-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A2ya3S7bvPPqv7gKsI1dAhQQ5QvzYb12x61Bw9p7pLu/xTw81xGEqin+TyLBijEz VrU2ZUozRlEaTlarTgemPw== 0000950131-97-003619.txt : 19970526 0000950131-97-003619.hdr.sgml : 19970526 ACCESSION NUMBER: 0000950131-97-003619 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19970523 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOUSEHOLD INTERNATIONAL INC CENTRAL INDEX KEY: 0000354964 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 363121988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-27305 FILM NUMBER: 97613886 BUSINESS ADDRESS: STREET 1: 2700 SANDERS RD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 BUSINESS PHONE: 8475645000 MAIL ADDRESS: STREET 1: 2700 SANDERS ROAD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 S-3/A 1 AMENDMENT #1 TO S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 23, 1997 REGISTRATION NO. 333-27305 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------- HOUSEHOLD INTERNATIONAL, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ---------------- DELAWARE 36-3121988 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 2700 SANDERS ROAD PROSPECT HEIGHTS, ILLINOIS 60070 847-564-5000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) PATRICK D. SCHWARTZ, ASSOCIATE GENERAL COUNSEL HOUSEHOLD INTERNATIONAL, INC. 2700 SANDERS ROAD PROSPECT HEIGHTS, ILLINOIS 60070 847-564-6301 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ---------------- WITH A COPY TO: SCOTT N. GIERKE MCDERMOTT, WILL & EMERY 227 WEST MONROE STREET CHICAGO, ILLINOIS 60606 312-984-7521 (UNDERWRITER'S COUNSEL) APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to time 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. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] ---------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION DATED MAY 23, 1997 HOUSEHOLD INTERNATIONAL, INC. DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES PREFERRED STOCK (WITHOUT PAR VALUE) COMMON STOCK (PAR VALUE $1.00 PER SHARE) STOCK PURCHASE CONTRACTS STOCK PURCHASE UNITS Household International, Inc. ("Household International" or the "Company") from time to time may offer one or more series of debt securities ("Debt Securities") and warrants ("Warrants") to purchase Debt Securities, shares of one or more series of its preferred stock, without par value ("Preferred Shares"), shares of its common stock, par value $1.00 per share ("Common Stock"), stock purchase contracts ("Stock Purchase Contracts") to purchase Common Stock or stock purchase units ("Stock Purchase Units"), each representing ownership of a Stock Purchase Contract and either Debt Securities or debt obligations of third parties, including U.S. Treasury Securities, securing the holder's obligation to purchase Common Stock under the Stock Purchase Contract (the Debt Securities, Warrants, Preferred Shares, Common Stock, Stock Purchase Contracts and Stock Purchase Units being hereinafter collectively referred to as the "Securities"), or any combination of the foregoing, for proceeds of up to $1,500,000,000, or the equivalent thereof if any of the Debt Securities or Warrants are denominated in a foreign currency or a foreign currency unit. All specified terms of the offering and sale of the Securities shall be set forth in one or more supplements to this Prospectus ("Prospectus Supplement") including (a) in the case of Debt Securities, the designations, aggregate principal amount, the currency or currency unit for which the Debt Securities may be purchased, the currency or currency unit in which the principal and any interest is payable, the rate (or method of calculation) and time of payment of any interest authorized denominations, maturity, offering price and any redemption terms, (b) in the case of Preferred Shares, the designations, rights, preferences, privileges, and restrictions applicable thereto, including dividend rate or rates (or method of ascertaining the same), dividend payment dates, voting rights, liquidation preferences, and any conversion, exchange, redemption or sinking fund provisions, (c) in the case of Common Stock, the number of shares of Common Stock, (d) in the case of Stock Purchase Contracts, the designation and number of shares of Common Stock issuable thereunder, the purchase price of the Common Stock, the date or dates on which the Common Stock is required to be purchased by the holders of the Stock Purchase Contracts, any periodic payments required to be made by the Company to the holders of the Stock Purchase Contracts or vice versa, and the terms of the offering and sale thereof, (e) in the case of Stock Purchase Units, the specific terms of the Stock Purchase Contracts and any Debt Securities or debt obligations of third parties securing the holders' obligation to purchase the Common Stock under the Stock Purchase Contracts, and the terms of the offering and sale thereof, and (f) in the case of the Securities generally, the initial public offering price, listing on a securities exchange, if any, and any other specific terms relating to the Securities in respect of which this Prospectus is being delivered. With regard to the Warrants, if any, in respect of which this Prospectus is being delivered, the Prospectus Supplement shall set forth a description of the Debt Securities for which each Warrant is exercisable and the offering price, if any, exercise price, duration, detachability and other terms of the Warrants. The Debt Securities and Warrants may be sold for U.S. dollars, foreign currencies or foreign currency units, and the principal of and any interest on the Debt Securities may be payable in U.S. dollars, foreign currencies or foreign currency units. The Debt Securities will be unsecured obligations of Household International and will rank on a parity with other unsecured senior indebtedness of Household International. The shares of any series of Preferred Shares may be represented by Depositary Shares as described herein. Household International may sell Securities through underwriting syndicates led by one or more managing underwriters or through one or more underwriting firms acting alone, to or through dealers, acting as principals for their own account or as agents, and also may sell Securities directly to other purchasers. See "Plan of Distribution." The names of any underwriters or agents involved in the sale of the Securities in respect to which this Prospectus is being delivered and their compensation are set forth in the Prospectus Supplement. ----------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------- The date of this Prospectus is , 1997. AVAILABLE INFORMATION Household International is subject to the informational requirements of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission ("Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, New York, New York 10048, and may also be accessed through the Web site maintained by the Commission at http://www.sec.gov. Copies of such material can also be obtained at prescribed rates by writing to the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, reports, proxy statements and other material concerning Household International can be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, and the Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605. Although Household International may not be required to send a copy of its latest Annual Report to Shareholders to holders of Debt Securities, Warrants, Preferred Shares, Stock Purchase Contracts or Stock Purchase Units, Household International will, upon request, send to any holder of Securities a copy of its latest Annual Report to Shareholders, as filed with the Commission, which contains financial information that has been examined and reported upon, with an opinion expressed, by independent certified public accountants. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed with the Commission (File No. 1- 8198) pursuant to the Exchange Act and are incorporated herein by reference and made a part of this Prospectus: (a) Household International's Annual Report on Form 10-K for the fiscal year ended December 31, 1996; (b) Household International's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; and (c) Household International's Current Reports on Form 8-K dated January 23, February 10, and May 23, 1997. All documents filed by Household International with the Commission pursuant to Sections 13(a), 13(c), 14 or 15 (d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated herein by reference and made a part of this Prospectus from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. HOUSEHOLD INTERNATIONAL WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (WITHOUT EXHIBITS OTHER THAN EXHIBITS SPECIFICALLY INCORPORATED BY REFERENCE). REQUESTS SHOULD BE DIRECTED TO: HOUSEHOLD INTERNATIONAL, INC. 2700 SANDERS ROAD PROSPECT HEIGHTS, ILLINOIS 60070 ATTENTION: OFFICE OF THE SECRETARY TELEPHONE: 847-564-6989 2 HOUSEHOLD INTERNATIONAL Household International was formed in 1981 as a holding company for various subsidiaries which operated in the financial services, manufacturing, transportation and merchandising industries. In 1985 the Company initiated a restructuring program that has resulted in the disposition of its merchandising, transportation and manufacturing businesses. This has enabled the Company to focus its resources in the financial services industry through the operation of its primary businesses, consumer finance and credit cards. The Company's principal executive office is located at 2700 Sanders Road, Prospect Heights, Illinois 60070 (telephone: 847-564-5000). Through subsidiaries, such as Household Finance Corporation ("HFC"), Household Bank, f.s.b., Household Retail Services, Inc., Household Bank (Nevada), National Association, Household Financial Corporation Limited and HFC Bank plc, the Company offers numerous consumer finance products to customers in the United States, Canada and the United Kingdom, including home equity credit lines, revolving and closed-end unsecured personal loans, private label credit cards, student loans, and VISA* and MasterCard* credit cards. Also, in conjunction with its consumer finance business, and where applicable laws permit, the Company makes credit life, credit accident, health and disability, and term and specialty insurance products available to its customers. This insurance is generally directly written by or reinsured with one of its insurance subsidiaries. Household International is principally a holding company whose primary source of funds is cash received from its subsidiaries, primarily in the form of dividends and borrowings under intercorporate agreements. Dividend distributions to the Company from its savings and loan, banking and insurance subsidiaries may be restricted by federal and state laws and regulations. Dividend distributions from its foreign subsidiaries may also be restricted by exchange controls of the country in which the subsidiary is located. Also, as a holding company the rights of any creditors or stockholders of Household International to participate in the assets of any subsidiary upon the latter's liquidation or recapitalization will be subject to the prior claims of the subsidiary's creditors, except to the extent that the Company may itself be a creditor with recognized claims against the subsidiary. Nevertheless, there are no restrictions that currently materially limit the Company's ability to make payments to its creditors or to pay dividends on its Preferred Stock or Common Stock at current levels nor are there any restrictions which Household International reasonably believes are likely to limit materially such payments in the future. USE OF PROCEEDS Household International will apply the net proceeds from the sale of the Securities to its general funds to be used to fund investments in, or extensions of credit to, its subsidiaries; to reduce other outstanding indebtedness (which may include indebtedness owed to its subsidiaries); to fund acquisitions by Household International and its subsidiaries of other companies; or for such other purposes as may be set forth in the Prospectus Supplement. Pending such application, such net proceeds may be temporarily invested or applied to the reduction of short-term debt. SELECTED RATIOS The ratio of earnings to fixed charges and the ratio of earnings to combined fixed charges and preferred stock dividends for Household International and subsidiaries for the periods indicated below was as follows:
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31, ------------- ------------------------ 1997 1996 1996 1995 1994 1993 1992 ------ ------ ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges...... 1.54 1.45 1.53 1.47 1.41 1.38 1.19 Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.. 1.52 1.42 1.50 1.43 1.37 1.33 1.15
- -------- *VISA and MasterCard are registered trademarks of VISA, USA, Inc. and MasterCard International Incorporated, respectively. 3 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). Preferred stock dividends represent an amount equal to income, before income tax, which would be required to meet the dividends on preferred stocks. DESCRIPTION OF DEBT SECURITIES The following description of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement (the "Offered Debt Securities") and the extent to which such general terms and provisions may apply to the Offered Debt Securities will be described in the Prospectus Supplement relating to such Offered Debt Securities. GENERAL The Offered Debt Securities will constitute unsecured senior debt of Household International and will rank on a parity with other unsecured senior debt of Household International. The Offered Debt Securities will be issued under one of the indentures specified elsewhere herein ("Indentures"). Copies of the Indentures are included as exhibits to Household International's Registration Statement which registers the Debt Securities with the Commission. The following summaries do not purport to be complete and, where particular provisions of the Indentures are referred to, such provisions, including definitions of certain terms, are incorporated by reference as part of such summaries, which are qualified in their entirety by such reference. The Indentures provide that Debt Securities may be issued thereunder from time to time in one or more series and do not limit the aggregate principal amount of the Debt Securities, except as may be otherwise provided with respect to any particular series of Offered Debt Securities. Reference is made to the Prospectus Supplement relating to the particular series of Debt Securities offered thereby for the following terms and other information to the extent applicable with respect to the Offered Debt Securities: (1) the title of the Offered Debt Securities; (2) any limit on the aggregate principal amount of the Offered Debt Securities; (3) the price (expressed as a percentage of the aggregate principal amount thereof) Household International will be paid for the Offered Debt Securities and the initial offering price, if any, at which the Offered Debt Securities will be offered to the public; (4) the currency, currencies or currency units for which the Offered Debt Securities may be purchased and the currency, currencies or currency units in which the principal of and any interest on such Offered Debt Securities may be payable; (5) the date or dates on which the Offered Debt Securities will mature; (6) the rate or rates (which may be fixed or variable) per annum at which the Offered Debt Securities will bear interest, if any; (7) the date from which such interest, if any, on the Offered Debt Securities will accrue, the dates on which such interest, if any, will be payable, the date on which payment of such interest, if any, will commence and the Regular Record Dates for such Interest Payment Dates, if any; (8) the dates, if any, on which and the price or prices at which the Offered Debt Securities will, pursuant to any mandatory sinking fund provisions, or may, pursuant to any optional sinking fund or to any purchase fund provisions, be redeemed by Household International, and the other detailed terms and provisions of such sinking and/or purchase funds; (9) the date, if any, after which and the price or prices at which the Offered Debt Securities may, pursuant to any optional redemption provisions, be redeemed at the option of Household International or of the Holder thereof and the other detailed terms and provisions of such optional redemption; (10) the denominations in which the Offered Debt Securities are authorized to be issued; (11) the securities exchange, if any, on which the Offered Debt Securities will be listed; (12) additional provisions, if any, with respect to the Offered Debt Securities; and (13) the Indenture under which the Offered Debt Securities are to be issued. With respect to Offered Debt Securities sold through dealers acting as agents, however, the maturities and interest rates of such Offered Debt Securities may be established by Household International from time to time and, if not set forth in the Prospectus Supplement relating thereto, will be made available through such dealers. If any of the Debt Securities are sold for foreign currencies or foreign currency units or if the principal of or any interest on any series of Debt Securities is payable in foreign currencies or foreign currency units, the 4 restrictions, elections, tax consequences, specific terms and other information with respect to such issue of Debt Securities and such currencies or currency units will be set forth in the Prospectus Supplement relating thereto. Debt Securities may be issued as Original Issue Discount Securities to be offered and sold at a discount below their stated principal amount. "Original Issue Discount Securities" means any Debt Securities that provide for an amount less that the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof upon the occurrence of an Event of Default and the continuance thereof. As used in the following summary of certain terms of the Debt Securities, the term "principal amount" means, in the case of any Original Issue Discount Security, the amount that would then be due and payable upon acceleration of the maturity thereof, as specified in such Debt Securities. BOOK-ENTRY SYSTEM The Offered Debt Securities will be represented by one or more global securities (the "Global Security"). The Global Security will be deposited with, or on behalf of, The Depository Trust Company (the "Depositary") and registered in the name of a nominee of the Depositary. Except under circumstances described below, such Offered Debt Securities will not be issuable in definitive form. The Depositary has advised Household International and will advise any underwriters, dealers or agents to be named in the applicable Prospectus Supplement as follows: the Depositary is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. The Depositary was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. The Depositary's participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of which (and/or their representatives) own the Depositary. Access to the Depositary's book-entry system is also available to others, such as banks, brokers, dealers and trust companies, that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Upon the issuance of the Global Security, the Depositary will credit on its book-entry registration and transfer system the accounts of participants with the respective principal amounts of the Offered Debt Securities represented by the Global Security. Ownership of beneficial interests in the Global Security will be limited to persons that have accounts with the Depositary or its nominee ("participants") or persons that may hold interests through participants. Ownership of beneficial interests in the Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary or its nominee (with respect to interests of participants) and on the records of participants (with respect to interests of persons other than participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in the Global Security. So long as the Depositary or its nominee is the registered owner of the Global Security, the Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Offered Debt Securities represented by the Global Security for all purposes under the Indenture. Except as provided below, owners of beneficial interests in the Global Security will not be entitled to have Offered Debt Securities represented by the Global Security registered in their names, will not receive or be entitled to receive physical delivery of Offered Debt Securities in definitive form and will not be considered the owners or holders thereof under the Indenture. Principal and interest payments on Offered Debt Securities registered in the name of the Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner of the Global Security. None of the Company, the Trustee, any paying agent or the registrar for the Offered Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in the Global Security or for maintaining, supervising or reviewing any records relating to such beneficial interests. The Company expects that the Depositary for the Offered Debt Securities or its nominee, upon receipt of any payment of principal or interest, will credit immediately participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Security as shown on 5 the records of the Depositary or its nominee. The Company also expects that payments by participants to owners of beneficial interests in the Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such participants. If the Depositary is at any time unwilling or unable to continue as Depositary and a successor Depositary is not appointed by the Company within 90 days, the Company will issue Offered Debt Securities in definitive form in exchange for the entire Global Security. In addition, the Company may at any time and in its sole discretion determine not to have the Offered Debt Securities represented by the Global Security and, in such event, will issue Offered Debt Securities in definitive form in exchange for the entire Global Security. In any such instance, an owner of a beneficial interest in the Global Security will be entitled to physical delivery in definitive form of Offered Debt Securities represented by the Global Security equal in principal amount to such beneficial interest and to have such Offered Debt Securities registered in its name. Offered Debt Securities so issued in definitive form will be issued as registered Offered Debt Securities in denominations of $1,000 and integral multiples thereof, unless otherwise specified by the Company. INDENTURES Offered Debt Securities will be issued under (i) an Indenture dated as of October 1, 1993, between Household International and The First National Bank of Maryland, as Trustee or (ii) an Indenture dated as of January 1, 1995, between Household International and Harris Trust and Savings Bank, as Trustee (collectively, the "Trustees"). Unless a different place is specified in the Prospectus Supplement with respect to any particular series of Debt Securities, principal of and interest, if any, on Debt Securities will be payable at the office or agency of Household International in either Baltimore, Maryland, with respect to the Indenture with The First National Bank of Maryland, or in Chicago, Illinois, with respect to the Indenture with Harris Trust and Savings Bank; provided, however, that payment of interest may be made at the option of Household International by check or draft mailed to the person entitled thereto. COVENANT AGAINST CREATION OF PLEDGES OR LIENS All Debt Securities issued under the Indentures will be unsecured. Household International covenants that, with the exceptions listed below, it will not issue, assume or guarantee any indebtedness for borrowed money secured by a mortgage, security interest, pledge or lien ("security interest") of or upon any of its property, now owned or hereafter acquired, unless the Debt Securities then outstanding are, by supplemental indenture, effectively secured by such security interest equally and ratably with all other indebtedness secured thereby. The term "indebtedness for borrowed money" does not include any guarantee or other recourse obligation in connection with the sale or discount by Household International or any of its subsidiaries of finance or accounts receivable, trade acceptances, or other paper arising in the ordinary course of its business. The foregoing covenant does not apply to (a) security interests to secure the payment of the purchase price on property, shares of capital stock, or indebtedness acquired by Household International or the cost of construction or improvement of such property or the refinancing of all or any part of such secured indebtedness, provided that such security interests do not apply to any other property, shares of capital stock, or indebtedness of Household International; (b) security interests on property, shares of capital stock, or indebtedness existing at the time of acquisition by Household International; (c) security interests on property of a corporation which security interests exist at the time such corporation merges or consolidates with or into Household International or which security interests exist at the time of the sale or transfer of all or substantially all of the assets of such corporation to Household International; (d) security interests of Household International to secure any of its indebtedness to a subsidiary; (e) security interests in property of Household International in favor of the United States of America or any