanding Securities as a class, will be entitled to
vote on such amendment or proposal (but not on any other amendment or
proposal) and such amendment or proposal shall not be effective except
with the approval of the Holders of at least 66-2/3% in liquidation
amount of the Securities, voting together as a single class provided,
however, that the rights Holders of Preferred Securities under Article
V of the Declaration to appoint, remove or replace a Special Regular
Trustee shall not amended without the consent of each Holder of
Preferred Securities, provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, only the affected class
will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval
of 66 2/3% in liquidation amount of such class of securities.
(b) In the event the consent of the Property Trustee as the holder of the
Notes is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Notes, the
Property Trustee shall request the direction of the Holders of the
Securities with respect to such amendment, modification or termination
and shall vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation amount of the
Securities voting together as a single class; provided, however, that
where a consent under the Indenture would require the consent of the
holders of greater than a majority in aggregate principal amount of
the Notes (a "Super Majority"), the Property Trustee may only give
such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which the relevant
Super Majority represents of the aggregate principal amount of the
Notes outstanding provided, further, that the Property Trustee shall
not take any action in accordance with the directions of the Holders
of the Securities under this Section 7(b) unless the Property Trustee
has obtained an opinion of tax counsel to the
14
<PAGE>
effect that for the purposes of United States federal income tax the
Trust will not be classified as other than a grantor trust.
8. Pro Rata.
A reference in these terms of the Securities to any payment, distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder of
Securities according to the aggregate liquidation amount of the Securities held
by the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Indenture has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari pasu and payment thereon shall be made
Pro Rata with the Common Securities except that where an Event of Default occurs
and is continuing under the Indenture in respect of the Notes held by the
Property Trustee, the rights of Holders of the Common Securities to payment in
respect of Distributions and payments upon liquidation, redemption and otherwise
are subordinated to the rights to payment of the Holders of the Preferred
Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the Preferred
Securities to be listed for quotation on the New York Stock Exchange.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
15
<PAGE>
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to subscribe
for any additional Securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Regular Trustees will provide a copy of the Declaration, the Preferred
Securities Guarantee and the Indenture to a Holder without charge on written
request to the Trust at its principal place of business.
16
<PAGE>
Annex I
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company (the "Depository") or a nominee of the Depository. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than the Depository or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository) may be registered except in
limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York) to
the Trust or its agent for registration of transfer, exchange or payment, and
any Preferred Security issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository Trust
Company and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Preferred Securities
CUSIP NO. 44180 _______
Certificate Evidencing Preferred Securities
of
HOUSEHOLD CAPITAL TRUST II
Preferred Securities.
(Liquidation Amount $25 per Preferred Security)
Household Capital Trust II, a business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that _____________ (the
"Holder") is the registered owner of preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the ______% Trust Preferred Securities (liquidation amount $25 per
Preferred Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and
A-1
<PAGE>
provisions of the Preferred Securities represented hereby are issued and shall
in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of June 15, 1996, as the same may be
amended from time to time (the "Declaration") including the designation of the
terms of the Preferred Securities as set forth in Exhibit A to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Preferred
Securities Guarantee to the extent provided therein. The Trust will provide a
copy of the Declaration, the Preferred Securities Guarantee and the Indenture to
a Holder without charge upon written request to the Trust at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat the Notes as indebtedness and the
Preferred Securities as evidence of indirect beneficial ownership in the Notes.
IN WITNESS WHEREOF, the Trust has executed this
certificate this day of , 199_.
[ ]
as Trustee
---------------------------
[ ]
as Trustee
---------------------------
A-2
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfer this
Preferred Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
____________________________________________________________(Insert assignee's
____________________________________________________________
social security of tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
____________________________________________________________
(Insert address and zip code of assignee) and irrevocably appoint)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
___________________________________ agent to transfer this Preferred Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date:______________________________________________
Signature:_________________________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A-3
<PAGE>
Annex II
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
HOUSEHOLD CAPITAL TRUST II
Common Securities
(Liquidation Amount $25 per Common Security)
Household Capital Trust II, a business trust formed under the laws of the State
of Delaware (the "Trust"), hereby certifies that ________________ (the "Holder")
is the registered owner of common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the _____% Trust
Common Securities (liquidation amount $25 per Common Security) (the "Common
Securities"). The Common Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of June 15, 1996, as the same may be amended from time to
time (the "Declaration") including the designation of the terms of the Common
Securities as set forth in Exhibit A to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The
Holder is entitled to the benefits of the Common Securities Guarantee to the
extent provided therein. The Trust will provide a copy of the Declaration, the
Common Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration and is
entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat the Notes as indebtedness and the
Common Securities as evidence of indirect beneficial ownership in the Notes.
IN WITNESS WHEREOF, the Trust has executed this certificate this day
of , 199_.
[ ]
as Trustee
-------------------------------
[ ]
as Trustee
--------------------------------
A-4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfer this Common
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security of tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee) and irrevocably appoint)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_____________agent to transfer this Common Security Certificate on the books
of the Trust. The agent may substitute another to act for him or her.
Date:___________________________________________
Signature:______________________________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A-5
<PAGE>
EXHIBIT B
SPECIMEN OF NOTE
<PAGE>
EXHIBIT C
UNDERWRITING AGREEMENT
<PAGE>
Exhibit 4.7
----------------------------------------
PREFERRED SECURITIES GUARANTEE AGREEMENT
Household International, Inc.
