<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-65679
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 29, 1998.
$500,000,000
Household International Netherlands B.V.
6.2% Senior Notes Due December 1, 2003
Guaranteed as to Payment of Principal and Interest by
Household International, Inc.
-----------
Interest on the Notes is payable on June 1 and December 1, commencing on June 1,
1999. The Notes are not redeemable prior to maturity, except that the Notes
may be redeemed if, at any time, the Company or Household
International has been or will be required to pay additional
amounts with respect to the Notes. See "Description of the
Notes" for a complete description of terms.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these Notes or determined if this
prospectus supplement or the prospectus to which it relates is
truthful or complete. Any representation to the contrary
is a criminal offense.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Company (1)
---------------- -------------- ----------------
<S> <C> <C> <C>
Per Note.............................................. 100% .45% 99.55%
Total................................................. $ 500,000,000 $ 2,250,000 $ 497,750,000
</TABLE>
(1) Plus accrued interest, if any, from December 2, 1998.
Delivery of the Notes, in book-entry form only, will be made through The
Depository Trust Company on or about December 2, 1998, against payment in
immediately available funds.
Credit Suisse First Boston
Chase Securities Inc.
Donaldson, Lufkin & Jenrette
Salomon Smith Barney
Prospectus Supplement dated November 19, 1998.
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--
<S>
PROSPECTUS SUPPLEMENT
DESCRIPTION OF THE NOTES.......... S-3
CERTAIN TAX MATTERS............... S-5
USE OF PROCEEDS................... S-5
RATIOS OF EARNINGS TO FIXED
CHARGES......................... S-6
UNDERWRITING...................... S-7
NOTICE TO CANADIAN RESIDENTS...... S-8
LEGAL OPINIONS.................... S-9
EXPERTS........................... S-9
<CAPTION>
PAGE
--
<S>
PROSPECTUS
ABOUT THIS PROSPECTUS............. 2
WHERE YOU CAN FIND MORE
INFORMATION..................... 2
SPECIAL NOTE REGARDING FORWARD-
LOOKING STATEMENTS.............. 3
HOUSEHOLD INTERNATIONAL........... 3
HOUSEHOLD INTERNATIONAL
NETHERLANDS B.V................. 3
USE OF PROCEEDS................... 4
RATIOS OF EARNINGS TO FIXED
CHARGES......................... 4
DESCRIPTION OF DEBT SECURITIES AND
GUARANTEES...................... 4
DESCRIPTION OF WARRANTS........... 11
PLAN OF DISTRIBUTION.............. 12
ERISA MATTERS..................... 13
</TABLE>
S-2
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the terms of the 6.2% Senior Notes due December
1, 2003 (the "Notes") offered hereby (referred to in the Prospectus as the
"Offered Debt Securities") supplements, insofar as such description relates to
the Notes, the description of the Debt Securities set forth in the Prospectus
under the heading "Description of Debt Securities and Guarantees," to which
description reference is hereby made.
The Notes will be issued in fully registered form only in denominations of
$100,000 or any amount in excess thereof which is an integral multiple of
$1,000. The Notes will mature on December 1, 2003.
Interest on the Notes at the rate of 6.2% per annum will be payable
semiannually on June 1 and December 1, beginning June 1, 1999, to the persons in
whose names the Notes are registered at the close of business on the fifteenth
day of the preceding month, except that interest payable at maturity shall be
paid to the same persons to whom principal of the Notes is payable.
Subject to certain exceptions and limitations, the Company will pay as
additional interest on the Notes, such additional amounts as are necessary in
order that the net payment by the Company or a paying agent of the principal and
interest on the Notes, after deduction for any present or future tax, assessment
or governmental charge of The Netherlands or a political subdivision or taxing
authority thereof or therein imposed by withholding with respect to such
payment, will not be less than the amount provided in the Notes to then be due
and payable. See "Payment of Additional Amounts."
The Notes are not redeemable at the option of the Company prior to maturity,
except that the Notes may be redeemed, as a whole but not in part, at a
redemption price equal to 100% of their principal amount, together with interest
thereon to the date of redemption, if at any time the Company or Household
International has been or will be required to pay additional amounts with
respect to the Notes. See "Optional Tax Redemption." The Notes will not be
entitled to any sinking fund.
The Notes will be unconditionally guaranteed as to payment of principal and
interest (including additional amounts) by Household International. See
"Description of Debt Securities and Guarantees-- Guarantees" in the Prospectus.
The Notes and the Guarantees will be issued under an Indenture dated as of
September 1, 1998, among the Company, Household International and The Chase
Manhattan Bank, as Trustee.
PAYMENT OF ADDITIONAL AMOUNTS
If any deduction or withholding for any present or future taxes, assessments
or other governmental charges of The Netherlands or any political subdivision or
taxing authority thereof or therein shall at any time be required in respect of
any amounts to be paid by the Company or Household International under the
Notes, the Company or Household International will pay as additional interest
such additional amounts as may be necessary in order that the said amounts paid
to the Holder of any Note pursuant to the terms of such Note, after such
deduction or withholding, will be not less than the amounts specified in such
Note to be then due and payable; provided, however, that the Company or
Household International shall not be required to make any payment of additional
amounts for or on account of:
(a) any tax, assessment or other governmental charge which would not
have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
Holder, if such Holder is an estate, trust, partnership or corporation) and
The Netherlands or any political subdivision or territory or possession of
The Netherlands or area subject to its jurisdiction, including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident or
treated as a resident thereof, being or having been present or engaged in
trade or business therein or having had a permanent establishment therein or
S-3
<PAGE>
(ii) the presentation of a Note (where presentation is required) for payment
on a date more than 20 days after the date on which such payment became due
and payable or the date on which payment thereof was duly provided for,
whichever occurs later;
(b) Any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;
(c) Any tax, assessment or other governmental charge which is payable
otherwise than by withholding from payments of (or in respect of) principal
of or interest on the Notes;
(d) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure to comply by the Holder or the beneficial
owner with a request of the Company or Household International addressed to
the Holder to provide information concerning the nationality, residence or
identity of the Holder or beneficial owner of the Note, and to make such
declaration or other similar claim or reporting requirement, which is
required by statute, treaty or regulation of The Netherlands as a
precondition to exemption from all or part of such tax, assessment or other
governmental charge; or
(e) any combination of items (a), (b), (c) and (d) above;
nor will additional amounts be paid with respect to any payment of the principal
or interest on any Note to any such Holder who is a fiduciary or partnership or
other than the sole beneficial owner of such payment to the extent such payment
would be required by the laws of The Netherlands (or any political subdivision
or taxing authority of or in The Netherlands) to be included in the income for
tax purposes of a beneficiary or settlor with respect to such fiduciary or
member of such partnership or a beneficial owner who would not have been
entitled to such additional amounts had it been the Holder of such Note.