state or agency or instrumentality thereof, or in favor of any other country or political subdivision, to secure partial, progress, advance, or other payments pursuant to any contract or statute or to secure any indebtedness incurred for the purpose of financing or refinancing all or any part of the purchase price or the cost of construction of the property subject to such security interests; (f) security interests on properties financed through tax exempt municipal obligations, provided that such security interests are limited to the property so financed; (g) security interests existing on the date of the applicable Indenture; and (h) any extension, renewal, refunding, or replacement (or successive extensions, renewals, refundings, or replacements), in whole or in part, of any security interest referred to in the foregoing clauses (a) through (g) inclusive, provided, 6 however, that the principal amount of indebtedness secured in such extension, renewal, refunding, or replacement does not exceed the principal amount of indebtedness secured at the time by such security interest, and provided further, that such extension, renewal, refunding, or replacement of such security interest is limited to all or part of the property subject to such security interest so extended, renewed, refunded, or replaced. Notwithstanding the foregoing, Household International may, without equally and ratably securing the Debt Securities, issue, assume, or guarantee indebtedness secured by a security interest not excepted pursuant to clauses (a) through (h) above, if the aggregate amount of such indebtedness, together with all other indebtedness of, or guaranteed by, Household International existing at such time and secured by security interests not so excepted, does not at the time exceed 10% of Household International's Consolidated Net Worth (as defined). In addition, an arrangement with any person providing for the leasing by Household International of any property, which property has been or is to be sold or transferred by Household International to such person with the intention that such property be leased back to Household International, shall not be deemed to create any indebtedness secured by a security interest if the obligation in respect to such lease would not be included as liabilities on a consolidated balance sheet of Household International. The Holders of not less than a majority in principal amount of the Debt Securities at the time outstanding under an Indenture, on behalf of the Holders of all of the Debt Securities issued under such Indenture, may waive compliance with the foregoing covenant. (Section 3.08) SATISFACTION, DISCHARGE AND DEFEASANCE OF THE INDENTURES AND DEBT SECURITIES If there is deposited irrevocably with the Trustee as trust funds for the benefit of the Holders of Debt Securities of a particular series, for the purpose hereinafter stated, an amount, in money or the equivalent in securities of the United States or securities the principal of and interest on which is fully guaranteed by the United States, sufficient to pay the principal, premium, if any, and interest, if any, on such series of Debt Securities on the dates such payments are due in accordance with the terms of such series of Debt Securities through their maturity, and if Household International has paid or caused to be paid all other sums payable by it under the applicable Indenture with respect to such series, then Household International will be deemed to have satisfied and discharged the entire indebtedness represented by such series of Debt Securities and all the obligations of Household International under such Indenture with respect to such series, except as otherwise provided in such Indenture. In the event of any such defeasance, Holders of such Debt Securities will be able to look only to such trust funds for payment of principal, premium, if any, and interest, if any, on their Debt Securities. (Section 6.03) For federal income tax purposes, any such defeasance may be treated as a taxable exchange of the related Debt Securities for an issue of obligations of the trust or a direct interest in the cash and securities held in the trust. In that case, Holders of such Debt Securities may recognize a gain or loss as if the trust obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their Debt Securities. Such Holders thereafter would be required to include in income a share of the income, gain or loss of the trust. The amount so required to be included in income could be a different amount than would be includable in the absence of defeasance. Prospective investors are urged to consult their own tax advisors as to the specific consequences to them of defeasance. THE TRUSTEES Household International and certain of its subsidiaries maintain banking relationships with each of the Trustees or affiliates thereof. Certain of the Trustees are also trustees under other indentures of Household International or its subsidiaries under which outstanding senior or subordinated unsecured debt securities of such entities have been issued. The Trustees or affiliates thereof may also have other financial relationships with Household International and its subsidiaries. MODIFICATION OF INDENTURES Each Indenture provides that the Holders of not less than a majority in principal amount of each series of Debt Securities at the time outstanding under such Indenture may enter into supplemental indentures for the 7 purpose of amending or modifying, in any manner, provisions of the Indenture or of any supplemental indenture modifying the rights of Holders of such series of Debt Securities. However, no such supplemental indenture, without the consent of the Holder of each outstanding Debt Security affected thereby, shall, among other things, (i) change the maturity of the principal of, or any installment of interest on any Debt Security, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or (ii) reduce the aforesaid percentage of the Debt Securities, the consent of the Holders of which is required for the execution of any such supplemental indenture or for any waiver of compliance with any covenant or condition in such Indenture. (Section 11.02) Each Indenture may be amended or supplemented without the consent of any Holder of Debt Securities under certain circumstances, including (i) to cure any ambiguity, defect or inconsistency in the Indenture, any supplemental indenture, or in the Debt Securities of any series; (ii) to evidence the succession of another corporation to the Company and to provide for the assumption of all the obligations of the Company under the Debt Securities and the Indenture by such corporation; (iii) to provide for uncertificated debt securities in addition to certificated debt securities; (iv) to make any change that does not adversely affect the rights of Holders of Debt Securities issued thereunder; (v) to provide for a new series of Debt Securities; or (vi) to add to rights of Holders of Debt Securities or add additional Events of Default. (Section 11.01) SUCCESSOR ENTITY The Company may not consolidate with or merge into, or transfer, sell or lease its properties and assets as, or substantially as, an entirety to another entity unless the successor entity is a corporation incorporated within the United States and, after giving effect thereto, no default under the Indenture shall have occurred and be continuing. Thereafter, except in the case of a lease, all obligations of the Company under the Indenture terminate. (Sections 10.01 and 10.02) EVENTS OF DEFAULT Each Indenture defines the following as Events of Default with respect to any series of Debt Securities: default for 30 days in the payment of any interest upon any Debt Security of such series issued under such Indenture; default in the payment of any principal of or premium on any such Debt Security; default for 30 days in the deposit of any sinking fund or similar payment for such series of Debt Securities; default for 60 days after notice in the performance of any other covenant in the Indenture; certain defaults for 30 days after notice in the payment of principal or interest, or in the performance of other covenants, with respect to borrowed money under another indenture in which the Trustee for such Debt Securities is trustee which results in the principal amount of such indebtedness becoming due and payable prior to maturity, which acceleration has not been rescinded or annulled; and certain events of bankruptcy, insolvency or reorganization. Household International is required to file with each Trustee annually an Officers' Certificate as to the absence of certain defaults under the Indenture. (Sections 7.01 and 3.05) If an Event of Default with respect to Debt Securities of any series at the time outstanding occurs and is continuing, either the Trustee or the Holders of not less than 25% in principal amount of the outstanding Debt Securities of such series by notice as provided in the Indenture may declare the principal amount and all accrued but unpaid interest of all the Debt Securities of such series to be due and payable immediately. At any time after a declaration of acceleration with respect to Debt Securities of any series has been made, but before a judgment or decree for payment of money has been obtained by the Trustee, the Holders of not less than a majority in principal amount of outstanding Debt Securities of such series may, under certain circumstances, rescind or annul such declaration of acceleration. (Section 7.02) The Holders of not less than a majority in principal amount of the outstanding Debt Securities of each series may, on behalf of all Holders of Debt Securities of such series, waive any past default under the Indenture and its consequences with respect to Debt Securities of such series, except a default (a) in the payment of principal of or premium, if any, or interest, if any, on any Debt Securities of such series, or (b) in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of the Holder of each outstanding Debt Security of such series affected. (Section 7.13) 8 Each Indenture provides that the Trustee thereunder may withhold notice to Holders of Debt Securities of any default (except in payment of the principal of (or premium, if any) or interest on any Debt Security issued under such Indenture or in the payment of any sinking fund or similar payment) if it considers it in the interest of Holders of Debt Securities to do so. (Section 8.02) Holders of Debt Securities may not enforce an Indenture except as provided therein. (Section 7.07) Each Indenture provides that the Holders of a majority in principal amount of the outstanding Debt Securities issued under such Indenture have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. (Section 7.12) The Trustee will not be required to comply with any request or direction of Holders of Debt Securities pursuant to the Indenture unless offered indemnity against costs and liabilities which might be incurred by the Trustee as a result of such compliance. (Section 8.03(e)) DESCRIPTION OF WARRANTS Household International may issue, together with any Debt Securities offered by any Prospectus Supplement or separately, Warrants for the purchase of other Debt Securities. The Warrants are to be issued under warrant agreements (each a "Warrant Agreement") to be entered into betweeen Household International and a bank or trust company, as warrant agent ("Warrant Agent"), all as set forth in the Prospectus Supplement relating to the particular issue of Warrants ("Offered Warrants"). A copy of the forms of Warrant Agreement, including the form of warrant certificates representing the Warrants ("Warrant Certificates"), reflecting the alternative provisions to be included in the Warrant Agreements that will be entered into with respect to particular offerings of Warrants, is filed as an exhibit to the Registration Statement. The following summaries of certain provisions of the Warrant Agreement and the Warrant Certificates do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Warrant Agreement and the Warrant Certificates, respectively, including the definitions therein of certain terms. GENERAL The Prospectus Supplement describes the terms of the Offered Warrants, the Warrant Agreement relating to the Offered Warrants and the Warrant Certificates representing the Offered Warrants, including the following: (1) the designation, aggregate principal amount, and terms of the Debt Securities purchasable upon exercise of the Offered Warrants; (2) the designation and terms of any related Debt Securities with which the Offered Warrants are issued and the number of Offered Warrants issued with each such Debt Security; (3) the date, if any, on and after which the Offered Warrants and the related Offered Debt Securities will be separately transferable; (4) the principal amount of Debt Securities purchasable upon exercise of one Offered Warrant and the price at which such principal amount of Debt Securities may be purchased upon such exercise; (5) the date on which the right to exercise the Offered Warrants shall commence and the date ("Expiration Date") on which such right shall expire; (6) whether the Warrants represented by the Warrant Certificates will be issued in registered or bearer form, and if registered, where they may be transferred and registered; and (7) any other terms of the Offered Warrants. Warrant Certificates will be exchangeable on the terms specified in the Prospectus Supplement for new Warrant Certificates of different denominations, and Warrants may be exercised at the corporate trust office of the Warrant Agent or any other office indicated in the Prospectus Supplement. Prior to the exercise of their Warrants, holders of Warrants will not have any of the rights of holders of the Debt Securities purchasable upon such exercise and will not be entitled to payments of principal of, premium, if any, or interest, if any, on the Debt Securities purchasable upon such exercise. EXERCISE OF WARRANTS Each Offered Warrant will entitle the holder to purchase such principal amount of Debt Securities at such exercise price as shall in each case be set forth in, or be determinable as set forth in, the Prospectus Supplement 9 relating to the Offered Warrants by payment of such exercise price in full in the manner specified in the Prospectus Supplement. Offered Warrants may be exercised at any time up to the close of business on the Expiration Date set forth in the Prospectus Supplement relating to the Offered Warrants. After the close of business on the Expiration Date, unexercised Warrants will become void. Upon receipt of payment of the exercise price and the Warrant Certificate properly completed and duly executed at the corporate trust office of the Warrant Agent or any other office indicated in the Prospectus Supplement, Household International will, as soon as practicable, forward the Debt Securities purchasable upon such exercise. If less than all of the Warrants represented by such Warrant Certificate are exercised, a new Warrant Certificate will be issued for the remaining amount of Warrants. DESCRIPTION OF CAPITAL STOCK GENERAL The following description of the capital stock of the Company is qualified in its entirety by reference to the Company's Restated Certificate of Incorporation, as amended, which has been filed with and is available from the offices of the Commission as referred to under "Available Information". The Company's Restated Certificate of Incorporation authorizes the issuance of 258,155,004 shares of capital stock of which 8,155,004 shares shall be designated preferred stock, without par value ("Preferred Stock"), and 250,000,000 shares shall be designated common stock, par value $1.00 per share ("Common Stock"). Although 8,155,004 shares of preferred stock are authorized, 3,454,635 shares are reserved in the Restated Articles of Incorporation for a series of convertible preferred stock that was issued in 1981, all of which shares have been converted to Common Stock, redeemed or repurchased by the Company. As of May 15, 1997, of the remaining 4,700,369 authorized shares of preferred stock, 400,000 shares were issued and outstanding or reserved for issuance as follows: 50,000 shares of 8 1/4% Cumulative Preferred Stock, Series 1992-A ("1992 Preferred") and 100,000 shares of 7.35% Cumulative Preferred Stock, Series 1993-A ("1993 Preferred") were issued and outstanding and 250,000 shares of Series A Junior Participating Preferred Stock ("Junior Preferred") were reserved for issuance. As of March 31, 1997, 97,308,547, shares of the Company's Common Stock were issued and outstanding. All outstanding shares of Common Stock and Preferred Stock are fully paid and non- assessable. PREFERRED STOCK The Preferred Stock of the Company may be issued from time to time in one or more series as authorized by the Board of Directors or a duly authorized committee of the Board of Directors. The Board of Directors has adopted a resolution creating an Offering Committee of the Board with the power to authorize the issuance and sale of one or more series of Preferred Stock ("Preferred Shares") and to determine the particular designations, powers, preferences and relative, participating, optional or other special rights (other than voting rights which shall be fixed by the Board of Directors) and qualifications, limitations or restrictions of the Preferred Shares. The following description sets forth certain general terms and provisions of the Preferred Stock of the Company. Certain other terms of any series of Preferred Shares, including the dividend rate, liquidation preference, redemption rights, if any, voting rights, conversion or sinking fund provisions, if any, and other special terms as determined by the Offering Committee will be set forth in the Prospectus Supplement relating to such series. Dividends. Holders of shares of Preferred Stock are entitled to receive, when and as declared by the Board of Directors of the Company out of any funds legally available for that purpose, dividends in cash at such respective rates, payable on such dates in each year and in respect of such dividend periods, as stated in the Company's Restated Certificate of Incorporation or applicable Certificate of Designation, Preferences and Rights for each series of Preferred Stock, before any dividends may be declared or paid or set apart for payment upon the Common Stock. No dividend may be declared or paid on any series of Preferred Stock unless at the same time a dividend in like proportion to the respectively designated dividend rates shall be declared or paid on each other series of Preferred Stock then issued and outstanding ranking prior to or on a parity with such particular series with respect to the payment of dividends. Dividends may be either cumulative or non- cumulative. 10 Liquidation Preference. In the event of dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, holders of Preferred Stock of each series (if any shares thereof are then issued and outstanding) will be entitled to payment of the applicable liquidation price or prices, out of the available assets of the Company, after payment to the Company's creditors but in preference to the holders of the Common Stock. The Company's Restated Certificate of Incorporation, as amended, provides that a consolidation, merger or sale by the Company of its assets as an entirety or substantially as an entirety shall not be deemed to be a liquidation, dissolution or winding up of the Company. Redemption. No Preferred Stock or Common Stock may be purchased by the Company if any dividends on any shares of Preferred Stock are in arrears, and no Preferred Stock may be redeemed in such case unless all shares of issued and outstanding Preferred Stock are redeemed. Voting Rights. Voting rights of the holders of Preferred Stock are non- cumulative. Holders of Preferred Stock have such voting rights as are set forth in the Company's Restated Certificate of Incorporation, as amended, or applicable Certificate of Designation, Preferences and Rights or as otherwise provided for by law. The Company's Restated Certificate of Incorporation, as amended, provides that, without the vote or consent of the holders of at least two-thirds of the outstanding shares of all series of Preferred Stock (except for a series of Preferred Stock in which the right is expressly withheld) voting as a single class, the Company may not (i) consolidate or merge with another corporation or corporations or sell its assets as an entirety or substantially as an entirety; (ii) issue any shares of Preferred Stock of any series if the cumulative dividends payable on shares of any series of outstanding Preferred Stock are in arrears; (iii) adopt any amendment to the Company's Restated Certificate of Incorporation which adversely alters the preferences, powers and special rights of the Preferred Stock, provided, however, that if any such amendment would adversely alter any preference, power or special right of one or more but not all of the series of the Preferred Stock, then only the vote or consent of the outstanding shares of all series of Preferred Stock so affected, voting as one class, shall be required; or (iv) increase the authorized amount of the Preferred Stock, or create or issue any class of stock ranking prior to or on a parity with the Preferred Stock, or any series thereof, as to the payment of dividends or the distribution of assets. In addition, the holders of the outstanding shares of all series of Preferred Stock (except for a series of Preferred Stock in which the right is expressly withheld) shall be entitled to elect one-third of the members of the Board of Directors of the Company out of the number fixed by the Company's Bylaws in the event the Company fails to declare and pay any four quarterly cumulative dividends, whether consecutive or not, on any series of Preferred Stock and shall be entitled to elect a majority of said directors should any eight quarterly cumulative dividends, whether consecutive or not, be unpaid. Any such right to elect members of the Board of Directors of the Company shall continue until all unpaid dividends upon all series of Preferred Stock shall have been paid in full. Under current provisions of the General Corporation Law of the State of Delaware, the holders of issued and outstanding Preferred Stock are entitled to vote as a class upon a proposed amendment to the Company's Restated Certificate of Incorporation (whether or not entitled to vote thereon by the Company's Restated Certificate of Incorporation), with the consent of a majority of said class being required to increase or decrease the aggregate number of authorized shares of Preferred Stock, increase or decrease the par value of shares of Preferred Stock, or alter or change the powers, preferences or special rights of the Preferred Stock as to affect them adversely. If any proposed amendment would alter or change the powers, preferences or special rights of one or more series of Preferred Stock as to affect them adversely, but would not affect the entire class of Preferred Stock, then only the shares of the series so affected by the amendment would be considered a separate class for the purpose of determining who is entitled to vote on the proposed amendment. Preemptive Rights. Holders of Preferred Stock have no preemptive rights to purchase any securities of the Company. DEPOSITARY SHARES General. The Company may, at its option, elect to issue fractional shares of Preferred Shares, rather than full shares of Preferred Shares. In the event such option is exercised, the Company may elect to have a 11 Depositary (as defined below) issue receipts for Depositary Shares, each receipt representing a fraction (to be set forth in the Prospectus Supplement relating to a particular series of Preferred Shares) of a share of a particular series of Preferred Shares as described below. The shares of any series of Preferred Shares represented by Depositary Shares will be deposited under a Deposit Agreement ("Deposit Agreement") between the Company and a bank or trust company selected by the Company having its principal office in the United States and having a combined capital and surplus of at least $50,000,000 ("Depositary"). Subject to the terms of the Deposit Agreement, each owner of a Depositary Share will be entitled, in proportion to the applicable fraction of a share of Preferred Shares represented by such Depositary Share, to all the rights and preferences of the Preferred Share represented thereby (including dividend, voting, redemption and liquidation rights). The Depositary Shares will be evidenced by depositary receipts issued pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts will be distributed to those persons purchasing the fractional shares of Preferred Shares in accordance with the terms of an offering of the Preferred Shares. Copies of the forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the Registration Statement of which this Prospectus is a part, and the following summary is qualified in its entirety by reference to such exhibits. Pending the preparation of definitive engraved Depositary Receipts, the Depositary may, upon the written order of the Company, issue temporary Depositary Receipts substantially identical to (and entitling the holders thereof to all the rights pertaining to) the definitive Depositary Receipts but not in definitive form. Definitive Depositary Receipts will be prepared thereafter without unreasonable delay, and temporary Depositary Receipts will be exchangeable for definitive Depositary Receipts at the Company's expense. Upon surrender of Depositary Receipts at the office of the Depositary and upon payment of the charges provided in the Deposit Agreement and subject to the terms thereof, a holder of Depositary Receipts is entitled to have the Depositary deliver to such holder the whole shares of Preferred Shares relating to the surrendered Depositary Receipts. Holders of Depositary Shares will be entitled to receive whole shares of the related series of Preferred Shares on the basis set forth in the related Prospectus Supplement for such series of Preferred Shares, but holders of such whole shares will not thereafter be entitled to receive Depositary Shares therefor. If the Depositary Receipts delivered by the holder evidence a number of Depositary Shares in excess of the number of Depositary Shares representing the number of whole shares of the related series of Preferred Shares to be withdrawn, the Depositary will deliver to such holder at the same time a new Depositary Receipt evidencing such excess number of Depositary Shares. Dividends and Other Distributions. The Depositary will distribute all cash dividends or other cash distributions received in respect of the Preferred Shares to the record holders of Depositary Shares relating to such Preferred Shares in proportion to the numbers of such Depositary Shares owned by such holders. In the event of a distribution other than in cash, the Depositary will distribute property received by it to the record holders of Depositary Shares entitled thereto, unless the Depositary determines that it is not feasible to make such distribution, in which case the Depositary may, with the approval of the Company, sell such property and distribute the net proceeds from such sale to such holders. Redemption of Depositary Shares. If a series of Preferred Shares represented by Depositary Shares is subject to redemption, the Depositary Shares will be redeemed from the proceeds received by the Depositary resulting from the redemption, in whole or in part, of such series of Preferred Shares held by the Depositary. The redemption price per Depositary Share will be equal to the applicable fraction of the redemption price per share payable with respect to such series of the Preferred Stock. Whenever the Company redeems shares of Preferred Shares held by the Depositary, the Depositary will redeem as of the same redemption date the number of Depositary Shares representing shares of Preferred Shares so redeemed. If less than all the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will be selected by lot or pro rata as may be determined by the Depositary. 