Dated as of ______________, 1996
----------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Section of Trust Indenture Section of
Act of 1939, as amended Guarantee Agreement
- -------------------------- -------------------
310(a) .................................................. 4.1(a)
310(b) .................................................. 4.1(c)
310(c) .................................................. Inapplicable
311(a) .................................................. 2.2(b)
311(b) .................................................. 2.2(b)
311(c) .................................................. Inapplicable
312(a) .................................................. 2.2(a)
312(b) .................................................. 2.2(b)
313 .................................................. 2.3
314(a) .................................................. 2.4
314(b) .................................................. Inapplicable
314(c) .................................................. 2.5
314(d) .................................................. Inapplicable
314(f) .................................................. Inapplicable
315(a) .................................................. 3.1(b)
315(b) .................................................. 2.7
315(c) .................................................. 3.1(a)
315(d) .................................................. 3.1(a)
316(a) .................................................. 5.4(a), 2.6
__________________
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of ___________,
1996, is executed and delivered by Household International, Inc., a Delaware
corporation (the "Guarantor"), and Wilmington Trust Company, a Delaware banking
corporation, as trustee (the "Preferred Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of Household Capital Trust II, a Delaware statutory business
trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of June 15, 1996, among the trustees of the Issuer
named therein, the Guarantor as Sponsor and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof $__________ aggregate stated liquidation amount of
Preferred Securities designated the _____% Trust Preferred Securities (the
"Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred Securities,
the Guarantor desires to irrevocably and unconditionally agree, to the extent
set forth in this Guarantee Agreement, to pay to the Holders of the Preferred
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee Agreement") in substantially
identical terms to this Guarantee Agreement for the benefit of the holders of
the Common Securities (as defined herein) except that if an Event of Default (as
defined in the Indenture (as defined herein)), has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Guarantee
Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION.
In this Guarantee Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not defined in
the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933 as amended or any successor rule thereunder.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder of Preferred Securities.
"Distributions" means a distribution payable to holders of the Preferred
Securities or the Common Securities in accordance with Section 6.1 of the
Declaration.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Issuer: (i) any accrued and unpaid Distributions which are required
to be paid on such Preferred Securities to the extent the Issuer shall have
funds
<PAGE>
available therefore, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Notes to the Holders in exchange for
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution"). If an Event of Default
under the Indenture has occurred and is continuing, the rights of Holders of the
Common Securities to receive Guarantee Payments under the Common Securities
Guarantee Agreement are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any entity directly or indirectly controlling or
controlled by or under direct or indirect common control with the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate
of the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agents of the Preferred
Guarantee Trustee.
"Indenture" means the Indenture dated as of May 15, 1995 among Household
International, Inc., a Delaware corporation (as "Debt Issuer") and The First
National Bank of Chicago, a national banking association, as trustee and any
indenture supplemental thereto pursuant to which certain subordinated debt
securities of the Debt Issuer are to be issued to the Property Trustee of the
Issuer.
"Majority in liquidation amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, Holder(s) of Preferred Securities voting
separately as a class, who vote Preferred Securities and the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of the Preferred
Securities voted by such Holders represents more than 50% of the above stated
liquidation amount of all Preferred Securities.
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"Notes" means a series of debt securities issued by the Debt Issuer
pursuant to the Indenture to be known as _____% Junior Subordinated Deferrable
Interest Notes due 2036.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means Wilmington Trust Company, a Delaware
banking corporation, until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment pursuant to the terms of this
Guarantee Agreement and thereafter means each such Successor Preferred Guarantee
Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, the chairman of the board of directors, the president, any vice-
president, any assistant vice-president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any trust officer or assistant trust
officer or any other officer of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is
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referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be a part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) To the extent the Preferred Securities Trustee shall not also be
acting as Property Trustee at the time action is called for under (i) or (ii)
below, the Guarantor shall provide the Preferred Securities Trustee (i) within
14 days after January 1 and June 30 of each year, a list, in such form as the
Preferred Guarantee Trustee may reasonably require, of the names and addresses
of the Holders of the Preferred Securities ("List of Holders") as of such date,
provided that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Preferred Guarantee Trustee by the Guarantor, and
(ii) at any other time, within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Preferred Guarantee Trustee. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
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SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.
Within 60 days after May 15 of each year, the Preferred Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement which relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officer's Certificate.
SECTION 2.6 EVENT OF DEFAULT; WAIVER.
The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Event of Default and its consequences. Upon such waiver, any such Event
of Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this Guarantee
Agreement, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
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SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default known to the Preferred Guarantee Trustee, unless such defaults have been
cured before the giving of such notice, provided that, the Preferred Guarantee
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers, of the Preferred Guarantee Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default except any Event of Default as to which the Preferred
Guarantee Trustee shall have received written notice or a Responsible Officer
charged with the administration of the Declaration shall have obtained written
notice of.
SECTION 2.8 CONFLICTING INTERESTS.