OPTIONAL TAX REDEMPTION
The Notes may be redeemed, at the option of the Company or Household
International, in whole but not in part, upon not less than 30 nor more than 60
days' notice given as provided in the Indenture, at any time at a redemption
price equal to the principal amount thereof plus accrued interest to the date
fixed for redemption if, as a result of any change in or amendment to the laws
or any regulations or rulings promulgated thereunder of The Netherlands or any
political subdivision or taxing authority thereof or therein or any change in
the official application or interpretation of such laws, regulations or rulings,
or any change in the official application or interpretation of, or any execution
of or amendment to, any treaty or treaties affecting taxation to which The
Netherlands is a party, which change, execution or amendment becomes effective
on or after the original issue date of the Notes, the Company or Household
International has been or will be required to pay additional amounts with
respect to the Notes as described above under "Payment of Additional Amounts."
The Company or Household International will also pay, or make available to
Holders on the date of redemption any additional amounts (as described above
under "Payment of Additional Amounts") resulting from the payment of such
redemption price.
BOOK-ENTRY SYSTEM
The Notes will be represented by one or more global securities (the "Global
Security"). The Global Security will be deposited with, or on behalf of, The
Depository Trust Company (the "Depositary") and registered in the name of a
nominee of the Depositary. See "Description of Debt Securities and
Guarantees--Book-Entry System" in the Prospectus.
S-4
<PAGE>
CERTAIN TAX MATTERS
The following is a summary of the principal United States and Netherlands
income tax consequences with respect to the purchase, ownership and disposition
of a Note by a Holder that is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States, or any estate or trust the income of which is subject
to United Stated Federal income taxation regardless of its source (a "United
States Holder"). This summary is based on facts as they exist and laws,
regulations, rulings and decisions in effect on the date hereof, all of which
are subject to change, and is included for general information only and may not
apply to all United States Holders. Prospective purchasers of Notes should
consult their own tax advisors in determining the United States, Netherlands and
any other tax consequences to them of the purchase, ownership and disposition of
Notes or beneficial interests therein.
UNITED STATES TAXATION
Due to the guarantee of the Notes by Household International, it is possible
that any interest paid on the Notes will be considered as U.S. source income for
United States income tax purposes (including for purposes of computing a
Holder's U.S. foreign tax credit limitation).
Upon the sale, exchange or redemption of a Note, a United States Holder will
recognize a gain or loss, if any, for United States Federal income tax purposes
equal to the difference between the amount realized on the sale, exchange or
redemption and the United States Holder's tax basis in the Note. Such gain or
loss generally will be capital gain or loss if the Note is held as a capital
asset.
A 31% backup withholding tax and an information reporting requirement is
applicable to certain non-corporate United States Holders with respect to
payments of principal and interest on, and the proceeds of the sale of, the
Notes unless such United States Holder makes certain written certifications and
provides certain identifying information in accordance with applicable
requirements or otherwise establishes an exemption. Any amounts withheld under
the backup withholding rules from a payment to a Holder would be allowed as a
refund or a credit against such United States Holder's Federal income tax
provided that the required information is furnished to the United States
Internal Revenue Service.
THE NETHERLANDS TAXATION
No income taxes will be payable under the tax laws of The Netherlands on
payments of principal or interest on a Note to, or on a disposition of a Note
by, a Holder who is not a resident, nor deemed to be a resident, of The
Netherlands, assuming the Holder does not have an enterprise nor an interest in
an enterprise which carries on business in The Netherlands through a permanent
establishment or permanent representative to which or to whom the interest on
the Note is attributable or to which or to whom the Note belongs.
No payment of principal or interest in respect of the Notes will be subject
to Netherlands withholding tax.
USE OF PROCEEDS
The Company will loan the net proceeds from the sale of the Securities to
HFC Bank plc to be used for general corporate purposes, including to fund
extensions of credit to its subsidiaries and to consumers in the United Kingdom;
to reduce other outstanding indebtedness (which may include indebtedness owed to
its affiliates, including Household International); or to fund acquisitions of
other companies or portfolios.
S-5
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for Household International and
subsidiaries for the periods indicated below were as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------
1998 1997 1997 1996 1995 1994
----------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Household International and subsidiaries...................... 1.22 1.63 1.58 1.54 1.42 1.43
<CAPTION>
1993
---------
<S> <C>
Household International and subsidiaries...................... 1.42
</TABLE>
For purposes of calculating the ratio, earnings consist of income from
continuing operations to which has been added income taxes and fixed charges.
For Household International, fixed charges consist of interest on all
indebtedness (including capitalized interest) and one-third of rental expense
(approximate portion representing interest). The September 30, 1998 ratio has
been impacted by the one-time merger and integration costs associated with the
merger of Household International and Beneficial Corporation. Excluding the
merger and integration costs, the September 30, 1998 ratio would have been 1.73.
S-6
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated November 19, 1998 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters") have severally but not jointly
agreed to purchase from the Company the following respective principal amounts
of the Notes:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
- ------------------------------------------------------------------------------ --------------
<S> <C>
Credit Suisse First Boston Corporation........................................ $ 125,000,000
Chase Securities Inc.......................................................... 125,000,000
Donaldson, Lufkin & Jenrette Securities Corporation........................... 125,000,000
Salomon Smith Barney Inc...................................................... 125,000,000
--------------
Total..................................................................... $ 500,000,000
--------------
--------------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all of the Notes, if any are purchased. The Underwriting
Agreement provides that, in the event of a default by an Underwriter, in certain
circumstances the purchase commitments of non-defaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
The Company estimates that its expenses associated with the offer and sale
of the Notes will be $550,000.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the public offering price
set forth on the cover page of this Prospectus Supplement and to certain dealers
at such price less a concession of .275% of the principal amount per Note, and
the Underwriters and such dealers may allow a discount of .250% of such
principal amount per Note on sales to certain other dealers. After the initial
public offering, the public offering price and concession and discount to
dealers may be changed by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Underwriters have advised the Company that they intend to act as market
makers for the Notes. However, the Underwriters are not obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of the trading market for the Notes.