12 Voting the Preferred Shares. Upon receipt of notice of any meeting at which the holders of the Preferred Shares are entitled to vote, the Depositary will mail the information contained in such notice of meeting to the record holders of the Depositary Shares relating to such Preferred Shares. Each record holder of such Depositary Shares on the record date (which will be the same date as the record date for the Preferred Shares) will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of the Preferred Shares represented by such holder's Depositary Shares. The Depositary will endeavor, insofar as practicable, to vote the amount of the Preferred Shares represented by such Depositary Shares in accordance with such instructions, and the Company will agree to take all action which may be deemed necessary by the Depositary in order to enable the Depositary to do so. The Depositary will abstain from voting shares of the Preferred Shares to the extent it does not receive specific instructions from the holders of Depositary Shares representing such Preferred Shares. Amendment and Termination of the Deposit Agreement. The form of Depositary Receipt evidencing the Depositary Shares and any provision of the Deposit Agreement may at any time be amended by agreement between the Company and the Depositary. However, any amendment which materially and adversely alters the rights of the holders of Depositary Shares will not be effective unless such amendment has been approved by the holders of at least a majority of the Depositary Shares then outstanding. The Deposit Agreement may be terminated by the Company or the Depositary only if (i) all outstanding Depositary Shares have been redeemed or (ii) there has been a final distribution in respect of the Preferred Shares in connection with any liquidation, dissolution or winding up of the Company and such distribution has been distributed to the holders of Depositary Receipts. Charges of Depositary. The Company will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. The Company will pay charges of the Depositary in connection with the initial deposit of the Preferred Shares and any redemption of the Preferred Shares. Holders of Depositary Receipts will pay other transfer and other taxes and governmental charges and such other charges as are expressly provided in the Deposit Agreement to be for their accounts. Miscellaneous. The Depositary will forward to the record holders of the Depositary Shares relating to such Preferred Shares all reports and communications from the Company which are delivered to the Depositary. Neither the Depositary or the Company will be liable if it is prevented or delayed by law or any circumstance beyond its control in performing its obligations under the Deposit Agreement. The obligations of the Company and the Depositary under the Deposit Agreement will be limited to performance in good faith of their duties thereunder, and they will not be obligated to prosecute or defend any legal proceeding in respect of any Depositary Shares or Preferred Shares unless satisfactory indemnity is furnished. They may rely upon written advice of counsel or accountants, or information provided by persons presenting Preferred Shares for deposit, holders of Depositary Receipts or other persons believed to be competent and on documents believed to be genuine. Resignation and Removal of Depositary. The Depositary may resign at any time by delivering to the Company notice of its election to do so, and the Company may at any time remove the Deposition, any such resignation or removal to take effect upon the appointment of a successor Depositary and its acceptance of such appointment. Such successor Depositary must be appointed within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least $50,000,000. DESCRIPTION OF AUTHORIZED SERIES OF PREFERRED STOCK The following summary descriptions of the authorized series of Preferred Stock of the Company are qualified in their entirety by reference to the Company's Restated Certificate of Incorporation, as amended (including the respective Certificates of Designation, Preferences and Rights relating to such series). 13 1992 PREFERRED AND 1993 PREFERRED General. The 1992 Preferred and 1993 Preferred rank on a parity as to the payment of dividends and distribution of assets of the Company upon the voluntary or involuntary liquidation, dissolution, or winding up of the Company. 1992 Preferred. Holders of the 1992 Preferred are entitled to receive quarterly cumulative dividends at an annual rate of $82.50 per share. All dividends on the 1992 Preferred have been paid to date. In the event of the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, holders of the 1992 Preferred are entitled to receive $1,000 per share plus accrued and unpaid dividends. The 1992 Preferred is not redeemable prior to October 15, 2002. The 1992 Preferred is redeemable, at the option of the Company, in whole or in part, from time to time on or after October 15, 2002, at $1,000 per share plus an amount equal to accrued and unpaid dividends. The 1992 Preferred is not entitled to the benefits of any sinking fund. 1993 Preferred. Holders of the 1993 Preferred are entitled to receive quarterly cumulative dividends at an annual rate of $73.50 per share. All dividends on the 1993 Preferred have been paid to date. In the event of the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, holders of the 1993 Preferred are entitled to receive $1,000 per share plus accrued and unpaid dividends. The 1993 Preferred is not redeemable prior to October 15, 1998. The 1993 Preferred is redeemable, at the option of the Company, in whole or in part, from time to time on or after October 15, 1998, at $1,000 per share plus an amount equal to accrued and unpaid dividends. The 1993 Preferred is not entitled to the benefits of any sinking fund. Voting Rights. The 1992 Preferred and 1993 Preferred have the right, voting as a class with each other and any other series of Preferred Stock ranking on a parity thereto as to the payment of dividends or the distribution of assets and upon which like voting rights have been conferred and are exercisable, to elect two members of the Board of Directors of the Company at the meeting of stockholders called for such purpose after six quarterly cumulative dividends on such Preferred Stock, whether consecutive or not, shall be in arrears. The right of such holders of Preferred Stock to elect said members to the Board of Directors shall continue until such time as all dividends accrued on such stock shall have been paid in full, at which time such right shall terminate. On any item with respect to which the holders of the 1992 Preferred and 1993 Preferred are entitled to vote, such holders shall be entitled to one vote for each share held. Conversion Rights. The holders of the 1992 Preferred and 1993 Preferred do not have any rights to convert the shares thereof into shares of any other class or series of capital stock (or any other security) of the Company. JUNIOR PREFERRED Issuance. Currently, there are no shares of Junior Preferred issued or outstanding. Rights to purchase shares or fractions thereof of the Junior Preferred ("Rights") have been distributed to holders of the Common Stock. Each Right entitles the registered holder to purchase from the Company one thousandth of a share of the Junior Preferred at a price of $300 per one thousandth of a share, subject to adjustment in the event of any dividend of shares of Common Stock or any subdivision, combination, reclassification or change of the Common Stock. The description and terms of the Rights are set forth in a Rights Agreement ("Rights Agreement") between the Company and Harris Trust and Savings Bank, as Rights Agent, a copy of which has been filed with and is available from the offices of the Commission as referred to under "Available Information". The Rights are not exercisable until the "Distribution Date", which will be the date which is ten days following (i) a public announcement that a person or group of affiliated or associated persons acquired 15% or more of the outstanding shares of Common Stock of the Company or (ii) the commencement or announcement of an intention to make a tender offer or exchange offer for 15% or more of the outstanding shares of the Common Stock. The Rights will expire on July 31, 2006, unless the expiration date is extended or the Rights are earlier redeemed or exchanged by the Company, in each case, as described below. 14 In the event that the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earning power are sold to a person or a group, the Rights Agreement provides that each holder of a Right shall receive, upon the payment of the then current exercise price of the Right, that number of shares of the common stock of the surviving company which at the time of such transaction would have a market value of two times the exercise price of the Right. In the event that any person or group of affiliated or associated persons acquires beneficial ownership of 15% or more of the Common Stock, proper provision shall be made so that each holder of a Right, other than Rights beneficially owned by such person or group (which will thereafter be void), will thereafter have the right to receive upon exercise that number of Common Shares having a market value of two times the exercise price of the Right. At any time prior to public announcement that a person or group of affiliated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of Common Stock of the Company, the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right ("Redemption Price"). The redemption of the Rights may be made effective at such time on such basis with such conditions as the Board of Directors, in its sole discretion, may establish. Immediately upon the action of the Board of Directors of the Company electing to redeem the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. Dividends. The holders of the Junior Preferred will be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for that purpose, quarterly dividends payable in cash commencing after such shares or a fraction thereof are issued. Quarterly dividends will be in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to adjustment as described below, 1,000 times the aggregate per share amount of all cash dividends and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision, combination or reclassification thereof, declared on the Common Stock since the immediately preceding quarterly dividend payment date or the date of the first issuance of the Junior Preferred if the first dividend date has not yet occurred. In the event the Company shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision, combination or reclassification of the outstanding shares of Common Stock into a greater or lesser number of shares of Common Stock, then in each such case the amount of dividends to which holders of Junior Preferred are entitled to shall be adjusted. Dividends will begin to accrue and be cumulative on the Junior Preferred from the dividend date next preceding the date of issue unless the date of issue is prior to the record date for the first dividend date, in which case dividends will accrue and be cumulative from the date of issue. Dividends paid on shares of Junior Preferred in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. Conversion, Sinking Fund and Redemption. The Junior Preferred will not have any rights to convert to any other security issued by the Company and such shares are not redeemable at the option of the Company. In addition, there is no sinking fund for the Junior Preferred. Voting Rights. The Junior Preferred generally votes together with the Common Stock as one class. Each share of Junior Preferred is entitled to 1,000 votes on all matters submitted to a vote of the stockholders of the Company. In the event the Company declares or pays any dividend on its Common Stock payable in shares of Common Stock, or subdivides, combines or reclassifies its shares of Common Stock into a greater or lesser number of shares of Common Stock, then the number of votes per share of the Junior Preferred shall be adjusted. Additionally, the Junior Preferred will have the right (as described above under "DESCRIPTION OF CAPITAL STOCK--Preferred Stock--Voting Rights") to vote, together with all other outstanding series of Preferred Stock for which such voting right has not been expressly withheld, to elect directors in the event dividends on any 15 series of Preferred Stock are in arrears. In addition, the Restated Certificate of Incorporation of the Company shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Junior Preferred so as to affect the Junior Preferred adversely without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Junior Preferred, voting together as a single class. The Certificate of Designation, Preferences and Rights of the Junior Preferred expressly withholds all other special voting rights to which holders of Preferred Stock are entitled, except for voting rights otherwise provided by law. Liquidation Preference. No distribution shall be made on any shares of stock ranking junior to the Junior Preferred upon any voluntary liquidation, dissolution or winding up of the Company unless the holders of the Junior Preferred have received the greater of (i) $1,000 per share plus accrued and unpaid dividends or (ii) 1,000 times the aggregate amount to be distributed per share to holders of Common Stock. This liquidation amount shall be adjusted in the event the Company declares a stock split of the Common Stock or pays any dividend on Common Stock payable in shares of Common Stock, or effects a subdivision, combination or reclassification of the Common Stock into a greater or lesser number of shares. In the event the assets of the Company are insufficient to satisfy the liquidation preference of the Junior Preferred, the Junior Preferred shall share ratably with each series of Preferred Stock ranking on a parity (as to dividends or liquidation) with the Junior Preferred. In the event of any merger, consolidation or other transaction in which shares of Common Stock are exchanged, each Preferred Share will be entitled to receive 1,000 times the amount received per Common Share. These rights are protected by customary anti-dilution provisions. COMMON STOCK If shares of Common Stock are offered, the Prospectus Supplement relating thereto will set forth the number of shares offered, the public offering price and information regarding Household International's dividend history and Common Stock prices as reflected on the New York Stock Exchange Composite Tape, including a recent last sale price of the Common Stock. Holders of Common Stock are entitled to receive dividends out of any funds legally available for that purpose as and if declared by the Board of Directors of the Company, subject to the prior dividend rights of Preferred Stock. Subject to certain voting rights of the Preferred Stock described elsewhere herein, the holders of shares of Common Stock are entitled to vote at all meetings of the stockholders and are entitled to one vote for each share of Common Stock held. The issued and outstanding shares of Common Stock are fully paid and non- assessable. The holders of Common Stock are not entitled to preemptive rights or conversion or redemption rights. The Common Stock does not have cumulative voting rights in the election of directors. In the event of the voluntary dissolution, liquidation or winding up of the Company, holders of Common Stock will be entitled to receive, pro rata, after satisfaction in full of the prior rights of creditors and holders of Preferred Stock, all of the remaining assets of the Company available for distribution. PREFERRED SHARE PURCHASE RIGHTS In July 1996, the Company entered into a Rights Agreement with Harris Trust and Savings Bank, as Rights Agent. The Rights Agreement is intended to address the threat of certain types of takeover activity deemed abusive and unfair to stockholders and to assure that all stockholders receive fair and equal treatment in the event of an unsolicited takeover of the Company. The Rights Agreement also enhances the bargaining position of the Company's Board of Directors in negotiating on behalf of stockholders with potential acquirors of the Company. 16 The Rights Agreement provides that attached to each share of Common Stock is one right (a "Right") to purchase from the Company one thousandth of a share of Junior Preferred at a price of $300 per one thousandth of a share ("Purchase Price"), subject to adjustment. The following description of the Rights is qualified in its entirety by reference to the Rights Agreement, as amended, which has been filed with and is available from the offices of the Commission as referred to under "Available Information". Until ten days following (i) a public announcement that a person or group of affiliated or associated persons acquired beneficial ownership of 15% or more of the outstanding shares of Common Stock of the Company or (ii) the commencement or announcement of an intention to make a tender offer or exchange offer for 15% or more of the outstanding shares of such Common Stock (the earlier of such dates being called "Distribution Date"), the Rights will be evidenced by outstanding Common Stock certificates. The Rights Agreement provides that, until the Distribution Date, the Rights will be transferred with and only with the Company's Common Stock. Common Stock certificates contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date the surrender for transfer of any of the Company's Common Stock certificates also constitutes the transfer of the Rights associated with the Common Stock represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights will be mailed to holders of record of the Company's Common Stock as of the close of business on the Distribution Date, and such separate certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution Date. The Rights will expire on July 31, 2006, unless earlier redeemed or exchanged by the Company, in each case, as described below. The Purchase Price payable, and the number of shares of Junior Preferred or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Junior Preferred, (ii) upon the grant to holders of Junior Preferred of certain rights or warrants to subscribe for or purchase shares of Junior Preferred at a price, or convertible securities into Preferred Shares with a conversion price less than the current market price of the Junior Preferred or (iii) upon the distribution to holders of Junior Preferred of evidences of indebtedness or assets (excluding regular periodic cash dividends out of earnings or retained earnings or dividends payable in Junior Preferred) or of subscription rights or warrants (other than those referred to above). At any time after any person or group acquires beneficial ownership of 15% or more of the Common Stock, and prior to the acquisition by such person or group of 50% or more of the outstanding Common Stock, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which will have become void), in whole or in part, at an exchange ratio of one share of Common Stock, or one thousandth of a Preferred Share (or of a share of a class or series of the Company's preferred stock having equivalent rights, preferences and privileges), per Right (subject to adjustment). The number of outstanding Rights and the number of one thousandths of a Preferred Share issuable upon exercise of each Right are also subject to adjustment in the event of a stock split of the Common Stock or a stock dividend on the Common Stock payable in Common Stock or subdivisions, consolidations or combinations of the Common Stock occurring, in any such case, prior to the Distribution Date. With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares will be issued (other than fractions which are integral multiples of one thousandth of a share which may, at the election of the Company, be evidenced by depository receipts) and, in lieu thereof, an adjustment in cash will be made based on the market price of the Junior Preferred on the last trading date prior to the date of exercise. The terms of the Rights may be amended by the Board of Directors of the Company without the consent of the holders of the Rights, including an amendment to lower certain thresholds described above to not less than the greater of (i) the sum of .001% and the largest percentage of the outstanding Common Shares then known to the Company to be beneficially owned by any person or group of affiliated or associated persons and (ii) 10%, except that from and after such time as any person or group of affiliated or associated persons becomes an Acquiring Person no such amendment may adversely affect the interests of the holders of the Rights. See the description of the Junior Preferred herein. 17 SPECIAL CHARTER PROVISIONS The Rights Agreement was adopted to address the threat of certain types of takeover activity deemed abusive and unfair to stockholders and to assure that all stockholders receive fair and equal treatment in the event of an unsolicited takeover of the Company. The Rights Agreement also enhances the bargaining position of the Company's Board of Directors in negotiating on behalf of stockholders with potential acquirors of the Company. The Company's Restated Certificate of Incorporation, as amended, contains provisions, in accordance with Section 102(b)(7) of the General Corporation Law of the State of Delaware, eliminating the personal liability of a director to the Company or its stockholders for money damages for breach of fiduciary duty as a director, provided that the liability of a director may not be eliminated or limited (i) for any breach of the directors' duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 (relating to liability for unauthorized acquisitions or redemptions of, or dividends on, capital stock) of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS Household International may issue Stock Purchase Contracts, representing contracts obligating holders to purchase from Household International, and Household International to sell to the holders, a specified number of shares of Common Stock at a future date or dates. The price per share of Common Stock may be fixed at the time the Stock Purchase Contracts are issued or may be determined by reference to a specific formula set forth in the Stock Purchase Contracts. The Stock Purchase Contracts may be issued separately or as a part of units ("Stock Purchase Units") consisting of a Stock Purchase Contract and either Debt Securities, or debt obligations of third parties, including U.S. Treasury securities, securing the holders obligations to purchase the Common Stock under the Stock Purchase Contracts. The Stock Purchase Contracts may require Household International to make periodic payments to the holders of the Stock Purchase Units or vice versa, and such payments may be unsecured or prefunded on some basis. The Stock Purchase Contracts may require holders to secure their obligations thereunder in a specified manner. The applicable Prospectus Supplement will describe the terms of any Stock Purchase Contracts or Stock Purchase Units. The description in the Prospectus Supplement will not purport to be complete and will be qualified in its entirety by reference to the Stock Purchase Contracts, and, if applicable, collateral arrangements and depositary arrangements, relating to such Stock Purchase Contracts or Stock Purchase Units. PLAN OF DISTRIBUTION Household International may sell the Securities in any of three ways: (i) through underwriters or dealers; (ii) directly to a limited number of purchasers or to a single purchaser; or (iii) through agents. The Prospectus Supplement sets forth the terms of the offering of the Securities (collectively, the "Offered Securities"), including the name or names of any underwriters, dealers or agents, the purchase price of the Offered Securities and the proceeds to Household International from such sale, any underwriting discounts and other items constituting underwriters' compensation, and any discounts and commissions allowed or paid to dealers. