<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 26, 2000.
REGISTRATION NOS. 333-33052 AND 333-33052-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
HOUSEHOLD INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
36-3121988
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
HOUSEHOLD CAPITAL TRUST V
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
APPLIED FOR
(I.R.S. EMPLOYER 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)
LAURIE S. MATTENSON, ASSOCIATE GENERAL COUNSEL
HOUSEHOLD INTERNATIONAL, INC.
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
847-564-6557
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
(UNDERWRITERS' COUNSEL)
SCOTT N. GIERKE
MCDERMOTT, WILL & EMERY
227 WEST MONROE STREET
CHICAGO, ILLINOIS 60606
312-984-7521
(ISSUERS' COUNSEL)
JOHN W. BLENKE
VICE PRESIDENT -- CORPORATE LAW
HOUSEHOLD INTERNATIONAL, INC.
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
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. [ ]
------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is
not an offer to sell these securities and is not soliciting an offer to
buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION DATED MAY 26, 2000
PROSPECTUS
6,000,000 TRUST PREFERRED SECURITIES
HOUSEHOLD CAPITAL TRUST V
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
HOUSEHOLD INTERNATIONAL, INC.
------------------------
THE TRUST:
Household Capital Trust V is a Delaware business trust which will:
- sell Trust Preferred Securities to the public;
- sell common interests to Household International;
- use the proceeds from these sales to buy an equal principal amount of
% Junior Subordinated Deferrable Interest Notes due , 2030 of
Household International; and
- distribute the cash payments it receives on the Notes to the holders of
its Trust Preferred Securities and common interests.
QUARTERLY DISTRIBUTIONS:
- For each Trust Preferred Security that you own, you will receive
cumulative cash distributions, accumulating from , 2000 at an
annual rate of % of the liquidation amount of $25 per Trust Preferred
Security, on March 31, June 30, September 30 and December 31 of each year
beginning June 30, 2000.
- Household International may defer interest payments on the Notes at any
time, and from time to time, for up to 20 consecutive quarters. If
Household International does defer interest payments on the Notes, the
Trust will also defer payment of distributions on the Trust Preferred
Securities. However, deferred distributions will themselves accrue
interest at an annual rate of %, to the extent permitted by law.
REDEMPTION:
- Household International may redeem the Notes on or after , 2005
or at any time upon the occurrence of specified changes in tax law at a
redemption price equal to their principal amount plus any accrued and
unpaid interest to the redemption date. If Household International does
redeem the Notes, the Trust will use the cash it receives on redemption of
the Notes to redeem the Trust Preferred Securities and the common
interests.
INVESTING IN THE TRUST PREFERRED SECURITIES INVOLVES CERTAIN RISKS WHICH
ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS
PROSPECTUS.
We intend to list the Trust Preferred Securities on the New York Stock
Exchange under the trading symbol " ". We expect that the Trust Preferred
Securities will begin trading on the New York Stock Exchange within 30 days
after they are first issued.
------------------------
<TABLE>
<CAPTION>
PER
TRUST PREFERRED
SECURITY TOTAL
--------------- -----
<S> <C> <C>
Public Offering Price (1)................................... $ $
Underwriting Commission..................................... $(2) $(2)
Proceeds, before expenses, to the Trust..................... $ $
</TABLE>
- ---------------
(1) Plus accumulated distributions from , 2000, if settlement occurs
after that date.
(2) The underwriting commission of $ per Trust Preferred Security ($
per Trust Preferred Security sold to certain institutions) will be paid by
Household International. The maximum total underwriting commission will be
$ .
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We expect that the Trust Preferred Securities will be ready for delivery in
book-entry form through The Depository Trust Company on or about ,
2000.
------------------------
Joint Book Running Managers
MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
------------------------
The date of this prospectus is , 2000.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THIS PROSPECTUS................. 2
SUMMARY INFORMATION -- QUESTIONS &
ANSWERS............................. 2
RISK FACTORS.......................... 5
HOUSEHOLD CAPITAL TRUST V............. 7
FINANCIAL STATEMENTS OF TRUST AND
ACCOUNTING TREATMENT................ 8
HOUSEHOLD INTERNATIONAL, INC.......... 8
USE OF PROCEEDS....................... 9
RATIO OF EARNINGS TO FIXED CHARGES OF
HOUSEHOLD........................... 9
SELECTED FINANCIAL INFORMATION OF
HOUSEHOLD........................... 10
CAPITALIZATION OF HOUSEHOLD........... 11
DESCRIPTION OF TRUST PREFERRED
SECURITIES.......................... 11
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF THE PREFERRED
SECURITIES GUARANTEE................ 22
DESCRIPTION OF THE NOTES.............. 24
EFFECT OF OBLIGATIONS UNDER THE NOTES
AND THE PREFERRED SECURITIES
GUARANTEE........................... 33
CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES.................... 34
CERTAIN ERISA CONSIDERATIONS.......... 37
UNDERWRITING.......................... 39
WHERE YOU CAN FIND MORE INFORMATION... 40
INCORPORATION OF INFORMATION WE FILE
WITH THE SEC........................ 41
LEGAL MATTERS......................... 41
EXPERTS............................... 41
</TABLE>
ABOUT THIS PROSPECTUS
You should only rely on the information provided or incorporated by
reference in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of the Trust Preferred
Securities to any person in any state where the offer is not permitted. You
should not assume that the information in this prospectus is accurate as of any
date other than the date on the front of this document.
SUMMARY INFORMATION -- QUESTIONS & ANSWERS
This summary includes questions and answers that highlight selected
information from the prospectus to help you understand the Trust Preferred
Securities. This summary may not contain all the information that may be
important to you. You should carefully read this prospectus to fully understand
the terms of the Trust Preferred Securities, as well as the tax and other
considerations that should be important to you in making a decision about
whether to invest in the Trust Preferred Securities. You should pay special
attention to the "Risk Factors" section to determine whether an investment in
the Trust Preferred Securities is appropriate for you. You should also read the
documents described under "Where You Can Find More Information" to learn more
about Household's business.
In this prospectus references to:
- "Household International", "Household", "we", "us" and "our" are to
Household International, Inc.,
- "Household Trust" or "Trust" are to Household Capital Trust V,
- "Notes" are to the % Junior Subordinated Deferrable Interest Notes due
, 2030 of Household that are deposited with Household
Trust, and
- "Trust Preferred Securities" are to the % Trust Preferred Securities
being offered by Household Trust through this prospectus.
2
<PAGE> 4
Q: WHO IS HOUSEHOLD TRUST?
A: Household Trust is a business trust established under Delaware law that
exists for the sole purpose of issuing the Trust Preferred Securities and a
set amount of common interests for cash. The proceeds from these securities
will be used by the Trust to purchase the Notes from us.
Q: WHAT ARE THE TRUST PREFERRED SECURITIES?
A: Each Trust Preferred Security is a preferred undivided beneficial ownership
interest in the assets of Household Trust. The common interests issued by
the Trust are subordinate to the Trust Preferred Securities with respect to
distributions made by the Trust in the event the Trust is liquidated or
dissolved. We will own all of the common interests of Household Trust. The
sole assets of Household Trust will be our capital contribution to Household
Trust for the common interests and our Notes that will be purchased from us
by Household Trust.
Q: WHAT DISTRIBUTIONS WILL I RECEIVE ON THE TRUST PREFERRED SECURITIES?
A: The Trust Preferred Securities provide for quarterly cash distributions at
the annual rate of % or $ per quarter ($ per year) for each
Trust Preferred Security you own. Distributions are payable on each March
31, June 30, September 30 and December 31, beginning June 30, 2000.
Distributions will accumulate from the date Household Trust originally
issues the Trust Preferred Securities, which is expected to be ,
2000. The initial cash distribution payable on , 2000 will
equal $ . for each Trust Preferred Security. Because the principal asset
of Household Trust will be the Notes issued by us, Household Trust's ability
to pay distributions on the Trust Preferred Securities is ultimately
dependent upon our ability to make interest payments on those Notes. If we
exercise our right to defer making an interest payment on our Notes,
Household Trust will not be able to pay distributions to you until we resume
making interest payments on those Notes.
Q: WHO IS HOUSEHOLD?
A: Household is a holding company. Our subsidiary companies provide consumer
lending, credit cards and credit insurance products in the United States,
the United Kingdom and Canada. Our principal executive offices are located
at 2700 Sanders Road, Prospect Heights, Illinois 60070. Our telephone number
is (847) 564-5000. For information about us, see the section "Household
International, Inc." in this prospectus. You should also read the other
documents we have filed with the SEC, which you can find by referring to the
section entitled "Where You Can Find More Information" in this prospectus.
Q: WHAT ARE THE NOTES?
A: The Notes are unsecured, junior subordinated debt obligations of Household.
They rank below any of our senior debt, including normal day-to-day business
expenses. We may exercise our right to defer interest payments on the Notes
for a period of not more than 20 consecutive quarters. We cannot, however,
defer any payments on the Notes beyond their stated maturity which is
, 2030. In certain circumstances we can elect to liquidate
Household Trust and distribute the Notes to you.
Q: CAN THE TRUST PREFERRED SECURITIES BE REDEEMED?
A: The Trust must redeem the Trust Preferred Securities when the Notes are paid
at maturity or if Household redeems the Notes early. Household can redeem
the Notes in whole or in part from time to time on or after , 2005.
Also, Household can redeem the Notes at any time if there is a tax event as
described in this prospectus. In the event of any redemption, you will be
entitled to receive $25 per Trust Preferred Security plus accrued and unpaid
distributions to the redemption date.
The trustees of Household Trust can elect to liquidate Household Trust and
distribute the Notes to you if at any time there is a specified tax event or
a change in U.S. investment company law as described in this prospectus.
Neither the Notes nor the Trust Preferred Securities can be redeemed at any
time at the option of their holders.
Q: ARE THERE ANY RISKS ASSOCIATED WITH MY INVESTMENT?
A: Yes, an investment in the Trust Preferred Securities is subject to risk.
Please refer to the section entitled "Risk Factors" in this prospectus for a
description of these risks.
Q: WHAT HAPPENS IF HOUSEHOLD TRUST DOESN'T PAY DISTRIBUTIONS ON THE TRUST
PREFERRED SECURITIES?
A: If your distributions are deferred, you will still accumulate distributions
at the annual rate of
3
<PAGE> 5
% plus you will be entitled to additional distributions at the same rate,
compounded quarterly, on any deferred distribution that remains unpaid.
If distributions are deferred, during that period until all scheduled
quarterly distributions which are due and owing are paid or set aside for
payment to you, we may not, except in limited circumstances, declare or pay
dividends on, acquire, or make a liquidation payment with respect to, any of
our outstanding capital stock.
This limitation prevents us from paying cash or other dividends to our
shareholders if payments are not being made on the Trust Preferred
Securities, the Notes or the guarantee issued by us in connection with the
Trust Preferred Securities. However, these provisions will not restrict:
- our ability to pay dividends or distributions on our capital stock in
shares of, or options, warrants or rights to subscribe for or purchase
shares of our capital stock;
- our ability to convert or exchange our common stock or preferred stock of
one class into our common stock or preferred stock of another class;
- our ability to redeem or purchase any rights under a rights agreement
applicable to our common stock or issue preferred stock under those
rights; and
- our ability to purchase our capital stock in the open market or in
private transactions for employee benefit or similar purposes.
Q: WHAT IS THE GUARANTEE?
A: We will guarantee, to the extent described in this prospectus:
- distribution of quarterly payments on the Trust Preferred Securities by
Household Trust to you to the extent Household Trust receives
distributions on the Notes;
- the redemption amount due to you if Household Trust redeems the Trust
Preferred Securities; and
- the liquidation amount of the Trust Preferred Securities if Household
Trust is liquidated.
Our obligations under the guarantee, like our Notes, are subordinate and
junior in right of payment to all other of our liabilities and rank equally
with our most senior preferred stock and similar guarantees of ours with
respect to previous and future issues of securities that are similar to the
Trust Preferred Securities.
Q: CAN HOUSEHOLD TRUST BE LIQUIDATED?
A: Household has the right to liquidate the Trust under certain circumstances
and cause cash or the Notes to be distributed to you as part of the Trust
liquidation. If Household Trust is liquidated and cash is to be distributed,
you will be entitled to receive $25 plus any accumulated and unpaid
distributions per Trust Preferred Security before we can receive any payment
for our common interests. If Household Trust is liquidated and the Notes are
distributed, you will be entitled to receive $25 principal amount of Notes
plus accumulated and unpaid distributions per Trust Preferred Security.
Q: DO I HAVE VOTING RIGHTS?
A: Except in limited circumstances you will not have any voting rights. The
holders of a majority of the Trust Preferred Securities, however, have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the property trustee, or direct the exercise of any
trust power conferred upon the property trustee.
Q: IN WHAT FORM WILL THE TRUST PREFERRED SECURITIES BE ISSUED?
A: The Trust Preferred Securities will be issued in the form of a global
certificate or certificates registered in the name of Cede & Co., as nominee
for The Depository Trust Company also known as DTC. This means you will not
receive a certificate for your Trust Preferred Securities. Your interests in
the Trust Preferred Securities will be evidenced by, and transfers of the
Trust Preferred Securities will be effected only through, records maintained
by the participants in DTC.
Q: WILL THE TRUST PREFERRED SECURITIES BE LISTED ON A STOCK EXCHANGE?
A: We intend to list the Trust Preferred Securities on the New York Stock
Exchange. If approved for listing, trading on the New York Stock Exchange
will begin within 30 days after the issuance of the Trust Preferred
Securities. The listing of the Trust Preferred Securities will not
necessarily ensure that a liquid trading market will be available for the
Trust Preferred Securities.
4
<PAGE> 6
RISK FACTORS
Your investment in the Trust Preferred Securities will involve risks. You
should carefully consider the following discussion of risks before deciding
whether an investment in the Trust Preferred Securities is suitable for you.
