<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 17, 2001.
REGISTRATION NOS. 333- AND 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 VI
(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)
JOHN W. BLENKE, VICE PRESIDENT-CORPORATE LAW
HOUSEHOLD INTERNATIONAL, INC.
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
847-564-6150
(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
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement, as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(2) PER UNIT(2)(3) PRICE(2)(3) FEE
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<S> <C> <C> <C> <C>
Trust Preferred Securities of Household Capital
Trust V and Junior Subordinated Deferrable 8,000,000
Interest Notes of Household International, Preferred
Inc.(1)........................................... Securities $25.00 $200,000,000 $50,000.00
Guarantee of Trust Preferred Securities by Household
International, Inc. and certain back-up
obligations(4).................................... N/A N/A N/A N/A
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</TABLE>
(1) The Junior Subordinated Deferrable Interest Notes will be purchased by and
constitute assets of Household Capital Trust VI. No separate consideration
therefor will be received.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(i) and Rule 457(n).
(3) Exclusive of accrued interest and distributions, if any.
(4) Includes the rights of holders of the Trust Preferred Securities under the
Preferred Securities Guarantee and certain back-up undertakings, comprised
of the obligations of Household International to provide certain indemnities
in respect of, and pay and be responsible for certain costs, expenses, debts
and liabilities of the Trust (other than with respect to the Trust Preferred
Securities) and such obligations of Household International as set forth in
the Declaration and the Indenture, in each case as further described in the
Registration Statement. The Preferred Securities Guarantee, when taken
together with Household International's obligations under the Junior
Subordinated Deferrable Interest Notes, the Indenture and the Declaration,
will provide a full and unconditional guarantee on a subordinated basis by
Household International of payments due on the Trust Preferred Securities.
The Guarantee of Trust Preferred Securities referred to in this table is the
Preferred Securities Guarantee described in the Registration Statement. No
separate consideration will be received for the Guarantee or such back-up
obligations.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 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 JANUARY 17, 2001
PROSPECTUS
8,000,000 TRUST PREFERRED SECURITIES
HOUSEHOLD CAPITAL TRUST VI
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
HOUSEHOLD INTERNATIONAL, INC.
------------------------
THE TRUST:
Household Capital Trust VI 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 , 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 , 2001 at an
annual rate of % of the liquidation amount of $25 per Trust Preferred
Security, on , , and of each year
beginning , 2001.
- 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 , 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.
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<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 , 2001, 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 ,
2001.
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------------------------
The date of this prospectus is , 2001.
<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 VI............ 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
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<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 VI,
- "Notes" are to the % Junior Subordinated Deferrable Interest
Notes due , 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
, , and , beginning ,
2001. Distributions will accumulate from the date Household Trust originally
issues the Trust Preferred Securities, which is expected to be ,
2001. The initial cash distribution payable on , 2001 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
, . 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 , .
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 December 31, 2000, we had outstanding senior
indebtedness aggregating approximately $ 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 VI
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
January 17, 2001. 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 four. 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. The fourth trustee will serve as property trustee under the
Declaration and as indenture trustee for purposes of the Trust Indenture Act.
The Bank of New York (Delaware) will act as the trustee with a principal place
of business in the State of Delaware. The Bank of New York, an affiliate of The
Bank of New York (Delaware), will be the other trustee and will act as the
property trustee until removed or replaced by Household. Bank of New York 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 The Bank of
New York (Delaware), White Clay Center, Newark, Delaware 19711. 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, and will not become, subject to the information reporting
requirements of the Exchange Act.