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. If the Offered Securities are sold through underwriters, the Prospectus Supplement relating thereto describes the nature of the obligation of the underwriters to take the Offered Securities. The Offered Securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more underwriting firms acting alone. The underwriter or underwriters with respect to a particular underwritten offering of Offered Securities are named in the Prospectus Supplement relating to such offering, and, if an underwriting syndicate is used, the managing underwriter or underwriters are set forth on the cover of such Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement, the obligations 18 of the underwriters to purchase the Offered Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all the Offered Securities if any are purchased. The Offered Securities may be sold directly by Household International or through agents designated by Household International from time to time. Any agent involved in the offer or sale of the Offered Securities in respect of which this Prospectus is delivered is named, and any commissions payable by Household International to such agent are set forth, in the Prospectus Supplement relating thereto. Underwriters and agents who participate in the distribution of the Offered Securities may be entitled under agreements which may be entered into by Household International to indemnification by Household International against certain liabilities, including liabilities under the Securities Act of 1933, or to contribution with respect to payments which the underwriters or agents may be required to make in respect thereof. If so indicated in the Prospectus Supplement, Household International will authorize underwriters, dealers or other persons acting as Household International's agents to solicit offers by certain institutions to purchase Offered Securities from Household International pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must be approved by Household International. The obligations of any purchaser under any such contract will not be subject to any conditions except that (i) the purchase of the Offered Securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject, and (ii) if the Offered Securities are also being sold to underwriters, Household International shall have sold to such underwriters the Offered Securities not sold for delayed delivery. The underwriters, dealers and such other persons will not have any responsibility in respect to the validity or performance of such contracts. There can be no assurance that a secondary market will be created for the Offered Securities or, if it is created, that it will continue. ERISA MATTERS The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), imposes certain restrictions on employee benefit plans ("Plans") that are subject to ERISA and on persons who are fiduciaries with respect to such Plans. In accordance with ERISA's general fiduciary requirements, a fiduciary with respect to any such Plan who is considering the purchase of Notes on behalf of such Plan should determine whether such purchase is permitted under the governing Plan documents and is prudent and appropriate for the Plan in view of its overall investment policy and the composition and diversification of its portfolio. Other provisions of ERISA and Section 4975 of the Code prohibit certain transactions between a Plan and persons who have certain specified relationships to the Plan ("parties in interest" within the meaning of ERISA or "disqualified persons" within the meaning of Section 4975 of the Code). Thus, a Plan fiduciary considering the purchase of Notes should consider whether such a purchase might constitute or result in a prohibited transaction under ERISA or Section 4975 of the Code. Household International may be considered a "party in interest" or a "disqualified person" with respect to many Plans that are subject to ERISA. The purchase of Notes by a Plan that is subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of Section 4975 of the Code (including individual retirement accounts and other plans described in Section 4975(e)(1) of the Code) and with respect to which Household International is a party in interest or a disqualified person may constitute or result in a prohibited transaction under ERISA or Section 4975 of the Code, unless such Notes are "marketable obligations" (as defined in Section 407(e) of ERISA) or are acquired pursuant to and in accordance with an applicable exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain transactions determined by an independent qualified professional asset manager), PTCE 91-38 (an exemption for certain transactions involving bank collective investment funds), PTCE 90-1 (an exemption for certain transactions involving insurance company pooled separate accounts) or PTCE 95-60 (an exemption for certain transactions involving insurance company general accounts). ANY PENSION OR OTHER EMPLOYEE BENEFIT PLAN PROPOSING TO ACQUIRE ANY NOTES SHOULD CONSULT WITH ITS COUNSEL. 19 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Estimated Expenses: Printing and Engraving........................................ $ 300,000 Fees of Trustees/Transfer Agents/Registrars................... 100,000 Accountants' Fees............................................. 100,000 Blue Sky Qualifications Fees.................................. 5,000 SEC Filing Fee................................................ 287,879* Rating Service Fees........................................... 550,000 Stock Exchange Listing Fees................................... 50,000 Legal Fees and Expenses....................................... 25,000 Miscellaneous................................................. 7,121 ---------- Total.................................................... $1,425,000
- -------- *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 Law of Delaware (Section 145) gives Delaware corporations 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. Pursuant to agreements which the Company may enter into with underwriters or agents (forms of which are or will be filed as exhibits to this Registration Statement) officers and directors of the Company 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-1 ITEM 16. EXHIBITS. 1(a) Form of Underwriting Agreement for Debt Securities and Warrants to Purchase Debt Securities. 1(b)** Form of Underwriting Agreement for Preferred Shares. 1(c)** Forms of Underwriting Agreement for Common Stock. 1(d)** Form of Underwriting Agreement for Stock Purchase Contracts. 1(e)** Form of Underwriting Agreement for Stock Purchase Units. 3(a) Restated Certificate of Incorporation, as amended, of Household International, Inc. (incorporated by reference to Exhibit 3(i) of Household International's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997). 3(b) Bylaws of Household International, Inc (incorporated by reference to Exhibit 3(ii) of Household International's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995). 4(a) Indenture dated as of October 1, 1993, between Household International, Inc. and The First National Bank of Maryland, as Trustee (incorporated by reference to Exhibit 4(a) to the Company's Registration Statement on Form S-3, Registration No. 33-57249). 4(b)+ Indenture between Household International, Inc. and Harris Trust and Savings Bank, as Trustee. 4(c) Forms of Warrant Agreement, including form of Warrant Certificates. 4(d) Form of Deposit Agreement. 4(e)** Form of Certificate of Designation, Preferences and Rights for Preferred Shares. 4(f) Form of Purchase Contract Agreement. 4(g) Form of Pledge Agreement. 4(h) Rights Agreement dated as of July 9, 1996 between the Company and Harris Trust and Savings Bank, as Rights Agent (incorporated by reference to Exhibit 99.1 of the Company's Current Report on Form 8-K dated July 9, 1996. 4(i) Form of Prepaid Securities Indenture. 5 Opinion and Consent of Mr. John W. Blenke, Vice President--Corporate Law of Household International, Inc. 12 Statement on the Computation of Ratio of Earnings to Fixed Charges and to Combined Fixed Charges and Preferred Stock Dividends (incorporated herein by reference from Exhibit 12 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and from Exhibit 12 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 of Household International, Inc. (File No. 1-8198)). 23(a)* Consent of Arthur Andersen LLP, Certified Public Accountants. 23(b) Consent of Mr. John W. Blenke, Vice President--Corporate Law of Household International, Inc. is contained in his opinion (Exhibit 5). 24* Powers of Attorney (included on signature page). 25(a) Statement of eligibility and qualification of The First National Bank of Maryland. 25(b) Statement of eligibility and qualification of Harris Trust and Savings Bank.
- -------- * Previously filed. ** To be filed as an exhibit to Form 8-K in reference to the specific offering of Securities, if any, to which it relates. + Filing omitted pursuant to Instruction 2 to Item 601 of Regulation S-K because the exhibit is substantially identical in all material respects to Exhibit 4(a), except as to parties thereto. II-2 ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made of the Securities registered hereby, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that the undertakings set forth in paragraphs (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment 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. (3) To remove from registration by means of a post-effective amendment any of the Securities being registered which remain unsold at the termination of the offering. (4) 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. (5) 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. (6) 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. (7) To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions set forth or described in Item 15 of this Registration Statement, or otherwise, the Registrant has 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 the 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 the Registrant by such director, officer or controlling person, in connection with the Securities registered hereby, the 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-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT TO THE 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 23RD DAY OF MAY, 1997. Household International, Inc. * By: _________________________________ William F. Aldinger Chairman and Chief Executive Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED AND ON THE 23RD DAY OF MAY, 1997.
SIGNATURE TITLE --------- ----- * Chairman, Chief Executive Officer, and ___________________________________________ Director (as Principal Executive Officer) (William F. Aldinger) * Director ___________________________________________ (Robert J. Darnall) * Director ___________________________________________ (Gary G. Dillon) * Director ___________________________________________ (John A. Edwardson) * Director ___________________________________________ (Mary J. Evans) * Director ___________________________________________ (Dudley Fishburn) * Director ___________________________________________ (Cyrus F. Freidheim, Jr.) * Director ___________________________________________ (Louis E. Levy)
II-4
SIGNATURE TITLE --------- ----- * Director ___________________________________________ (George A. Lorch) * Director ___________________________________________ (John D. Nichols) * Director ___________________________________________ (James B. Pitblado) * Director ___________________________________________ (S. Jay Stewart) * Director ___________________________________________ (Louis W. Sullivan, M.D.) * Executive Vice President--Chief Financial ___________________________________________ Officer (as Principal Accounting and (David A. Schoenholz) Financial Officer)
The Registrant reasonably believes that the security rating to be assigned to the Securities registered hereunder will make the Securities "investment grade securities" pursuant to Transaction Requirement B.2 of Form S-3. Patrick D. Schwartz *By: _____________________________ (Patrick D. Schwartz) Attorney-in-Fact II- 5 EX-1.(A) 2 FORM OF UNDERWRITING AGREEMENT EXHIBIT 1(a) HOUSEHOLD INTERNATIONAL, INC. Underwriting Agreement ---------------------- [Names of Representatives] [Address] ____________, 199__ Dear Sirs: From time to time Household International, Inc., a Delaware corporation (the "Company"), proposes to enter into one or more Pricing Agreements (each a "Pricing Agreement" and together the "Pricing Agreements") in the form of Annex I hereto, with such additions and deletions as the parties thereto may determine, and, subject to the terms and conditions stated herein and therein, to issue and sell to the underwriters named in Schedule I to the applicable Pricing Agreement (with respect to each such Pricing Agreement, the "Underwriters") certain of its debt securities (the "Debt Securities") and, if applicable, warrants to purchase Debt Securities (the "Warrants") specified in Schedule II to such Pricing Agreement (with respect to each such Pricing Agreement, the "Designated Debt Securities" and the "Designated Warrants"). The terms and rights of any particular issuance of Designated Debt Securities shall be as specified in the applicable Pricing Agreement and in the indenture, as it may be supplemented from time to time (the "Indenture"), identified in such Pricing Agreement. The terms and rights of any particular issuance of Designated Warrants shall be as specified in the applicable Pricing Agreement and in the warrant agreement (the "Warrant Agreement") identified in such Pricing Agreement. Each Pricing Agreement shall constitute an agreement by the Company and the Underwriters to be bound by all of the provisions of this Underwriting Agreement. 1. Particular sales of Designated Debt Securities and Designated Warrants may be made from time to time to the Underwriters of such Debt Securities and Warrants for whom the firms designated as representatives of the Underwriters of such Debt Securities and Warrants in the Pricing Agreement relating thereto will act as representatives (the "Representatives"). The term "Representatives" also refers to a single firm acting as sole representative of the Underwriters and to Underwriters who act without any firm being designated as their representative. This Underwriting Agreement shall not be construed as an obligation of the Company to sell any of the Debt Securities or Warrants or as an obligation of any of the Underwriters to purchase any of the Debt Securities or Warrants. The obligation of the Company to issue and sell any of the Debt Securities or Warrants shall be evidenced by the Pricing Agreement with respect to the Designated Debt Securities and Designated Warrants specified therein. Each Pricing Agreement shall specify the aggregate principal amount of such Designated Debt Securities and the number of Designated Warrants, the public offering price of such Designated Debt Securities, the purchase price to the Underwriters of such Designated Debt Securities, the names of the Underwriters of such Designated Debt Securities, the names of the Representatives of such Underwriters and the principal amount of such Designated Debt Securities and the number of Designated Warrants to be purchased by each Underwriter, whether any of such Designated Debt Securities and Designated Warrants are to be purchased from the Company pursuant to delayed delivery contracts on terms to be specified in the Pricing Agreement and such contracts ("Delayed Delivery Contracts") and shall set forth the date, time and manner of delivery of such Designated Debt Securities and Designated Warrants and payment for such Designated Debt Securities and Designated Warrants. The Pricing Agreement shall also specify (to the extent not set forth in the registration statement and prospectus with respect thereto) the terms of such Designated Debt Securities and Designated Warrants. A Pricing Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications transmitted. The obligations of the Underwriters under this Agreement and each Pricing Agreement shall be several and not joint. 2. The Company represents and warrants to, and agrees with, each of the Underwriters that: (a) A registration statement (Registration No. 333-______) in respect of the Debt Securities and the Warrants has been filed with the Securities and Exchange Commission (the "Commission") in the form heretofore delivered or to be delivered to the Representatives and, excluding exhibits to such registration statement, but including all documents incorporated by reference therein, to the Representatives for each of the other Underwriters and such registration statement in such form has been declared effective by the Commission and no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or threatened by the -2- Commission (any preliminary prospectus included in such registration statement being hereinafter called a "Preliminary Prospectus"; such registration statement, including all exhibits thereto but excluding each Form T-1, as amended at the time such registration statement or any part thereof became effective, being hereinafter called the "Registration Statement"; the prospectus included in the Registration Statement, in the form in which it has most recently been filed with, or transmitted for filing to, the Commission pursuant to Rule 424 of Regulation C on or prior to the date of this Agreement being hereinafter called the "Prospectus"); any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents, if any, incorporated by reference therein pursuant to the applicable form under the Securities Act of 1933, as amended (the "Act"), as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and so incorporated by reference; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the applicable Designated Debt Securities and Designated Warrants in the form in which it is filed with the Commission pursuant to Rule 424 under the Act in accordance with Section 5(a) hereof including any documents incorporated by reference therein as of the date of such filing or transmission; (b) The documents incorporated by reference in the Prospectus, when they became effective or were filed with Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus and in the Prospectus as amended or supplemented, when they become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act -3- or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Debt Securities and Designated Warrants through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Debt Securities and Warrants; (c) The Registration Statement and the Prospectus conform, and any amendments or supplements thereto will conform, in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission thereunder; the Registration Statement and any amendment thereof (including the filing of any annual report on Form 10-K) at the time it became effective, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus, at the time the Registration Statement became effective did not, as of the date hereof does not and as of the Time of Delivery (as hereinafter defined) will not, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Debt Securities and Designated Warrants through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Debt Securities and Warrants; (d) The financial statements included or incorporated by reference in the Registration Statement present fairly the financial position of the Company and subsidiaries as of the dates indicated and the results of operations and changes in financial position for the periods specified; and said financial -4- statements have been prepared in conformity with generally accepted accounting principles applied on a basis which is consistent in all material respects during the periods involved; (e) Since the date of the latest audited financial statements in the Prospectus there has not been any material change in the capital stock or long-term debt of the Company (except for changes resulting from the purchase by the Company of its outstanding securities for sinking fund purposes) or any material adverse change in the general affairs or management or the consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Prospectus; (f) The Company and its significant subsidiaries, within the meaning of Rule 1-02 of Regulation S-X under the Act (the "Significant Subsidiaries") are validly organized and existing corporations under the laws of their respective jurisdictions of incorporation; and the Company and its Significant Subsidiaries are duly authorized to conduct in the various jurisdictions in which they do business the respective businesses therein conducted by them as described in the Prospectus, except where failure to be so authorized or permitted will not have a material adverse effect on the business or consolidated financial condition of the Company and its subsidiaries taken as a whole; (g) There are no legal or governmental proceedings pending, other than those referred to in the Prospectus, to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject, other than proceedings which are not reasonably expected, individually or in the aggregate, to have a material adverse effect on the consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries taken as a whole; and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (h) The Debt Securities and the Warrants have been duly authorized, and, when issued and delivered pursuant to this Agreement, the Pricing Agreement and any Delayed Delivery Contracts will have been duly -5- executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture and the Warrant Agreement under which such Debt Securities and Warrants are to be issued, the Indenture and the Warrant Agreement to be substantially in the forms filed as exhibits to the Registration Statement; the Indenture has been duly authorized and, when executed and delivered by the Company and the Trustee thereunder, the Indenture and the Warrant Agreement will constitute valid and legally binding instruments enforceable in accordance with their respective terms except as enforceability may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general principles of equity; and the Debt Securities, the Warrants, the Indenture and the Warrant Agreement conform to the descriptions thereof in the Prospectus as originally filed with the Commission, and will conform to the descriptions thereof in the Prospectus as amended or supplemented; (i) The issue and sale of the Debt Securities and the Warrants and compliance by the Company with all of the provisions of the Debt Securities, the Warrants, the Indenture, the Warrant Agreement, this Agreement, any Pricing Agreement and any Delayed Delivery Contracts will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company or any of its subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries may be bound or to which any of the property or assets of the Company or any of its subsidiaries is subject (except for conflicts, breaches and defaults which would not, individually or in the aggregate, be materially adverse to the Company and its subsidiaries taken as a whole or materially adverse to the transactions contemplated by this Agreement), nor will such action result in any violation of the provisions of the Certificate or Articles of Incorporation, as amended, or the By-Laws of the Company or any of its subsidiaries or any statute or any order, rule or regulation applicable to the Company or any of its subsidiaries of any court or of any Federal, State or other regulatory authority or other -6- governmental body having jurisdiction over the Company or any of its subsidiaries; and no consent, approval, authorization, order, registration or qualification of or with any court or any such regulatory authority or other governmental body is required for the issue and sale of the Debt Securities and the Warrants or the consummation of the other transactions contemplated in this Agreement, any Pricing Agreement, or any Delayed Delivery Contracts except the registration under the Act of the Debt Securities and the Warrants, the qualification of the Indenture under the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under State securities or Blue Sky laws in connection with the purchase and distribution of the Debt Securities and the Warrants by the Underwriters; and (j) Arthur Andersen LLP, who have certified certain financial statements included in the Registration Statement and the Prospectus, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder. 3. Upon the execution of the Pricing Agreement applicable to any Designated Debt Securities and Designated Warrants and authorization by the Representatives of the release of such Designated Debt Securities and Designated Warrants, the several Underwriters propose to offer such Designated Debt Securities and Designated Warrants for sale upon the terms and conditions set forth in the Prospectus and any amendment or supplement thereto relating to such Designated Debt Securities and Designated Warrants. 