The Declaration shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders of the Preferred Securities and the
Preferred Guarantee Trustee shall not transfer this Guarantee Agreement to any
Person except a Holder of Preferred Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee on
acceptance by such Successor Preferred Guarantee Trustee of its appointment to
act as Preferred Guarantee Trustee. The right, title and interest of the
Preferred Guarantee Trustee shall automatically vest in any Successor Preferred
Guarantee Trustee and such vesting and
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cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
(b) If an Event of Default has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Preferred Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.6), the Preferred Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee Agreement, and use the same degree of care
and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs;
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Preferred Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the curing
or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Preferred Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be read
into this Guarantee Agreement against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or opinions
that by any provision
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hereof are specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be under
a duty to examine the same to determine whether or not they
conform to the requirements of the Declaration;
(ii) the Preferred Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Preferred
Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts;
(iii) the Preferred Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities at the time
outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the Preferred
Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the Preferred
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) the Preferred Guarantee Trustee may rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Guarantor contemplated by this Guarantee
Agreement shall be sufficiently evidenced by an Officers' Certificate;
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(iii) whenever in the administration of this Guarantee Agreement, the
Preferred Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part and request and rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof);
(v) the Preferred Guarantee Trustee may consult with counsel and the
written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel
may be counsel to the Guarantor or any of its Affiliates, and may
include any of its employees. The Preferred Guarantee Trustee shall
have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Preferred Guarantee Trustee adequate
security and indemnity which would satisfy a reasonable person in the
position of the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Preferred Guarantee Trustee provided, that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Preferred Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee
Agreement;
(vii) the Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent,
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order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Preferred Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Preferred Guarantee Trustee
shall not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Preferred Guarantee Trustee or its agents
hereunder shall bind the Holders of the Preferred Securities and the
signature of the Preferred Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such action; and no third
party shall be required to inquire as to the authority of the
Preferred Guarantee Trustee to so act, or as to its compliance with
any of the terms and provisions of this Guarantee Agreement, both of
which shall be conclusively evidenced by the Preferred Guarantee
Trustee's or its agent's taking such action; and
(x) whenever in the administration of this Guarantee Agreement the
Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder the Preferred Guarantee Trustee (i) may
request instructions from the Holders of the Preferred Securities,
(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be
protected in acting in accordance with such instructions; and
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Preferred Guarantee Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Preferred
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Preferred Guarantee Trustee shall be construed to be a duty.
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SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The recitals contained in this Guarantee shall be taken as the statements
of the Guarantor and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Preferred Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor;
(ii) be a corporation organized and doing business under the laws of the
United States of America or any state or territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by federal, state, territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and
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Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
TRUSTEE.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance
with this Section 4.2 until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold office
until a Successor Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Preferred Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guarantee Trustee. Such court may thereupon
after such notice, if any, as it may deem proper and prescribe, appoint a
Successor Preferred Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE.
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert. The Guarantor's obligation to
make
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a Guarantee Payment may be satisfied by direct payment of the required amounts
by the Guarantor to the Holders or by causing the Issuer to pay such amounts to
the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Notes or any extension of the maturity date of the Notes
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors,
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reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation on the Holders or any other Person to give notice
to, or obtain consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 5.4 RIGHTS OF HOLDERS.
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or power conferred
upon Preferred Guarantee Trustee under this Guarantee Agreement.
(b) If the Preferred Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against the Issuer, the
Preferred Guarantee Trustee or any other Person.
SECTION 5.5 GUARANTEE OF PAYMENT.
This Guarantee Agreement creates a guarantee of payment and not of
collection.
SECTION 5.6 SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee Agreement; provided, however, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it may acquire
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by way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Guarantee Agreement, if, at the time of
any such payment, any amounts are due and unpaid under this Guarantee Agreement.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Preferred Securities and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS.
So long as any Preferred Securities remain outstanding, if there shall have
occurred and is continuing any event that would constitute an Event of Default
or an Event of Default under the Declaration, then (a) the Guarantor shall not
declare or pay any dividends on, or purchase, acquire or make a distribution or
liquidation payment with respect to any of its capital stock (other than (i)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Guarantor in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Guarantor's capital stock for any other class or series of the
Guarantor's capital stock, or (iii) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged),
and (b) the Guarantor shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Guarantor which rank pari passu with or
junior to the Notes. The foregoing, however, will not apply to any stock
dividends paid by the Guarantor where the dividend stock is the same stock as
that on which the dividend is being paid.
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SECTION 6.2 RANKING.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor, including the Notes, except those made pari
passu or subordinate by their terms, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor and (iii) senior
to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION.
This Guarantee Agreement shall terminate upon full payment of the
Redemption Price of all of the Preferred Securities and Common Securities upon
the distribution of the Notes to the Holder's of all of the Preferred Securities
or upon full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION.
(a) No indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee Agreement and
in a manner such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee
Agreement or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by
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reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.2 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the Guarantor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this in accordance with this Guarantee Agreement, except
that no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason or
negligence or willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees
-18-
<PAGE>
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding.
SECTION 9.2 AMENDMENTS.
Except with respect to any changes which do not adversely affect the rights
of Holders (in which case no consent of Holders will be required), this
Guarantee Agreement may only be amended with the prior approval of the Holders
of at least 66-2/3% in liquidation amount of all the outstanding Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Preferred Securities and Common Securities apply to
the giving of such approval.
SECTION 9.3 NOTICES.
All notices provided for in this Guarantee Agreement shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Preferred Guarantee Trustee at the Preferred Guarantee
Trustee's mailing address set forth below(or such other address as the
Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attn: Corporate Trust Administration
(b) if given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of
to the Holders of the Preferred Securities):
Household International, Inc.
2700 Sanders Road
Prospect Heights, IL 60070
Attn: Treasurer
(c) if given to any holder of Preferred Securities, at the address set
forth on the books and records of the Issuer.
-19-
<PAGE>
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 BENEFIT.