YOU WILL ONLY RECEIVE DISTRIBUTIONS IF PAYMENTS ON THE NOTES ARE MADE
Household Trust's ability to pay distributions on the Trust Preferred
Securities to you is dependent upon its receipt of payments on the Notes it
holds. We may defer interest payments on the Notes for up 20 consecutive
quarters. If we fail to make the payments of interest or principal on the Notes
the Trust will lack the funds necessary to pay distributions on the Trust
Preferred Securities. If Household Trust does not make payments to you on the
Trust Preferred Securities, we will be restricted from, among other things,
paying cash or certain other dividends on our capital stock.
THERE MAY BE TAX CONSEQUENCES TO YOU IF WE FAIL TO PAY YOU DISTRIBUTIONS
As a holder of the Trust Preferred Securities, each of which represents a
preferred ownership interest in the assets of Household Trust, if we defer the
payment of interest and principal on the Notes you will be required to accrue
income, for U.S. federal income tax purposes, on the cumulative deferred
distributions and accumulated interest allocable to your Trust Preferred
Securities. As a result, you will recognize income for U.S. federal income tax
purposes in advance of the receipt of cash and will not receive the cash from
Household Trust related to that distribution if you dispose of your Trust
Preferred Securities before the record date for the date on which those
distributions are made.
OUR OBLIGATIONS UNDER THE GUARANTEE AND OUR NOTES ARE SUBORDINATED
Our obligations under the guarantee are unsecured and will rank in priority
of payment:
- subordinate and junior in right of payment to all of our other
liabilities; and
- equally with any of our most senior preferred stock issued from time to
time, and similar guarantees of ours with respect to previous and future
issues of securities that are similar to the Trust Preferred Securities.
This means that our obligations under the guarantee will not be paid unless we
can satisfy in full all of our other obligations ranking senior to the
guarantee.
Our obligations under our Notes issued to Household Trust are subordinate
and junior in right of payment to all of our senior indebtedness, including our
day-to-day expenses. At March 31, 2000, we had outstanding senior indebtedness
aggregating approximately $4.2 billion which would have ranked senior to our
obligations under the guarantee and our Notes. In addition, because we are a
holding company, our obligations under the Notes and the guarantee are
effectively subordinated to all existing and future liabilities of our
subsidiaries.
There are no terms in the Trust Preferred Securities, the guarantees or the
Notes that limit our ability to incur additional indebtedness, including
indebtedness that ranks senior to the Notes or the guarantee.
REDEMPTION OF THE TRUST PREFERRED SECURITIES OR NOTES MAY AFFECT YOUR RETURN
Under certain circumstances involving a tax event or a change in U.S.
investment company law, we may dissolve Household Trust, pay its creditors, if
any, and distribute the Notes to you in exchange for the Trust Preferred
Securities. If your Trust Preferred Securities are exchanged for the Notes,
- the trading value of the Notes may be lower than the trading value of the
Trust Preferred Securities, which may result in a lower return upon your
sale of the Notes; and
- any resulting loss might not be deductible for tax purposes.
5
<PAGE> 7
Because you may receive Notes upon the occurrence of a tax event or a
change in U.S. investment company law, in connection with your investment
decision with regard to the Trust Preferred Securities you are also making an
investment decision with regard to the Notes. You should carefully review all
the information regarding the Notes contained in this prospectus.
ENFORCEMENT OF YOUR RIGHTS BY OR ON YOUR BEHALF IS LIMITED
If at any time:
- you have not received a distribution on the Trust Preferred Securities
for six consecutive quarters; or
- an event of default occurs and is continuing on the Notes;
then:
- you will be entitled to elect one trustee of the Trust;
- you would rely on the enforcement by the property trustee of its rights,
as a holder of the Notes, against us; and
- the property trustee, under our guarantee of the Trust Preferred
Securities, will have the right to enforce the terms of the guarantee.
Our guarantee only guarantees payments to you in the event Household Trust
has the funds to make such payments. If your Trust Preferred Securities are
exchanged for the Notes, you would only look to the Notes for repayment.
Except in the case of failure by us to pay interest on principal on the
Notes, you will not be able to proceed directly against us to enforce the Notes
or the guarantee unless the property trustee or the trustee for the guarantee
fail to do so.
YOU HAVE LIMITED VOTING RIGHTS
As a holder of the Trust Preferred Securities you will have limited voting
rights and will not be entitled to vote to appoint, change, or to increase or
decrease the number of trustees of Household Trust appointed by us. Since we own
all of Household Trust's common interests, those rights are ours exclusively.
THERE IS NO PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES
This series of Trust Preferred Securities constitutes a new issue of
securities with no established trading market. Household Trust intends to list
the Trust Preferred Securities on the New York Stock Exchange. There can be no
assurance that an active market for the Trust Preferred Securities will develop
or be sustained in the future on the New York Stock Exchange. Although the
underwriters have indicated to us that they intend to make a market in the Trust
Preferred Securities, as permitted by applicable laws and regulations, they are
not obligated to do so and may discontinue any market-making activities at any
time without notice. Accordingly, there is no assurance that a trading market
for the Trust Preferred Securities will exist and no assurance as to the
liquidity of any trading market.
POTENTIAL TAX LAW CHANGES
Certain tax law changes have been proposed from time to time which could
affect the deductibility of interest paid on the Notes. None of these proposals
have become law. If they were to become law, however, that event could result in
the early redemption of the Trust Preferred Securities.
6
<PAGE> 8
HOUSEHOLD CAPITAL TRUST V
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
March 22, 2000. The Trust's business is defined in a Declaration of Trust,
executed by Household International, as sponsor and the Household International
trustees. 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"). The Trust will
issue only the Trust Preferred Securities and the common interests (together,
the "Trust Securities"). Upon issuance of the Trust Preferred Securities, the
purchasers thereof will own all of the Trust Preferred Securities. Household
International will acquire all of the common interests in the Trust for an
aggregate liquidation value equal to % of the total capital of the Trust.
The Trust exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interest in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in the 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
appointed by Household International, as holder of the common interests. 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 and which is unaffiliated with Household
International. This third trustee will serve as property trustee under the
Declaration and as indenture trustee for purposes of the Trust Indenture Act.
Wilmington Trust Company will act as the property trustee until removed or
replaced by Household. 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 Trust 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 Trust Preferred Securities -- Voting Rights."
The property trustee will hold title to the Notes for the benefit of the
holders of the Trust Preferred Securities and will have the power to exercise
all rights, powers and privileges under the Indenture as the holder of the
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 Notes for the benefit of the holders of the
Trust Preferred 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 Trust Preferred Securities. Subject to the right
of the holders of the Trust Preferred Securities to appoint a Special Regular
Trustee, Household International, as the holder of all the common interests,
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 Notes -- Miscellaneous."
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are as set forth in
the Declaration, the Delaware Business Trust Act (the "Delaware Trust Act") and
the Trust Indenture Act. See "Description of Trust 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) 564-5000).
7
<PAGE> 9
FINANCIAL STATEMENTS OF TRUST AND ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with Household
International's financial statements, with the Trust Preferred Securities shown
as "Company obligated mandatorily redeemable preferred securities of subsidiary
trusts." There are no separate financial statements of Household Trust in this
prospectus. We do not believe such financial statements would be helpful
because:
- The Trust is a direct wholly-owned subsidiary of Household International,
which files consolidated financial information under the Exchange Act.
- The Trust does not have any independent operations other than the issuing
of the Trust Preferred Securities and common interests, and purchasing
the Notes.
- The obligations of Household International under the Notes and the
Preferred Securities Guarantee have the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under
the Trust Preferred Securities. Holders of Trust Preferred Securities
may, under certain circumstances, enforce these obligations directly
against Household International.
The Trust is not currently subject to the information reporting
requirements of the Exchange Act. The Trust will become subject to such
requirements upon the effectiveness of the registration statement that contains
this prospectus, although it intends to seek and expects to receive an exemption
therefrom.
HOUSEHOLD INTERNATIONAL, INC.
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 we initiated a
restructuring program that has resulted in the disposition of our merchandising,
transportation and manufacturing businesses. This has enabled Household to focus
its resources in the consumer finance industry. Our principal executive office
is located at 2700 Sanders Road, Prospect Heights, Illinois 60070 (telephone:
847-564-5000).
Through subsidiaries, such as Household Finance Corporation, Beneficial
Corporation, Household Bank, f.s.b., Household Automotive Finance Corporation,
Household Retail Services, Inc., Household Bank (Nevada), National Association,
Household Bank (S.B.), National Association, Household Financial Corporation
Limited, and HFC Bank plc, we offer numerous consumer finance products,
including home equity credit lines, 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
this business, and where applicable laws permit, we make credit life, credit
accident and health, and household contents insurance available to our
customers. This insurance is generally directly written by or reinsured with one
of our 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 from its savings and loan, banking and insurance subsidiaries may
be restricted by federal and state laws and regulations. Dividend distributions
from our 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 Household may itself be a creditor with
recognized claims against the subsidiary. Nevertheless, there are no
restrictions that currently materially limit our ability to make payments to our
creditors or to pay dividends on our preferred stock or common stock at current
levels nor are there any restrictions which we reasonably believe are likely to
limit materially such payments in the future.
- ---------------
* MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA,
USA, Inc., respectively.
8
<PAGE> 10
USE OF PROCEEDS
The proceeds from the sale of the Trust Preferred Securities will be used
by the Trust to purchase the Notes. Household International will use the net
proceeds from the sale of such Notes for the repayment of indebtedness we
incurred in the normal and ordinary course of our business and for other general
corporate purposes, including advances or capital contributions to our
subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES OF HOUSEHOLD
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,
------------ --------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges................. 1.67 1.73 1.79 1.37 1.58 1.54 1.42
</TABLE>
For purposes of calculating the above ratios, earnings consist of net
income 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). The
1998 ratio has been negatively impacted by one-time merger and integration
related costs associated with the merger of Household International and
Beneficial Corporation. Excluding the merger and integration related costs of
$751 million after-tax, the December 31, 1998 ratio would have been 1.75.
9
<PAGE> 11
SELECTED FINANCIAL INFORMATION OF HOUSEHOLD
The financial information which is set forth below as of and for the three
years ended December 31, 1999 has been derived from the consolidated financial
statements and notes thereto of Household International and subsidiaries which
have been audited by Arthur Andersen LLP, independent certified public
accountants. All consolidated 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 Information We File with the SEC" in this
prospectus. The selected financial information for the three months ended March
31, 2000 and 1999 are unaudited and should be read in conjunction with
Household's Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2000, which is incorporated by reference herein. Operating results for the
three months ended March 31, 2000 should not be considered indicative of results
for any future periods or the year ending December 31, 2000. All dollar amounts
stated below are in millions.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ------------------------------------
2000 1999 1999 1998 1997
-------- -------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Finance income..................................... $1,916.0 $1,498.6 $ 6,549.5 $ 5,604.2 $ 5,131.0
Other interest income.............................. 8.9 9.9 33.4 57.1 49.8
Interest expense................................... 821.7 648.9 2,776.6 2,517.0 2,358.4
-------- -------- --------- --------- ---------
Net interest margin.............................. 1,103.2 859.6 3,806.3 3,144.3 2,822.4
Provision for credit losses on owned receivables... 522.1 417.8 1,716.4 1,516.8 1,493.0
-------- -------- --------- --------- ---------
Net interest margin after provision for credit
losses........................................... 581.1 441.8 2,089.9 1,627.5 1,329.4
-------- -------- --------- --------- ---------
Securitization income.............................. 346.4 324.9 1,393.5 1,548.9 1,638.4
Insurance revenues................................. 135.0 142.2 534.6 492.8 454.2
Investment income.................................. 40.8 41.2 168.8 161.2 173.1
Fee income......................................... 179.3 129.7 595.5 599.7 592.4
Other income....................................... 133.3 109.2 223.8 243.7 355.7
Gain on sale of Beneficial Canada.................. -- -- -- 189.4 --
-------- -------- --------- --------- ---------
Total other revenues............................. 834.8 747.2 2,916.2 3,235.7 3,213.8
-------- -------- --------- --------- ---------
Salaries and fringe benefits....................... 344.9 284.1 1,194.6 1,127.5 1,085.3
Occupancy and equipment expense.................... 75.5 66.8 270.9 316.1 333.6
Other marketing expenses........................... 133.1 88.5 370.0 403.2 449.6
Other servicing and administrative expenses........ 186.8 162.6 547.9 654.9 857.9
Amortization of acquired intangibles and
goodwill......................................... 43.2 36.3 143.9 170.6 158.4
Policyholders' benefits............................ 66.9 68.6 258.1 238.2 255.9
Merger and integration related costs............... -- -- -- 1,000.0 --
-------- -------- --------- --------- ---------
Total costs and expenses......................... 850.4 706.9 2,785.4 3,910.5 3,140.7
-------- -------- --------- --------- ---------
Income before income taxes......................... 565.5 482.1 2,220.7 952.7 1,402.5
Income taxes....................................... 192.6 161.3 734.3 428.6 462.2
-------- -------- --------- --------- ---------
Net income....................................... $ 372.9 $ 320.8 $ 1,486.4 $ 524.1(2) $ 940.3
======== ======== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------
MARCH 31, 2000 1999 1998 1997
-------------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
PERIOD END BALANCE SHEET DATA:
Total assets:
Owned........................................... $64,991.4 $60,749.4 $52,892.7 $46,817.0
Managed(1)...................................... 84,248.7 80,188.3 72,594.6 71,295.5
Deposits.......................................... 6,514.5 4,980.0 2,105.0 2,344.2
Total other debt.................................. 47,526.0 45,665.1 40,356.5 34,402.3
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts................. 375.0 375.0 375.0 175.0
Preferred stock................................... 164.4 164.4 164.4 264.5
Common shareholders' equity....................... 6,989.3 6,450.9 6,221.4 6,174.0
</TABLE>
- ------------------
(1) Managed assets include assets on our balance sheet and assets that we
service for investors as part of our asset securitization program.