4. Designated Debt Securities and Designated Warrants to be purchased by each Underwriter pursuant to the Pricing Agreement relating thereto, in book-entry form, and in such authorized denominations and registered in the name of the nominee of the Depository Trust Company, shall be delivered by or on behalf of the Company through the facilities of the Depository Trust Company to the Representatives for the account of such Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor by wire transfer of same-day funds to the Company, all at the place and time and date specified in such Pricing Agreement or at such other place and time and date as the Representatives and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Designated Debt Securities and Designated Warrants. -7- 5. The Company agrees with each of the Underwriters of any Designated Debt Securities and Designated Warrants: (a) To make no further amendment or any supplement to the Registration Statement or Prospectus as amended or supplemented after the date of the Pricing Agreement relating to such Debt Securities and Warrants and prior to the Time of Delivery for such Debt Securities and Warrants which shall be disapproved by the Representatives promptly after reasonable notice thereof; to advise the Representatives promptly of any such amendment or supplement after such Time of Delivery and furnish the Representatives with copies thereof and to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of such Debt Securities and Warrants, and during such same period to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed or transmitted for filing, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Prospectus, of the suspension of the qualification of such Debt Securities and Warrants for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any Prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal; (b) Promptly from time to time to take such action as the Representatives may reasonably request to qualify such Debt Securities and Warrants for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Debt Securities and Warrants, provided that in connection therewith the Company shall -8- not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) To furnish the Underwriters with copies of the Prospectus as amended or supplemented in such quantities as the Representatives may from time to time reasonably request, and, if the delivery of a prospectus is required at any time in connection with the offering or sale of such Debt Securities and Warrants and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify the Representatives and upon their request to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; (d) To make generally available to its security holders as soon as practicable, but in any event not later than ninety days after the close of the period covered thereby, an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and covering a period of at least twelve consecutive months beginning not later than the first day of the fiscal quarter following the Time of Delivery; and (e) During the period beginning from the date of the Pricing Agreement for such Designated Debt Securities and Designated Warrants and continuing to and including the later of (i) the termination of trading restrictions on such Designated Debt Securities and Designated Warrants, as notified to the Company by the Representatives and (ii) the Time of Delivery for such Designated Debt Securities and Designated Warrants, not to offer, sell, contract to sell or -9- otherwise dispose of any debt securities of the Company (except for Debt Securities issued upon exercise of warrants) which mature more than nine months after such Time of Delivery and which are substantially similar to such Designated Debt Securities, without the prior written consent of the Representatives, provided, however, that in no event shall the foregoing period extend more than fifteen calendar days from the date of the Pricing Agreement. 6. The Company covenants and agrees with the several Underwriters that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Debt Securities and the Warrants under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or reproducing this Agreement, any Pricing Agreement, any Delayed Delivery Contract, any Indenture and supplements thereto, any Warrant Agreement and amendments thereto, and any Blue Sky Survey and Legal Investment Memorandum; (iii) all expenses in connection with the qualification of the Debt Securities and the Warrants for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky Survey and Legal Investment Memorandum; (iv) any fees charged by securities rating services for rating the Debt Securities; (v) any filing fees incident to any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Debt Securities and the Warrants; (vi) the cost of preparing the Debt Securities and the Warrants; (vii) the fees and expenses of any Trustee and any agent of any Trustee, the fees and expenses of any warrant agent, and the fees and disbursements of counsel for any Trustee or any warrant agent in connection with any Indenture, Warrant Agreement, the Debt Securities and the Warrants; and (viii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, Section 8 and Section 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Debt Securities or Warrants by them, and any advertising expenses connected with any offers they may make. -10- 7. The obligations of the Underwriters of any Designated Debt Securities and any Designated Warrants hereunder shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company herein are, at and as of the Time of Delivery for such Designated Debt Securities and Designated Warrants, true and correct, the condition that the Company shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions: (a) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the Representatives' reasonable satisfaction; (b) Counsel for the Underwriters shall have furnished to the Representatives such opinion or opinions, dated the Time of Delivery for such Designated Debt Securities and Designated Warrants, with respect to the incorporation of the Company, the validity of the Indenture, the Designated Debt Securities, the Designated Warrants, the Warrant Agreement, the Registration Statement, the Prospectus as amended or supplemented and other related matters as the Representatives may reasonably request and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; (c) Counsel for the Company shall have furnished to you his written opinion, dated the Time of Delivery, in form and substance satisfactory to you, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware; (ii) The Significant Subsidiaries of the Company are validly organized and existing corporations under the laws of their respective jurisdictions of incorporation; and all of the issued shares of capital stock of each Significant Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and (other then -11- certain preferred shares issued by Household Finance Corporation and Household Global Funding, Inc.) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims; (iii) The Company and its Significant Subsidiaries are duly authorized to conduct in the various jurisdictions in which they do business the respective businesses therein conducted by them as described in the Prospectus, except where failure to be so permitted or failure to be so authorized will not have a material adverse effect on the business or consolidated financial condition of the Company and its subsidiaries taken as a whole; (iv) The Company has an authorized capitalization as set forth in the Prospectus as amended or supplemented and all of the outstanding shares of its common and preferred stock have been duly and validly authorized and issued and are fully paid and nonassessable; (v) To the best of such counsel's knowledge, there are no legal or governmental proceedings pending, other than those referred to or incorporated in the Prospectus, to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which individually or in the aggregate is material, and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (vi) This Agreement and the Pricing Agreement with respect to the Designated Debt Securities and the Designated Warrants have been duly authorized, executed and delivered by the Company; (vii) Each Delayed Delivery Contract has been duly authorized, executed and delivered by the Company and is a valid and -12- legally binding agreement of the Company in accordance with its terms; (viii) The Indenture and the Warrant Agreement have been duly authorized, executed and delivered by the Company, and constitute valid and legally binding instruments of the Company enforceable in accordance with their respective terms except as enforcement of the provisions thereof may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general principles of equity; the Indenture has been duly qualified under the Trust Indenture Act; and all taxes and fees required to be paid with respect to the execution of the Indenture and the Warrant Agreement and the issuance of the Designated Debt Securities and the Designated Warrants have been paid; (ix) The Designated Debt Securities and the Designated Warrants have been duly authorized and executed and, when the Designated Debt Securities and the Designated Warrants have been duly authenticated, issued and delivered against payment of the agreed consideration therefor, the Designated Debt Securities and the Designated Warrants will constitute valid and legally binding obligations of the Company and, with like exception as noted in subdivision (viii) above, will be entitled to the benefits provided by the Indenture and the Warrant Agreement; and the Designated Debt Securities, the Designated Warrants, the Indenture and the Warrant Agreement conform to the descriptions thereof in the Prospectus as amended or supplemented; (x) The issue and sale of the Designated Debt Securities and the Designated Warrants, and the compliance of the Company with all of the provisions of the Designated Debt Securities, the Designated Warrants, the Indenture, the Warrant Agreement and this Agreement, will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result -13- in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company or any of its subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust, loan agreement, or other agreement or instrument, known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries may be bound or to which any of the property or assets of the Company or any of its subsidiaries is subject (except for conflicts, breaches and defaults which would not, individually or in the aggregate, be materially adverse to the Company and its subsidiaries taken as a whole or materially adverse to the transactions contemplated by this Agreement), nor will such action result in any violation of the provisions of the Certificate or Articles of Incorporation, as amended, or the By-Laws of the Company or any of its subsidiaries or, to the best of such counsel's knowledge, any statute or any order, rule or regulation applicable to the Company or any of its subsidiaries of any court or of any Federal, State or other regulatory authority or other governmental body having jurisdiction over the Company or any of its subsidiaries; and no consent, approval, authorization, order, registration or qualification of or with any court or any such regulatory authority or other governmental body is required for the issue and sale of the Designated Debt Securities and Designated Warrants or the consummation of the other transactions contemplated in this Agreement and the Pricing Agreement, except the registration under the Act of the Designated Debt Securities and the Designated Warrants, the qualification of the Indenture under the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under State securities or Blue Sky laws in connection with the public offering of the Designated Debt Securities and the Designated Warrants by the Underwriters; (xi) The documents incorporated by reference in the Prospectus as amended or -14- supplemented (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; and such counsel has no reason to believe that any of such documents, when they became effective or were so filed, as the case may be, contained, in the case of documents which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, in the case of documents which were filed under the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading; (xii) The Registration Statement has become and is now effective under the Act and, to the best of such counsel's knowledge, no proceedings for a stop order in respect of the Registration Statement are pending or threatened under Section 8(d) or 8(e) of the Act; and (xiii) The Registration Statement and the Prospectus as amended or supplemented and any further amendments and supplements thereto made by the Company prior to the Time of Delivery for the Designated Debt Securities and the Designated Warrants (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; such counsel has no reason to believe that either the Registration Statement or any amendment thereof (including the filing of any annual -15- report on Form 10-K) at the time it became effective contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus as amended or supplemented at the time it was filed or transmitted for filing pursuant to Rule 424 under the Act contained or as amended or supplemented at the Time of Delivery contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and such counsel does not know of any contracts required to be filed with the Registration Statement which are not so filed; (d) At the Time of Delivery for the Designated Debt Securities and the Designated Warrants, the independent accountants of the Company who have certified the financial statements of the Company and its subsidiaries included or incorporated by reference in the Registration Statement shall have furnished to the Representatives a letter, dated such Time of Delivery, in form and substance satisfactory to the Representatives, to the effect set forth in the letter furnished to counsel for the Underwriters by said independent accountants at the time the Registration Statement was filed under the Act, and as to such other matters as the Representatives may reasonably request; (e)(i) The Company and its subsidiaries taken as a whole shall not have sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus as amended or supplemented any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree and (ii) since the respective dates as of which information is given in the Prospectus as amended or supplemented there shall not have been any material change in the general affairs of management, or the consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Prospectus as amended or -16- supplemented, the effect of which in any such case described in clause (i) or (ii) is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Debt Securities and the Designated Warrants on the terms and in the manner contemplated in the Prospectus as amended or supplemented; (f) Subsequent to the date of the Pricing Agreement relating to the Designated Debt Securities and the Designated Warrants no downgrading shall have occurred in the rating accorded the Company's senior debt securities by any "nationally recognized statistical rating organization," as that term is defined by the Commission for purposes of Rule 436(g) of the Act; (g) Subsequent to the date of the Pricing Agreement relating to the Designated Debt Securities and the Designated Warrants there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities; or (iii) the outbreak or material escalation of hostilities or the declaration of a national emergency or war, if the effect of any such event specified in this clause (iii) in the reasonable judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Debt Securities and the Designated Warrants on the terms and in the manner contemplated in the Prospectus as amended or supplemented; and (h) The Company shall have furnished or caused to be furnished to the Representatives at the Time of Delivery for the Designated Debt Securities and the Designated Warrants certificates of officers of the Company satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company herein at and as of such Time of Delivery (provided that, each representation and warranty which refers to the Prospectus in Section 2 hereof shall be in relation to the Prospectus as amended or supplemented relating to the Designated Debt Securities and the Designated Warrants), as to the performance by the Company of all of its obligations hereunder to be -17- performed at or prior to such Time of Delivery, and as to such other matters as the Representatives may reasonably request. 8. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, Preliminary Prospectus Supplement, the Registration Statement, the Prospectus or the Prospectus as amended or supplemented, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim, as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, Preliminary Prospectus Supplement, the Registration Statement, the Prospectus or the Prospectus as amended or supplemented or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter of Designated Debt Securities and Designated Warrants through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Securities. (b) Each Underwriter will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any Preliminary Prospectus Supplement, the Registration Statement, the Prospectus or the Prospectus as amended or supplemented, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, any Preliminary Prospectus Supplement, -18- the Registration Statement, the Prospectus or the Prospectus as amended or supplemented, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim, as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. (d) If the indemnification provided for in this Section 8 is unavailable to an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters of the Designated Debt Securities and the Designated Warrants on the other from the offering of the Designated Debt Securities and the Designated Warrants to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) -19- above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Underwriters of the Designated Debt Securities and the Designated Warrants on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and such Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by such Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statements of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or such Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or action in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Designated Debt Securities and the Designated Warrants underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Underwriters of Designated Debt Securities and Designated Warrants in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Debt Securities and Warrants and not joint. -20- (e) The obligations of the Company under this Section 8 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act. 9. (a) If any Underwriter shall default in its obligation to purchase the Designated Debt Securities and the Designated Warrants which it has agreed to purchase under the Pricing Agreement relating to such Designated Debt Securities and Designated Warrants, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Designated Debt Securities and Designated Warrants on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such Designated Debt Securities and Designated Warrants, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Designated Debt Securities and Designated Warrants on such terms. In the event that, within the respective prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Designated Debt Securities and Designated Warrants, or the Company notifies the Representatives that it has so arranged for the purchase of such Designated Debt Securities and Designated Warrants, the Representatives or the Company shall have the right to postpone the Time of Delivery for such Designated Debt Securities and Designated Warrants for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to the Pricing Agreement with respect to such Designated Debt Securities and Designated Warrants. (b) If, after giving effect to any arrangements for the purchase of the Designated Debt Securities and the Designated Warrants of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) -21- above, the aggregate principal amount of such Designated Debt Securities which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of the Designated Debt Securities to be purchased at the Time of Delivery for such Designated Debt Securities, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Designated Debt Securities and the number of Designated Warrants which such Underwriter agreed to purchase under the Pricing Agreement relating to such Designated Debt Securities and Designated Warrants and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Debt Securities and the number of Designated Warrants which such Underwriter agreed to purchase under such Pricing Agreement) of the Designated Debt Securities and the Designated Warrants of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Designated Debt Securities and the Designated Warrants of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of Designated Debt Securities and the number of Designated Warrants which remain unpurchased exceeds one-eleventh of the aggregate principal amount of the Designated Debt Securities to be purchased at the Time of Delivery for such Designated Debt Securities, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Designated Debt Securities and Designated Warrants of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to such Designated Debt Securities and Designated Warrants shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default. 10. The respective indemnities, agreements, representations, warranties and other statements of the Company and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of -22- and payment for the Designated Debt Securities and the Designated Warrants. 11. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof, the Company shall not then be under any liability to any Underwriter with respect to the Designated Debt Securities and the Designated Warrants covered by such Pricing Agreement except as provided in Section 6 and Section 8 hereof; but, if for any other reason Designated Debt Securities and Designated Warrants are not delivered by or on behalf of the Company as provided herein, the Company will reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of such Designated Debt Securities and Designated Warrants, but the Company shall then be under no further liability to any Underwriter with respect to such Designated Debt Securities and Designated Warrants except as provided in Section 6 and Section 8 hereof. 12. In all dealings hereunder, the Representatives of the Underwriters of Designated Debt Securities and Designated Warrants shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives. All statements, requests, notices and agreements hereunder shall be in writing or by telegram if promptly confirmed in writing and if to the Underwriters shall be sufficient in all respects, if delivered or sent by registered mail to the address of the Representatives as set forth in the Pricing Agreement; and if to the Company shall be sufficient in all respects if delivered or sent by registered mail to the address of the Company set forth in the Registration Statement: Attention: Secretary; provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by registered mail to such Underwriter at its address set forth in its Underwriters' Questionnaire delivered to the Company. 13. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and, to the extent provided in Section 8 and Section 10 hereof, the officers and directors of the Company and each person who controls the Company or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement or -23- any such Pricing Agreement. No purchaser of any of the Debt Securities or Warrants from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence of each Pricing Agreement. 15. This Agreement and each Pricing Agreement shall be construed in accordance with the laws of the State of Illinois. 