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>
NINE MONTHS
ENDED
SEPTEMBER 30, 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................. 1.64 1.76 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 nine months ended
September 30, 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
September 30, 2000, which is incorporated by reference herein. Operating results
for the nine months ended September 30, 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>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- ------------------------------------
2000 1999 1999 1998 1997
-------- -------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Finance income..................................... $6,252.3 4,776.3 $ 6,549.5 $ 5,604.2 $ 5,131.0
Other interest income.............................. 26.4 25.3 33.4 57.1 49.8
Interest expense................................... 2,811.9 2,013.8 2,776.6 2,517.0 2,358.4
-------- -------- --------- --------- ---------
Net interest margin.............................. 3,466.8 2,787.8 3,806.3 3,144.3 2,822.4
Provision for credit losses on owned receivables... 1,542.1 1,263.2 1,716.4 1,516.8 1,493.0
-------- -------- --------- --------- ---------
Net interest margin after provision for credit
losses........................................... 1,924.7 1,524.6 2,089.9 1,627.5 1,329.4
-------- -------- --------- --------- ---------
Securitization income.............................. 1,081.9 995.3 1,393.5 1,548.9 1,638.4
Insurance revenues................................. 413.5 405.4 534.6 492.8 454.2
Investment income.................................. 127.2 128.0 168.8 161.2 173.1
Fee income......................................... 591.4 421.2 595.5 599.7 592.4
Other income....................................... 195.3 180.0 223.8 243.7 355.7
Gain on sale of Beneficial Canada.................. -- -- -- 189.4 --
-------- -------- --------- --------- ---------
Total other revenues............................. 2,409.3 2,129.9 2,916.2 3,235.7 3,213.8
-------- -------- --------- --------- ---------
Salaries and fringe benefits....................... 1,109.9 887.4 1,194.6 1,127.5 1,085.3
Occupancy and equipment expense.................... 229.5 200.0 270.9 316.1 333.6
Other marketing expenses........................... 366.6 264.0 370.0 403.2 449.6
Other servicing and administrative expenses........ 466.9 433.4 547.9 654.9 857.9
Amortization of acquired intangibles and
goodwill......................................... 121.1 107.8 143.9 170.6 158.4
Policyholders' benefits............................ 198.3 199.0 258.1 238.2 255.9
Merger and integration related costs............... -- -- -- 1,000.0 --
-------- -------- --------- --------- ---------
Total costs and expenses......................... 2,492.3 2,091.6 2,785.4 3,910.5 3,140.7
-------- -------- --------- --------- ---------
Income before income taxes......................... 1,841.7 1,562.9 2,220.7 952.7 1,402.5
Income taxes....................................... 633.7 515.3 734.3 428.6 462.2
-------- -------- --------- --------- ---------
Net income....................................... $1,208.0 1,047.6 $ 1,486.4 $ 524.1(2) $ 940.3
======== ======== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
SEPTEMBER 30, -----------------------------------
2000 1999 1998 1997
-------------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
PERIOD END BALANCE SHEET DATA:
Total assets:
Owned........................................... $73,728.6 $60,749.4 $52,892.7 $46,817.0
Managed(1)...................................... 92,596.1 80,188.3 72,594.6 71,295.5
Deposits.......................................... 8,530.7 4,980.0 2,105.0 2,344.2
Total other debt.................................. 53,369.9 45,665.1 40,356.5 34,402.3
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts................. 675.0 375.0 375.0 175.0
Preferred stock................................... 164.4 164.4 164.4 264.5
Common shareholders' equity....................... 7,550.4 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 September 30, 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>
------------------------
ACTUAL PRO FORMA
--------- -----------
(UNAUDITED)
-----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Deposits............................................. $ 8,530.7 $ 8,530.7
Commercial paper, bank and other borrowings.......... 10,882.6 10,682.6
Senior and senior subordinated debt (with original
maturities over one year).......................... 42,487.3 42,487.3
--------- ---------
Total debt........................................... 61,900.6 61,700.6
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts(1)................. 675.0 875.0
Preferred stock...................................... 164.4 164.4
Common shareholders' equity.......................... 7,550.4 7,550.4
--------- ---------
Total capitalization................................. $70,290.4 $70,290.4
========= =========
</TABLE>
-------------------------
(1) The sole assets of the trusts are Junior Subordinated Deferrable Interest
Notes issued by Household International in June 2000, March 1998, June 1996
and June 1995, bearing interest at 10.00, 7.25, 8.70 and 8.25 percent,
respectively, with principal balances of $309.3, $206.2, $103.1 and $77.3
million, respectively, and due June 30, 2030, 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 , 2001 and will be payable quarterly in arrears on ,
, and of each year to the holders of record
on the applicable record date, commencing , 2001 when, as and if
available for payment by the property trustee, except as otherwise described
below. The distribution on , 2001 will include the period from ,
2001 to , 2001.