The Company and Household International have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act of 1933, or to contribute to payments which the Underwriters may
be required to make in respect thereof.
The Notes are offered for sale in those jurisdictions in the United States
and Canada where it is lawful to make such offers.
Certain of the Underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including commercial and investment banking
services, for, Household International and its subsidiaries in the ordinary
course of business.
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934. Over-allotment involves syndicate
sales in excess of the offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the underlying security so long
as the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Underwriters to reclaim a selling concession from a
syndicate member when the Notes
S-7
<PAGE>
originally sold by such syndicate member are purchased in a syndicate covering
transaction to cover syndicate short positions. Such stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of the
Notes to be higher than it would otherwise be in the absence of such
transactions. Neither the Company nor the Underwriters make any representation
that the Underwriters will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.
It is expected that delivery of the Notes will be made against payment
therefor on or about the date specified in the last paragraph of the cover page
of this Prospectus, which is the eighth business day following the date hereof.
Under Rule 15c6-1 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, trades in the secondary market generally are required to
settle in three business days, unless the parties to any such trade expressly
agree otherwise. Accordingly, purchasers who wish to trade Notes on the date
hereof or the next four succeeding business days will be required, by virtue of
the fact that the Notes initially will settle in T+8, to specify an alternate
settlement cycle at the time of any such trade to prevent a failed settlement
and should consult their own advisor.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company and Household
International prepare and file a prospectus with the securities regulatory
authorities in each province where trades of Notes are effected. Accordingly,
any resale of the Notes in Canada must be made in accordance with applicable
securities laws which will vary depending on the relevant jurisdiction, and
which may require resales to be made in accordance with available statutory
exemptions or pursuant to a discretionary exemption granted by the applicable
Canadian securities regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Company and Household International and the dealer
from whom such purchase confirmation is received that (i) such purchaser is
entitled under applicable provincial securities laws to purchase such Notes
without the benefit of a prospectus or offering memorandum qualified under such
securities laws, (ii) where required by law, that such purchaser is purchasing
as principal and not as agent, and (iii) such purchaser has reviewed the text
above under "Resale Restrictions."
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under SECURITIES ACT (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the Company's and Household International's directors and officers as
well as the experts named herein may be located outside of Canada and, as a
result, it may not be possible for Canadian purchasers to effect service of
process within Canada upon the Company, Household International or such persons.
All or a substantial portion of the assets of the Company, Household
International and such persons may be located outside of Canada and, as a
result, it may not be possible to satisfy a judgement against the Company,
Household International or such persons in Canada or to enforce a judgement
S-8
<PAGE>
obtained in Canadian courts against the Company, Household International or such
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the SECURITIES ACT (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes acquired
by such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #95/17, a
copy of which may be obtained from the Company. Only one such report must be
filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of Notes should consult their own legal and tax advisors
with respect to the tax consequences of an investment in the Notes in their
particular circumstances and with respect to the eligibility of the Notes for
investment by the purchaser under relevant Canadian legislation.
LEGAL OPINIONS
The legality of the Notes and the Guarantees will be passed upon by John W.
Blenke, Vice President -- Corporate Law and Assistant Secretary for Household
International. As of the date of this Prospectus Supplement, Mr. Blenke is a
full-time employee and an officer of Household International and owns, and holds
options to purchase, shares of Common Stock of Household International. Certain
legal matters will be passed upon for the Underwriters by McDermott, Will &
Emery, Chicago, Illinois.
EXPERTS
The financial statements and schedules of Household International and its
subsidiaries incorporated by reference in the Prospectus Supplement, 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.
S-9
<PAGE>
HOUSEHOLD INTERNATIONAL NETHERLANDS B.V.
ISSUER
$750,000,000
SENIOR NOTES
AND
WARRANTS TO PURCHASE SENIOR NOTES
HOUSEHOLD INTERNATIONAL, INC.
GUARANTOR
Household International Netherlands B.V. may sell at one or more times up to
$750,000,000 of its debt securities and warrants to purchase debt securities.
Household International, Inc. owns Household International Netherlands B.V. and
is guaranteeing that all scheduled payments will be made on the debt securities.
We will provide specific terms of the securities which we may offer at any time
in supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
------------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER 29, 1998.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission ("SEC") utilizing a "shelf" registration
process. Under this process, we may sell any combination of the securities
described in this prospectus in one or more offerings up to a total dollar
amount of $750,000,000. This prospectus provides you with a general description
of the securities we may offer. Each time we offer to sell securities, we will
provide a supplement to this prospectus that will contain specific information
about the terms of that offering. The prospectus supplement may also add,
update, or change information contained in this prospectus. You should read both
this prospectus and any prospectus supplement together with the additional
information described under the heading WHERE YOU CAN FIND MORE INFORMATION.
WHERE YOU CAN FIND MORE INFORMATION
Household International files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
document filed by Household International at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. SEC
filings are also available to the public on the SEC's Internet web site at
http:\\www.sec.gov.
Because Household International Netherlands B.V. is wholly owned by
Household International and exists only to issue debt securities and loan the
funds it receives from such issuances to an affiliated company, it is not
required to file such reports and information.
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we file with the SEC later
will automatically update and supersede this information. We incorporate by
reference the Household International documents listed below and any future
filings made by Household International or Household International Netherlands
B.V. with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, until we sell all of the securities.
- Annual Report on Form 10-K for the year ended December 31, 1997;
- Quarterly Reports on Forms 10-Q for the quarters ended March 31 and June
30, 1998;
- Current Reports on Forms 8-K dated January 21, March 6, April 7, April 20,
June 30, August 14, and September 1, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at: Household International, Inc., Office of the Secretary,
Prospect Heights, Illinois 60070, Telephone (847) 564-5000.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different or additional information. You should
not assume that the information in this prospectus or any supplement is accurate
as of any date other than the date on the front of those documents.