16. This Agreement and each Pricing Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. If the foregoing is in accordance with your understanding, please sign and return to us _______ counterparts hereof. Very truly yours, HOUSEHOLD INTERNATIONAL, INC. By:________________________________ Title: Accepted as of the date hereof: [Names of Representatives] By:____________________________ By:____________________________ Title: -24- ANNEX I PRICING AGREEMENT ----------------- [Names of Representative(s)] As Representatives of the several Underwriters named in Schedule I hereto, [Address] _______, 19__ Dear Sirs: Household International, Inc. (the "Company") proposes, subject to the terms and conditions stated herein and in the Underwriting Agreement dated ___________, _____ (the "Underwriting Agreement"), between the Company on the one hand and [names of representative[s] named therein] on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Designated Debt Securities and the Designated Warrants specified in Schedule II hereto less the principal amount of Designated Debt Securities and the number of Designated Warrants covered by Delayed Delivery Contracts ("Delayed Delivery Contracts") as provided below (such Designated Debt Securities and Designated Warrants covered by Delayed Delivery Contracts being hereinafter referred to collectively as Contract Securities). Each of the provisions of the Underwriting Agreement to be a part of this Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provision had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each of the representations and warranties set forth in Section 2 of the Underwriting Agreement with respect to the Prospectus or the information contained in the Prospectus shall constitute a representation or warranty thereof (a) as of the date of the Underwriting Agreement with respect to the Prospectus, and also (b) as of the date of this Pricing Agreement with respect to the Prospectus as amended or supplemented. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you is now proposed to be filed with, or in the case of a supplement transmitted for filing to, the Commission. The Company hereby authorizes the Underwriters to solicit offers to purchase Designated Debt Securities and Designated Warrants from the Company pursuant to Delayed Delivery Contracts, substantially in the form of Schedule III attached hereto but with such changes therein as you and the Company may authorize or approve. The Underwriters will endeavor to make such arrangements, and as compensation therefor the Company will pay to you, for the accounts of the Underwriters, at the Time of Delivery, a commission of ___% of the principal amount of Designated Debt Securities for which Delayed Delivery Contracts have been made. Delayed Delivery Contracts are to be with institutional investors of the types mentioned in the last paragraph under the caption "Plan of Distribution" in the Prospectus and subject to other conditions therein set forth. The Company will enter into a Delayed Delivery Contract in each case arranged by the Underwriters where the Company has advised you of its approval of the proposed sale of Contract Securities to the purchaser thereunder; provided, however, that the minimum principal amount of Designated Debt Securities covered by any Delayed Delivery Contract with any purchaser or any Delayed Delivery Contract with affiliated purchasers shall be $_________ and the aggregate principal amount of Designated Debt Securities covered by Delayed Delivery Contracts shall not exceed $_____________, unless the Company shall otherwise agree in writing. However, if the aggregate principal amount of Designated Debt Securities requested for delayed delivery is less than $_________, the Company will have the right to reject all requests. The Underwriters will not have any responsibility in respect of the validity or performance of Delayed Delivery Contracts. The amount of Contract Securities to be deducted from the principal amount of Designated Debt Securities and the number of Designated Warrants to be purchased by each Underwriter as set forth in Schedule I hereto shall be, in each case, the amount of Contract Securities which the Company has been advised by you have been attributed to such Underwriter, provided that if the Company has not been so advised, the amount of Contract Securities to be so deducted shall be, in each case, that proportion of Contract Securities which the principal amount of Designated Debt Securities and the number of Designated Warrants to be purchased by such Underwriter under this Agreement bears to the total principal amount of the Designated Debt Securities (rounded as you may determine to the nearest $1,000 principal amount) and the total number of Designated Warrants. The total principal amount of Designated Debt Securities to be purchased by -2- all the Underwriters shall be $___________ less the principal amount of the Designated Debt Securities covered by Delayed Delivery Contracts and the total number of Designated Warrants so purchased shall be _____ less the number of Designated Warrants covered by such Contracts. The Company will deliver to you not later than 3:30 p.m., Chicago time, on the business day preceding the Time of Delivery (or such other time and date as you and the Company may agree upon in writing) a written notice setting forth the principal amount of Designated Debt Securities and the number of Designated Warrants covered by Delayed Delivery Contracts. Subject to the terms and conditions set forth herein and in the Underwriting Agreement, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a purchase price to the Underwriters set forth in Schedule II hereto, the principal amount of Designated Debt Securities and number of Designated Warrants set forth opposite the name of such Underwriter in Schedule I hereto less such Underwriter's portion of Contract Securities determined as provided in the preceding paragraph. If the foregoing is in accordance with your understanding, please sign and return to us ______ counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be supplied to the Company upon request. Very truly yours, HOUSEHOLD INTERNATIONAL, INC. By:_______________________________ Accepted as of the date hereof: [Name(s) of Representative(s)] By:___________________________ (Title) On behalf of each of the Underwriters -3- SCHEDULE I Principal Amount of Designated Number of Debt Designated Securities Warrants to be to be Underwriter Purchased Purchased - ----------- ---------- ---------- [Name(s) of Representative(s)]..... $ [Names of other Underwriters]........ ---------- ---------- Total.................. $ ========== ========== SCHEDULE II Designated Debt Securities Title of Designated Debt Securities: [__%] [Floating Rate] [Zero Coupon] Notes due Aggregate principal amount: $ Price to Public: % of the principal amount of the Designated Debt Securities, plus accrued interest from ___________________ to the Time of Delivery [and accrued amortization, if any, from __________________ to the Time of Delivery] Purchase Price by Underwriters: % of the principal amount of the Designated Debt Securities, plus accrued interest from ___________________ to the Time of Delivery [and accrued amortization, if any, from __________________ to the Time of Delivery] Indenture: Indenture, dated ___________, 199_, between the Company and as Trustee Maturity: Interest Rate: [____%] [Zero Coupon] Interest Payment Dates: [months and dates] Redemption Provisions: [No provisions for redemption] [The Designated Debt Securities may be redeemed in whole or in part at the option of the Company, in the amount of $_________ or an integral multiple thereof, [on or after ________, _________ at the following redemption prices (expressed in percentages of principal amount). If redeemed during the 12-month period beginning Year Redemption Price ---- ---------------- And thereafter at 100% of their principal amount, together in each case with accrued interest to the redemption date.] [on any interest payment date falling on or after ________, ________, at the election of the Company, at a redemption price equal to the principal amount thereof, plus accrued interest to the date of redemption.] [Other possible redemption provisions, such as mandatory redemption upon occurrence of certain events or redemption for changes in tax law] Sinking Fund Provisions: [No sinking fund provisions] [The Designated Debt Securities are entitled to the benefit of a sinking fund to retire $________ principal amount of Designated Debt Securities on ________ in each of the years _______ through _____ at 100% of their principal amount plus accrued interest], [together with [cumulative] [non-cumulative] redemptions at the option of the Company to retire an additional $________ principal amount of Designated Debt Securities in the years _____ through ______ at 100% of their principal amount plus accrued interest]. Designated Warrants Warrant Exercise Price: Principal Amount of Designated Debt Securities Issuable on Exercise of One Warrant: -2- Date after which Warrants are Exercisable: Expiration Date: Detachable Date: Bearer or Registered Miscellaneous Time of Delivery: Closing Location: Type of Funds: [Other Terms]*: ____________________ * A description of particular tax, accounting or other unusual features of the Securities should be set forth, or referenced to an attached and accompanying description, if necessary to the issuer's understanding of the transaction contemplated. Such a description might appropriately be in the form in which such features will be described in the Prospectus Supplement for the offering. -3- SCHEDULE III DELAYED DELIVERY CONTRACT ------------------------- HOUSEHOLD INTERNATIONAL, INC. [Name and address of Representative(s)] _________, 19__ Attention: Dear Sirs: The undersigned hereby agrees to purchase from HOUSEHOLD INTERNATIONAL, INC. (hereinafter called the "Company"), and the Company agrees to sell to the undersigned, $______________ principal amount of the Company's [full title of Debt Securities] and ______ [full title of Warrants] (hereinafter collectively called the "Securities"), offered by the Company's Prospectus dated ______________, as supplemented by a supplement dated __________, ___, receipt of a copy of which is hereby acknowledged, at a purchase price of ____% of the principal amount of the Debt Securities, plus accrued interest from the date from which interest accrues as set forth below, and on the further terms and conditions set forth in this contract. The undersigned will purchase the Securities from the Company on _____________, ____ (the "Delivery Date"), and interest on the Securities so purchased will accrue from ________________, _____. Payment for the Securities which the undersigned has agreed to purchase on the Delivery Date shall be made to the Company or its order by certified or official bank check in Federal funds at the office of the Company, 2700 Sanders Road, Prospects Heights, Illinois 60070, on the Delivery Date upon delivery to the undersigned of the Securities then to be purchased by the undersigned in definitive fully registered form and in such denominations and registered in such names as the undersigned may designate by written or telegraphic communication addressed to the Company not less than five full business days prior to the Delivery Date. The obligation of the undersigned to take delivery of and make payment for Securities on the Delivery Date shall be subject to the conditions that (1) the purchase of Securities to be made by the undersigned shall not on the Delivery Date be prohibited under the laws of the jurisdiction to which the undersigned is subject and (2) the Company, on or before ____________, _____, shall have sold to the several Underwriters, pursuant to the Underwriting Agreement and Pricing Agreement each dated _____________, ____, with the Company, an aggregate principal amount of Debt Securities equal to $_______, and an aggregate number of Warrants equal to ________, minus the aggregate principal amount of Debt Securities and aggregate number of Warrants covered by this contract and other contracts similar to this contract. The obligation of the undersigned to take delivery of and make payment for Securities shall not be affected by the failure of any purchaser to take delivery of and make payment for Securities pursuant to other contracts similar to this contract. Promptly after completion of the sale to the Underwriters the Company will mail or deliver to the undersigned at its address set forth below notice to such effect, accompanied by a copy of the Opinion of Counsel for the Company delivered to the Underwriters in connection therewith. The undersigned represents and warrants that, as of the date of this contract, the undersigned is not prohibited from purchasing the Securities hereby agreed to be purchased by it under the laws of the jurisdiction to which the undersigned is subject. This contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. This contract shall be construed in accordance with and governed by the laws of the State of Illinois. It is understood that the acceptance by the Company of any Delayed Delivery Contract (including this contract) is in the Company's sole discretion and that, without limiting the foregoing, acceptances of such contracts need not be on a first-come, first-served basis. If this contract is acceptable to the Company, it is requested that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This -2- will become a binding contract between the Company and the undersigned when such counterpart is so mailed or delivered. Yours very truly, _______________________________ By:____________________________ (Signature) _______________________________ (Name and Title) _______________________________ (Address) Accepted, _____________, ________. Household International, Inc. By:____________________________ -3- EX-4.(C) 3 FORMS OF WARRANT AGREEMENT Exhibit 4(c) HOUSEHOLD INTERNATIONAL, INC. Form of Warrant Agreement (for warrants sold alone) THIS WARRANT AGREEMENT dated as of between Household International, Inc., a Delaware corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to) and as Warrant Agent (the "Warrant Agent"). WHEREAS, the Company has entered into an Indenture dated as of (the "Indenture"), with , as Trustee (the "Trustee"), providing for the issuance from time to time of its unsecured debt securities (the "Debt Securities"), to be issued in one or more series as provided in the Indenture; and WHEREAS, the Company proposes to sell warrant certificates evidencing one or more warrants (the "Warrants" or, individually a "Warrant) representing the right to purchase [title of debt securities purchasable through exercise of Warrants] (the "Warrant Debt Securities"), such warrant certificates and other warrant certificates issued pursuant to this Agreement hereinafter referred to as the "Warrant Certificates"; and WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company in connection with the issuance, exchange, exercise and replacement of the Warrant Certificates, and in this Agreement wishes to set forth, among other things, the form and provisions of the Warrant Certificates and the terms and conditions on which they may be issued, exchanged, exercised and replaced; NOW THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I Issuance of Warrants and Execution and Delivery of Warrant Certificates Section 1.01. Issuance of Warrants. Each Warrant Certificate shall -------------------- evidence one or more Warrants. Each Warrant evidenced thereby shall represent the right, subject to the provisions contained herein and therein, to purchase a Warrant Debt Security in the principal amount of $ . Section 1.02. Execution and Delivery of Warrant Certificates. Each ---------------------------------------------- Warrant Certificate, whenever issued, shall be in [bearer] [registered] form substantially in the form set forth in Exhibit A hereto, shall be dated and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Warrant Certificates may be listed, or to conform to usage. The Warrant Certificates shall be signed on behalf of the Company by either its President, one of its Vice Presidents or one of its Assistant Treasurers under its corporate seal and attested by its Secretary or any of its Assistant Secretaries. Such signatures may be manual or facsimile signatures of such authorized officers and may be imprinted or otherwise reproduced on the Warrant Certificates. The seal of the Company may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant Certificates. No Warrant Certificate shall be valid for any purpose, and no Warrant evidenced thereby shall be exercisable, until such Warrant Certificate has been countersigned by the manual signature of the Warrant Agent. Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that the Warrant Certificate so countersigned has been duly issued hereunder. In case any officer of the Company who shall have signed any of the Warrant Certificates either manually or by facsimile signature shall cease to be such officer before the Warrant Certificates so signed shall have been countersigned and delivered by the Warrant Agent, such Warrant Certificates may be countersigned and delivered notwithstanding that the person who signed such Warrant Certificates has ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Warrant Certificate, shall be the proper officers of the Company, although at the date of the execution of this Agreement any such person was not such officer. [If bearer Warrants -- The term "holder" or "holder of a Warrant ------------------ Certificate" as used herein shall mean the bearer of such Warrant Certificate.] [If registered Warrants -- The term "holder" or "holder of a Warrant ---------------------- Certificate" as used herein shall mean any person in whose name at the time any Warrant Certificate shall be registered 2 upon the books to be maintained by the Warrant Agent for that purpose.] Section 1.03. Issuance of Warrant Certificates. Warrant Certificates -------------------------------- evidencing the right to purchase an aggregate principal amount not exceeding $ aggregate principal amount of Warrant Debt Securities (except as provided in Sections 2.03(c), 3.02 and 4.01) may be executed by the Company and delivered to the Warrant Agent upon the execution of this Warrant Agreement or from time to time thereafter. The Warrant Agent shall, upon receipt of Warrant Certificates duly executed on behalf of the Company, countersign Warrant Certificates evidencing Warrants representing the right to purchase up to $ aggregate principal amount of Warrant Debt Securities and shall deliver such Warrant Certificates to or upon the order of the Company. Subsequent to such original issuance of the Warrant Certificates, the Warrant Agent shall countersign a Warrant Certificate only if the Warrant Certificate is issued in exchange or substitution for one or more previously countersigned Warrant Certificates, [If registered Warrants -- or in connection with their ---------------------- transfer], as hereinafter provided or as provided in Section 2.03(c). ARTICLE II Warrant Price, Duration and Exercise of Warrants Section 2.01. Warrant Price/*/. [On , 19 the exercise price of ------------- each Warrant is $ . During the period from , 19 through and including , 19 the exercise price of each Warrant will be $ plus [accrued amortization of the original issue discount] [accrued interest] from , 19 . On , 19 the exercise price of each Warrant will be $ . During the period from , 19 , through and including , 19 , the exercise price of each Warrant will be $ plus [accrued amortization of the original issue discount] [accrued interest] from , 19 , [in each case, the original issue discount will be amortized at a % annual rate, computed on an annual basis using a 360-day year consisting of twelve 30-day months]. Such purchase price of Warrant Debt Securities is referred to in this Agreement as the "Warrant Price". [The original issue discount for each $1,000 principal amount of Warrant Debt Securities is $ ]. Section 2.02. Duration of Warrants. Each Warrant evidenced by a Warrant -------------------- Certificate may be exercised in whole at any time, as _________________________________ /*/ Complete and modify the provisions of this Section as appropriate to -------------------------------------------------------------------- reflect the exact terms of the Offered Warrants and the Warrant Debt -------------------------------------------------------------------- Securities. ----------- 3 specified herein, on or after [the date thereof] [ , 19 ] and at or before 5 p.m. time on , 19 (the "Expiration Date"). Each Warrant not exercised at or before 5 p.m. time on the Expiration Date shall become void, and all rights of the holder of the Warrant Certificate evidencing such Warrant under this Agreement shall cease. Section 2.03. Exercise of Warrants. (a) During the period specified -------------------- in Section 2.02 any whole number of Warrants may be exercised by providing certain information set forth on the reverse side of the Warrant Certificate and by paying in full, in lawful money of the United States of America, [in cash or by certified check or official bank check or by bank wire transfer, in each case] [by bank wire transfer] in immediately available funds, the Warrant Price for each Warrant exercised, to the Warrant Agent at its corporate trust office [or at ], provided that such exercise is subject to receipt within five business days of such [payment] [wire transfer] by the Warrant Agent of the Warrant Certificate with the form of election to purchase Warrant Debt Securities set forth on the reverse side of the Warrant Certificate properly completed and duly executed. The date on which payment in full of the Warrant Price is received by the Warrant Agent shall, subject to receipt of the Warrant Certificate as aforesaid, be deemed to be the date on which the Warrant is exercised. The Warrant Agent shall deposit all funds received by it in payment of the Warrant Price in an account of the Company maintained with it and shall advise the Company by telephone at the end of each day on which a [payment] [wire transfer] for the exercise of Warrants is received of the amount so deposited to its account. The Warrant Agent shall promptly confirm such telephone advice to the Company in writing. (b) The Warrant Agent shall, from time to time, as promptly as practicable, advise the Company and the Trustee under the Indenture of (i) the number of Warrants exercised in accordance with the terms and conditions of this Agreement and the Warrant Certificates; (ii) the instructions of each holder of the Warrant Certificates evidencing such Warrants with respect to delivery of the Warrant Debt Securities to which such holder is entitled upon such exercise; (iii) delivery of Warrant Certificates evidencing the balance, if any, of the Warrants remaining after such exercise; and (iv) such other information as the Company or the Trustee shall reasonably require. (c) As soon as practicable after the exercise of any Warrant, the Company shall issue, pursuant to the Indenture, in authorized denominations to or upon the order of the holder of the Warrant Certificate evidencing such Warrant, the Warrant Debt Securities to which such holder is entitled [in fully registered form, registered in such name or names] [in bearer form] as may be 4 directed by such holder/*/; [provided, however, the Company shall not be required to deliver any unregistered Warrant Debt Securities in the United States]. If fewer than all of the Warrants evidenced by such Warrant Certificate were exercised, the Company shall execute, and an authorized officer of the Warrant Agent shall manually countersign and deliver, a new Warrant Certificate evidencing the number of such Warrants remaining unexercised. (d) The Company shall not be required to pay any stamp or other tax or other governmental charge required to be paid in connection with any transfer involved in the issue of the Warrant Debt Securities; and in the event that any such transfer is involved, the Company shall not be required to issue or deliver any Warrant Debt Securities until such tax or other charge shall have been paid or it has been established to the Company's satisfaction that no such tax or other charge is due. [(e) Issuance of unregistered Warrant Debt Securities upon exercise of Warrants shall be subject to such arrangements and procedures as shall be provided pursuant to Section of the Indenture.] ARTICLE III Other Provisions Relating to Rights of Holders of Warrant Certificates Section 3.01. No Rights as Warrant Debt Security Holder Conferred by ------------------------------------------------------ Warrants or Warrant Certificates. No Warrant Certificate or Warrant evidenced - -------------------------------- thereby shall entitle the holder thereof to any of the rights of a holder of Warrant Debt Securities, including, without limitation, the right to receive the payment of principal of, premium (if any) or interest on Warrant Debt Securities or to enforce any of the covenants in the Indenture. Section 3.02. Lost, Stolen, Mutilated or Destroyed Warrant -------------------------------------------- Certificates. Upon receipt by the Company and the Warrant Agent of evidence - ------------ reasonably satisfactory to them of the ownership of and the loss, theft, destruction or mutilation of any Warrant Certificate and of indemnity reasonably satisfactory to them and, in the case of mutilation, upon surrender thereof to the Warrant Agent for cancellation, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute, and an authorized officer of the Warrant Agent shall manually countersign and deliver, in exchange for or in lieu of the lost, _________________________ /*/ Subject to change in accordance with changes in tax laws and regulations. ------------------------------------------------------------------------ 5 stolen, destroyed or mutilated Warrant Certificate, a new Warrant Certificate of the same tenor and evidencing the same number of Warrants. Upon the issuance of any new Warrant