(2) Excluding merger and integration related costs of $751.0 million after-tax
and the $118.5 million after-tax gain on sale of Beneficial's Canadian
operations, operating net income was $1,156.6 million.
10
<PAGE> 12
CAPITALIZATION OF HOUSEHOLD
The following table sets forth the consolidated capitalization of Household
International at March 31, 2000, and as adjusted to reflect a proposed
application of the estimated net proceeds from the sale of the Trust Preferred
Securities to reduce our short-term borrowings. 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 Information We File with the SEC."
<TABLE>
<CAPTION>
MARCH 31, 2000
------------------------
ACTUAL PRO FORMA
--------- -----------
(UNAUDITED)
-----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Deposits............................................. $ 6,514.5 $ 6,514.5
Commercial paper, bank and other borrowings.......... 10,299.7 10,149.7
Senior and senior subordinated debt (with original
maturities over one year).......................... 37,226.3 37,226.3
--------- ---------
Total debt........................................... 54,040.5 53,890.5
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts(1)................. 375.0 525.0(2)
Preferred stock...................................... 164.4 164.4
Common shareholders' equity.......................... 6,989.3 6,989.3
--------- ---------
Total capitalization................................. $61,569.2 $61,569.2
========= =========
</TABLE>
- -------------------------
(1) The sole assets of the trusts are Junior Subordinated Deferrable Interest
Notes issued by Household International in March 1998, June 1996 and June
1995, bearing interest at 7.25, 8.70 and 8.25 percent, respectively, with
principal balances of $206.2, $103.1 and $77.3 million, respectively, and
due December 31, 2037, June 30, 2036 and June 30, 2025, respectively.
(2) Pro forma assets of the trusts includes the $ million principal
amount of Notes issued by Household International in connection with the
issuance of the Trust Preferred Securities offered hereby.
DESCRIPTION OF TRUST PREFERRED SECURITIES
The Trust 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 Trust 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 Trust 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 Delaware Trust
Act and the Trust Indenture Act.
The Declaration authorizes the Regular Trustees, on behalf of the Trust, to
issue the Trust Preferred Securities, which represent preferred undivided
beneficial interests in the assets of the Trust, and the common interests, which
represent common undivided beneficial interests in the assets of the Trust. All
of the common interests will be owned by Household International. The common
interests rank pari passu, and payments will be made to them on a pro rata basis
with the Trust Preferred Securities, except that upon the occurrence of a
Declaration Event of Default, the rights of the holders of the common interests
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Trust Preferred Securities. The Declaration does not permit the issuance by
the Trust of any securities other than the Trust Preferred Securities and the
common interests or the incurrence of any indebtedness by the Trust. Pursuant to
the Declaration, the property trustee will own and hold the Notes for the
benefit of the holders of the Trust Securities. The payment of distributions out
of money held by the Trust,
11
<PAGE> 13
and payments upon redemption of the Trust 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 Trust Preferred Securities. The
Preferred Securities Guarantee does not cover payment of distributions on the
Trust 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 Trust Preferred Securities is to (i) vote to appoint a
Special Regular Trustee, (ii) to direct the property trustee to enforce its
rights under the 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 Notes, institute a proceeding directly against Household
International for enforcement of payment to such holder of the principal or
interest on the Notes having a principal amount equal to the aggregate
liquidation amount of the Trust Preferred Securities of such holder on or after
the respective due date specified in the Notes. See "Description of the Trust
Preferred Securities -- Voting Rights."
DISTRIBUTIONS
Distributions on the Trust Preferred Securities will be fixed at a rate per
annum of % of the stated liquidation amount of $25 per Trust 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 (i) for any full
90-day quarterly distribution period, on the basis of a 360-day year of twelve
30-day months and (ii) for any period shorter than a full 90-day quarterly
distribution period on the basis of a 30-day month, and for periods of less than
a month, the actual number of days elapsed per 30-day month.
Distributions on the Trust Preferred Securities will be cumulative, will
accrue from , 2000 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 June 30, 2000 when, as and if available for
payment by the property trustee, except as otherwise described below. The
distribution on June 30, 2000 will include the period from , 2000 to June
30, 2000.
Household International has the right under the Indenture to defer payments
of interest on the Notes by extending the interest payment period from time to
time on the Notes (each, an "Extension Period"). If Household elects to defer
such payments, this would defer quarterly distributions on the Trust Preferred
Securities (though such distributions would continue to accrue interest since
interest would continue to accrue on the 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 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 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
12
<PAGE> 14
above requirements. See "Description of the 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 Trust 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 Trust 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 Trust Preferred Securities will be limited to
payments received under the Notes. See "Description of the 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 Trust 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 Trust Preferred Securities remain
in book-entry only form, will be one business day prior to the relevant payment
dates. Such distributions will be paid through the property trustee, who will
hold amounts received in respect of the 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 Trust 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 Trust 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 Notes will mature on , 2030, and may be redeemed at any time, in
whole or in part, on or after , 2005 or at any time, in whole or in
part, in certain circumstances upon the occurrence of a tax event. See
"-- Special Event Redemption or Distribution" below. Upon the repayment of the
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
Notes so repaid or redeemed at $25 per Trust Preferred Security plus accrued and
unpaid distributions thereon to the redemption date; 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 Notes." In the event that fewer than
all of the outstanding Trust Preferred Securities are to be redeemed, the Trust
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 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 Notes, (ii) interest payable to the Trust on the 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
13
<PAGE> 15
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.
A "change in U.S. investment company law" 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, 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 becomes effective on or after
the date of this prospectus.
If, at any time, a tax event or a change in U.S. investment company law
(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 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, all securities issued by the Trust would be distributed
to the holders of the such 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
Special 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, which opinion may rely on published revenue rulings of the
Internal Revenue Service, to the effect that the holders of all securities
issued by the Trust will not recognize any gain or loss for United States
federal income tax purposes as a result of such dissolution and distribution of
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 all securities issued by
the Trust, 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 from independent tax counsel experienced
in such matters that, as a result of the tax event, there is more than an
insubstantial risk that Household International would be precluded from
deducting the interest on the Notes for United States federal income tax
purposes even after the Notes were distributed to the holders of all securities
issued by the Trust in liquidation of such holders' interests in the Trust as
described above or (ii) the Regular Trustees shall have been informed by such
counsel that the legal opinion required to be delivered with respect to the
recognition of gain or loss as described above cannot be delivered, Household
International shall have the right, 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, such
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 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
securities issued by the Trust or Household International, the Trust will pursue
such measure in lieu of redemption.
If Notes are distributed to the holders of the Trust Preferred Securities,
Household International will use its best efforts to have the Notes listed on
the New York Stock Exchange or on such other exchange as the Trust Preferred
Securities are then listed.
After the date for any distribution of Notes upon dissolution of the Trust,
(i) the Trust 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 Trust Preferred Securities, will receive a registered
global certificate or certificates representing the Notes to be delivered upon
such distribution and (iii) any certificates representing the Trust Preferred
Securities and the Preferred Securities Guarantee not held by the depositary or
its nominee will be deemed to represent 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
14
<PAGE> 16
interest equal to accrued and unpaid distribution on, such Trust 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 Trust Preferred
Securities or the Notes that may be distributed in exchange for the Trust
Preferred Securities if a dissolution and liquidation of the Trust were to
occur. Accordingly, the Trust Preferred Securities that an investor may
purchase, or the 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 Trust Preferred Securities offered hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Trust Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Trust 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 the Trust 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 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 Trust 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 Trust
Preferred Securities so called for redemption will cease, except the right of
the holders of such Trust Preferred Securities to receive the redemption price,
but without interest on such redemption price. In the event that any date fixed
for redemption of the Trust Preferred Securities is not a business day, then
payment of the redemption price payable on such date will be made on the next
succeeding day which is a business day (and without any interest or other
payment in respect of any such delay), except that, if such business day falls
in the next calendar year, such payment will be made on the immediately
preceding business day. In the event that payment of the redemption price in
respect of the Trust 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 Trust 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 Trust Preferred
Securities are to be redeemed, the Trust 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
Trust 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 Trust 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 Trust
Preferred Security plus accrued and unpaid distributions thereon to the date of
payment, unless, in connection with such liquidation, dissolution, winding-up or
termination, 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 Trust Preferred Securities have been distributed on
a pro rata basis to the holders of Trust Preferred Securities.
15
<PAGE> 17
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 Trust Preferred Securities shall be paid on a pro rata basis. The
holders of the common interests will be entitled to receive distributions upon
any such dissolution pro rata with the holders of the Trust Preferred
Securities, except that if a Declaration Event of Default has occurred and is
continuing, the Trust Preferred Securities shall have a preference over the
common interests with respect to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on March 22,
2055, 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 Notes following the occurrence of a Special Event, (v) upon
the redemption of all of the securities issued by the Trust 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 constitutes an event of default
under the Declaration with respect to the Trust Preferred Securities (a
"Declaration Event of Default"), provided that pursuant to the Declaration, the
holder of the common interests will be deemed to have waived any Declaration
Event of Default with respect to the common interests until all Declaration
Events of Default with respect to the Trust Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Trust 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 Trust Preferred Securities and only the holders of
the Trust 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 Trust Preferred Securities is waived by the holders of the Trust Preferred
Securities as provided in the Declaration, the holders of common interests
pursuant to the Declaration have agreed that such waiver also constitutes a
waiver of such Declaration Event of Default with respect to the common interests
for all purposes under the Declaration without any further act, vote or consent
of the holders of common interests. See " -- Voting Rights."
If the property trustee fails to enforce its rights under the Notes, any
holder of Trust Preferred Securities may directly institute a legal proceeding
against Household International to enforce the property trustee's rights under
the 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 Notes on the date such interest or principal is otherwise
payable (or in the case of redemption, the redemption date), then a holder of
Trust Preferred Securities may directly institute a proceeding for enforcement
of payment to such holder of the principal of or interest on the Notes having a
principal amount equal to the aggregate liquidation amount of the Trust
Preferred Securities of such holder on or after the respective due date
specified in the Notes. In connection with such action, Household International
will be subrogated to the rights of such holder of Trust Preferred Securities
under the Declaration to the extent of any payment made by Household
International to such holder of Trust Preferred Securities in such action. The
holders of Trust Preferred Securities will not be able to exercise directly any
other remedy available to the holders of the Notes.
Upon the occurrence of a Declaration Event of Default, the property
trustee, as the sole holder of the Notes, will have the right under the
Indenture to declare the principal of and interest on the Notes to be
immediately due and payable.
16
<PAGE> 18
VOTING RIGHTS
Except as provided below, under the Delaware 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 Trust Preferred Securities will have no voting rights.
If (i) the Trust fails to pay distributions in full on the Trust Preferred
Securities for six consecutive quarterly distribution periods, or (ii) a
Declaration Event of Default occurs and is continuing then the holders of the
Trust 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 Trust 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 Trust
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 Trust 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
event pursuant to which the Special Regular Trustee was appointed and all other
events which could cause such appointment 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 extend or defer interest payments as provided under "Description of the
Notes -- Option to Extend Interest Payment Period." If such an extension or
deferment 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 that period.
The holders of a majority in aggregate liquidation amount of the Trust
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 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 Notes, (ii)
waive any past Indenture event of default which is waivable under the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all 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 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 Notes (a "Super-Majority") affected thereby, only the
holders of at least such Super-Majority in aggregate liquidation amount of the
Trust 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 Notes, a holder of Trust Preferred Securities may institute a legal
proceeding directly against Household International to enforce the property
trustee's rights under the 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 Trust Preferred Securities of any notice of
default received from the Debt Trustee with respect to the 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
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 securities issued by the Trust with respect
to such amendment,
17
<PAGE> 19
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a majority in liquidation amount of
the such 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 all securities issued by the
Trust which the relevant Super-Majority represents of the aggregate principal
amount of the Notes outstanding. The property trustee shall not take any such
action in accordance with the directions of the holders of all securities issued
by the Trust 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 Trust Preferred Securities will constitute a
waiver of the corresponding Declaration Event of Default.
Any required approval or direction of holders of Trust Preferred Securities
may be given at a separate meeting of holders of Trust Preferred Securities
convened for such purpose, at a meeting of all of the holders of securities
issued by the Trust or pursuant to written consent. The Regular Trustees will
cause a notice of any meeting at which holders of Trust 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 Trust Preferred
Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matter upon which written consent
is sought and (iii) instructions for the delivery of proxies or consents. No
vote or consent of the holders of Trust Preferred Securities will be required
for the Trust to redeem and cancel Trust Preferred Securities or distribute
Notes in accordance with the Declaration.
Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the Trust
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 Trust 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 Trust 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 interests.
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 holders of securities issued by the Trust, 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 all the securities issued by the Trust 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 Preferred Securities affected
thereby, provided that (a) any modification of the right of holders of Trust
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 Trust Preferred Securities, shall not be permitted
without the consent of each holder of Trust Preferred Securities. In the event
any amendment or proposal referred to in clause (i) above would materially
adversely affect only the Trust Preferred Securities or the common interests,
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.
18
<PAGE> 20
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 securities issued by the
Trust, 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 securities issued by the Trust or (y) substitutes for the Trust
Preferred Securities other securities having substantially the same terms as the
Trust Preferred Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Trust Preferred Securities in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) Household International expressly appoints a trustee of such
successor entity possessing the same powers and duties as the property trustee
as the holder of the Notes, (iii) the Trust 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 Trust Preferred Securities are then listed, (iv) such
merger, consolidation, amalgamation or replacement does not cause the Trust
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 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 Trust 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 Trust Preferred Securities. The Trust 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 Trust Preferred Securities
certificates will be issued, representing in the aggregate the total number of
Trust Preferred Securities, and will be deposited with DTC.
19
<PAGE> 21
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 Trust
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 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. 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. The rules applicable to DTC and its
participants are on file with the Commission.