2
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed under the caption "Household International"
and elsewhere in this prospectus or in the information incorporated by reference
herein may constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such information may involve
known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of Household International to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
HOUSEHOLD INTERNATIONAL
Household International, Inc. ("Household International") is a holding
company for various subsidiaries which operate in the consumer financial
services industry. Household International'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, Household Bank,
f.s.b., Household Automotive Finance Corporation, Household Bank (Nevada),
National Association, Household Bank (SB), National Association, Household
Financial Corporation Limited, and HFC Bank plc, Household International offers
numerous consumer finance products, including home equity loans secured by first
and second mortgages, revolving and closed-end unsecured personal loans,
non-prime automobile loans, private label credit cards, MasterCard* and VISA*
credit cards and tax refund anticipation loans. Also, in conjunction with its
consumer finance business, and where applicable laws permit, Household
International offers credit life and credit accident, health and disability
insurance to its customers. This insurance is generally directly written by or
reinsured with one of its insurance subsidiaries.
Household International is principally a holding company whose primary
source of funds is cash received from its subsidiaries primarily in the form of
dividends and borrowings under intercorporate agreements. Dividend distributions
to Household International from its savings and loan, banking and insurance
subsidiaries may be restricted by federal and state laws and regulations.
Dividend distributions from its foreign subsidiaries 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 of Household International to
participate in the assets of any subsidiary upon the latter's liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors, except to the extent that Household International may itself be a
creditor with recognized claims against the subsidiary. Nevertheless, there are
no restrictions that currently materially limit Household International's
ability to make payments to its creditors nor are there any restrictions which
Household International reasonably believes are likely to limit materially such
payments in the future.
HOUSEHOLD INTERNATIONAL NETHERLANDS B.V.
Household International Netherlands B.V. (the "Company") was organized under
the Dutch Civil Code on September 14, 1990. The Company is a wholly-owned
indirect subsidiary of Household International (U.K.) Limited ("U.K. Limited"),
which is an indirect subsidiary of Household International and a holding company
for all operations of Household International in the United Kingdom. The Company
was organized solely to serve as a source of financing, directly or indirectly,
for HFC Bank plc. HFC Bank plc, is also a wholly-owned subsidiary of U.K.
Limited and is the principal operating subsidiary of Household International in
the United Kingdom.
- ------------------------
* MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA USA, Inc., respectively.
3
<PAGE>
The registered office of the Company is at Hoekenrode 6, 1102 BR, Amsterdam,
Netherlands. The Company's telephone number is 31-20-6298033. The Company's
principal business activity has been and will be to provide funds to HFC Bank
plc for general corporate purposes.
The enforcement by investors of civil liabilities under U.S. federal
securities laws may be affected adversely by the fact that the Company is
incorporated or organized under the laws of the Netherlands, that some or all of
its officers and directors may be residents of the Netherlands and that all or a
substantial portion of the assets of the Company and of those persons may be
located outside the United States.
USE OF PROCEEDS
The Company will loan the net proceeds from the sale of the Securities to
HFC Bank plc to be used for general corporate purposes, including to fund
extensions of credit to its subsidiaries and to consumers in the United Kingdom;
to reduce other outstanding indebtedness (which may include indebtedness owed to
its affiliates, including Household International); or to fund acquisitions of
other companies or portfolios.
RATIOS OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for Household International for the
periods indicated below were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED DECEMBER 31,
---------------------- ------------------------------------------
1998 1997 1997 1996 1995 1994
----- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Household International and subsidiaries....................... .96 1.61 1.58 1.54 1.42 1.43
<CAPTION>
1993
---------
<S> <C>
Household International and subsidiaries....................... 1.42
</TABLE>
For purposes of calculating the ratio, earnings consist of income from
continuing operations to which has been added income taxes and fixed charges.
For Household International, fixed charges consist of interest on all
indebtedness (including capitalized interest) and one-third of rental expense
(approximate portion representing interest). The June 30, 1998 ratio has been
impacted by the one-time merger and integration costs associated with the merger
of Household International and Beneficial Corporation. Excluding the merger and
integration costs, the June 30, 1998 ratio would have been 1.74.
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The Company may offer from time to time, one or more series of unsecured
senior notes ("Debt Securities") and warrants ("Warrants") to purchase Debt
Securities (the Debt Securities and Warrants being hereafter collectively called
the "Securities"). The Securities offered pursuant to this prospectus may have
an aggregate offering price up to U.S. $750,000,000, or the equivalent thereof
if any of the Securities are denominated in a foreign currency or a foreign
currency unit.
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any supplement to this
prospectus ("Prospectus Supplement") may relate. The particular terms of the
Debt Securities offered by any Prospectus Supplement (the "Offered Debt
Securities") and the extent to which such general terms and provisions may apply
to the Offered Debt Securities will be described in the Prospectus Supplement
relating to such Offered Debt Securities.
DEBT SECURITIES
The Offered Debt Securities will constitute unsecured senior debt of the
Company, will rank on a parity with other unsecured senior debt of the Company
and will be unconditionally guaranteed as to payment of principal, interest and
premium, if any, by Household International. The Offered Debt
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Securities will be issued under one of two indentures described herein (the
"Indentures"). Copies of the forms of the Indentures are filed as exhibits to
the Registration Statement which registers the Securities and the Guarantees
with the SEC. The following summaries do not purport to be complete and, where
particular provisions of the Indentures are referred to, such provisions,
including definitions of certain terms, are incorporated by reference as part of
such summaries, which are qualified in their entirety by such reference.
The Indentures provide that Debt Securities may be issued thereunder from
time to time in one or more series and do not limit the aggregate principal
amount of the Debt Securities, except as may be otherwise provided with respect
to any particular series of Offered Debt Securities.
Unless otherwise indicated in the Prospectus Supplement with respect to any
particular series of Offered Debt Securities, the Debt Securities will be issued
in definitive registered form without coupons, will be exchangeable for
authorized denominations and will be transferable at any time or from time to
time. No charge will be made to any Holder for any exchange or registration of
transfer except for any tax or governmental charge incident thereto. Unless
otherwise specified in the Prospectus Supplement, the Debt Securities will be
issued only in denominations of U.S. $100,000, or the equivalent thereof, or any
amount in excess thereof which is an integral multiple of U.S. $1,000. The Debt
Securities of any series may be issued in whole or in part in the form of one or
more global securities that will be deposited with, or on behalf of, a
depositary. See "Book-Entry System" below.