This Guarantee Agreement is solely for the benefit of the Holders of the
Preferred Securities and subject to Section 3.1(a) is not separately
transferable from the Preferred Securities.
SECTION 9.5 GOVERNING LAW.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
HOUSEHOLD INTERNATIONAL, INC.
By: _________________________________
Name: B. B. Moss, Jr.
Title: Assistant Treasurer
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Preferred Guarantee Trustee
By: _________________________________
Name:
Title:
-20-
<PAGE>
Exhibit 5.1
June 24, 1996
Household International, Inc.
2700 Sanders Road
Prospect Heights, IL 60070
Re: Combined Registration Statement on Form S-3, relating to Junior
Subordinated Debt Securities and Preferred Securities Guarantee of
Household International, Inc. and the Preferred Securities of Household
Capital Trust II--Registration Nos. 333-03337 and 333-03337-01
Ladies and Gentlemen:
As Vice President-Corporate Law and Assistant Secretary of Household
International, Inc. ("Household"), I am generally familiar with the proceedings
in connection with the Registration Statement on Form S-3 of Household and
Household Capital Trust II (the "Trust") filed with the Securities and Exchange
Commission (the "Commission") on May 8, 1996 and amended by Amendment No. 1
filed with the Commission on or about June 24, 1996 (as amended, the
"Registration Statement"), relating to the registration under the Securities Act
of 1933, as amended (the "Securities Act"), of preferred securities of the Trust
(the "Preferred Securities"), subordinated debt securities (the "Junior
Subordinated Notes") and a preferred securities guarantee, (the "Preferred
Securities Guarantee"), guaranteeing distributions on the Preferred Securities
to the extent set forth in a Preferred Securities Guarantee Agreement, a form of
which is filed as an exhibit to the Registration Statement (the "Guarantee
Agreement"). The Junior Subordinated Notes, which constitute unsecured junior
subordinated debt of Household, will be issuable under an Indenture dated as of
May 15, 1995, between Household and The First National Bank of Chicago, as
Trustee and a second Supplemental Indenture to be dated as of the date the
offering of the Preferred Securities is priced (together, the "Indenture"). The
Indenture, or forms as filed thereof, have been included as exhibits to the
Registration Statement as filed with the Commission.
<PAGE>
Household International, Inc.
June 24, 1996
Page 2
Based upon my review of the records and documents of Household am of the opinion
that:
1. Household is a corporation duly incorporated and validly existing under the
Laws of the State of Delaware.
2. Each of the Indenture and the Guarantee Agreement will, after being duly
authorized, executed and delivered by Household, constitute, a valid and
legally binding instrument of Household enforceable in accordance with its
terms, except as enforcement of the provisions thereof may be limited by
bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity of at law).
3. When (i) the Registration Statement on Form S-3 filed by Household with
respect to the Junior Subordinated Notes and the Preferred Securities
Guarantee shall have become effective under the Securities Act, (ii) the
issuance of Junior Subordinated Notes and the Preferred Securities
Guarantee have been duly authorized by the appropriate corporate action,
and (iii) such Junior Subordinated Notes and the Preferred Securities
Guarantee have been duly executed, authenticated, issued and delivered
against payment of the agreed consideration therefor in accordance with the
appropriate Indenture or Guarantee Agreement as described in the
Registration Statement, including the Prospectus relating to the offering
of Preferred Securities, such Junior Subordinated Notes and the Preferred
Securities Guarantee will be legally and validly issued and will be the
legal and binding obligations of Household enforceable in accordance with
their terms, except as enforcement of the provisions thereof may be limited
by bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to me under the heading "Legal Opinions" in any
Preliminary Prospectus or Prospectus forming a part of the Registration
Statement.
<PAGE>
Household International, Inc.
June 24, 1996
Page 3
In giving such consent I do not admit that I am in the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/ John W. Blenke
- ------------------
John W. Blenke
JWB:jmh
<PAGE>
EXHIBIT 5.2
[LETTERHEAD OF MORRIS, NICHOLS, ARSHT & TUNNELL]
June 19, 1996
Household Capital Trust II
c/o Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
Re: Household Capital Trust II
--------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to Household Capital Trust
II, a Delaware statutory business trust (the "Trust"), in connection with
certain matters relating to the organization of the Trust and the proposed
issuance of Preferred Securities to beneficial owners pursuant to and as
described in Registration Statement Nos. 333-03337 and 333-03337-01 (and the
Prospectus forming a part thereof) on Form S-3 as filed on May 8, 1996 with the
Securities and Exchange Commission (the "Registration Statement"). Capitalized
terms used herein and not otherwise herein defined are used as defined in the
Amended and Restated Declaration of Trust of the Trust in the form attached as
an exhibit to the Registration Statement (the "Governing Instrument").