Purchases of Trust Preferred Securities within the DTC system must be made
by or through direct participants, which will receive a credit for the Trust
Preferred Securities on DTC's records. The ownership interest of each actual
purchaser of Trust Preferred Securities is in turn to be recorded on the
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 participants through which the beneficial
owners purchased Trust Preferred Securities. Transfers of ownership interests in
the Trust 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 Trust
Preferred Securities, except in the event that use of the book-entry system for
the Trust Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Trust Preferred Securities
deposited by participants with DTC are registered in the name of DTC's nominee,
Cede & Co. The deposit of Trust 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 Trust Preferred
Securities. DTC's records reflect only the identity of the direct participants
to whose accounts such Trust 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 participants, and by 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
Trust Preferred Securities are being redeemed, DTC will use a lottery to select
certain of the Trust Preferred Securities to be redeemed in accordance with its
procedures.
Although voting with respect to the Trust 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 Trust 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 Trust Preferred
Securities are credited on the record date (identified in listing attached to
the omnibus proxy). Household International and the Trust believe the
arrangements among DTC, 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 Trust 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
20
<PAGE> 22
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
participants.
Except as provided herein, a beneficial owner in a global Trust Preferred
Security will not be entitled to receive physical delivery of Trust Preferred
Securities. Accordingly, each beneficial owner must rely on the procedures of
DTC to exercise any rights under the Trust Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Trust 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, Trust Preferred Securities certificates
are required to be printed and delivered. Additionally, the Regular Trustees
(with consent of Household International) may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary) with
respect to the Trust Preferred Securities. In that event, certificates for the
Trust 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 or interest, 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 Trust Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The holders of Trust 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 Trust 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 Trust 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 Trust Preferred
Securities after such Trust Preferred Securities have been called for
redemption.
GOVERNING LAW
The Declaration and the Trust 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
21
<PAGE> 23
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 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 Trust
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 Trust
Preferred Securities. The Preferred Securities Guarantee will be qualified as an
indenture under the Trust Indenture Act. Wilmington Trust Company will act as
indenture trustee under the Preferred Securities Guarantee (the "Preferred
Guarantee Trustee") 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 Trust
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 Trust Preferred Securities, the guarantee payments (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 guarantee payments with respect to the Trust
Preferred Securities, to the extent not paid or made by the Trust, will be: (i)
any accrued and unpaid distributions on the Trust Preferred Securities where
Household International has made a payment of principal, premium or interest on
the Notes held by the property trustee, (ii) the redemption price, including all
accrued and unpaid distributions to the date of the redemption, to the extent
the Trust has funds available therefor with respect to the Trust Preferred
Securities called for redemption by the Trust and (iii) upon a liquidation of
the Trust (other than in connection with the distribution of Notes to the
holders of Trust Securities or the redemption of all of the Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Trust 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
Trust 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 Trust Preferred Securities or by causing the Trust to pay such amounts to
such holders.
If Household International does not make interest payments on the Notes
held by the property trustee, the Trust will not make distributions on the Trust
Preferred Securities. The Preferred Securities Guarantee will guarantee, on a
subordinated basis, the guarantee payments with respect to the Trust Preferred
Securities from the time of issuance of the Trust Preferred Securities, but will
not apply to the payment of distributions and other payments on the Trust
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 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 Trust Preferred Securities.
22
<PAGE> 24
CERTAIN COVENANTS OF HOUSEHOLD INTERNATIONAL
In the Preferred Securities Guarantee, Household International will
covenant that, so long as the Trust 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 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 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 Trust 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 Trust Preferred Securities. The manner of
obtaining any such approval of holders of the Trust Preferred Securities is set
forth under "Description of the Trust 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
Trust 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 Trust Preferred Securities upon full payment of the
redemption price of all Trust Preferred Securities, upon distribution of the
Notes to the holders of Trust Preferred Securities, or upon full payment of the
amounts payable upon liquidation of the Trust. See "Description of the
Notes -- Events of Default" for a description of the events of default and
enforcement rights of the holders of 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 Trust Preferred Securities must repay to the Trust or
Household International, or their respective successors, any sums paid to them
under the Trust 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 Trust Preferred
Securities relating to such Preferred Securities Guarantee have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee in respect of Preferred Securities
Guarantee or to direct the exercise of any trust or power conferred upon the
Preferred Guarantee Trustee under such Preferred Securities Guarantee. If the
Preferred Guarantee Trustee fails to enforce the Preferred Securities Guarantee,
any holder of Trust 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
23
<PAGE> 25
such event is attributable to the failure of Household International to pay
interest or principal on the Notes on the date such interest or principal is
otherwise payable (or in the case of redemption, the redemption date), then a
holder of Trust Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
Notes having a principal amount equal to the aggregate liquidation amount of the
Trust Preferred Securities of such holder on or after the respective due date
specified in the Notes. In connection with such action, Household International
will be subrogated to the rights of such holder of Trust Preferred Securities
under the Declaration to the extent of any payment made by Household
International to such holder of Trust Preferred Securities in such action. The
holders of Trust Preferred Securities will not be able to exercise directly any
other remedy available to the holders of the Notes.
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
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 Trust Preferred Securities provide that each
holder of Trust 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 Trust
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 Trust 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 Trust 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 NOTES
Set forth below is a description of the terms of the 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, between Household International and Bank One, National
Association (formerly known as The First National Bank of Chicago) as trustee
(the "Debt Trustee"), as
24
<PAGE> 26
supplemented by a Fourth Supplemental Indenture, dated as of April 1, 2000 (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 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, Notes may be distributed to the
holders of Trust securities in liquidation of the Trust. See "Description of the
Trust Preferred Securities -- Special Event Redemption or Distribution."
If the Notes are distributed to the holders of the Trust Preferred
Securities, Household International will use its best efforts to have the Notes
listed on the New York Stock Exchange or on such other exchange as the Trust
Preferred Securities are then listed.
GENERAL
The Notes will be issued as unsecured junior subordinated debt securities
under the Indenture. The Notes will be limited in aggregate principal amount to
approximately $ , such amount being the sum of the aggregate
stated liquidation amount of the Trust Preferred Securities and the capital
contributed by Household International in exchange for the common interests (the
"Payment").
The Notes are not subject to a sinking fund provision. The Notes will
mature on , 2030 (such date, as it may be advanced as hereinafter
described, the "Stated Maturity"). If a tax event occurs, then Household
International will have the right prior to the termination of the Trust, to
advance the Stated Maturity of the Notes to the minimum extent required in order
to allow for the payments of interest in respect of the Notes to continue to be
tax deductible, but in no event shall the resulting maturity of the Notes be
less than 15 years from the date of original issuance thereof. The Stated
Maturity shall be advanced only if, in the opinion of counsel to Household
International experienced in such matters, (a) after advancing the Stated
Maturity, interest paid on the Notes will be deductible for United States
federal income tax purposes and (b) advancing the Stated Maturity will not
result in a taxable event to holders of the Trust Preferred Securities.
If Household International elects to advance the Stated Maturity of the
Notes, it will give notice to the Debt Trustee, and the Debt Trustee will give
notice of such change to the holders of the Notes not less than 30 and not more
than 60 days prior to the effectiveness thereof.
If Notes are distributed to holders of the Trust Preferred Securities in
liquidation of such holders' interests in the Trust, such Notes will initially
be issued as a Global Security. As described herein, under certain limited
circumstances, Notes may be issued in certificated form in exchange for a Global
Security. See "-- Book-Entry and Settlement." In the event Notes are issued in
certificated form, the Notes will be in denominations of $25 and integral
multiples thereof and may be transferred or exchanged at the offices described
below. Payments on Notes issued as Global Securities will be made to the
depositary for the Notes. In the event Notes are issued in certificated form,
principal and interest will be payable, the transfer of the Notes will be
registrable and Notes will be exchangeable for Notes of other denominations of a
like aggregate principal amount at the corporate trust office of the Debt
Trustee in Chicago, Illinois or its current principal office; 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 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 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 Notes may be made if (a) any senior indebtedness is not paid
when
25
<PAGE> 27
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 Notes are
entitled to receive or retain any payment. The rights of the holders of the
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 Notes are paid in full.
The term "senior indebtedness" means, with respect to Household
International, (i) any payment in respect of (a) indebtedness of such obligor
for money borrowed (including any financial derivative, hedging or futures
contract or similar instrument) and (b) indebtedness evidenced by securities,
debentures, bonds, notes or other similar instruments issued by Household
International which, by their terms, are senior or senior subordinated debt
securities including, without limitation, all obligations under its indentures
with various trustees; (ii) all capital lease obligations; (iii) all obligations
issued or assumed as the deferred purchase price of property, all conditional
sale obligations and all obligations of Household International under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations for the reimbursement on any
letter of credit, banker's acceptance, security purchase facility or similar
credit transaction; (v) all obligations of the type referred to in clauses (i)
through (iv) above of other persons the payment of which Household International
is responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of Household International
(whether or not such obligation is assumed by Household International), except
for (1) any such indebtedness that is by its terms subordinated to or pari passu
with the 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 securities similar to the Trust Preferred Securities or
other securities that rank pari passu with, or junior to, the Trust 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, 2000, senior
indebtedness of Household International aggregated approximately $4.2 billion.
In addition, because Household International is a holding company, its
obligations under the Notes will be effectively subordinated to all existing and
future liabilities of its subsidiaries. At March 31, 2000, such subsidiaries had
total liabilities of approximately $56.4 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 to extend or defer interest payments on the Notes 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
26
<PAGE> 28
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 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 interests 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 interests, 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 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.
OPTIONAL REDEMPTION
Household International shall have the right to redeem the Notes at any
time, in whole or in part, on or after , 2005, or at any time, in whole or
in part, in certain circumstances upon the occurrence of a tax event as
described under "Description of the Trust Preferred Securities -- Special Event
Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice. The redemption price shall be equal to 100% of the principal amount to
be redeemed plus any accrued and unpaid interest, including Additional Interest,
if any, to the redemption date. If a partial redemption of the Trust Preferred
Securities resulting from a partial redemption of the Notes would result in the
delisting of the Trust Preferred Securities, Household International may only
redeem the Notes in whole.
POSSIBLE TAX LEGISLATION
There can be no assurance that legislation affecting Household
International's ability to deduct interest paid on the Notes or the
characterization of the Notes for United States federal income tax purposes will
not be enacted in the future or that any such legislation would not be effective
retroactively. If tax law changes are enacted and apply retroactively to the
Notes, such changes could give rise to a tax event, which would, in certain
circumstances, require the dissolution of the Trust or permit Household
International to redeem the Notes. See "Risk Factors -- Redemption of the Trust
Preferred Securities or Notes May Affect Your Return," "Description of Trust
Preferred Securities -- Special Event Redemption or Distribution," and "Certain
United States Federal Income Consequences -- Possible Tax Legislation."
INTEREST
Each 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 June 30, 2000, to the person in whose name such 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 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 (i) for any
full 90-day quarterly interest payment period, on the basis of a 360-day year of
twelve 30-day months and (ii) for any period shorter than a full 90-day
quarterly interest payment period for which interest payments are computed, on
the basis of a 30-day month, and for periods of less than a month, the actual
number of days elapsed per 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 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.
27
<PAGE> 29
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 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 of the 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 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 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
quarterly periods and no extension period may extend beyond the maturity of the
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 Notes. If the property trustee shall be the sole holder of
the 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 Trust Preferred
Securities are payable or (ii) the date the Regular Trustees are required to
give notice to the New York Stock Exchange or the applicable self-regulatory
organization or to holders of the Trust 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 Trust Preferred Securities. If the property trustee shall not be the sole
holder of the Notes, Household International shall give the holders of the 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 the
applicable self-regulatory organization or to holders of the 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 Notes, will have the right to declare the
principal of and the interest on the Notes (including Additional
28
<PAGE> 30
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the 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 Notes:
(a) failure for 60 days to pay interest on the 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 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 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 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
Notes to the holders of Trust 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
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
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
Notes affected thereby may, on behalf of the holders of all the 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 Trust Preferred Securities in
certain circumstances have the right to direct the Property Trustee to exercise
its rights as the holder of the Notes. See "Description of the Trust 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 Notes on the date
such interest or principal is otherwise payable, Household International
acknowledges that, in such event, a holder of Trust Preferred Securities may
institute a direct action for payment on or after the respective due date
specified in the 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 Trust Preferred Securities of the Trust.
Notwithstanding any payment made to such holder of Trust 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
Notes held by the Trust or property trustee, and Household International shall
be subrogated to the rights of the holder of such Trust Preferred Securities
with respect to payments on the Trust Preferred Securities to the extent of any
payments made by Household International to such holder in any such direct
action. The holders of Trust Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Notes.
29
<PAGE> 31
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Trust 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 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, Notes represented by the Global Security
will not be exchangeable for, and will not otherwise be issuable as, 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 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 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 Notes are distributed to holders of Trust Preferred Securities in
liquidation of such holders' interests in the Trust, DTC will act as securities
depositary for the Notes. For a description of DTC and the specific terms of the
depository arrangements, see "Description of the Trust 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 Trust
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 Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
A Global Security shall be exchangeable for 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 Notes. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for 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 Notes are not represented by one or more Global
Securities, certificates evidencing 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
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
30
<PAGE> 32
Note Registrar with respect to the 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 Notes.
In the event of any redemption in part, Household International shall not
be required to (i) issue, register the transfer of or exchange Notes during a
period beginning at the opening of business 15 days before any selection for
redemption of 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 Notes and (ii) register the transfer of or exchange any Notes so
selected for redemption, in whole or in part, except the unredeemed portion of
any Notes being redeemed in part.
PAYMENT AND PAYING AGENTS
Payment of principal of and premium (if any) on the Notes will be made only
against surrender to the paying agent of the Notes. Principal of and any premium
and interest, if any, on 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 Notes. Payment of interest on
Notes on any Interest Payment Date will be made to the person in whose name the
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 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 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 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 Notes, to modify the Indenture or any supplemental
indenture affecting that series or the rights of the holders of the Notes;
provided, that no such modification may, without the consent of the holder of
each outstanding Note affected thereby, (i) extend the fixed maturity of the
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 Notes so affected or
(ii) reduce the 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.