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms and other
information to the extent applicable with respect to the Offered Debt
Securities: (1) the title of the Offered Debt Securities; (2) any limit on the
aggregate principal amount of the Offered Debt Securities; (3) the price
(expressed as a percentage of the aggregate principal amount thereof) the
Company will be paid for the Offered Debt Securities and the initial offering
price, if any, at which the Offered Debt Securities will be offered to the
public; (4) the currency, currencies or currency units for which the Offered
Debt Securities may be purchased and the currency, currencies or currency units
in which the principal of and any interest on such Offered Debt Securities may
be payable; (5) the date or dates on which the Offered Debt Securities will
mature; (6) the rate or rates (which may be fixed or variable) per annum at
which the Offered Debt Securities will bear interest, if any; (7) the date from
which such interest, if any, on the Offered Debt Securities will accrue, the
dates on which such interest, if any, will be payable, the date on which payment
of such interest, if any, will commence and the Regular Record Dates for such
Interest Payment Dates, if any; (8) the dates, if any, on which and the price or
prices at which the Offered Debt Securities will, pursuant to any mandatory
sinking fund provisions, or may, pursuant to any optional sinking fund or
purchase fund provisions, be redeemed by the Company and the other detailed
terms and provisions of such sinking and/or purchase funds; (9) the date, if
any, after which and the price or prices at which the Offered Debt Securities
may, pursuant to any optional redemption provisions, be redeemed at the option
of the Company or of the Holder thereof and the other detailed terms and
provisions of such optional redemption; (10) the denominations in which the
Offered Debt Securities are authorized to be issued; (11) the securities
exchange, if any, on which the Debt Securities will be listed; and (12)
additional provisions, if any, with respect to the Offered Debt Securities.
However, with respect to Offered Debt Securities sold through dealers acting as
agents, the maturities and interest rates of such Offered Debt Securities may be
established by the Company from time to time and, if not set forth in the
Prospectus Supplement relating thereto, will be made available through such
dealers.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of or any interest on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Debt Securities and such currencies or currency
units will be set forth in the Prospectus Supplement relating thereto.
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<PAGE>
Debt Securities may be issued as Original Issue Discount Securities to be
offered and sold at a discount below their stated principal amount. "Original
Issue Discount Securities" means any Debt Securities that provide for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the maturity thereof upon the occurrence of the Event of
Default and the continuance thereof. As used in the following summary of certain
terms of the Debt Securities, the term "principal amount" means, in the case of
any Original Issue Discount Security, the amount that would then be due and
payable upon acceleration of the maturity thereof, as specified in such Debt
Securities.
GUARANTEES
Household International will unconditionally guarantee the due and punctual
payment of the principal of, premium, if any, and interest on the Debt
Securities when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise. The guarantees of the Debt Securities
(the "Guarantees") are unsecured obligations of Household International and will
rank equally with all other unsecured and unsubordinated obligations of
Household International. The Guarantees provide that in the event of a default
in payment of principal, premium, if any, or interest on a Debt Security, the
Holder of the Debt Security may institute legal proceedings directly against
Household International to enforce the Guarantee without first proceeding
against the Company. The Indentures provide that Household International may,
without the consent of any Holder, under certain circumstances assume all rights
and obligations of the Company under the Indentures with respect to a series of
Debt Securities. Upon such an assumption, the Company shall be released from its
liabilities with respect to such series of Debt Securities. (Section 2.12)
Household International is principally a holding company whose primary
source of funds is dividends from its subsidiaries. Dividend distributions to
Household International from its savings and loan, banking and insurance
subsidiaries may be restricted by federal and state laws and regulations.
Dividend distributions from its foreign subsidiaries, including the Company, may
also be restricted by exchange controls of the country in which the subsidiary
is located. Also, as a holding company the rights of any creditors or
stockholders of Household International to participate in the assets of any
subsidiary upon the latter's liquidation or recapitalization will be subject to
the prior claims of the subsidiary's creditors, except to the extent that
Household International may itself be a creditor with recognized claims against
the subsidiary. Nevertheless, there are no restrictions that currently
materially limit Household International's ability to make payments to its
creditors at current levels nor are there any restrictions which Household
International reasonably believes are likely to limit materially such payments
in the future.
BOOK-ENTRY SYSTEM
If so indicated in the Prospectus Supplement with respect to any series of
Offered Debt Securities, such Offered Debt Securities will be represented by one
or more global securities (the "Global Security"). The Global Security will be
deposited with, or on behalf of, The Depository Trust Company (the "Depositary")
and registered in the name of a nominee of the Depositary. Except under
circumstances described below, such Offered Debt Securities will not be issuable
in definitive form.
The Depositary has advised the Company and any underwriters, dealers or
agents named in the applicable Prospectus Supplement as follows: the Depositary
is a limited-purpose trust company organized under the laws of the State of New
York, 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 Securities Exchange
Act of 1934. The Depositary was created to hold securities of its participants
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depositary's participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations, some of which (and/or their representatives) own the
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<PAGE>
Depositary. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies, that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
Upon the issuance of the Global Security, the Depositary will credit on its
book-entry registration and transfer system the accounts of participants with
the respective principal amounts of the Offered Debt Securities represented by
the Global Security. Ownership of beneficial interests in the Global Security
will be limited to persons that have accounts with the Depositary or its nominee
("participants") or persons that may hold interests through participants.
Ownership of beneficial interests in the Global Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depositary or its nominee (with respect to interests of participants) and
on the records of participants (with respect to interests of persons other than
participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
the Global Security.
So long as the Depositary or its nominee is the registered owner of the
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Offered Debt Securities represented
by the Global Security for all purposes under the Indenture. Except as provided
below, owners of beneficial interests in the Global Security will not be
entitled to have Offered Debt Securities represented by the Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Offered Debt Securities in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Principal and interest payments on Offered Debt Securities registered in the
name of the Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security.
None of the Company, the Trustee, any paying agent or the registrar for the
Offered Debt Securities will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial interests
in the Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Company expects that the Depositary for the Offered Debt Securities or
its nominee, upon receipt of any payment of principal or interest, will
immediately credit participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of the Global
Security as shown on the records of the Depositary or its nominee. The Company
also expects that payments by participants to owners of beneficial interests in
the Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name", and
will be the responsibility of such participants.