In rendering this opinion, we have examined copies of the following
documents in the forms provided to us: the Certificate of Trust of the Trust as
filed in the Office of the Secretary of State of the State of Delaware (the
"State Office") on May 7, 1996 (the "Certificate"); a Declaration of Trust dated
as of May 7, 1996 (the "Original Governing Instrument"); the Governing
Instrument; the form of Indenture dated as of May 15, 1995 between Household
International, Inc. and The First National Bank of Chicago, as Trustee (the
"Indenture"); the Second Supplemental Indenture between Household International,
Inc. and the First National Bank of Chicago, as Trustee, under the Indenture;
the Underwriting Agreement relating to the Preferred Securities; the
Registration Statement; and a certificate of good standing of the Trust obtained
as of a recent date from the State Office. In such examinations, we have assumed
the genuineness of all signatures, the conformity to original documents of all
documents submitted to us as drafts or copies or forms of documents to be
executed and the legal capacity
<PAGE>
Household Capital Trust II
June 19, 1996
Page 2
of natural persons to complete the execution of documents. We have further
assumed for purposes of this opinion: (i) the due formation or organization,
valid existence and good standing of each entity (other than the Trust) that is
a party to any of the documents reviewed by us under the laws of the
jurisdiction of its respective formation or organization; (ii) the due
authorization, execution and delivery by, or on behalf of, each of the parties
thereto of the above-referenced documents (including, without limitation, the
due execution and delivery of the Governing Instrument and the Underwriting
Agreement prior to the first issuance of Preferred Securities); (iii) that no
event has occurred subsequent to the filing of the Certificate that would cause
a dissolution or liquidation of the Trust under the Original Governing
Instrument or the Governing Instrument, as applicable; (iv) that the activities
of the Trust have been and will be conducted in accordance with the Original
Governing Instrument or the Governing Instrument, as applicable, and the
Delaware Business Trust Act, 12 Del. C. (S) 3801 et seq. (the "Delaware Act");
(v) that each Holder of Preferred Securities has made payment of the required
consideration therefor and received a Preferred Securities Certificate in
consideration thereof in accordance with the terms and conditions of the
Governing Instrument, Registration Statement and Underwriting Agreement; (vi)
that the Preferred Securities are issued and sold to the Preferred Securities
Holders in accordance with the terms, conditions, requirements and procedures
set forth in the Governing Instrument, Registration Statement and Underwriting
Agreement; and (vii) that the documents examined by us are in full force and
effect, express the entire understanding of the parties thereto with respect to
the subject matter thereof and have not been modified, supplemented or otherwise
amended. No opinion is expressed with respect to the requirements of, or
compliance with, federal or state securities or blue sky laws. We have not
participated in the preparation of the Registration Statement or any other
offering materials relating to the Preferred Securities and we assume no
responsibility for their contents. As to any fact material to our opinion, other
than those assumed, we have relied without independent investigation on the
above-referenced documents and on the accuracy, as of the date hereof, of the
matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly organized and validly existing business trust
in good standing under the laws of the State of Delaware.
2. The Preferred Securities, upon issuance, will constitute validly
issued and, subject to the qualifications set forth in paragraph 3 below, fully
paid and nonassessable beneficial interests in the Trust.
<PAGE>
Household Capital Trust II
June 19, 1996
Page 3
3. Under the Delaware Act and the terms of the Governing Instrument,
each Preferred Security Holder of the Trust, in such capacity, will be entitled
to the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized under the General Corporation Law of
the State of Delaware; provided, however, we express no opinion with respect to
the liability of any Preferred Security Holder who is, was or may become a named
Trustee of the Trust. Notwithstanding the foregoing, we note that pursuant to
Section 11.4 of the Governing Instrument, the Trust may withhold amounts
otherwise distributable to a Holder and pay over such amounts to the applicable
jurisdictions in accordance with federal, state and local law and any amount
withheld will be deemed to have been distributed to such Holder and that,
pursuant to the Governing Instrument, Preferred Security Holders may be
obligated to make payments or provide indemnity or security under the
circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit to a
pre-effective amendment to the Registration Statement. In giving this consent,
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder. This opinion speaks only as of the date hereof and is based on our
understandings or assumptions as to present facts, and on our review of the
above referenced documents and the application of Delaware law as the same exist
as of the date hereof, and we undertake no obligation to update or supplement
this opinion after the date hereof for the benefit of any person or entity with
respect to any facts or circumstances that may hereafter come to our attention
or any changes in facts or law that may hereafter occur or take effect. This
opinion is intended solely for the benefit of the addressee hereof in connection
with the matters contemplated hereby and may not be relied on by any other
person or entity or for any other purpose without our prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
<PAGE>
EXHIBIT 8
June 21, 1996
Household Capital Trust II
Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
Re: Household Capital Trust II
Trust Preferred Securities
--------------------------
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-3 filed with
the Securities and Exchange Commission by Household International, Inc. ("HII")
and Household Capital Trust II (the "Trust") and the preliminary prospectus (the
"Preliminary Prospectus") included in the Registration Statement.
We have acted as special tax counsel to HII and the Trust in
connection with the Preliminary Prospectus forming a part of the Registration
Statements. The statements contained in the Preliminary Prospectus under the
heading "Certain Federal Income Tax Consequences" to the extent they constitute
matters of federal income tax law or legal conclusions with respect thereto,
have been prepared or reviewed by us, and, in our opinion, are correct in all
material respects. We hereby affirm to you the opinions attributed to us under
such heading in the Preliminary Prospectus.
<PAGE>
Household International, Inc.
June 21, 1996
Page 2
This opinion is provided to you only and, without our prior
written consent, may not be relied upon, used, circulated, quoted or otherwise
referred to in any manner by any person, firm, governmental authority or entity
whatsoever. This opinion letter is limited to the matters stated herein and no
opinion is implied or may be inferred beyond the matters expressly stated
herein. This opinion letter shall not be construed as or deemed to be a
guaranty or insuring agreement.
Notwithstanding the immediately preceding paragraph, we hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to this Firm under the caption "Certain Income
Tax Consequences" and "Legal Matters" in the Preliminary Prospectus included in
the Registration Statement. By giving such consent, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules promulgated
thereunder.