In addition, Household International and the Debt Trustee may execute,
without the consent of holders of the Notes, any supplemental indenture for
certain other usual purposes including the creation of any new series of 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 Notes issued thereunder
and the performance of every other covenant of the Indenture on the part of
Household International and (b) immediately thereafter no
31
<PAGE> 33
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 Notes.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, Household International will be
discharged from any and all obligations in respect of the Notes (except in each
case for certain obligations to register the transfer or exchange of Notes,
replace stolen, lost or mutilated 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 Notes on the dates such payments
are due in accordance with the terms of the Notes.
For federal income tax purposes, any such defeasance of the Notes will be
treated as a taxable exchange of the 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 Trust 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 Trust 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 Trust Preferred
Securities should consult their own tax advisors as to the specific consequences
of defeasance.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the internal laws of the State of Illinois.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Debt Trustee
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of 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
Notes, (ii) the organization, maintenance and dissolution of
32
<PAGE> 34
the Trust, (iii) the retention of the Household International trustees and (iv)
the enforcement by the property trustee of the rights of holders of Trust
Preferred Securities.
EFFECT OF OBLIGATIONS UNDER THE NOTES
AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
Trust Preferred Securities and the common interests and invest the proceeds
thereof in the Notes.
As long as payments of interest and other payments are made when due on the
Notes, such payments will be sufficient to cover distributions and payments due
on the Trust Securities primarily because (i) the aggregate principal amount of
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 Notes will match the distribution rate and distribution and other payment
dates for the Trust 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 Trust 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 Notes purchased
by the Trust, it is expected that the Trust will not have sufficient funds to
pay distributions on the Trust 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
Notes when due (taking into account any extension period), the Declaration
provides a mechanism whereby the holders of the Trust Preferred Securities,
using the procedures described in "Description of the Trust Preferred
Securities -- Voting Rights," may (i) appoint a Special Regular Trustee and (ii)
direct the property trustee to enforce its rights under the Notes, including
proceeding directly against Household International to enforce the Notes. If the
property trustee fails to enforce its rights under the Notes, a holder of Trust
Preferred Securities may institute a legal proceeding directly against Household
International to enforce the property trustee's rights under the 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 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 Trust Preferred Securities
may institute an action for payment on or after the respective due date
specified in the Notes. In connection with such action, Household International
will be subrogated to the rights of such holder of Trust Preferred Securities
under the Declaration to the extent of any payment made by Household
International to such holder of Trust 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 Trust 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 Trust 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 Trust
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 Notes, the Indenture and the Declaration,
including its obligations under the Indenture to pay costs,
33
<PAGE> 35
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 Trust Preferred Securities. See "Description of the Preferred
Securities Guarantee -- General."
CERTAIN UNITED STATES 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 Trust 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 described in Section 7701(a)(30) of the Code (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 Trust 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 V
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 V will be classified as a "grantor trust" for federal
income tax purposes and will not be classified as an association taxable as a
corporation or a partnership. Each Holder will be treated as owning an undivided
beneficial interest in the Notes. Accordingly, each Holder will be required to
include in its gross income interest (or accrued original issue discount
("OID"), if any) with respect to its allocable share of 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.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Unless the Notes are issued with OID, stated interest on the Notes will be
taxable to a Holder as ordinary income at the time such interest is paid (if the
Holder uses the cash method of accounting for tax purposes) or accrued (if the
Holder uses the accrual method of accounting for tax purposes). Under
regulations of the U.S. Treasury Department, the Notes will not be considered
issued with OID if the likelihood of Household International exercising its
right to defer interest (as described under "Description of the Notes -- Option
to Extend Interest Payment Period") is considered a "remote" contingency at the
time the Notes are issued. Household International believes that such likelihood
is remote, because exercise of its right to defer interest would prevent
Household International from declaring dividends on its capital stock.
Accordingly, Household International intends to take the position that the Notes
will not be issued with OID. However, the definition of the term "remote" in the
regulations has not yet been addressed in any rulings or other interpretations
by the Service, and it is possible that the Service would assert that the Notes
were issued with OID.
If, notwithstanding Household International's current belief, it does
exercise its right to defer interest payments, the Notes would be treated as if
they were retired and then reissued with OID at such time. In such case, the
amount of OID would generally be equal to the interest payable thereafter.
34
<PAGE> 36
If the Notes are treated as having been issued or reissued with OID (either
because Household International exercises its right to defer interest payments
or because the likelihood of exercise of such right is not considered a remote
contingency at the time of issuance), Holders would include that interest in
income on an accrual basis, regardless of their method of tax accounting. The
amount of OID that accrued in any period would approximately equal the amount of
interest that accrued on the Notes in that period at the stated interest rate.
If interest payments were received later than the taxable year in which the
interest accrued, OID treatment would have the effect of accelerating the
reporting of income for Holders who otherwise use a cash method of tax
reporting.
Corporate Holders of Trust Preferred Securities will not be entitled to a
dividends-received deduction with respect to any interest earned with respect to
the Trust Preferred Securities.
PREMIUM AND MARKET DISCOUNT
To the extent a Holder acquires its Trust Preferred Securities at a price
that is greater or less than the principal payable at maturity (or, if the Notes
are treated as having been issued or reissued with OID, the adjusted issue price
of such Holder's share of Notes (which generally should approximate par plus any
OID accrued with respect to unpaid interest)), the Holder will be deemed to have
acquired its interest in the Trust Preferred Securities with premium or with
market discount, as the case may be. A Holder acquiring Trust Preferred
Securities at a premium may elect to reduce the amount of interest payments (and
will reduce the amount of OID, if any) required to be included in income to
reflect amortization of the premium over the remaining term. A Holder acquiring
Trust 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 Trust 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 Notes or, to the extent of
any gain, upon the disposition of the Trust 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 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 Trust 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.
RECEIPT OF NOTES UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
Trust Preferred Securities -- Special Event Redemption or Distribution," Notes
may be distributed to Holders in exchange for the Trust 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 Notes equal to such Holder's aggregate tax basis in
its Trust Preferred Securities. A Holder's holding period in the Notes so
received in liquidation of the Trust would include the period for which the
Trust Preferred Securities were held by such Holder.
SALE OF TRUST PREFERRED SECURITIES AND REDEMPTION OF NOTES
A Holder that sells Trust Preferred Securities, or whose Trust Preferred
Securities or 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 Trust Preferred Securities or
Notes and the amount realized on the sale or redemption. A Holder's adjusted tax
basis in the Trust Preferred Securities or Notes generally will be its initial
purchase price increased by OID, if any, 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 (other than payments of interest not reflected in
OID) received on the Trust Preferred Securities and/or Notes and by any premium
that the Holder has taken into account. Subject to the market discount rules
described above, any such gain or loss generally will be capital gain or loss.
35
<PAGE> 37
The Trust Preferred Securities may trade at prices that do not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Notes. A Holder that uses the accrual method of accounting for tax purposes (and
a cash method Holder if the Notes are deemed to have been issued with OID) and
that disposes of Trust Preferred Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest on
the Notes through the date of disposition in income as ordinary income, and to
add such amount to such Holder's adjusted tax basis in the pro rata share of the
underlying Notes deemed disposed of. To the extent that the selling price is
less than the Holder's adjusted tax basis (so determined) 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.
POSSIBLE TAX LEGISLATION
There can be no assurance that legislation affecting Household
International's ability to deduct interest paid on the Junior Subordinated
Debentures or the characterization of the Notes for United States federal income
tax purposes will not be enacted in the future or that any such legislation
would not be effective retroactively. If tax law changes are enacted and apply
retroactively to the Notes, such changes could give rise to a Tax Event, which
would, in certain circumstances, require the dissolution of the Trust or permit
Household International to redeem the Notes. See "Risk Factors -- Possible Tax
Event," "Risk Factors -- Redemption of the Trust Preferred Securities or Notes
May Affect Your Return," "Description of Trust Preferred Securities -- Special
Event Redemption or Distribution," and "Description of the Notes -- Possible Tax
Legislation."
FOREIGN INVESTORS
Subject to the discussion of backup withholding below, interest (including
OID) with respect to the Trust Preferred Securities paid to a nonresident alien
individual, foreign corporation, foreign partnership or foreign estate or trust
(collectively, "United States Alien Holder") will be exempt from U.S.
withholding tax, provided that the United States Alien Holder complies with
applicable certification requirements (and does not actually or constructively
own ten percent or more of the total combined voting power of all classes of
stock of Household International and is not a controlled foreign corporation
related to Household International or its affiliates).
On October 14, 1997, the Service published in the Federal Register final
regulations (the "Withholding Regulations") which affect the United States
taxation of United States Alien Holders. The Withholding Regulations are
effective for payments after December 31, 2000, regardless of the issue date of
the instrument with respect to which such payments are made, subject to certain
transition rules. In general, the Withholding Regulations provide certification
requirements designed to simplify compliance by those responsible for
withholding on payments to United States Alien Holders. Among other provisions,
the Withholding Regulations provide, in the case of an entity classified as a
foreign partnership under United States tax principles, that the partners,
rather than the partnership, generally will be required to provide the required
certification to qualify for an exemption from withholding.
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Trust
Preferred Securities will be reported to Holders on Form 1099, which forms
should be mailed to Holders of Trust Preferred Securities by January 31
following each calendar year.
The Trust will be obligated to report annually to Cede & Co., as Holder of
record of the Trust Preferred Securities, the interest (and OID, if any) with
respect to the Trust 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
Trust 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
36
<PAGE> 38
Trust 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
Trust Preferred Securities who hold their Trust Preferred Securities through the
Underwriters will receive Forms 1099 reflecting the income on their Trust
Preferred Securities from such nominee Holders rather than the Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Trust Preferred
Securities may be subject to a "backup" withholding tax of 31% unless the Holder
or the United States Alien Holder complies with certain identification or
certification requirements. Any withheld amounts will be allowed as a credit
against the holder's United States federal income tax, if any, 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 TRUST
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.
CERTAIN ERISA CONSIDERATIONS
Before authorizing an investment in the Trust Preferred Securities,
fiduciaries of pension, profit sharing or other employee benefit plans subject
to ERISA ("Plans") should consider, among other matters, (a) ERISA's fiduciary
standards (including its prudence and diversification requirements), (b) whether
such fiduciaries have authority to make such investment in the Trust Preferred
Securities under the applicable Plan investment policies and governing
instruments, and (c) rules under ERISA and the Code that prohibit Plan
fiduciaries from causing a Plan to engage in a "prohibited transaction."
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from, among other things, engaging in certain transactions
involving "plan assets" with persons who are "parties in interest" under ERISA
or "disqualified persons" under the Code (collectively, "Parties in Interest")
with respect to such Plan. A violation of these "prohibited transaction" rules
may result in an excise tax or other liabilities under ERISA and/or Section 4975
of the Code for such persons, unless exemptive relief is available under an
applicable statutory or administrative exemption. Such administrative exemptions
include prohibited transaction class exemption ("PTCE"). PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 91-38 (for certain
transactions involving bank collective investment funds), PTCE 95-60 (for
certain transaction involving insurance company general accounts), PTCE 90-1
(for certain transactions involving insurance company pooled separate accounts),
and PTCE 84-14 (for certain transactions determined by independent qualified
asset managers).
The Department of Labor has issued a regulation (29 C.F.R. section
2510.3-101) (the "Plan Assets Regulation") concerning the definition of what
constitutes the assets of a Plan. The Plan Assets Regulation provides that, as a
general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a Plan makes an
"equity" investment will be deemed, for purposes of ERISA, to be assets of the
investing Plan unless certain exceptions apply.
Pursuant to an exception contained in the Plan Assets Regulations, the
assets of the Trust would not be deemed to be "plan assets" of investing Plans
if the equity interests acquired by employee benefit plans are "publicly-offered
securities" -- that is, they are (1) widely held (i.e., owned by more than 100
investors independent of the issuer and of each other), (2) freely transferable
and (3) sold as part of an offering pursuant to an effective registration
statement under the Securities Act and then timely registered under Section
12(b) or 12(g) of the Exchange Act. It is expected that the Trust Preferred
Securities will meet the
37
<PAGE> 39
criteria of "publicly-offered securities" above. The Underwriters expect that
the Trust Preferred Securities will be held by at least 100 independent
investors at the conclusion of the offering; there are no restrictions imposed
on the transfer of the Trust Preferred Securities and the Trust Preferred
Securities will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act, and then will be timely
registered under the Exchange Act.
Although it is expected that the assets of the Trust should not be deemed
to be "plan assets" of an investing Plan, if Household International or the
Trust is a Party in Interest with respect to the Plan, in the absence of an
applicable exemption, the Plan's purchase of the Trust Preferred Securities from
the Trust would likely constitute a prohibited transaction under Section
406(a)(1)(A) or ERISA and Section 4975(c)(1)(A) of the Code. In addition, in the
absence of an applicable exemption, certain other transactions coincident to the
Trust Preferred Securities may involve a prohibited transaction, such as a
distribution of the Notes from the Trust to a Plan investor.
Any plans or other entities whose assets include Plan assets subject to
ERISA or Section 4975 of the Code proposing to acquire Trust Preferred
Securities should consult with their own counsel to confirm that such investment
will not result in a prohibited transaction that is not subject to an exemption
and will satisfy any other applicable requirements of ERISA and the Code. Each
purchaser using assets of a Plan to acquire Trust Preferred Securities will be
deemed to have represented that its purchase and holding of such Trust Preferred
Securities will not result in a non-exempt prohibited transaction under ERISA or
the Code or will be covered by the exemptive relief provided by PTCE 96-23,
95-60, 91-38, 90-1 or 84-14 or another applicable exemption.