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 , , and may be redeemed at any time,
in whole or in part, on or after , 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.
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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 ,
, 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.
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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,
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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.
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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.
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The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in a global 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
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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.
Household International, and certain of its affiliates, maintain a banking
relationship with the property trustee. The property trustee, or affiliates
thereof, serves as trustee under other indentures pursuant to which securities
of Household International, or an affiliate, are outstanding.
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.
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MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United States
federal income tax purposes as other than a grantor trust. Household
International is authorized and directed to conduct its affairs so that the
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. The Bank of New York 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
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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.
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 the 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
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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 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.
Household International, and certain of its affiliates, maintain a banking
relationship with the Preferred Guarantee Trustee. The Preferred Guarantee
Trustee, or affiliates thereof, serves as trustee under other indentures
pursuant to which securities of Household International, or an affiliate, are
outstanding.
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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 supplemented by a Fifth Supplemental Indenture, dated
as of , 2001 (the Base Indenture, as so supplemented, is hereinafter
referred to as the "Indenture"), the forms of which are filed as exhibits 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 , (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
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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 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 December 31, 2000, senior
indebtedness of Household International aggregated approximately $ 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 , 2000, such subsidiaries had
total liabilities of approximately $ 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
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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 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 , , 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 , ,
and of each year (each, an "Interest Payment Date"),
commencing , 2001, 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.
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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.
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.
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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 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."
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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.
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
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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
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
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<PAGE> 33
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 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.
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<PAGE> 34
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 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
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<PAGE> 35
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, 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 beneficial owner that is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any state
thereof or the District of Columbia or an estate or trust treated as a United
States person under 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 VI
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 VI 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 publicly traded 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
34
<PAGE> 36
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 they contain terms that make the likelihood of
Household International exercising its right to defer interest (as described
under "Description of the Notes -- Option to Extend Interest Payment Period") 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.
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 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
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<PAGE> 37
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.
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 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 -- 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).
New regulations governing withholding became effective on January 1, 2001
(the "Withholding Regulations"). 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.
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<PAGE> 38
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, record holders of 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
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<PAGE> 39
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 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.
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<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
and
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>
---------
Total............................................. 8,000,000
=========
</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 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.
39
<PAGE> 41
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 quarters ended March 31, June 30
and September 30, 2000; and
- current reports on Form 8-K dated January 19, 2000, April 20, 2000, July
19, 2000, October 18, 2000, November 8, 2000 and January 17, 2001.
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
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
8,000,000 TRUST PREFERRED SECURITIES
HOUSEHOLD CAPITAL TRUST VI
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
HOUSEHOLD INTERNATIONAL, INC.
--------------------
PROSPECTUS
--------------------
, 2001
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<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...................................... $ 70,000
Fees of Trustees/Transfer Agents/Registrars................. 25,000
Accountants' Fees........................................... 20,000
Blue Sky Qualifications Fees................................ 15,000
SEC Filing Fee*............................................. 50,000
Rating Service Fees......................................... 30,000
Stock Exchange Listing Fees................................. 25,000
Legal Fees and Expenses..................................... 30,000
Miscellaneous............................................... 10,000
--------
Total.................................................. $275,000
========
</TABLE>
-------------------------
* Actual
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The General Corporation Law of Delaware (Section 102) allows a corporation
to eliminate the personal liability of directors of a corporation to the
corporation or to any of its stockholders for monetary damage for a breach of
his/her fiduciary duty as a director, except in the case where the director
breached his/her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or knowingly violated a law, authorized the payment of a
dividend or approved a stock repurchase in violation of Delaware corporate law
or obtained an improper personal benefit. The Restated Certificate of
Incorporation, as amended, of Household International, Inc. (the "Company"),
contains a provision which eliminates directors' personal liability as set forth
above.