If the Depositary is at any time unwilling or unable to continue as
Depositary and a successor Depositary is not appointed by the Company within 90
days, the Company will issue Offered Debt Securities in definitive form in
exchange for the entire Global Security. In addition, the Company may at any
time and in its sole discretion determine not to have the Offered Debt
Securities represented by the Global Security and, in such event, will issue
Offered Debt Securities in definitive form in exchange for the entire Global
Security. In any such instance, an owner of a beneficial interest in the Global
Security will be entitled to physical delivery in definitive form of Offered
Debt Securities represented by the Global Security equal in principal amount to
such beneficial interest and to have such Offered Debt Securities registered in
its name. Offered Debt Securities so issued in definitive form will be issued as
registered Offered Debt Securities in denominations of $1,000 and integral
multiples thereof, unless otherwise specified by the Company.
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<PAGE>
INDENTURES
Offered Debt Securities and the related Guarantees will be issued under (i)
an Indenture dated as of September 1, 1998, among the Company, Household
International and The First National Bank of Chicago, as Trustee, or (ii) an
Indenture dated as of September 1, 1998, among the Company, Household
International and The Chase Manhattan Bank, as Trustee.
Unless a different place is specified in the Prospectus Supplement with
respect to any particular series of Debt Securities, principal of and interest,
if any, on Debt Securities will be payable at the office or agency of the
respective Trustee or Paying Agent, if any, in New York, New York, provided,
however, that payment of interest may be made at the option of the Company by
check or draft mailed to the person entitled thereto.
COVENANT OF HOUSEHOLD INTERNATIONAL AGAINST CREATION OF PLEDGES OR LIENS
Household International covenants in the Indentures that, with the
exceptions listed below, it will not issue, assume or guarantee any indebtedness
for borrowed money secured by a mortgage, security interest, pledge or lien
("security interest") of or upon any of its property, now owned or hereafter
acquired, unless the Guarantees, by supplemental indenture, are effectively
secured by such security interest equally and ratably with all other
indebtedness secured thereby. The term "indebtedness for borrowed money" does
not include any guarantee or other recourse obligation in connection with the
sale or discount by Household International or any of its subsidiaries of
finance or accounts receivable, trade acceptances, or other paper arising in the
ordinary course of its business.
The foregoing covenant does not apply to (a) security interest to secure the
payment of the purchase price on property, shares of capital stock, or
indebtedness acquired by Household International or the cost of construction or
improvement of such property or the refinancing of all or any part of such
secured indebtedness, provided that such security interests do not apply to any
other property, shares of capital stock, or indebtedness of Household
International; (b) security interests on property, shares of capital stock, or
indebtedness existing at the time of acquisition by Household International; (c)
security interests on property of a corporation which security interest
interests exist at the time such corporation merges or consolidates with or into
Household International or which security interests exist at the time of the
sale or transfer of all or substantially all of the assets of such corporation
to Household International; (d) security interests of Household International to
secure any of its indebtedness to a subsidiary; (e) security interests in
property of Household International in favor of the United States of America or
any state or agency or instrumentality thereof, or in favor of any other country
or political subdivision, to secure partial, progress, advance, or other
payments pursuant to any contact or statute or to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase price or
the cost of construction of the property subject to such security interest; (f)
security interests on properties financed through tax exempt municipal
obligations, provided that such security interests are limited to the property
so financed; (g) security interests existing on September 1, 1998; and (h) any
extension, renewal, refunding, or replacement (or successive extensions,
renewals, refundings, or replacements), in whole or in part, of any security
interest referred to in the foregoing clauses (a) through (g) inclusive,
provided, however, that the principal amount of indebtedness secured in such
extension, renewal, refunding, or replacement does not exceed the principal
amount of indebtedness secured at the time by such security interest, and
provided further, that such extension, renewal, refunding, or replacement of
such security interest is limited to all or part of the property subject to such
security interest so extended, renewed, refunded, or replaced.
Notwithstanding the foregoing, Household International may, without equally
and ratably securing the Guarantees, issue, assume, or guarantee indebtedness
secured by a security interest not excepted pursuant to clauses (a) through (h)
above, if the aggregate amount of such indebtedness, together with all other
indebtedness of, or guaranteed by, Household International existing at such time
and secured by security interests not so excepted, does not at the time exceed
10% of Household International's
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Consolidated Net Worth. As used herein, "Consolidated Net Worth" shall mean the
difference between Household International's consolidated assets and
consolidated liabilities as shown on Household International's most recent
audited consolidated financial statements prepared in accordance with United
States generally accepted accounting principles. In addition, an arrangement
with any person providing for the leasing by Household International of any
property, which property has been or is to be sold or transferred by Household
International to such person with the intention that such property be leased
back to Household International, shall not be deemed to create any indebtedness
secured by a security interest if the obligation with respect to such lease
would not be included as liabilities on a consolidated balance sheet of
Household International. The Holders of not less than a majority in principal
amount of the Debt Securities at the time outstanding under an Indenture, on
behalf of the Holders of all of the Debt Securities issued under such Indenture,
may waive compliance with the foregoing covenants. (Section 4.04)
SATISFACTION, DISCHARGE AND DEFEASANCE OF THE INDENTURES AND DEBT SECURITIES
If there is deposited irrevocably with the Trustee as trust funds for the
benefit of the Holders of Debt Securities of a particular series, for the
purpose hereinafter stated, an amount, in money or the equivalent in securities
of the United States or securities the principal of and interest on which is
fully guaranteed by the United States, sufficient to pay the principal, premium,
if any, and interest, if any, on such series of Debt Securities on the dates
such payments are due in accordance with the terms of such series of Debt
Securities through their maturity, and if the Company has paid or caused to be
paid all other sums payable by it under the applicable Indenture with respect to
such series, then the Company will be deemed to have satisfied and discharged
the entire indebtedness represented by such series of Debt Securities and all
the obligations of the Company and Household International under such Indenture
with respect to such series, except as otherwise provided in such Indenture. In
the event of any such defeasance, Holders of such Debt Securities will be able
to look only to such trust funds for payment of principal, premium, if any, and
interest, if any, on their Debt Securities. (Section 7.03)
For federal income tax purposes, any such defeasance may be treated as a
taxable exchange of the related Debt Securities for an issue of obligations of
the trust or a direct interest in the cash and securities held in the trust. In
that case, Holders of such Debt Securities may recognize a gain or loss as if
the trust obligations or the cash or securities deposited, as the case may be,
had actually been received by them in exchange for their Debt Securities. Such
Holders thereafter would be required to include in income a share of the income,
gain or loss of the trust. The amount so required to be included in income could
be a different amount than would be includable in the absence of defeasance.