This opinion is rendered as of the date hereof based on the law
and facts in existence on the date hereof, and we do not undertake, and hereby
disclaim, any obligation to advise you of any changes in law or fact, whether or
not material, which may be brought to our attention at a later date.
Very truly yours,
/s/ Sidley & Austin
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
Household International, Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this Amendment No. 1 to the Registration Statement on Form S-3
relating to the offering of up to $100,000,000 of Household Capital Trust II
Trust Preferred Securities, Household International, Inc. Junior Subordinated
Deferrable Interest Notes and Household International, Inc. Guarantees of Trust
Preferred Securities, to be filed with the Securities and Exchange Commission on
or about June 24, 1996, of our report dated January 24, 1996, included in
Household International's Form 10-K for the year ended December 31, 1995, and to
all references to our Firm included in this Registration Statement.
/s/ Arthur Andersen LLP
Chicago, Illinois,
June 24, 1996
<PAGE>
Exhibit 25
Registration No. 333-03337
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
HOUSEHOLD INTERNATIONAL, INC.
HOUSEHOLD CAPITAL TRUST II
(Exact name of obligor as specified in its charter)
36-3121988
Delaware Applied for
(State of incorporation) (I.R.S. employer identification no.)
2700 Sanders Road
Prospect Heights, Illinois 60070
(Address of principal executive offices) (Zip Code)
Trust Preferred Securities of Household Capital Trust II
Guarantees of Trust Preferred Securities by Household International, Inc.
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee and
upon information furnished by the obligor, the obligor is not an affiliate
of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 20th day
of June, 1996.
WILMINGTON TRUST COMPANY
[SEAL]
/s/ Dorothy K. Scarlett /s/ Cynthia L. Corliss
Attest: ___________________________ By: ____________________________
Assistant Secretary Name: Cynthia L. Corliss
Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE>
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate
<PAGE>
and property, and to appoint such officers and agents as the business
of the Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this State,
to discount bills, notes or other evidences of debt, to receive
deposits of money, or securities for money, to buy gold and silver
bullion and foreign coins, to buy and sell bills of exchange, and
generally to use, exercise and enjoy all the powers, rights,
privileges and franchises incident to a corporation which are proper
or necessary for the transaction of the business of the Corporation
hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands
or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between the
two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
2
<PAGE>
bond or other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or in
conjunction with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any trust, office, duty, contract or
agreement, either by itself or in conjunction with any other person,
or persons, corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within the
State of Delaware or elsewhere, or which may now or hereafter be
required by any law, judge, officer or court in the State of Delaware
or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation is so
appointed by any person, corporation, court, officer or authority
such trustee, trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as security for
the performance of the duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any private,
public or municipal corporation within and without the State of
Delaware, or of the Government of the United States, or of any state,
3
<PAGE>
territory, colony, or possession thereof, or of any foreign
government or country; to receive, collect, receipt for, and dispose
of interest, dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property
held and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other property,
any and all the rights, powers and privileges of individual owners
thereof, including the right to vote thereon; to invest and deal in
and with any of the moneys of the Corporation upon such securities
and in such manner as it may think fit and proper, and from time to
time to vary or realize such investments; to issue bonds and secure
the same by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the Corporation,
and to sell and pledge such bonds, as and when the Board of Directors
shall determine, and in the promotion of its said corporate business
of investment and to the extent authorized by law, to lease,
purchase, hold, sell, assign, transfer, pledge, mortgage and convey
real and personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
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(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of, real
and personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any
foreign country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes and
powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and
the preferences and relative, participating, optional and other special
rights of each such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
Directors of the
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Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including,
but without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such
dividends shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a
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class, to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any one or
more series of Preferred Stock or under such circumstances and on
such conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding-up, of the Corporation, the
holders of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders ratably in
proportion to the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted by the
Board of Directors pursuant to section (b) of this Article FOURTH,
each holder of Common Stock shall have one vote in respect of each
share of Common Stock held on all matters voted upon by the
stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized
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<PAGE>
issue of shares of any class or series of stock or securities convertible
into or exchangeable for stock, or carrying any right to purchase stock,
may be issued and disposed of pursuant to resolution of the Board of
Directors to such persons, firms, corporations or associations, whether
such holders or others, and upon such terms as may be deemed advisable by
the Board of Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased from
time to time by the affirmative vote of the holders of a majority of the
stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not
8
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less than five nor more than twenty-five as fixed from time to time by
vote of a majority of the whole Board, provided, however, that the number
of directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the number of
directors constituting the whole Board shall be twenty-four until
otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such
election, the stockholders shall elect a successor to such director to
hold office until the next election of the class for which such director
shall have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the term
of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any
time without cause, but only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days'
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<PAGE>
notice of the meeting is given to stockholders, such written notice shall
be delivered or mailed, as prescribed, to the Secretary of the Corporation
not later than the close of the seventh day following the day on which
notice of the meeting was mailed to stockholders. Notice of nominations
which are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of stock of the Corporation which
are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
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ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or more
of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose
as one class).
FOURTEENTH: - Meetings of the Directors may be held outside of the State
of Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or more,
or
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<PAGE>
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any one
or more of clauses (A) through (E) of paragraph 1 of the section
(a).