Certificate under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Warrant Agent) in connection therewith. Every substitute Warrant Certificate executed and delivered pursuant to this Section in lieu of any lost, stolen or destroyed Warrant Certificate shall represent an additional contractual obligation of the Company, whether or not the lost, stolen or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement of mutilated, lost, stolen or destroyed Warrant Certificates. Section 3.03. Holder of Warrant Certificate May Enforce Rights. ------------------------------------------------ Notwithstanding any of the provisions of this Agreement, any holder of a Warrant Certificate, without the consent of the Warrant Agent, the Trustee, the holder of any Warrant Debt Securities or the holder of any other Warrant Certificate, may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce or otherwise in respect of, his right to exercise the Warrants evidenced by his Warrant Certificate in the manner provided in his Warrant Certificate and in this Agreement. ARTICLE IV Exchange and Transfer of Warrant Certificates Section 4.01. Exchange and Transfer of Warrant Certificates. Upon --------------------------------------------- surrender at the corporate trust office of the Warrant Agent [or ], Warrant Certificates evidencing Warrants may be exchanged for Warrant Certificates in other denominations evidencing such Warrants [If registered ------------- Warrants --or may be transferred in whole or in part]; provided that such other - -------- Warrant Certificates evidence the same aggregate number of Warrants as the Warrant Certificates so surrendered. [If registered Warrants -- The Warrant ---------------------- Agent shall keep, at its corporate trust office [and at ], books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates and exchanges and transfers of outstanding Warrant Certificates, upon surrender of the Warrant Certificates to the Warrant Agent at its corporate trust office [or ] for exchange [or transfer], properly endorsed or accompanied by appropriate instruments of transfer and written instructions for transfer, all in form satisfactory to the Company 6 and the Warrant Agent.] No service charge shall be made for any exchange [or transfer] of Warrant Certificates, but the Company may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed in connection with any such exchange [or transfer]. Whenever any Warrant Certificates are so surrendered for exchange [or transfer] an authorized officer of the Warrant Agent shall manually countersign and deliver to the person or persons entitled thereto a Warrant Certificate or Warrant Certificates duly authorized and executed by the Company, as so requested. The Warrant Agent shall not be required to effect any exchange [or transfer] which will result in the issuance of a Warrant Certificate evidencing a fraction of a Warrant or a number of full Warrants and a fraction of a Warrant. All Warrant Certificates issued upon any exchange [or transfer] of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such exchange [or transfer]. Section 4.02. Treatment of Holders of Warrant Certificates. [Bearer -------------------------------------------- ------ warrants -- Each Warrant Certificate shall be transferable by delivery and shall - -------- be deemed negotiable and the bearer of each Warrant Certificate may be treated by the Company, the Warrant Agent and all other persons dealing with such bearer as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to the contrary notwithstanding.] [Registered Warrants -- The Company and the ------------------- Warrant Agent may treat the registered holder as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to the contrary notwithstanding.] Section 4.03. Cancellation of Warrant Certificates. Any Warrant ------------------------------------ Certificate surrendered for exchange [transfer] or exercise of the Warrants evidenced thereby shall, if surrendered to the Company, be delivered to the Warrant Agent and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly cancelled by the Warrant Agent and shall not be reissued and, except as expressly permitted by this Agreement, no Warrant Certificate shall be issued hereunder in exchange or in lieu thereof. The Warrant Agent shall deliver to the Company from time to time or otherwise dispose of cancelled Warrant Certificates in a manner satisfactory to the Company. ARTICLE V Concerning the Warrant Agent Section 5.01. Warrant Agent. The Company hereby appoints ------------- as Warrant Agent of the Company in respect of the Warrants and the Warrant Certificates, upon the 7 terms and subject to the conditions herein set forth; and hereby accepts such appointment. The Warrant Agent shall have the powers and authority granted to and conferred upon it in the Warrant Certificates and hereby and such further powers and authority to act on behalf of the Company as the Company may hereafter grant to or confer upon it. All of the terms and provisions with respect to such powers and authority contained in the Warrant Certificates are subject to and governed by the terms and provisions hereof. Section 5.02. Conditions of Warrant Agent's Obligations. The Warrant ----------------------------------------- Agent accepts its obligations herein set forth upon the terms and conditions hereof, including the following, to all of which the Company agrees and to all of which the rights hereunder of the holders from time to time of the Warrant Certificates shall be subject: (a) Compensation and Indemnification. The Company agrees promptly -------------------------------- to pay the Warrant Agent the compensation to be agreed upon with the Company for all services rendered by the Warrant Agent and to reimburse the Warrant Agent for reasonable out-of-pocket expenses (including counsel fees) incurred by the Warrant Agent in connection with the services rendered hereunder by the Warrant Agent. The Company also agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Warrant Agent, arising out of or in connection with its acting as Warrant Agent hereunder, as well as the costs and expenses of defending against any claim of such liability. (b) Agent for the Company. In acting under this Warrant Agreement --------------------- and in connection with the Warrant Certificates, the Warrant Agent is acting solely as agent of the Company and does not assume any obligation or relationship of agency or trust for or with any of the holders of Warrant Certificates or beneficial owners of Warrants. (c) Counsel. The Warrant Agent may consult with counsel ------- satisfactory to it, and the advise of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the advice of such counsel. (d) Documents. The Warrant Agent shall be protected and shall --------- incur no liability for or in respect of any action taken or thing suffered by it in reliance upon any Warrant Certificate, notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties. (e) Certain Transactions. The Warrant Agent, and its officers, -------------------- directors and employees, may become the owner of, or 8 acquire any interest in, Warrants, with the same rights that it or they would have if it were not the Warrant Agent hereunder, and, to the extent permitted by applicable law, it or they may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Warrant Debt Securities or other obligations of the Company as freely as if it were not the Warrant Agent hereunder. Nothing in this Warrant Agreement shall be deemed to prevent the Warrant Agent from acting as Trustee under the Indenture. (f) No Liability for Interest. The Warrant Agent shall have no ------------------------- liability for interest on any monies at any time received by it pursuant to any of the provisions of this Agreement or of the Warrant Certificates. (g) No Liability for Invalidity. The Warrant Agent shall have no --------------------------- liability with respect to any invalidity of this Agreement or any of the Warrant Certificates. (h) No Responsibility for Representations. The Warrant Agent shall ------------------------------------- not be responsible for any of the recitals or representations herein or in the Warrant Certificates (except as to the Warrant Agent's countersignature thereon), all of which are made solely by the Company. (i) No Implied Obligations. The Warrant Agent shall be obligated to ---------------------- perform only such duties as are herein and in the Warrant Certificates specifically set forth, and no implied duties or obligations shall be read into this Agreement or the Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be under any obligations to take any action hereunder which may tend to subject it to any expense or liability, reimbursement for which within a reasonable time is not, in its reasonable opinion, assured to it. The Warrant Agent shall not be accountable or responsible for the use by the Company of any of the Warrant Certificates authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the Warrant Certificates. The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in the Warrant Certificates or in the case of the receipt of any written demand from a holder of a Warrant Certificate with respect to such default, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or, except as provided in Section 6.02 hereof, to make any demand upon the Company. Section 5.03. Resignation and Appointment of Successor. (a) The ---------------------------------------- Company agrees, for the benefit of the holders from time to time of the Warrant Certificates, that there shall at all times be 9 a Warrant Agent hereunder until all the Warrant Certificates are no longer exercisable. (b) The Warrant Agent may at any time resign as such agent by giving written notice to the Company of such intention on its part, specifying the date on which its desired resignation shall become effective; provided that such date shall be not less than three months after the date on which such notice is given, unless the Company otherwise agrees. The Warrant Agent hereunder may be removed at any time by the filing with it of an instrument in writing signed by or on behalf of the Company and specifying such removal and the date when it shall become effective. Such resignation or removal shall take effect upon the appointment by the Company, as hereinafter provided, of a successor Warrant Agent (which shall be a bank or trust company authorized under the laws of the jurisdiction of its organization to exercise corporate trust powers) and the acceptance of such appointment by such successor Warrant Agent. The obligation of the Company under Section 5.02(a) shall continue to the extent set forth therein, notwithstanding the resignation or removal of the Warrant Agent. (c) In case at any time the Warrant Agent shall resign, or shall be removed, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall file a petition seeking relief under Title II of the United States Code, as now constituted or hereafter amended, or under any other applicable Federal or State bankruptcy law or similar law or make an assignment for the benefit of its creditors or consent to the appointment of a receiver or custodian of all or any substantial part of its property, or shall admit in writing its inability to pay or meet its debts as they mature, or if a receiver or custodian of it or of all or any substantial part of its property shall be appointed, or if an order of any court shall be entered for relief against it under the provisions of Title II of the United States Code, as now constituted or hereafter amended, or under any other applicable Federal or State bankruptcy or similar law, or if any public officer shall have taken charge or control of the Warrant Agent or of its property or affairs, for the purpose of rehabilitation, conservation or liquidation, a successor Warrant Agent, qualified as set forth in subsection (b) above, shall be appointed by the Company by an instrument in writing, filed with the successor Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent and acceptance by the successor Warrant Agent of such appointment, the Warrant Agent shall cease to be Warrant Agent hereunder. (d) Any successor Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the Company an instrument accepting such appointment hereunder, and thereupon such successor Warrant Agent, without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such 10 predecessor with like effect as if originally named as Warrant Agent hereunder, and such predecessor upon payment of its charges and disbursements then unpaid, shall thereupon become obligated to transfer, deliver and pay over, and such successor Warrant Agent shall be entitled to receive, all monies, securities and other property on deposit with or held by such predecessor, as Warrant Agent hereunder. (e) Any corporation into which the Warrant Agent hereunder may be merged or converted or any corporation with which the Warrant Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party, or any corporation to which the Warrant Agent shall sell or otherwise transfer all or substantially all the assets and business of the Warrant Agent shall be the successor Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that it shall be qualified as set forth above in subsection (b). ARTICLE VI Miscellaneous Section 6.01 Amendment. This Agreement may be amended by the parties --------- hereto, without the consent of the holder of any Warrant Certificate, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or making any other provisions with respect to matters or questions arising under this Agreement as the Company and the Warrant Agent may deem necessary or desirable; provided that such action shall not adversely affect the interests of the holders of the Warrant Certificates. Section 6.02. Notices and Demands to the Company and Warrant Agent. ---------------------------------------------------- If the Warrant Agent shall receive any notice or demand addressed to the Company by the holder of a Warrant Certificate pursuant to the provisions of the Warrant Certificates, the Warrant Agent shall promptly forward such notice or demand to the Company. Section 6.03. Addresses. Any communications from the Company to the --------- Warrant Agent with respect to this Agreement shall be addressed to , attention: , and any communications from the Warrant Agent to the Company with respect to this Agreement shall be addressed to Household International, Inc., 2700 Sanders Road, Prospect Heights, Illinois 60070, attention: Treasurer (or such other address as shall be specified in writing by the Warrant Agent or by the Company). 11 Section 6.04. Applicable Law. The validity, interpretation and -------------- performance of this Agreement and each Warrant Certificate issued hereunder and of the respective terms and provisions thereof shall be governed by, and construed in accordance with, the laws of the State of . Section 6.05. Delivery of Prospectus. The Company will furnish to ---------------------- the Warrant Agent sufficient copies of a prospectus relating to the Warrant Debt Securities deliverable upon exercise of Warrants (the "Prospectus"), and the Warrant Agent agrees that upon the exercise of any Warrant, the Warrant Agent will deliver to the holder of the Warrant Certificate evidencing such Warrant, prior to or concurrently with the delivery of the Warrant Debt Securities issued upon such exercise, a Prospectus. Section 6.06. Obtaining of Governmental Approvals. The Company will ----------------------------------- from time to time take all action which may be necessary to obtain and keep effective any and all permits, consents and approvals of governmental agencies and authorities and securities acts filings under United States Federal and State laws (including without limitation a registration statement in respect of the Warrants and Warrant Debt Securities under the Securities Act of 1933), which may be or become requisite in connection with the issuance, sale, transfer, and delivery of the Warrant Certificates, the exercise of the Warrants, the issuance, sale, transfer and delivery of the Warrant Debt Securities issued upon exercise of the Warrants or upon the expiration of the period during which the Warrants are exercisable. Section 6.07. Persons Having Rights under Warrant Agreement. Nothing --------------------------------------------- in this Agreement expressed or implied and nothing that may be inferred from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the Company, the Warrant Agent and the holders of the Warrant Certificates any right, remedy or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise or agreement hereof; and all covenants, conditions, stipulations, promises and agreements in this Agreement contained shall be for the sole and exclusive benefit of the Company and the Warrant Agent and their successors and of the holders of the Warrant Certificates. Section 6.08. Headings. The descriptive headings of the several -------- Articles and Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. Section 6.09. Counterparts. This Agreement may be executed in any ------------ number of counterparts, each of which as so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument. 12 Section 6.10. Inspection of Agreement. A copy of this Agreement ----------------------- shall be available at all reasonable times at the principal corporate trust office of the Warrant Agent for inspection by the holder of any Warrant Certificate. The Warrant Agent may require such holder to submit his Warrant Certificate for inspection by it. IN WITNESS WHEREOF, Household International, Inc. has caused this Agreement to be signed by one of its duly authorized officers, and its corporate seal to be affixed hereunto, and the same to be attested by its Secretary or one of its Assistant Secretaries; and has caused this Agreement to be signed by one of its duly authorized officers, and its corporate seal to be affixed hereunto, and the same to be attested by its Secretary or one of its Assistant Secretaries, all as of the day and year first above written. HOUSEHOLD INTERNATIONAL, INC. By________________________________________ Attest: ____________________ By________________________________________ as Warrant Agent Attest: _____________________ 13 EXHIBIT A (FORM OF WARRANT CERTIFICATE) [Face of Warrant Certificate] EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT AGENT AS PROVIDED HEREIN Warrant Certificates representing Warrants to purchase [Title of Warrant Debt Securities] as described herein. HOUSEHOLD INTERNATIONAL, INC. WARRANTS TO PURCHASE [Title of Warrant Debt Securities] VOID AFTER 5 P.M. TIME ON , 19 [No.] Warrants This certifies that [the bearer is the] [ or registered assigns is the registered] owner of the above indicated number of Warrants, each Warrant entitling such [bearer] [owner] to purchase, at any time [after 5 p.m. time on , 19 and] on or before 5 p.m. time on , 19 , $ principal amount of [Title of Warrant Debt Securities] (the "Warrant Debt Securities"), of HOUSEHOLD INTERNATIONAL, INC. (the "Company"), issued and to be issued under the Indenture (as hereinafter defined), on the following basis:/*/ [on , 19 the exercise price of each Warrant is $ ; during the period from , 19 through and including , 19 , the exercise price of each Warrant will be $ plus [accrued amortization of the original issue discount] [accrued interest] from , 19 ; on , 19 the exercise price of each Warrant will be $ ; during the period from , 19 , through and including , 19 , the exercise price of each Warrant will be $ plus [accrued amortization of the original issue discount] [accrued interest] ________________________ /*/ Complete and modify the following provisions as appropriate to reflect the exact terms of the Offered Warrants and the Warrant Debt Securities. from , 19 ; [in each case, the original issue discount will be amortized at a % annual rate, computed on an annual basis, using a 360-day year consisting of twelve 30-day months] (the "Warrant Price"). [The original issue discount for each $1,000 principal amount of Warrant Debt Securities is $ .] The holder may exercise the Warrants evidenced hereby by providing certain information set forth on the back hereof and by paying in full in lawful money of the United States of America, [in cash or by certified check or official bank check or by bank wire transfer, in each case,] [by bank wire transfer] in immediately available funds, the Warrant Price for each Warrant exercised to the Warrant Agent [as hereinafter defined] and by surrendering this Warrant Certificate, with the purchase form on the back hereof duly executed at the corporate trust office of [name of Warrant Agent], or its successor as warrant agent (the "Warrant Agent"), [or ] at the address specified on the reverse hereof and upon compliance with and subject to the conditions set forth herein and in the Warrant Agreement [as hereinafter defined]. Any whole number of Warrants evidenced by this Warrant Certificate may be exercised to purchase Warrant Debt Securities in registered form in denominations of $ and any integral multiples thereof. Upon any exercise of fewer than all of the Warrants evidenced by this Warrant Certificate, there shall be issued to the holder hereof a new Warrant Certificate evidencing the number of Warrants remaining unexercised. This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of , 19 (the "Warrant Agreement"), between the Company and the Warrant Agent and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the holder of this Warrant Certificate consents by acceptance hereof. Copies of the Warrant Agreement are on file at the above-mentioned office of the Warrant Agent [and at ]. The Warrant Debt Securities to be issued and delivered upon the exercise of the Warrants evidenced by this Warrant Certificate will be issued under and in accordance with an Indenture dated as of (the "Indenture"), between the Company and , a organized and existing under the laws of , as Trustee, ( and any successor to such Trustee being hereinafter referred to as the "Trustee") and will be subject to the terms and provisions contained in the Indenture. [In particular, issuance of unregistered Warrant Debt Securities upon exercise of Warrants shall be subject to such arrangements and procedures as shall be provided pursuant to Section of the Indenture.] Copies of the Indenture and the form of the Warrant Debt Securities are on file at the corporate trust office of the Trustee [and at ]. 2 [If Bearer Warrants -- This Warrant Certificate, and all rights hereunder, may be transferred by delivery and the Company and the Warrant Agent may treat the bearer hereof as the owner for all purposes.] [If Registered Warrants -- This Warrant Certificate may be transferred when surrendered at the corporate trust office of the Warrant Agent [or ] by the registered owner or his assigns, in person or by an attorney duly authorized in writing, in the manner and subject to the limitations provided in the Warrant Agreement.] After countersignature by the Warrant Agent and prior to the expiration of this Warrant Certificate, this Warrant Certificate may be exchanged at the corporate trust office of the Warrant Agent for Warrant Certificates representing the same aggregate number of Warrants. This Warrant Certificate shall not entitle the holder hereof to any of the rights of a holder of the Warrant Debt Securities, including, without limitation, the right to receive payments of principal of (premium, if any) or interest, if any, on the Warrant Debt Securities or to enforce any of the covenants of the Indenture. This Warrant Certificate shall not be valid or obligatory for any purpose until countersigned by the Warrant Agent. Dated as of , 19 . HOUSEHOLD INTERNATIONAL, INC. By______________________________________ Attest: ________________________ Countersigned: ________________________ As Warrant Agent By______________________ Authorized Signature 3 [Reverse of Warrant Certificate] (Instructions for Exercise of Warrant) To exercise the Warrants evidenced hereby, the holder must pay [in cash or by certified check or official bank check or by bank wire transfer] [by bank wire transfer] in immediately available funds the Warrant Price in full for Warrants exercised to [insert name of Warrant Agent] Corporate Trust Department, [insert address of Warrant Agent], Attn: [or ], which [payment] [wire transfer] must specify the name of the holder and the number of Warrants exercised by such holder. In addition, the holder must complete the information required below and present this Warrant Certificate in person or by mail (registered mail is recommended) to the Warrant Agent at the addresses set forth below. This Warrant Certificate, completed and duly executed, must be received by the Warrant Agent within five business days of the [payment] [wire transfer]. [FORM OF ELECTION TO PURCHASE] (To be executed upon exercise of Warrant.) The undersigned hereby irrevocably elects to exercise Warrants, evidenced by this Warrant Certificate, to purchase $ principal amount of the [Title of Debt Securities] (the "Warrant Debt Securities") of Household International, Inc. and represents that he has tendered payment for such Warrant Debt Securities [in cash or by certified check or official bank check or by bank wire transfer, in each case] [by bank wire transfer] in immediately available funds to the order of Household International, Inc. c/o [insert name and address of Warrant Agent], in the amount of $ in accordance with the terms hereof. The undersigned requests that said principal amount of Warrant Debt Securities be in [bearer form in the authorized denominations] [fully registered form in the authorized denominations, registered in such names and delivered] all as specified in accordance with the instructions set forth below. If the number of Warrants exercised is less than all of the Warrants evidenced hereby, the undersigned requests that a new Warrant Certificate representing the remaining Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below. Dated: ________________________ ___________________________ Name_________________________________ (Insert Social Security (Please Print) or Other Identifying Number of Holder) Address______________________________ ______________________________ Signature____________________________ The Warrants evidenced hereby may be exercised at the following addresses: By hand at ______________________________________________ ______________________________________________ ______________________________________________ ______________________________________________ $________________ By mail at ______________________________________________ ______________________________________________ ______________________________________________ ______________________________________________ (Instructions as to form and delivery of Warrant Debt Securities and, if applicable, Warrant Certificates evidencing unexercised Warrants.) 