Prospectus investors are urged to consult their own tax advisors as to the
specific consequences to them of defeasance.
THE TRUSTEES
Household International and its subsidiaries maintain banking relationships
with The First National Bank of Chicago and The Chase Manhattan Bank in the
normal course of business. The First National Bank of Chicago and The Chase
Manhattan Bank also act as trustees under other indentures of Household
International or its subsidiaries under which debt securities have been issued
and are outstanding.
MODIFICATION OF INDENTURES
Each Indenture provides that the Holders of not less than a majority in
principal amount of each series of Debt Securities at the time outstanding under
such Indenture may enter into supplemental indentures for the purpose of
amending or modifying, in any manner, provisions of the Indenture or of any
supplemental indenture modifying the rights of Holders of such series of Debt
Securities. However, no such supplemental indenture, without the consent of the
Holder of each outstanding Debt Security affected thereby, shall, among other
things, (i) change the maturity of the principal of, or any installment of
interest on any Debt Security, or reduce the principal amount thereof or the
interest thereon
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<PAGE>
or any premium payable upon the redemption thereof, or (ii) reduce the aforesaid
percentage of the Debt Securities, the consent of the Holders of which is
required for the execution of any such supplemental indenture or for any waiver
of compliance with any covenant or condition in such Indenture. (Section 12.02)
Each Indenture may be amended or supplemented without the consent of any
Holder of Debt Securities under certain circumstances, including (i) to cure any
ambiguity, defect or inconsistency in the Indenture, any supplemental indenture,
or in the Debt Securities of any series; (ii) to evidence the succession of
another corporation to the Company or Household International and to provide for
the assumption of all the obligations of the Company or Household International
under the Indenture by such corporation; (iii) to provide for uncertificated
debt securities in addition to certificated debt securities; (iv) to make any
change that does not adversely affect the rights of Holders of Debt Securities
issued thereunder; (v) to provide for a new series of Debt Securities; or (vi)
to add to rights to Holders of Debt Securities or add additional Events of
Default. (Section 12.01)
SUCCESSOR ENTITY
Household International may not consolidate with or merge into, or transfer,
sell or lease its properties and assets as, or substantially as, an entirety to
another entity unless the successor entity is a corporation incorporated within
the United States and, after giving effect thereto, no default under the
Indenture shall have occurred and be continuing. Thereafter, except in the case
of a lease, all obligations of Household International under the Indenture
terminate. (Sections 11.01 and 11.02)
The Indentures do not contain any covenants specifically designed to protect
Holders of Debt Securities against a reduction in the creditworthiness of
Household International or the Company in the event of a highly leveraged
transaction.
EVENTS OF DEFAULT
Each Indenture defines the following as Events of Default with respect to
any series of Debt Securities: default for 30 days in the payment of any
interest upon any Debt Security of such series issued under such Indenture;
default in the payment of any principal of or premium on any such Debt Security;
default for 30 days in the deposit of any sinking fund or similar payment for
such series of Debt Securities; default for 60 days after notice in the
performance of any other covenant in the Indenture; certain defaults for 30 days
after notice in the payment of principal or interest, or in the performance of
other covenants, with respect to borrowed money under another indenture in which
the Trustee for such Debt Securities is trustee which results in the principal
amount of such indebtedness becoming due and payable, prior to maturity, which
acceleration has not been rescinded or annulled; and certain events of
bankruptcy, insolvency or reorganization. The Company and Household
International are required to file with each Trustee annually an Officers'
Certificate as to the absence of certain defaults under the Indenture. (Sections
8.01, 3.06 and 4.05)
If an Event of Default with respect to Debt Securities of any series at the
time outstanding occurs and is continuing, either the Trustee or the Holders of
not less than 25% in principal amount of the outstanding Debt Securities of such
series by notice as provided in the Indenture may declare the principal amount
of all the Debt Securities of any such series to be due and payable immediately.
At any time after a declaration of acceleration with respect to Debt Securities
of any series has been made, but before a judgment or decree for payment of
money has been obtained by the Trustee, the Holders of not less than a majority
in principal amount of outstanding Debt Securities of such series may, under
certain circumstances, rescind or annul such declaration of acceleration.
(Section 8.02)
The Holders of not less than a majority in principal amount of the
outstanding Debt Securities of each series may, on behalf of all Holders of Debt
Securities of such series, waive any past default under the Indenture and its
consequences with respect to Debt Securities of such series, except a default
(a) in the
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payment of principal of or premium, if any, or interest, if any, on any Debt
Securities of such series, or (b) in respect of a covenant or provision of the
Indenture which cannot be modified or amended without the consent of the Holder
of each outstanding Debt Security of such series affected. (Section 8.13)
Each Indenture provides that the Trustee thereunder may withhold notice to
Holders of Debt Securities of any default (except in payment of the principal of
(or premium, if any) or interest on any Debt Security issued under such
Indenture or in the payment of any sinking fund or similar payment) if it
considers it in the interest of Holders of Debt Securities to do so. (Section
9.02)
Holders of Debt Securities may not enforce an Indenture except as provided
therein. (Section 8.07) Each Indenture provides that the Holders of a majority
in principal amount of the outstanding Debt Securities issued under such
Indenture have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. (Section 8.12) The Trustee will not be required
to comply with any request or direction of Holders of Debt Securities pursuant
to the Indenture unless offered indemnity against costs and liabilities which
might be incurred by the Trustee as a result of such compliance. (Section
9.03(e))
DESCRIPTION OF WARRANTS
The Company may issue, together with any Debt Securities offered by any
Prospectus Supplement or separately, Warrants for the purchase of other Debt
Securities. The Warrants are to be issued under warrant agreements (each a
"Warrant Agreement") to be entered into among the Company, Household
International and a bank or trust company, as warrant agent ("Warrant Agent"),
all as set forth in the Prospectus Supplement relating to the particular issue
of Warrants ("Offered Warrants"). A copy of the forms of Warrant Agreement,
including the form of warrant certificates representing the Warrants ("Warrant
Certificates"), reflecting the alternative provisions to be included in the
Warrant Agreements that will be entered into with respect to particular
offerings of Warrants, is filed as an exhibit to the Registration Statement. The
following summaries of certain provisions of the Warrant Agreement and the
Warrant Certificates do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Warrant
Agreement and the Warrant Certificates, respectively, including the definitions
therein of certain terms.