(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
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(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31,
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1981) is owned, directly or indirectly, by the Corporation; provided,
however, that for the purposes of the definition of Investment Stockholder
set forth in paragraph (2) of this section (c), the term "Subsidiary"
shall mean only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an Affiliate
or Associate of another, (3) whether a person has an agreement,
arrangement or understanding with another as to the matters referred
to in paragraph (3) of section (c), or (4) whether the assets subject
to any business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON FEBRUARY 21, 1991
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors shall
<PAGE>
be held on the third Thursday of each month at the principal office of the
Company, or at such other place and time as may be designated by the Board of
Directors, the Chairman of the Board, or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting,
which shall be mailed not less than two days before the time of holding such
meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
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ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than nine
members who shall be selected by the Board of Directors from its own members and
who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the Board of
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a week in each week the
Board is not regularly scheduled to meet. A majority of its members shall be
necessary to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when a quorum is
present.
(D) Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section.
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This By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws(other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive Committee
acting under this section that it shall be to the advantage of the Company to
resume the conduct and management of its affairs and business under all of the
other provisions of these By-Laws.
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.
(B) The Trust Committee shall have general supervision over the Trust
Department and the investment of trust funds, in all matters, however, being
subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a month. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Trust Committee may be held at any time when
a quorum is present.
(D) Minutes of each meeting of the Trust Committee shall be kept
and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who shall
be selected by the Board of Directors from its own members, none of whom shall
be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over the Audit
Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in
4
<PAGE>
charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the majority
of its members shall deem it to be proper for the transaction of its business,
and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more than
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at any time
by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by the
Board of Directors as an associate director, to serve during the pleasure of the
Board.
(B) An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote. An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any Committee
created under Article III of the By-Laws
5
<PAGE>
of this Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 3. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 4. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 5. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
6
<PAGE>
Section 6. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 7. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 8. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 9. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 10. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the
7
<PAGE>
books of the Company and a transfer book shall be kept in which all transfers of
stock shall be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
8
<PAGE>
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
9
<PAGE>
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, 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, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses, under this
Article X is not paid in full within ninety days after a written claim therefor
has been received by the Corporation the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim. In any such action
the Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification of payment of expenses under
applicable law.
(D) The rights conferred on any person by this Article X shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the Charter or Act of Incorporation, these By-
Laws, agreement, vote of stockholders or disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.
10
<PAGE>
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.
11
<PAGE>
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, Wilmington
Trust Company hereby consents that reports of examinations by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
/s/ Cynthia L. Corliss
By: ______________________________
Name: Cynthia L. Corliss
Title: Vice President
Dated: June 20, 1996
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has
not been approved by any state banking authorities. Refer
to your appropriate state banking authorities for your
state publication requirements.
REPORT OF CONDITION
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- -------------------------------------------- ----------------------
Name of Bank City
in the State of DELAWARE , at the close of business on March 31, 1996.
------------------
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins .......... 198,158
Interest-bearing balances .................................... 0
Held-to-maturity securities ...................................... 536,638
Available-for-sale securities .................................... 862,050
Federal funds sold ............................................... 82,000
Securities purchased under agreements to resell .................. 25,000
Loans and lease financing receivables:
Loans and leases, net of unearned income .......... 3,404,372
LESS: Allowance for loan and lease losses ........ 48,153
LESS: Allocated transfer risk reserve ............ 0
Loans and leases, net of unearned income, allowance,
and reserve ................................................ 3,356,219
Assets held in trading accounts .................................. 0
Premises and fixed assets (including capitalized leases) ......... 76,915
Other real estate owned .......................................... 16,314
Investments in unconsolidated subsidiaries and associated
companies ...................................................... 146
Customers' liability to this bank on acceptances outstanding ..... 0
Intangible assets ................................................ 4,403
Other assets ..................................................... 107,240
Total assets ..................................................... 5,265,083
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE>
<TABLE>
LIABILITIES
<S> <C>
Deposits:
In domestic offices .............................................. 3,450,823
Noninterest-bearing .................................. 689,843
Interest-bearing ................................... 2,760,980
Federal funds purchased .......................................... 99,885
Securities sold under agreements to repurchase ................... 198,506
Demand notes issued to the U.S. Treasury ......................... 38,856
Trading liabilities .............................................. 0
Other borrowed money: ............................................ ///////
With original maturity of one year or less ................... 930,611
With original maturity of more than one year ................. 28,000
Mortgage indebtedness and obligations under capitalized leases ... 0
Bank's liability on acceptances executed and outstanding ......... 0
Subordinated notes and debentures ................................ 0
Other liabilities ................................................ 100,832
Total liabilities ................................................ 4,847,513
Limited-life preferred stock and related surplus ................. 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus .................... 0
Common Stock ..................................................... 500
Surplus .......................................................... 62,118
Undivided profits and capital reserves ........................... 354,791
Net unrealized holding gains (losses) on available-for-sale
securities ..................................................... 161
Total equity capital ............................................. 417,570
Total liabilities, limited-life preferred stock, and equity
capital ........................................................ 5,265,083
</TABLE>
2
<PAGE>
Exhibit 25.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) ________
------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312)732-6919
(Name, address and telephone number of agent for service)
----------------------------------------
HOUSEHOLD INTERNATIONAL, INC.
(Exact name of obligor as specified in its charter)
Delaware 36-3121988
(State or other jurisdiction of (I.R.S. employer
incorporation of organization) identification number)
2700 Sanders Road 60070
Prospect Heights, Illinois (Zip Code)
(Address of Principal
Executive Offices) JUNIOR SUBORDINATED DEBT SECURITIES
(Title of Indenture Securities)
<PAGE>
ITEM 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of Currency, Washington, D. C.; Federal Deposit Insurance
Corporation, Washington, D. C., The Board of Governors of the Federal
Reserve System, Washington, D. C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. Affiliations With The Obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.