Governmental Plans and certain church plans are not subject to ERISA, and
are also not subject to the prohibited transaction provisions of Section 4975 of
the Code. However, state laws or regulations governing the investment and
management of the assets of such plans may contain fiduciary and prohibited
transaction provisions similar to those under ERISA and the Code discussed
above. Accordingly, fiduciaries of governmental and church plans, in
consultation with their advisers, should consider the impact of their respective
state laws on investments in the Trust Preferred Securities and the
considerations discussed above to the extent applicable.
38
<PAGE> 40
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Trust has agreed to sell to each of the Underwriters named below
(the "Underwriters"), for whom Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated are acting as
joint book running managers and representatives (the "Representatives"), and the
Underwriters have severally agreed to purchase from the Trust, the respective
number of Trust Preferred Securities set forth opposite their names below. In
the Underwriting Agreement, the several Underwriters have agreed, subject to the
terms and conditions set forth therein (including, without limitation, the
approval of certain legal matters by counsel to the Underwriters), to purchase
all the Trust Preferred Securities offered hereby if any of the Trust 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
TRUST PREFERRED
UNDERWRITER SECURITIES
- ----------- ---------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith.......................
Incorporated
Morgan Stanley & Co. Incorporated...........................
A.G. Edwards & Sons, Inc....................................
PaineWebber Incorporated....................................
Prudential Securities Incorporated..........................
---------
Total............................................. 6,000,000
=========
</TABLE>
The Representatives have advised us that they propose initially to offer
the Trust Preferred Securities to the public at the public offering price set
forth on the cover page of this prospectus and to certain dealers at such price
less a concession not in excess of $ per Trust Preferred Security. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per Trust Preferred Security to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed by the Representatives.
In view of the fact that the proceeds from the sale of the Trust Preferred
Securities will be used to purchase the Notes issued by Household, the
Underwriting Agreement provides that Household will pay to the Underwriters as
compensation for their arranging the investment therein of such proceeds an
amount of $ per Trust Preferred Security (or $ in the aggregate);
provided that such compensation will be $ per Trust Preferred Security sold
to certain institutions. Therefore, to the extent of such sales, the aggregate
amount of compensation will be less than that specified in the preceding
sentence. Household estimates that the total expenses of the offering, excluding
the underwriting commission, will be $ .
Household and the Trust have agreed that, during a period of 30 days from
the date of the Underwriting Agreement they will not offer, sell, contract to
sell or otherwise dispose of any preferred securities in any trust similar to
the Trust, any other beneficial interests in the assets of the Trust or any
trust similar to the Trust, or any preferred securities or any other securities
of the Trust or Household, as the case may be, that are substantially similar to
the Trust Preferred Securities, including any guarantee of such securities, or
any securities convertible into or exchangeable for or representing the right to
receive securities, preferred securities or any such substantially similar
securities of either the Trust, any trust similar to the Trust or Household that
are subordinated to Household's senior indebtedness in a manner substantially
similar to the subordination of the Notes, without the prior written consent of
the Underwriters, except for the Trust Preferred Securities offered in
connection with this offering.
The Trust Preferred Securities are a new issue of securities with no
established trading market. The Trust Preferred Securities are expected to be
approved for listing on the New York Stock Exchange subject to official notice
of issuance. Trading of the Trust Preferred Securities on the New York Stock
Exchange is
39
<PAGE> 41
expected to commence within a 30-day period after the initial delivery of the
Trust Preferred Securities. The Underwriters have advised Household and the
Trust that they intend to make a market in the Trust Preferred Securities prior
to commencement of trading on the New York Stock Exchange, but are not obligated
to do so and may discontinue market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for the Trust
Preferred Securities.
In order to meet one of the requirements for listing the Trust Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Trust Preferred Securities to a minimum of 400
beneficial holders.
Household and the Trust have agreed to indemnify the several 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.
In order to facilitate the offering of the Trust Preferred Securities, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Trust Preferred Securities. Specifically, the
Underwriters may overallot in connection with the offering, creating a short
position in the Trust Preferred Securities for their own account. In addition,
to cover overallotments or to stabilize the price of the Trust Preferred
Securities, the Underwriters may bid for, and purchase, the Trust Preferred
Securities in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an Underwriter or a dealer for distributing the
Trust Preferred Securities in the offering, if the syndicate repurchases
previously distributed Trust Preferred Securities in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the Trust
Preferred Securities above independent market levels. The Underwriters are not
required to engage in these activities, and may end any of these activities at
any time.
It is expected that delivery of the Trust Preferred Securities will be made
against payment therefor on or about the date specified in the last paragraph of
the cover page of this prospectus, which will be the fifth business day
following the date of pricing of the Trust Preferred Securities. Under Rule
15c6-1 under the Securities Exchange Act of 1934, as amended, purchases or sales
of securities in the secondary market generally are required to settle within
three business days ("T+3"), unless the parties to any such transactions
expressly agree otherwise. Accordingly, prospective purchasers of the Trust
Preferred Securities who wish to trade such securities will be required, by
virtue of the fact that the Trust Preferred Securities initially will settle
within five business days ("T+5"), to specify an alternate settlement cycle at
the time of any such trade to prevent a failed settlement. Prospective
purchasers of the Trust Preferred Securities who wish to trade prior to the
settlement date should consult their own legal advisors.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to Household and its affiliates, for which such Underwriters or their
affiliates have received or will receive customary fees and commissions.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. Our
SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
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
about the public reference rooms. You may also inspect our SEC reports and other
information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement on Form S-3 with the SEC covering
the Trust Preferred Securities, the Notes and the guarantee. For further
information on Household International and the Trust Preferred Securities, the
Notes and the guarantee, you should refer to our registration statement and its
exhibits. This prospectus summarizes material provisions of contracts and other
documents that are included with that registration statement. Because this
prospectus may not contain all the information that you may find important, you
should review the full text of these contracts and documents.
40
<PAGE> 42
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file with
them, which means:
- incorporated documents are considered part of the prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed
with the SEC under the Exchange Act:
- annual report on Form 10-K for the year ended December 31, 1999;
- quarterly report on Form 10-Q for the quarter ended March 31, 2000; and
- current reports on Form 8-K dated January 19, 2000 and April 20, 2000.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus until this offering is
completed or after the date of this initial registration statement and before
the effectiveness of the registration statement:
- reports filed under Sections 13(a) and (c) of the Exchange Act;
- definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting; and
- any reports filed under Section 15(d) of the Exchange Act.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address:
Ms. Darcie Oakes
Office of the Corporate Secretary
Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois
847-564-7580
email: [email protected]
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities will be passed upon on behalf of the Trust and Household
International by Richards, Layton & Finger, P.A., Wilmington, Delaware, special
Delaware counsel to the Trust and Household International. The validity of the
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> 43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6,000,000 TRUST PREFERRED SECURITIES
HOUSEHOLD CAPITAL TRUST V
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
HOUSEHOLD INTERNATIONAL, INC.
--------------------
PROSPECTUS
--------------------
Joint Book Running Managers
MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 44
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated Expenses
<TABLE>
<S> <C>
Printing and Engraving...................................... $100,000
Fees of Trustees/Transfer Agents/Registrars................. 25,000
Accountants' Fees........................................... 30,000
Blue Sky Qualifications Fees................................ 25,000
SEC Filing Fee*............................................. 79,200
NYSE Listing Fee............................................ 70,000
Rating Service Fees......................................... 30,000
Legal Fees and Expenses..................................... 50,000
Miscellaneous............................................... 15,800
--------
Total..................................................... $425,000
========
*Actual amount.
</TABLE>
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1 Form of Underwriting Agreement for Trust Preferred
Securities.
4.1 Indenture between Household International, Inc. and Bank
One, National Association (formerly known as The First
National Bank of Chicago), as Trustee, dated as of May 15,
1995 (incorporated herein by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 (Nos. 333-03337 and
333-03337-01)).
4.2 Form of Supplemental Indenture between Household
International, Inc. and Bank One, National Association, as
Trustee.
4.3* Declaration of Trust of Household Capital Trust V.
4.4 Form of Amended and Restated Declaration of Trust.
4.5 Form of Trust Preferred Security (included in Exhibit 4.4
above).
4.6 Form of Notes (included in Exhibit 4.2 above).
4.7 Form of Guarantee with respect to Trust 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 Richards, Layton & Finger, P.A.
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 to Exhibit 12 of
Household International's Form 10-K (File No. 1-8198) for
the year ended December 31, 1999) and Form 10-Q (File No.
1-8198) for the quarter ended March 31, 2000.
23.1 Consent of Arthur Andersen LLP, Independent 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 Richards, Layton & Finger, P.A. is contained in
their opinion (Exhibit 5.2).
24.1* Powers of Attorney with respect to Household International
officers and directors.
24.2* Powers of Attorney with respect to Household Capital Trust V
trustees.
25.1* Statement of eligibility and qualification of Wilmington
Trust Company.
25.2* Statement of eligibility and qualification of Bank One,
National Association.
</TABLE>
- ---------------
* Previously filed.
+ To be filed by Amendment.
II-1
<PAGE> 45
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
and has duly caused this Post-Effective Amendment to its Registration Statement
on Form S-3 (No. 333-33052-01) to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Prospect Heights, and State of
Illinois, on the 26th day of May, 2000.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ JOHN W. BLENKE
------------------------------------
John W. Blenke
Vice President -- Corporate Law
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to this Registration Statement has been signed below by
the following persons in the capacities indicated and on the 26th day of May,
2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
*
- --------------------------------------------------- Chairman, Chief Executive Officer, and Director
(William F. Aldinger) (as Principal Executive Officer)
*
- ---------------------------------------------------
(Robert J. Darnall) Director
*
- ---------------------------------------------------
(Gary G. Dillon) Director
*
- ---------------------------------------------------
(John A. Edwardson) Director
*
- ---------------------------------------------------
(Mary J. Evans) Director
*
- ---------------------------------------------------
(Dudley Fishburn) Director
- ---------------------------------------------------
(Cyrus F. Freidheim, Jr.) Director
- ---------------------------------------------------
(James H. Gilliam, Jr.) Director
*
- ---------------------------------------------------
(Louis E. Levy) Director
*
- ---------------------------------------------------
(George A. Lorch) Director
</TABLE>
II-2
<PAGE> 46
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
*
- ---------------------------------------------------
(John D. Nichols) Director
*
- ---------------------------------------------------
(James B. Pitblado) Director
*
- ---------------------------------------------------
(S. Jay Stewart) Director
*
- ---------------------------------------------------
(Louis W. Sullivan, M.D.) Director
* Group Executive -- Chief Financial Officer
- --------------------------------------------------- (as Principal Accounting and Financial
(David A. Schoenholz) Officer)
*By: /s/ JOHN W. BLENKE
---------------------------------------------
(John W. Blenke)
Attorney-in-fact
</TABLE>
II-3
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Household
Capital Trust V has duly caused this Post-Effective Amendment to its
Registration Statement on Form S-3 (No. 333-33052) to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Prospect Heights,
State of Illinois, on this 26th day of May, 2000.
HOUSEHOLD CAPITAL TRUST V
By: /s/ B.B. MOSS, JR.
------------------------------------
Name: Benjamin B. Moss, Jr.
Title: Trustee
By: /s/ DENNIS J. MICKEY
------------------------------------
Name: Dennis J. Mickey
Title: Trustee
II-4
<PAGE> 48
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S> <C>
1 Form of Underwriting Agreement for Trust Preferred
Securities..................................................
4.1 Indenture between Household International, Inc. and Bank
One, National Association (formerly known as The First
National Bank of Chicago, as Trustee, dated as of May 15,
1995 (incorporated herein by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 (Nos. 333-03337 and
333-03337-01)). ............................................
4.2 Form of Supplemental Indenture between Household
International, Inc. and Bank One, National Association, as
Trustee.....................................................
4.3* Declaration of Trust of Household Capital Trust V...........
4.4 Form of Amended and Restated Declaration of Trust...........
4.5 Form of Trust Preferred Security (included in Exhibit 4.4
above)......................................................
4.6 Form of Notes (included in Exhibit 4.2 above)...............
4.7 Form of Guarantee with respect to Trust 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 Richards, Layton & Finger, P.A.......
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 by reference to Exhibit 12 of
Household International's Form 10-K (File No. 1-8198) for
the year ended December 31, 1999 and Form 10-Q (File No.
1-8198) for the quarter ended March 31, 2000)...............
23.1 Consent of Arthur Andersen LLP, Independent 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 Richards, Layton & Finger, P.A. is contained in
their opinion (Exhibit 5.2).................................
24.1* Powers of Attorney with respect to Household International
officers and directors......................................
24.2* Powers of Attorney with respect to Household Capital Trust V
trustees....................................................
25.1* Statement of eligibility and qualification of Wilmington
Trust Company...............................................
25.2* Statement of eligibility and qualification of Bank One,
National Association........................................
</TABLE>
- ---------------
* Previously Filed.
+ To be filed by Amendment.
II-5
<PAGE> 1
EXHIBIT 1
Household Preferred Trust V
and
Household International, Inc.
Trust Preferred Securities
UNDERWRITING AGREEMENT
, 2000
-------------
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Morgan Stanley & Co. Incorporated
[Names of Co-Managers]
As Representatives of the Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center-North Tower
New York, NY 10281-1325
Ladies and Gentlemen:
Household Preferred Trust V (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. Sections 3801
et seq.), proposes, upon the terms and conditions set forth herein, to issue and
sell ____________ ____% Trust Preferred Securities with an aggregate liquidation
amount equal to $_______________ (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 _______________, 2000,
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 ________, 2000, between the Company
<PAGE> 2
and the Guarantee Trustee, as trustee, and will be used by the Trust to purchase
the $____________ of _____% Junior Subordinated Deferrable 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 ____________, 2000 (the
"Declaration"), among the Company, as Sponsor, Benjamin B. Moss, Jr. and Dennis
J. Mickey (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 Bank One, National
Association (formerly known as The First National Bank of Chicago), as trustee
(the "Debt Trustee"), and a supplement to the Base Indenture, dated as of April
1, 2000 (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 (Nos. 333-33052 and 333-33052-01) 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
2
<PAGE> 3
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.