GENERAL
The Prospectus Supplement will describe the terms of the Offered Warrants,
the Warrant Agreement relating to the Offered Warrants and the Warrant
Certificates representing the Offered Warrants, including the following: (1) the
designation, aggregate principal amount, and terms of the Debt Securities
purchasable upon exercise of the Offered Warrants; (2) the designation and terms
of any related Debt Securities with which the Offered Warrants are issued and
the number of Offered Warrants issued with each such Debt Security; (3) the
date, if any, on and after which the Offered Warrants and the related Offered
Debt Securities will be separately transferable; (4) the principal amount of
Debt Securities purchasable upon exercise of one Offered Warrant and the price
at which such principal amount of Debt Securities may be purchased upon such
exercise; (5) the date on which the right to exercise the Offered Warrants shall
commence and the date ("Expiration Date") on which such right shall expire; (6)
whether the Warrants represented by the Warrant Certificates will be issued in
registered or bearer form, and if registered, where they may be transferred and
registered; and (7) any other terms of the Offered Warrants.
Warrant Certificates will be exchangeable on the terms specified in the
Prospectus Supplement for new Warrant Certificates of different denominations,
and Warrants may be exercised at the corporate trust office of the Warrant Agent
or any other office indicated in the Prospectus Supplement. Prior to the
exercise of their Warrants, holders of Warrants will not have any of the rights
of holders of the Debt Securities purchasable upon such exercise and will not be
entitled to payments of principal of, premium, if any, or interest, if any, on
the Debt Securities purchasable upon such exercise.
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EXERCISE OF WARRANTS
Each Offered Warrant will entitle the holder to purchase such principal
amount of Debt Securities at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the Prospectus Supplement relating
to the Offered Warrants by payment of such exercise price in full in the manner
specified in the Prospectus Supplement. Offered Warrants may be exercised at any
time up to the close of business on the Expiration Date set forth in the
Prospectus Supplement relating to the Offered Warrants. After the close of
business on the Expiration Date, unexercised Warrants will become void.
Upon receipt of payment of the exercise price and the Warrant Certificate
properly completed and duly executed at the corporate trust office of the
Warrant Agent or any other office indicated in the Prospectus Supplement, the
Company will, as soon as practicable, forward the Debt Securities purchasable
upon such exercise. If less than all of the Warrants represented by such Warrant
Certificate are exercised, a new Warrant Certificate will be issued for the
remaining amount of Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number or purchasers or to a
single purchaser; or (iii) through agents. The Prospectus Supplement will set
forth the terms of the offering of the Offered Debt Securities and any Offered
Warrants (collectively, the "Offered Securities"), including the name or names
of any underwriters, dealers or agents, the purchase price of the Offered
Securities and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' compensation, and any
discounts and commissions allowed or paid to dealers. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
If the Offered Securities are sold through underwriters, the Prospectus
Supplement relating thereto will describe the nature of the obligation of the
underwriters to take the Offered Securities. The Offered Securities may be
offered to the public either through underwriting syndicates represented by one
or more managing underwriters or directly by one or more underwriting firms
acting alone. The underwriter or underwriters with respect to a particular
underwritten offering of Offered Securities will be named in the Prospectus
Supplement relating to such offering, and, if an underwriting syndicate is used,
the managing underwriter or underwriters will be set forth on the cover of such
Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement,
the obligations of the underwriters to purchase the Offered Securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all the Offered Securities if any are purchased.
The Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement relating thereto.
Underwriters and agents who participate in the distribution of the Offered
Securities may be entitled under agreements which may be entered into by the
Company or Household International to indemnification by the Company and
Household International against certain liabilities, including liabilities under
the Securities Act of 1933, or to contribution with respect to payments which
the underwriters or agents may be required to make in respect thereof.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase Offered Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any
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such contract will not be subject to any conditions except that (i) the purchase
of the Offered Securities shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which such purchaser is subject, and (ii) if the
Offered Securities are also being sold to underwriters, the Company shall have
sold to such underwriters the Offered Securities not sold for delayed delivery.
The underwriters, dealers and such other persons will not have any
responsibility in respect to the validity or performance of such contracts.
There can be no assurance that a secondary market will be created for the
Offered Securities or, if it is created, that it will continue.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with the ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of Securities on behalf
of such Plan should determine whether such purchase is permitted under the
governing Plan documents and is prudent and appropriate for the Plan in view of
its overall investment policy and the composition and diversification of its
portfolio. Other provisions of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), prohibit certain transactions between a
Plan and persons who have certain specified relationships to the Plan ("parties
in interest" within the meaning of ERISA or "disqualified persons" within the
meaning of Section 4975 of the Code). Thus, a Plan fiduciary considering the
purchase of Securities should consider whether such purchase might constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code.
The Company or Household International may be considered a "party in
interest" or a "disqualified person" with respect to many Plans that are subject
to ERISA. The purchase of Securities by a Plan that is subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
Section 4975 of the Code (including individual retirement accounts and other
plans described in Section 4975 (c)(1) of the Code) and with respect to which
the Company or Household International is a party in interest or a disqualified
person may constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code, unless such Securities are acquired pursuant to and in
accordance with an applicable exemption, such as Prohibited Transaction Class
Exemption ("PTCE") 84-14 (an exemption for certain transactions determined by an
independent qualified professional asset manager), PTCE 80-51 (an exemption for
certain transactions involving bank collective investment funds) or PTCE 90-1
(an exemption for certain transactions involving insurance company pooled
separate accounts). Any pension or other employee benefit plan proposing to
acquire any Securities should consult with its counsel.
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