The General corporation of Law of Delaware (Section 145) gives Delaware
corporation broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes the Company to buy directors' and
officers' liability insurance. Such indemnification is not exclusive of any
other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
The Company's Restated Certificate of Incorporation, as amended, provides
for indemnification to the fullest extent as expressly authorized by Section 145
of the General Corporation Law of Delaware for directors, officers and employees
of the Company and also to persons who are serving at the request of the Company
as directors, officers or employees of other corporations (including
subsidiaries). This right of indemnification is not exclusive of any other right
which any person may acquire under any statute, bylaw, agreement, contract, vote
of stockholders or otherwise.
The Company has purchased liability policies which indemnify its officers
and directors against loss arising from claims by reason of their legal
liability for acts as officers, subject to limitations and conditions as set
forth in the policies.
The Declaration of Household Capital Trust VI provides that no Household
International trustee, affiliate of any Household International trustee, or any
officers, directors, shareholders, members, partners, employees, representatives
or agents of any Household International trustee, or any employee or agent of
such Trust or its affiliates (each an "Indemnified Person") shall be liable,
responsible or accountable in damages or otherwise to such Trust or any employee
or agent of the trust or its affiliates for any loss, damage or claim incurred
by
II-1
<PAGE> 45
reason of any act or omission performed or omitted by such Indemnified Person in
good faith on behalf of such Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by such 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 willful misconduct with respect to
such acts or omission. The Declaration of Trust also provides that to the
fullest extent permitted by applicable law, Household International 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 such Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by such
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 willful misconduct with respect to such
acts or omissions. The Declaration of Trust further provides that 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 Household International prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
by Household International 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 for the underlying cause of action as
authorized by such Declaration.
Pursuant to agreements which the Company and the Trust may enter into with
underwriters or agents (forms of which are or will be filed as exhibit to this
Registration Statement) officers and directors of the Company and the Trustees
of the Trust may be entitled to indemnification by such underwriters or agents
against certain liabilities, including liabilities under the Securities Act of
1933, as amended, arising from information appearing in the Registration
Statement or any Prospectus or Prospectus Supplement which has been furnished to
the Company by such underwriters or agents.
II-2
<PAGE> 46
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 (successor to 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 VI.
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 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 September 30, 2000.
23.1* Consent of Arthur Andersen LLP, Certified Public
Accountants.
23.2* Consent of Mr. John W. Blenke, Vice President -- Corporate
Law and Assistant Secretary of Household International, Inc.
is contained in his opinion (Exhibit 5.1).
23.3* Consent of Sidley & Austin is contained in their opinion
(Exhibit 8).
23.4* Consent of 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 (included on Page II-5 hereto).
24.2 Powers of Attorney with respect to Household Capital Trust
VI trustees (included in Exhibit 4.3 hereto).
25.1* Statement of eligibility and qualification of The Bank of
New York.
25.2* Statement of eligibility and qualification of Bank One,
National Association.
</TABLE>
---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants hereby undertake:
(1) That for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the
Securities offered herein, and the offering of such Securities at that time
shall be deemed to be the initial bona fide offering thereof.
(2) That for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) under the Securities Act of 1933 shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(3) That for purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement relating
to the securities offered therein and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 47
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions set forth or described in Item 15 of this
Registration Statement, or otherwise, the Registrants have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by a Registrant of expenses incurred or paid by a director,
officer or controlling person in the successful defense of any action, suit or
proceeding) is asserted against a Registrant by such director, officer or
controlling person, in connection with the Securities registered hereby, such
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE> 48
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Prospect Heights, and State of Illinois, on the 17th
day of January, 2001.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ WILLIAM F. ALDINGER
------------------------------------
William F. Aldinger
Chairman and Chief Executive Officer
Each person whose signature appears below constitutes and appoints J. W.