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 _________, 2000, 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
sold to certain institutions. 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 offices of Household International, Inc., Prospect Heights, Illinois, at
9:00 A.M., Central Time, on ____________, 2000 (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
3
<PAGE> 4
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 (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 the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is to
be
4
<PAGE> 5
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 Company 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 Company'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,
contract 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:
(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
5
<PAGE> 6
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
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 (exclusive of any amendments or
supplements after the date hereof), 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
6
<PAGE> 7
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 materially adverse 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 organized or incorporated and is validly existing in good
standing under the laws of the jurisdiction of its incorporation,
association or organization, 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 entity 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 materially
adverse 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
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
7
<PAGE> 8
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 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
8
<PAGE> 9
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.
(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
9
<PAGE> 10
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.
(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 adverse 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 or foreign
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
10
<PAGE> 11
earnings or business affairs of the Company and its subsidiaries considered
as one enterprise or of the Trust.
7. Indemnification and Contribution.
(a) Each of the Trust and the Company jointly and severally agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
1933 Act or Section 20 of the 1934 Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein 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, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages or
liabilities purchased Preferred Securities, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto)
was not sent or given by or on behalf of such Underwriter to such person,
if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Preferred Securities to such person, and if
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncompliance by the Company with Section 6(a)
hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Trust, the Company, its directors, its officers who
sign the Registration Statement, the trustees of the Trust and each person,
if any, who controls the Company within the meaning of either Section 15 of
the 1933 Act or Section 20 of the 1934 Act to the same extent as the
foregoing indemnity from the Trust and the Company to such Underwriter, but
only with reference to information relating to such Underwriter furnished
to the Company in writing by such Underwriter through you expressly for use
in the Registration Statement, any preliminary prospectus, the Prospectus
or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to paragraph (a) or (b) of this Section 7, such person
(the "indemnified party") shall
11
<PAGE> 12
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request
of the indemnified party, shall retain counsel reasonably satisfactory to
the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees
and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel)
for all such indemnified parties and that all such fees and expenses shall
be reimbursed as they are incurred. Such firm shall be designated in
writing by Merrill Lynch, Pierce, Fenner & Smith Incorporated in the case
of parties indemnified pursuant to paragraph (a) of this Section 7, and by
the Company, in the case of parties indemnified pursuant to paragraph (b)
of this Section 7. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by
the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened 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 includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (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
12
<PAGE> 13
the other hand from the offering of the Preferred Securities or (ii) if the
allocation 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 of the Underwriters on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, 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 hand in
connection with the offering of the Preferred Securities shall be deemed to
be in the same respective proportions as the net proceeds from the offering
of the Preferred Securities (before deducting expenses) received by the
Trust and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate public offering price of the Preferred
Securities. 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 Trust and the Company or by the
Underwriters and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute pursuant
to this Section 7 are several in proportion to the respective number of
Preferred Securities they have purchased hereunder, and not joint.
(e) The Trust, the Company and the Underwriters agree that it would
not be just or equitable if contribution pursuant to this Section 7 were
determined by 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) of this Section 7. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph 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 or
defending any such action or claim. 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 at which the Preferred
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages that 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 remedies provided for in this
Section 7 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Trust and the Company contained in this Agreement shall remain operative
and in full force and effect regardless of (i) any
13
<PAGE> 14
termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any person controlling
the Company and (iii) acceptance of and payment for any of the Preferred
Securities.
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 Act 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.
(iv) To the best of his knowledge and information, the Trust
is duly qualified and in good standing as a foreign entity in any
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
14
<PAGE> 15
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.
(v) 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.
(vi) 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.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company.
(viii) 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.
(ix) 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.
(x) 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
15
<PAGE> 16
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.
(xi) 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.
(xii) 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.
(xiii) 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.
16
<PAGE> 17
(xiv) The Declaration has been duly qualified under the 1939
Act.
(xv) 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.
(xvi) To the best of his knowledge, 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.
(xvii) The Indenture has been duly authorized, 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.
(xviii) 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 Exceptions;
and the Junior Subordinated Notes conform to the description
thereof in the Prospectus.
(xix) 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.
(xx) The Common Securities, the Preferred Securities and the
Declaration conform in all material respects to all statements
relating thereto contained in the Prospectus.
(2) The favorable opinion of Richards, Layton & Finger, P.A.,
Special Delaware counsel to the Offerors, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
17
<PAGE> 18
(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.
(ii) The Declaration constitutes 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 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) This Agreement has been duly authorized, executed and
delivered by the Trust.
(vi) 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
18
<PAGE> 19
Declaration or Certificate of Trust, or any applicable law, rule
or regulation of the State of Delaware.
(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.
(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.
19
<PAGE> 20
In giving its opinion, McDermott Will & Emery may rely as to certain
matters of Delaware law upon the opinion of, counsel for the Offerors, which
shall be delivered in accordance with Section 8(b)(1) and (2) 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 "Certain Federal Income Tax
Consequences", 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.
(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.
20
<PAGE> 21
(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.
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 Blue Sky Memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering the Preferred
Securities; (v) the registration of the Preferred Securities under the Exchange
Act and the listing of the Securities on the New York Stock Exchange; (vi) the
registration or qualification of the Preferred 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
21
<PAGE> 22
relating to the preparation, printing (or reproduction), and delivery of the
Blue Sky Memorandum 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 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.
22
<PAGE> 23
11. Termination. This Agreement shall be subject to termination by notice
given by you to the Offerors, if (a) after the execution and delivery of this
Agreement and prior to the Closing Time (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, either of the New
York Stock Exchange or the National Association of Securities Dealers, Inc.,
(ii) trading of any securities of the Company shall have been suspended on any
exchange, (iii) a general moratorium on commercial banking activities in New
York shall have been declared by either Federal or New York State authorities or
(iv) there shall have occurred any outbreak or escalation of hostilities or any
calamity or crisis that, in your judgment, is material and adverse and (b) in
the case of any of the events specified in clauses (a)(i) through (iv), such
event, singly or together with any other such event, makes it, in your judgment,
impracticable to market the Preferred Securities on the terms and in the manner
contemplated in the Prospectus.
12. 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 Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
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.
13. 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.
23
<PAGE> 24
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 V
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.
Merrill Lynch & Co.
Merrill Lynch Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
[Names of Co-Managers]
As Representatives of the Underwriters
By: Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
By:
--------------------------------
24
<PAGE> 25
SCHEDULE I
HOUSEHOLD CAPITAL TRUST V
% Preferred Securities
------------
Number of
Underwriter Preferred Securities
- ----------- --------------------
[Name]..................................
Total............................
25
<PAGE> 1
Exhibit 4.2
FOURTH SUPPLEMENTAL INDENTURE, dated as of _________ __, 2000 (the
"Supplemental Indenture"), between Household International, Inc., a Delaware
corporation (the "Company"), and BankOne, National 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 ____ (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 V, 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:
1
<PAGE> 2
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 V, a Delaware business trust, dated as of
_________________, 2000.
"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
2
<PAGE> 3
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, ________________, or such other earlier date as may
be determined by the Company pursuant to Section 3.4 herein.
"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 BankOne, National Association, until a successor
paying agent has been appointed and has accepted such appointment.
"Redemption Price" has the meaning set forth in Section 3.1.
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 ____", 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 ___________________, or such other
earlier date as may be determined by the Company pursuant to Section 3.4
herein, and the date on which the Notes mature and on which the principal shall
be due and payable together with all accrued and unpaid interest thereon.
3
<PAGE> 4
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 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
4
<PAGE> 5
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 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
______, ______, ______ and ______, of each year (each, an
"Interest Payment Date", commencing on _______________________), 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 (i)
for any full 90-day quarterly interest payment period, on the basis
of a 360-day year of twelve 30-day months and (ii) for any period
shorter than a full 90-day quarterly interest payment period for
which interest payments are computed, on the basis of a 30-day month,
and for periods of less than a month, the actual number of days
elapsed per 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.
5
<PAGE> 6
(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 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 AND
ACCELERATION OF MATURITY
SECTION 3.1 Tax 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, 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, at the redemption
price set forth below, 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.
The Redemption Price shall be equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest thereon to the date of such
redemption (The "Redemption Price").
6
<PAGE> 7
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 __________,
at 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.
SECTION 3.4 Conditional Right to Advance Maturity.
If a Tax Event has occurred and is continuing the Company shall have
the right, prior to dissolution of the Trust, to advance the Maturity Date of
the Notes to the minimum extent required in order to allow the Company to
deduct the interest payments on the Notes for United States federal income tax
purposes; provided, however, the resulting Maturity Date shall not be less than
15 years from the original issuance of the Notes or earlier than _____________.
The Company may elect to advance the Maturity Date only if it has received an
opinion of nationally recognized independent tax counsel to the Company
experienced in such matters (which opinion may rely on published revenue
rulings of the Internal Revenue Service), to the effect that (i) after the
Maturity Date has been advanced, interest paid on the Notes will be deductible
by the Company for United States federal income tax purposes and (ii) advancing
the Maturity Date will not result in a taxable event to holders of the
Preferred Securities.
7
<PAGE> 8
SECTION 3.5 Notice of Advancement of Maturity Date.
If the Company elects to advance the Maturity Date of the Notes pursuant
to Section 3.4, the Company shall give written notice of such election to the
Trustee, the Regular Trustees and the Property Trustee, and the Trustee shall
give notice to the holders of the Preferred Securities not less than 30 and not
more than 60 days prior to the effective date of such election.
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 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
8
<PAGE> 9
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.
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 Notes, 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
9
<PAGE> 10
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 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.
10
<PAGE> 11
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 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
11
<PAGE> 12
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 of 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 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
12
<PAGE> 13
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 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
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.
13
<PAGE> 14
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 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.
14
<PAGE> 15
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 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
15
<PAGE> 16
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 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
16
<PAGE> 17
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 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
17
<PAGE> 18
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.
HOUSEHOLD INTERNATIONAL, INC.
_____% JUNIOR SUBORDINATED DEFERRABLE INTEREST NOTE DUE
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
$____________ Dollars on _______________, and to pay interest on said principal
sum from March __, 2000 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
_________, _________, _________ and ___________ of each year commencing
________________, 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 (i) for any full 90-day quarterly
interest payment period, on the basis of a 360-day year of twelve 30-day months
and (ii) for any period shorter than a full 90-day quarterly interest payment
period for which interest payments are computed, on the basis of a 30-day month,
and for periods of less than a month, the actual number of days elapsed per
30-day month. 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
18
<PAGE> 19
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 day 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 day 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 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
19
<PAGE> 20
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.
20
<PAGE> 21
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
-----------------------------------------------------------------------
Assistant 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.
BANK ONE, NATIONAL ASSOCIATION
----------------------------------- -------------------------------
as Trustee or as Authentication Agent
By By
-------------------------------- -------------------------------
Authorized Signatory Authorized Signatory
21
<PAGE> 22
(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
Bank One, National Association (formerly known as The First National Bank of
Chicago), a national banking association, as Trustee (the "Trustee"), as
supplemented by the Fourth Supplemental Indenture dated as of _________, 2000
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 Fourth Supplemental Indenture.
In the event of the occurrence and continuation of a Tax Event, in certain
circumstances this Note may become due and payable at the redemption price set
forth below (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 Redemption Price shall be equal to 100% of
the principal amount plus any accrued but unpaid interest thereon to the date of
such redemption. In addition, 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 ________, 2005, at the Redemption Price (an
"Optional Redemption"). 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 the event of the occurrence and continuation of a Tax Event, in certain
circumstances the Company may elect to advance the Maturity Date of this Note to
the minimum extent required in order to allow the Company to deduct the interest
payments on the Notes for United States federal income tax purposes. However,
the
22
<PAGE> 23
Maturity Date will not be advanced to a date less than 15 years from the
original issuance of the Notes.
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.
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
23
<PAGE> 24
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
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.
24
<PAGE> 25
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
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.
25
<PAGE> 26
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.
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.
26
<PAGE> 27
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.
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
Managing Director-Treasurer
Attest:
------------------------
Assistant Secretary
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By
-------------------------------------
Steven M. Wagner
Vice President
Attest:
------------------------
Mark J. Frye
Assistant Vice President
27
<PAGE> 1
Exhibit 4.4
=========================================
AMENDED AND RESTATED
DECLARATION
OF TRUST
HOUSEHOLD CAPITAL TRUST V
Dated as of ________ ___, 2000
=========================================
<PAGE> 2
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> 3
TABLE OF CONTENTS
<TABLE>
<S> <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 of the Property
Trustee ............................................... 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> 4
<TABLE>
ARTICLE V
TRUSTEES
<S> <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> 5
<TABLE>
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
<S> <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> 6
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
HOUSEHOLD CAPITAL TRUST V
_______ __, 2000
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and effective
as of _______ __, 2000 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
March 21, 2000 (the "Original Declaration") and a Certificate of Trust filed
with the Secretary of State of Delaware on March 22, 2000, 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> 7
(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. Section Section 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> 8
"Closing Date" means ____________________, 2000.
"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 Bank One, National Association, 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> 9
"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 BankOne, National 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> 10
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> 11
"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-5" means Rule 3a-5 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> 12
"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> 13
"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 Section
Section 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> 14
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 Sections 311(a), 311(b)
and Section 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 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 Property Trustee shall also
comply with the requirements of Section 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 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.
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 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 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> 15
(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> 16
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
11
<PAGE> 17
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 V", 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.
12
<PAGE> 18
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 to 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, including any amendments thereto prepared
by the Sponsor; and
13
<PAGE> 19
(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 Section 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
Section 314(a)(4) of the Trust Indenture Act which certificate may
be executed by any Regular Trustee;
14
<PAGE> 20
(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.