No such affiliation exists with the trustee.
ITEM 16. List of Exhibits. List below all exhibits filed as a part of
this Statement of Eligibility.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise corporate
trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
8. Not Applicable
9. Not Applicable
* Exhibits 1,2,3 and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 12 of the Form T-1 of the First National Bank of
Chicago, filed as Exhibit 26 to the Registration Statement on Form S-3 of the
CIT Group Holdings, Inc., filed with the Securities and Exchange Commission on
February 16, 1993 (Registration No. 33-58418).
<PAGE>
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago and State of Illinois, on the 19th day of June, 1996.
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Steven M. Wagner
---------------------
Steven M. Wagner
Vice President and Senior Counsel
Corporate Trust Services Division
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(B) OF THE ACT
June 19, 1996
Securities and Exchange Commission,
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture and supplemental indenture
between Household International, Inc. and The First National Bank of Chicago,
the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of
1939, as amended, hereby consents that the reports of examinations of the
undersigned, made by Federal or State Authorities authorized to make such
examinations, may be furnished by such authorities to the Securities and
Exchange Commission upon its request therefore.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Steven M. Wagner
--------------------
Steven M. Wagner
Vice President and Senior Counsel
Corporate Trust Services Division
<PAGE>
EXHIBIT 7
A copy of the latest report of condition of the trustee published pursuant
to law or the requirements of its supervising or examining authority.
<PAGE>
EXHIBIT 7
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460 Page RC-1
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for March 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
Dollar Amounts in C400 less
Thousands RCFD BIL MIL THOU than-
----------------- ---- ------------ ------
ASSETS
<S> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule
RC-A):
a. Noninterest-bearing balances and currency and coin(1).................. 0081 3,047,140 1.a.
b. Interest-bearing balances(2)........................................... 0071 8,488,390 1.b.
2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A)............. 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)........... 1773 997,155 2.b.
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold..................................................... 0276 3,384,301 3.a.
b. Securities purchased under agreements to resell........................ 0277 685,531 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)..................................................................... RCFD 2122 16,884,488 4.a.
b. LESS: Allowance for loan and lease losses.............................. RCFD 3123 358,448 4.b.
c. LESS: Allocated transfer risk reserve.................................. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c).................................. 2125 16,526,040 4.d.
5. Assets held in trading accounts........................................... 3545 10,974,841 5.
6. Premises and fixed assets (including capitalized leases).................. 2145 592,581 6.
7. Other real estate owned (from Schedule RC-M).............................. 2150 9,952 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)............................................ 2130 42,098 8.
9. Customers' liability to this bank on acceptances outstanding.............. 2155 564,435 9.
10. Intangible assets (from Schedule RC-M).................................... 2143 96,463 10.
11. Other assets (from Schedule RC-F)......................................... 2160 1,703,124 11.
12. Total assets (sum of items 1 through 11).................................. 2170 47,112,051 12.
</TABLE>
- ------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460 Page RC-2
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
Schedule RC--Continued
<TABLE>
<CAPTION>
Dollar Amounts in
Thousands BiL Mil Thou
----------------- ------------
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)....................................... RCON 2200 14,251,874 13.a.
(1) Noninterest-bearing(1)........................................ RCON 6631 5,707,786 13.a.(1)
(2) Interest-bearing.............................................. RCON 6636 8,544,088 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)................................ RCFN 2200 12,839,836 13.b.
(1) Noninterest bearing........................................... RCFN 6631 196,311 13.b.(1)
(2) Interest-bearing.............................................. RCFN 6636 12,643,525 13.b.(2)
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased........................................... RCFD 0278 2,692,008 14.a.
b. Securities sold under agreements to repurchase.................... RCFD 0279 1,165,032 14.b.
15. a. Demand notes issued to the U.S. Treasury.......................... RCON 2840 77,000 15.a
b. Trading Liabilities............................................... RCFD 3548 7,103,300 15.b.
16. Other borrowed money:
a. With original maturity of one year or less........................ RCFD 2332 2,223,560 16.a.
b. With original maturity of more than one year...................... RCFD 2333 144,665 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases............................................................... RCFD 2910 283,041 17.
18. Bank's liability on acceptance executed and outstanding.............. RCFD 2920 564,435 18.
19. Subordinated notes and debentures.................................... RCFD 3200 1,275,000 19.
20. Other liabilities (from Schedule RC-G)............................... RCFD 2930 1,411,087 20.
21. Total liabilities (sum of items 13 through 20)....................... RCFD 2948 44,030,838 21.
22. Limited-Life preferred stock and related surplus..................... RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus........................ RCFD 3838 0 23.
24. Common stock......................................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)............. RCFD 3839 2,320,326 25.
26. a. Undivided profits and capital reserves............................ RCFD 3632 559,707 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities........................................................ RCFD 8434 730 26.b.
27. Cumulative foreign currency translation adjustments.................. RCFD 3284 (408) 27.
28. Total equity capital (sum of items 23 through 27).................... RCFD 3210 3,081,213 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)................................ RCFD 3300 47,112,051 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the ------------
bank by independent external Number
RCFD 6724 2 M.1.
auditors as of any date during 1993 ....................................................... ------------
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- -------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
7