Blenke, L. S. Mattenson and J. S. VanderLinde and each or any of them (with full
power to act alone), as his/her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him/her in his/her name,
place and stead, in any and all capacities, to sign and file, with the
Securities and Exchange Commission, any and all amendments (including
post-effective amendments) to the Registration Statement, granting unto each
such attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he/she might or could do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent or their substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated and on the 17th day of January, 2001.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ WILLIAM F. ALDINGER
--------------------------------------------------- Chairman, Chief Executive Officer, and Director
(William F. Aldinger) (as Principal Executive Officer)
/s/ ROBERT J. DARNALL
---------------------------------------------------
(Robert J. Darnall) Director
/s/ GARY G. DILLON
---------------------------------------------------
(Gary G. Dillon) Director
/s/ JOHN A. EDWARDSON
---------------------------------------------------
(John A. Edwardson) Director
/s/ MARY J. EVANS
---------------------------------------------------
(Mary J. Evans) Director
/s/ DUDLEY FISHBURN
---------------------------------------------------
(Dudley Fishburn) Director
/s/ CYRUS F. FREIDHEIM, JR.
---------------------------------------------------
(Cyrus F. Freidheim, Jr.) Director
/s/ JAMES H. GILLIAM, JR.
---------------------------------------------------
(James H. Gilliam, Jr.) Director
</TABLE>
II-5
<PAGE> 49
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ LOUIS E. LEVY
---------------------------------------------------
(Louis E. Levy) Director
/s/ GEORGE A. LORCH
---------------------------------------------------
(George A. Lorch) Director
/s/ JOHN D. NICHOLS
---------------------------------------------------
(John D. Nichols) Director
/s/ JAMES B. PITBLADO
---------------------------------------------------
(James B. Pitblado) Director
/s/ S. JAY STEWART
---------------------------------------------------
(S. Jay Stewart) Director
/s/ LOUIS W. SULLIVAN, M.D.
---------------------------------------------------
(Louis W. Sullivan, M.D.) Director
/s/ DAVID A. SCHOENHOLZ Group Executive -- Chief Financial Officer
--------------------------------------------------- (as Principal Accounting and Financial
(David A. Schoenholz) Officer)
</TABLE>
The Registrant reasonably believes that the security rating to be assigned
to the Securities registered hereunder will make the Securities "investment
grade securities" pursuant to Transaction Requirements B-2 of Form S-3.
II-6
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Household
Capital Trust VI certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Prospect Heights, State
of Illinois, on this 17th day of January, 2001.
HOUSEHOLD CAPITAL TRUST VI
By: /s/ B.B. MOSS, JR.
------------------------------------
Name: Benjamin B. Moss, Jr.
Title: Trustee
By: /s/ DENNIS J. MICKEY
------------------------------------
Name: Dennis J. Mickey
Title: Trustee
The Registrant reasonably believes that the security rating to be assigned
to the Securities registered hereunder will make the Securities "investment
grade securities" pursuant to Transaction Requirements B-2 of Form S-3.
II-7
<PAGE> 51
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 (successor to 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 VI..........
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 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 September 30, 2000............
23.1* Consent of Arthur Andersen LLP, Certified Public
Accountants.................................................
23.2* Consent of Mr. John W. Blenke, Vice President -- Corporate
Law and Assistant Secretary of Household International, Inc.
is contained in his opinion (Exhibit 5.1)...................
23.3* Consent of Sidley & Austin is contained in their opinion
(Exhibit 8).................................................
23.4* Consent of 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 (included on page II-5 hereof).......
24.2 Powers of Attorney with respect to Household Capital Trust
VI trustees (included in Exhibit 4.3 above).................
25.1* Statement of eligibility and qualification of The Bank of
New York....................................................
25.2* Statement of eligibility and qualification of Bank One,
National Association........................................
</TABLE>
---------------
* To be filed by amendment.
II-8