15
<PAGE> 21
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
16
<PAGE> 22
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,
17
<PAGE> 23
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 Section 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
18
<PAGE> 24
(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
19
<PAGE> 25
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
20
<PAGE> 26
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-5, subject to the requirements of Rule 3a-5, 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
21
<PAGE> 27
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
22
<PAGE> 28
(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 Section 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.
23
<PAGE> 29
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article VIII hereof,
shall have existence until March 22, 2055.
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,
the Delaware Trustee or the Property Trustee, 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 possess 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
24
<PAGE> 30
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 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.
25
<PAGE> 31
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.
26
<PAGE> 32
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
27
<PAGE> 33
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; and
(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.
(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 Section 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 Section 310(b)
of the Trust Indenture Act) shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
28
<PAGE> 34
(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:
Dennis J. Mickey
2700 Sanders Road
Prospect Heights, Illinois 60070
and
Benjamin 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
29
<PAGE> 35
(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:
30
<PAGE> 36
(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.
31
<PAGE> 37
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
32
<PAGE> 38
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
33
<PAGE> 39
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 dissolve;
(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,
34
<PAGE> 40
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, after paying or making
reasonable provision for payment of the liabilities of the Trust,
file a certificate of cancellation with the Secretary of State of
the State of Delaware and the Trust shall terminate.
(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.
35
<PAGE> 41
(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
36
<PAGE> 42
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
37
<PAGE> 43
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.
38
<PAGE> 44
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.
39
<PAGE> 45
(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 the Trust Indenture Act and
40
<PAGE> 46
Rule 3a-5, shall not be liable to the Trust or to any other Covered
Person for 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,
41
<PAGE> 47
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.
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
42
<PAGE> 48
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 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.
43
<PAGE> 49
(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 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
44
<PAGE> 50
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:
(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;
45
<PAGE> 51
(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
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 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
46
<PAGE> 52
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 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
47
<PAGE> 53
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.
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 Delaware banking corporation with trust
powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, 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 Certificate of Incorporation 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.
48
<PAGE> 54
(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.
(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 V
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
49
<PAGE> 55
(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):
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
50
<PAGE> 56
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.
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.
51
<PAGE> 57
IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as
of the day and year first above written.
------------------------------------
Dennis J. Mickey,
as Trustee
------------------------------------
Benjamin 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
52
<PAGE> 58
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 ________________, 2000 (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 $______________ 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 $__________________ and a liquidation amount with respect to the
assets of the Trust of $__ 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 Annex II,
1
<PAGE> 59
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 (i) for any full 90-day quarterly Distribution period, on
the basis of a 360-day year of twelve 30-day months and (ii) for any
period shorter than a full 90-day quarterly Distribution period for
which Distributions are computed, on the basis of a 30-day month, and
for periods of less than a month, the actual number of days elapsed
per 30-day month.
(b) Distributions on the Securities will be cumulative, will
accrue from _______________, 2000 and will be payable quarterly in
arrears, on ___________, ____________, ____________, and ___________
of each year, commencing on ____________, 2000, 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
2
<PAGE> 60
Extension Period. Upon the termination of any Extension 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
there of 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 ___________, (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
3
<PAGE> 61
hereunder, such property shall be distributed Pro Rata (as defined
herein) among the Holders of the Securities.
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 to 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")
4
<PAGE> 62
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 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. In addition, if a Tax Event shall occur and
be continuing, the Debt Issuer has the right to advance the maturity
date of the Notes to the minimum extent required in order to permit
payments of interest on the Notes to be deductible by the Debt Issuer
for United States federal income tax purposes, but the resulting
maturity may not be less than 15 years from the original issuance of
the Notes. The Debt Issuer may take such action only if nationally
recognized independent tax counsel to the Debt Issuer experienced in
such matters has delivered an opinion, which opinion may rely on
published revenue rulings of the Internal Revenue Service, to the
effect that (i) after advancing the maturity of the Notes, interest
payments on the Notes will be deductible for United States federal
income tax purposes and (ii) advancing the maturity date of the Notes
will not result in a taxable event to holders of the Preferred
Securities.
If, in the case of the occurrence of a Tax Event (i) the Debt Issuer
has received an opinion (a "Redemption Tax
5
<PAGE> 63
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 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.
6
<PAGE> 64
"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 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."
7
<PAGE> 65
(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(e)(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
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
8
<PAGE> 66
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 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
9
<PAGE> 67
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.
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
10
<PAGE> 68
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
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
11
<PAGE> 69
may, to the extent permissible by applicable law, 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 (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
12
<PAGE> 70
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 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
13
<PAGE> 71
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.
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
14
<PAGE> 72
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 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.
15
<PAGE> 73
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.
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> 74
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. ___________________
Certificate Evidencing Preferred Securities
of
HOUSEHOLD PREFERRED TRUST V
Preferred Securities.
(Liquidation Amount $25 per Preferred Security)
Household Capital Trust V, 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> 75
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 ______________, 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 , 200_.
[ ]
as Trustee
____________________________
[ ]
as Trustee
____________________________
A-2
<PAGE> 76
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> 77
Annex II
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
HOUSEHOLD CAPITAL TRUST V
Common Securities
(Liquidation Amount $25 per Common Security)
Household Capital Trust V, 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 ___________, 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
_____, 2000.
[ ]
as Trustee
_______________________________
[ ]
as Trustee
_______________________________
A-4
<PAGE> 78
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> 79
EXHIBIT B
SPECIMEN OF NOTE
<PAGE> 80
EXHIBIT C
UNDERWRITING AGREEMENT
<PAGE> 1
Exhibit 4.7
----------------------------------------
PREFERRED SECURITIES GUARANTEE AGREEMENT
Household International, Inc.
Dated as of __________, 2000
----------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Trust Indenture Section of
Act of 1939, as amended Guarantee Agreement
- -------------------------- -------------------
<S> <C>
310(a) ......................................... 4.1(a)
310(b) ......................................... 4.1(c)
310(c) ......................................... Inapplicable
311(a) ......................................... 2.2(b)
311(b) ......................................... 2.2(b)
311(c) ......................................... Inapplicable
312(a) ......................................... 2.2(a)
312(b) ......................................... 2.2(b)
313 ......................................... 2.3
314(a) ......................................... 2.4
314(b) ......................................... Inapplicable
314(c) ......................................... 2.5
314(d) ......................................... Inapplicable
314(f) ......................................... Inapplicable
315(a) ......................................... 3.1(b)
315(b) ......................................... 2.7
315(c) ......................................... 3.1(a)
315(d) ......................................... 3.1(a)
316(a) ......................................... 5.4(a), 2.6
</TABLE>
- --------------------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE> 3
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of ________ __,
2000, 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 V, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of _______ __, 2000 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> 4
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> 5
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 BankOne
National Association (formerly known as The First National Bank of Chicago) as
trustee and Household International Inc. (as "Debt Issuer") 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.
-3-
<PAGE> 6
"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 ____.
"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
-4-
<PAGE> 7
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.
-5-
<PAGE> 8
SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.
Within 60 days after May 15 of each year, the Preferred Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement which relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the
form of an Officer's Certificate.
SECTION 2.6 EVENT OF DEFAULT; WAIVER.
The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities,
waive any past Event of Default and its consequences. Upon such waiver, any
such Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
-6-
<PAGE> 9
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 Capital
Guarantee Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers, of the Preferred Guarantee Trustee in
good faith determine that the withholding of such notice is in the interests of
the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default except any Event of Default as to which the Preferred
Guarantee Trustee shall have received written notice or a Responsible Officer
charged with the administration of the Declaration shall have obtained written
notice of.
SECTION 2.8 CONFLICTING INTERESTS.
The Declaration shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders of the Preferred Securities and the
Preferred Guarantee Trustee shall not transfer this Guarantee Agreement to any
Person except a Holder of Preferred Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee on
acceptance by such Successor Preferred Guarantee Trustee of its appointment to
act as Preferred Guarantee Trustee. The right, title and interest of the
Preferred Guarantee Trustee shall automatically vest in any Successor Preferred
Guarantee Trustee and such vesting and
-7-
<PAGE> 10
cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
(b) If an Event of Default has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Preferred Guarantee Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6), the Preferred Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee Agreement, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs;
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Preferred Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Preferred Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Preferred Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be
read into this Guarantee Agreement against the Preferred
Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or
opinions that by any provision
-8-
<PAGE> 11
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;
-9-
<PAGE> 12
(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, request and rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor;
(iv) the Preferred Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof);
(v) the Preferred Guarantee Trustee may consult with counsel and the
written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its Affiliates,
and may include any of its employees. The Preferred Guarantee
Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction;
(vi) the Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Preferred Guarantee Trustee
adequate security and indemnity which would satisfy a reasonable
person in the position of the Preferred Guarantee Trustee, against
the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee provided, that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested
in it by this Guarantee Agreement;
(vii) the Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent,
-10-
<PAGE> 13
order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Preferred Guarantee Trustee, in
its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
(viii) the Preferred Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Preferred Guarantee
Trustee shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Preferred Guarantee Trustee or its agents
hereunder shall bind the Holders of the Preferred Securities and the
signature of the Preferred Guarantee Trustee or its agents alone
shall be sufficient and effective to perform any such action; and no
third party shall be required to inquire as to the authority of the
Preferred Guarantee Trustee to so act, or as to its compliance with
any of the terms and provisions of this Guarantee Agreement, both of
which shall be conclusively evidenced by the Preferred Guarantee
Trustee's or its agent's taking such action; and
(x) whenever in the administration of this Guarantee Agreement the
Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder the Preferred Guarantee Trustee (i) may
request instructions from the Holders of the Preferred Securities,
(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall
be protected in acting in accordance with such instructions; and
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Preferred Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Preferred
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Preferred Guarantee Trustee shall be construed to be a duty.
-11-
<PAGE> 14
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
-12-
<PAGE> 15
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
-13-
<PAGE> 16
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,
-14-
<PAGE> 17
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
-15-
<PAGE> 18
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.
-16-
<PAGE> 19
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
-17-
<PAGE> 20
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> 21
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> 22
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> 1
Exhibit 5.1
May 26, 2000
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 Trust Preferred or Capital Securities
Guarantee of Household International, Inc. and the Trust Preferred
or Capital Securities of Household Capital Trust V-Registration
Nos. 333-33052 and 333-33052-1.
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 V (the "Trust") filed with the Securities and Exchange
Commission (the "Commission") on March 22, 2000, as amended by Amendment No. 1
filed on April 4, 2000, post-effective Amendment No. 1 filed on May 4, 2000 and
post-effective Amendment No. 2 to be filed on or about May 26, 2000 (as amended,
the "Registration Statement"), relating to the registration under the Securities
Act of 1933, as amended (the "Securities Act"), of preferred beneficial
interests of the Trust (the "Trust Preferred Securities"), subordinated debt
securities (the "Junior Subordinated Notes") and a preferred securities
guarantee, (the "Preferred Securities Guarantee"), guaranteeing distributions on
the Trust 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 Bank One,
National Association (formerly the First National Bank of Chicago), as Trustee
and a Fourth Supplemental Indenture to be dated as of April 1, 2000 (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> 2
Household International, Inc.
May 26, 2000
Page 2
Based upon my review of the records and documents of Household I am of the
opinion that:
1. Household is a corporation duly incorporated and validly existing under
the Laws of the State of Delaware.
2. 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 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 Trust
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 Matters" in any
Preliminary Prospectus or Prospectus forming a part of the Registration
Statement.
<PAGE> 3
Household International, Inc.
May 26, 2000
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
<PAGE> 1
EXHIBIT 8
[SIDLEY & AUSTIN LETTERHEAD]
May 26, 2000
Household Capital Trust V
Household International, Inc.
2700 Sanders Road
Prospect Heights, IL 60070
Re: Household Capital Trust V
Trust Preferred Securities
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-3, including all
amendments thereto, filed with the Securities and Exchange Commission by
Household International, Inc. ("HII") and Household Capital Trust V (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 Statement.
In rendering the opinion expressed below, we have examined the Preliminary
Prospectus and such other documents as we have deemed relevant and necessary,
including without limitation, the Declaration of Trust, the Form of Amended and
Restated Declaration of Trust, the Indenture, and the Form of Supplemental
Indenture attached as Exhibits to the Registration Statement. Such opinion is
conditioned, among other things, upon the accuracy and completeness of the
facts, information and representations contained in the Preliminary Prospectus
as of the date hereof and the continuing accuracy and completeness thereof as
of the date of the issuance of the Trust Preferred Securities (the "Trust
Preferred Securities") described in the Registration Statement. We have assumed
that such other documents will be enforceable and the Trust valid under
applicable state law, that the transactions contemplated by the Preliminary
Prospectus and such other documents will occur as provided therein, and that
there will be no material change to the Preliminary Prospectus or any of such
other documents between the date hereof and the date of the issuance of the
Trust Preferred Securities.
The statements contained in the Preliminary Prospectus under the heading
"Certain United States Federal Income Tax Consequences" to the extent they
constitute matters
<PAGE> 2
Household Capital Trust V
May 26, 2000
Page 2
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.
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.
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 United States Federal Income Tax Consequences" and "Legal Matters" in
the Preliminary Prospectus included in the Registration Statement.
This opinion 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> 1
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 registration statement on Form S-3 (Nos. 333-33052 and
333-33052-1) relating to the offering of up to 12,000,000 shares of Trust
Preferred Securities of Household Capital Trust V and Junior Subordinated
Deferrable Interest Notes of Household International, Inc. filed with the
Securities and Exchange Commission on March 22, 2000, and as amended by
the pre-effective Amendment No. 1 filed on April 4, 2000, the post-effective
Amendment No. 1 filed on May 4, 2000 and the pre-effective Amendment No. 2
filed on or about May 26, 2000, of our report dated January 14, 1999 included in
Household International, Inc.'s Form 10-K for the year ended December 31, 1999
and to all references to our Firm included in this registration statement.
Arthur Andersen LLP
/s/ Arthur Andersen LLP
Chicago, Illinois
May 26, 2000