2 Reverse of Warrant Certificate *[CERTIFICATE FOR DELIVERY OF BEARER BONDS] HOUSEHOLD INTERNATIONAL, INC. Warrant Debt Securities TO: HOUSEHOLD INTERNATIONAL, INC. [Name of Trustee], as Trustee This certificate is submitted in connection with our request that you deliver to us $ principal amount of Warrant Debt Securities in bearer form upon exercise of Warrants. We hereby certify that either (a) none of such Warrant Debt Securities will be held by or on behalf of a United States Person, or (b) if a United States Person will have a beneficial interest in such Warrant Debt Securities, such person is described in Section 165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1954, as amended, and the regulations thereunder. As used herein, "United States Person" means 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 political subdivision thereof or an estate or trust whose income from sources without the United States is includible in gross income for United States Federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States. We understand that this certificate is required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings. Dated: _____________________________________ (Please print name) __________________ * Subject to changes in accordance with changes in tax laws and regulations. [If registered Warrant] ASSIGNMENT [FORM OF ASSIGNMENT TO BE EXECUTED IF HOLDER DESIRES TO TRANSFER WARRANTS EVIDENCED HEREBY] FOR VALUE RECEIVED hereby sells, assigns and transfers unto Please insert social security or other identifying number ________________________________ ______________________________ (Please print name and address including zip code) _____________________________________________________________________________ the Warrants represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint Attorney, to transfer said Warrant Certificate on the books of the Warrant Agent with full power of substitution in the premises. Dated: ________________________________ Signature (Signature must conform in all respects to name of holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member broker of the New York or Chicago Stock Exchange.) Signature Guaranteed: ______________________________ HOUSEHOLD INTERNATIONAL, INC. Form of Warrant Agreement (for warrants sold attached to debt securities) THIS WARRANT AGREEMENT dated as of between Household International, Inc. a Delaware corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to) and as Warrant Agent (the "Warrant Agent"). WHEREAS, the Company has entered into an Indenture dated as of (the "Indenture"), with , as Trustee (the "Trustee"), providing for the issuance from time to time of its unsecured debt securities ("Debt Securities"), to be issued in one or more series as provided in the Indenture; and WHEREAS, the Company proposes to sell [title of Debt Securities being offered] (the "Offered Debt Securities"), with warrant certificates evidencing one or more warrants (the "Warrants" or, individually a "Warrant") representing the right to purchase [title of Debt Securities purchasable through exercise of Warrants] (the "Warrant Debt Securities"), such warrant certificates and other warrant certificates issued pursuant to this Agreement hereinafter referred to as the "Warrant Certificates"; and WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company in connection with the issuance, exchange, exercise and replacement of the Warrant Certificates, and in this Agreement wishes to set forth, among other things, the form and provisions of the Warrant Certificates and the terms and conditions on which they may be issued, exchanged, exercised and replaced; NOW THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I Issuance of Warrants and Execution and Delivery of Warrant Certificates SECTION 1.01. Issuance of Warrants. Warrants shall be initially -------------------- issued in connection with the issuance of the Offered Debt Securities [but shall be separately transferable on and after , 19 (the "Detachable Date")] [shall not be separately transferable] and each Warrant Certificate shall evidence one or more Warrants. Each Warrant evidenced thereby shall represent the right, subject to the provisions contained herein and therein, to purchase a Warrant Debt Security in the principal amount of $ . Warrant Certificates shall be initially issued in units with the Offered Debt Securities and each Warrant Certificate included in such unit shall evidence Warrants for each $ principal amount of Offered Debt Securities included in such unit. SECTION 1.02. Execution and Delivery of Warrant Certificates. Each ---------------------------------------------- Warrant Certificate, whenever issued, shall be in [bearer] [registered] form substantially in the form set forth in Exhibit A hereto, shall be dated and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Warrant Certificates may be listed, or to conform to usage. The Warrant Certificates shall be signed on behalf of the Company by either its President, one of its Vice Presidents or one of its Assistant Treasurers under its corporate seal and attested by its Secretary or any of its Assistant Secretaries. Such signatures may be manual or facsimile signatures of such authorized officers and may be imprinted or otherwise reproduced on the Warrant Certificates. The seal of the Company may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant Certificates. No Warrant Certificate shall be valid for any purpose, and no Warrant evidenced thereby shall be exercisable, until such Warrant Certificate has been countersigned by the manual signature of the Warrant Agent. Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that the Warrant Certificate so countersigned has been duly issued hereunder. In case any officer of the Company who shall have signed any of the Warrant Certificates either manually or by facsimile signature shall cease to be such officer before the Warrant Certificates so signed shall have been countersigned and delivered by the Warrant Agent, such Warrant Certificates may be countersigned and delivered notwithstanding that the person who signed such Warrant Certificates has ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Warrant Certificate, shall be the proper officers of the Company, although at the date of the execution of this Agreement any such person was not such officer. [If bearer Warrants -- The term "holder" or "holder of a Warrant Certificate" as used herein shall mean [If Offered Debt Securities with Warrants which are not immediately detachable, prior to the Detachable Date, the registered owner of the Offered 2 Debt Security to which such Warrant Certificate was initially attached (or the bearer if the Offered Debt Security is a bearer Debt Security), and after such Detachable Date] the bearer of such Warrant Certificate.] [If registered Warrants -- The term "holder" or "holder of a Warrant Certificate" as used herein shall mean any person in whose name at the time any Warrant Certificate shall be registered upon the books to be maintained by the Warrant Agent for that purpose. [If Offered Debt Securities with Warrants which are not immediately detachable, or upon the register of the Offered Debt Securities prior to the Detachable Date. The Company will, or will cause the registrar of the Offered Debt Securities to make available at all times to the Warrant Agent such information as to holders of the Offered Debt Securities with Warrants as may be necessary to keep the Warrant Agent's records up to date.]] SECTION 1.03. Issuance of Warrant Certificates. Warrant Certificates -------------------------------- evidencing the right to purchase an aggregate principal amount not exceeding $ aggregate principal amount of Warrant Debt Securities (except as provided in Sections 2.03(c), 3.02 and 4.01) may be executed by the Company and delivered to the Warrant Agent upon the execution of this Warrant Agreement or from time to time thereafter. The Warrant Agent shall, upon receipt of Warrant Certificates duly executed on behalf of the Company, countersign Warrant Certificates evidencing Warrants representing the right to purchase up to $ aggregate principal amount of Warrant Debt Securities and shall deliver such Warrant Certificates to or upon the order of the Company. Subsequent to such original issuance of the Warrant Certificates, the Warrant Agent shall countersign a Warrant Certificate only if the Warrant Certificate is issued in exchange or substitution for one or more previously countersigned Warrant Certificates, [If registered Warrants -- or in connection with their transfer], as hereinafter provided or as provided in Section 2.03(c). ARTICLE II Warrant Price, Duration and Exercise of Warrants SECTION 2.01. Warrant Price./*/ [On , 19 the exercise ------------- price of each Warrant is $ . During the period from , 19 through and including , 19 the exercise price of each Warrant will be $ plus [accrued amortization of the original issue discount] [accrued interest] from , 19 . On , 19 the exercise price of ______________________ /*/ Complete and modify the provisions of this Section as appropriate to reflect the exact terms of the Offered Warrants and the Warrant Debt Securities. 3 each Warrant will be $ . During the period from , 19 , through and including , 19 , the exercise price of each Warrant will be $ plus [accrued amortization of the original issue discount] [accrued interest] from , 19 , [in each case, the original issue discount will be amortized at a % annual rate, computed on an annual basis using a 360-day year consisting of twelve 30-day months]. Such purchase price of Warrant Debt Securities is referred to in this Agreement as the "Warrant Price." [The original issue discount for each $1,000 principal amount of Warrant Debt Securities is $ ]. SECTION 2.02. Duration of Warrants. Each Warrant evidenced by a Warrant -------------------- Certificate may be exercised in whole at any time, as specified herein, on or after [the date thereof] [ , 19 ] and at or before 5 p.m. time on , 19 (the "Expiration Date"). Each Warrant not exercised at or before the close of business on the Expiration Date shall become void, and all rights of the holder of the Warrant Certificate evidencing such Warrant under this Agreement shall cease. SECTION 2.03. Exercise of Warrants. (a) During the period specified in -------------------- Section 2.02 any whole number of Warrants may be exercised by providing certain information set forth on the reverse side of the Warrant Certificate and by paying in full, in lawful money of the United States of America, [in cash or by certified check or official bank check or by bank wire transfer, in each case,] [by bank wire transfer] in immediately available funds the Warrant Price for each Warrant exercised to the Warrant Agent at its corporate trust office [or at ], provided that such exercise is subject to receipt within five business days of such [payment] [wire transfer] by the Warrant Agent of the Warrant Certificate with the form of election to purchase Warrant Debt Securities set forth on the reverse side of the Warrant Certificate properly completed and duly executed. The date on which payment in full of the Warrant Price is received by the Warrant Agent shall, subject to receipt of the Warrant Certificate as aforesaid, be deemed to be the date on which the Warrant is exercised. The Warrant Agent shall deposit all funds received by it in payment of the Warrant Price in an account of the Company maintained with it and shall advise the Company by telephone at the end of each day on which a [payment] [wire transfer] for the exercise of Warrants is received of the amount so deposited to its account. The Warrant Agent shall promptly confirm such telephone advice to the Company in writing. (b) The Warrant Agent shall, from time to time, as promptly as practicable, advise the Company and the Trustee under the Indenture of (i) the number of Warrants exercised in accordance with the terms and conditions of this Agreement and the Warrant Certificates, (ii) the instructions of each holder of the Warrant Certificates evidencing such Warrants with respect to delivery of the Warrant Debt Securities to which such holder is entitled upon 4 such exercise, (iii) delivery of Warrant Certificates evidencing the balance, if any, of the Warrants remaining after such exercise, and (iv) such other information as the Company or the Trustee shall reasonably require. (c) As soon as practicable after the exercise of any Warrant, the Company shall issue, pursuant to the Indenture, in authorized denominations to or upon the order of the holder of the Warrant Certificate evidencing such Warrant, the Warrant Debt Securities to which such holder is entitled, [in fully registered form, registered in such name or names] [in bearer form] as may be directed by such holder/*/ [; provided, however, the Company shall not be required to deliver any unregistered Warrant Debt Securities in the United States]. If fewer than all of the Warrants evidenced by such Warrant Certificate were exercised, the Company shall execute, and an authorized officer of the Warrant Agent shall manually countersign and deliver, a new Warrant Certificate evidencing the number of such Warrants remaining unexecuted. (d) The Company shall not be required to pay any stamp or other tax or other governmental charge required to be paid in connection with any transfer involved in the issue of the Warrant Debt Securities; and in the event that any such transfer is involved, the Company shall not be required to issue or deliver any Warrant Debt Security until such tax or other charge shall have been paid or it has been established to the Company's satisfaction that no such tax or other charge is due. [(e) Issuance of unregistered Warrant Debt Securities upon exercise of Warrants shall be subject to such arrangements and procedures as shall be provided pursuant to Section of the Indenture.] ARTICLE III Other Provisions Relating to Rights of Holders of Warrant Certificates SECTION 3.01. No Rights as Warrant Debt Security Holder Conferred by ------------------------------------------------------ Warrants or Warrant Certificates. No Warrant Certificate or Warrant evidenced - -------------------------------- thereby shall entitle the holder thereof to any of the rights of a holder of Warrant Debt Securities, including, without limitation, the right to receive the payment of principal of, premium (if any) or interest on Warrant Debt Securities or to enforce any of the covenants in the Indenture. SECTION 3.02. Lost, Stolen, Mutilated or Destroyed ------------------------------------ ________________________ /*/ Subject to change in accordance with changes in tax laws and regulations. 5 Warrant Certificates. Upon receipt by the Company and the Warrant Agent of - -------------------- evidence reasonably satisfactory to them of the ownership of and the loss, theft, destruction or mutilation of any Warrant Certificate and of indemnity reasonably satisfactory to them and, in the case of mutilation, upon surrender thereof to the Warrant Agent for cancellation, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute, and an authorized officer of the Warrant Agent shall manually countersign and deliver, in exchange for or in lieu of the lost, stolen, destroyed or mutilated Warrant Certificate, a new Warrant Certificate of the same tenor and evidencing the same number of Warrants. Upon the issuance of any new Warrant Certificate under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Warrant Agent) in connection therewith. Every substitute Warrant Certificate executed and delivered pursuant to this Section in lieu of any lost, stolen or destroyed Warrant Certificate shall represent an additional contractual obligation of the Company, whether or not the lost, stolen or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement of mutilated, lost, stolen or destroyed Warrant Certificates. SECTION 3.03. Holder of Warrant Certificate May Enforce Rights. ------------------------------------------------ Notwithstanding any of the provisions of this Agreement, any holder of a Warrant Certificate, without the consent of the Warrant Agent, the Trustee, the holder of any Warrant Debt Securities or the holder of any other Warrant Certificate, may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce or otherwise in respect of, his right to exercise the Warrants evidenced by his Warrant Certificate in the manner provided in his Warrant Certificate and in this Agreement. ARTICLE IV Exchange and Transfer of Warrant Certificates SECTION 4.01. Exchange and Transfer of Warrant Certificates. [If --------------------------------------------- Offered Debt Securities with Warrants which are immediately detachable -- Upon] [If Offered Debt Securities with Warrants which are not immediately detachable - - - Prior to the Detachable Date a Warrant Certificate may be exchanged or transferred only together with the Offered Debt Security to which the Warrant Certificate was initially attached, and only for the 6 purpose of effecting or in conjunction with an exchange or transfer of such Offered Debt Security. Prior to the Detachable Date, each transfer of the Offered Debt Security [on the register of the Offered Debt Securities] shall operate also to transfer the related Warrant Certificates. After the Detachable Date upon] surrender at the corporate trust office of the Warrant Agent [or ], Warrant Certificates evidencing Warrants may be exchanged for Warrant Certificates in other denominations evidencing such Warrants [If registered Warrants -- or may be transferred in whole or in part], provided that such other Warrant Certificates evidence the same aggregate number of Warrants as the Warrant Certificates so surrendered. [If registered Warrants -- The Warrant Agent shall keep, at its corporate trust office [and at ], books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates and exchanges and transfers of outstanding Warrant Certificates, upon the surrender of the Warrant Certificates to the Warrant Agent at its corporate trust office [or ] for exchange [or transfer], properly endorsed or accompanied by appropriate instruments of transfer and written instructions for transfer, all in form satisfactory to the Company and the Warrant Agent]. No service charge shall be made for any exchange [or transfer] of Warrant Certificates, but the Company may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed in connection with any such exchange [or transfer]. Whenever any Warrant Certificates are so surrendered for exchange [or transfer] an authorized officer of the Warrant Agent shall manually countersign and deliver to the person or persons entitled thereto a Warrant Certificate or Warrant Certificates duly authorized and executed by the Company, as so requested. The Warrant Agent shall not be required to effect any exchange [or transfer] which will result in the issuance of a Warrant Certificate evidencing a fraction of a Warrant or a number of full Warrants and a fraction of a Warrant. All Warrant Certificates issued upon any exchange [or transfer] of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such exchange [or transfer]. SECTION 4.02. Treatment of Holders of Warrant Certificates. [If -------------------------------------------- Offered Debt Securities with bearer Warrants which are not immediately detachable -- Subject to Section 4.01, each] [If Offered Debt Securities with bearer Warrants which are immediately detachable -- Each] Warrant Certificate shall be transferable by delivery and shall be deemed negotiable and the bearer of each Warrant Certificate may be treated by the Company, the Warrant Agent and all other persons dealing with such bearer as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to the contrary notwithstanding.] [If registered Warrants which are not immediately detachable --Every holder of a Warrant Certificate, by accepting the same, 7 consents and agrees with the Company, the Warrant Agent and with every subsequent holder of such Warrant Certificate that until the Warrant Certificate is transferred on the books of the Warrant Agent [or the register of the Offered Debt Securities prior to the Detachable Date], the Company and the Warrant Agent may treat the registered holder as the absolute owner thereof for any purpose and as the person entitled to exercise the rights represented by the Warrants evidenced thereby, any notice to the contrary notwithstanding.] SECTION 4.03. Cancellation of Warrant Certificates. Any Warrant ------------------------------------ Certificate surrendered for exchange [transfer] or exercise of the Warrants evidenced thereby shall, if surrendered to the Company, be delivered to the Warrant Agent and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly cancelled by the Warrant Agent and shall not be reissued and, except as expressly permitted by this Agreement, no Warrant Certificate shall be issued hereunder in exchange or in lieu thereof. The Warrant Agent shall deliver to the Company from time to time or otherwise dispose of cancelled Warrant Certificates in a manner satisfactory to the Company. ARTICLE V Concerning the Warrant Agent SECTION 5.01. Warrant Agent. The Company hereby appoints ------------- as Warrant Agent of the Company in respect of the Warrants and the Warrant Certificates, upon the terms and subject to the conditions herein set forth, and hereby accepts such appointment. The Warrant Agent shall have the powers and authority granted to and conferred upon it in the Warrant Certificates and hereby and such further powers and authority to act on behalf of the Company as the Company may hereafter grant to or confer upon it. All of the terms and provisions with respect to such powers and authority contained in the Warrant Certificates are subject to and governed by the terms and provisions hereof. SECTION 5.02. Conditions of Warrant Agent's Obligations. The Warrant ----------------------------------------- Agent accepts its obligations herein set forth upon the terms and conditions hereof, including the following, to all of which the Company agrees and to all of which the rights hereunder of the holders from time to time of the Warrant Certificates shall be subject: (a) Compensation and Indemnification. The Company agrees promptly to -------------------------------- pay the Warrant Agent the compensation to be agreed upon with the Company for all services rendered by the Warrant Agent and to reimburse the Warrant Agent for reasonable out-of-pocket expenses (including counsel fees) incurred by the Warrant Agent in connection with the services rendered hereunder by 8 the Warrant Agent. The Company also agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Warrant Agent, arising out of or in connection with its acting as Warrant Agent hereunder, as well as the costs and expenses of defending against any claim of such liability. (b) Agent for the Company. In acting under this Warrant Agreement --------------------- and in connection with the Warrant Certificates, the Warrant Agent is acting solely as agent of the Company and does not assume any obligation or relationship of agency or trust for or with any of the holders of Warrant Certificates or beneficial owners of Warrants. (c) Counsel. The Warrant Agent may consult with counsel satisfactory ------- to it, and the advise of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the advice of such counsel. (d) Documents. The Warrant Agent shall be protected and shall incur --------- no liability for or in respect of any action taken or thing suffered by it in reliance upon any Warrant Certificate, notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties. (e) Certain Transactions. The Warrant Agent, and its officers, -------------------- directors and employees, may become the owner of, or acquire any interest in, Warrants, with the same rights that it or they would have if it were not the Warrant Agent hereunder, and, to the extent permitted by applicable law, it or they may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Warrant Debt Securities or other obligations of the Company as freely as if it were not the Warrant Agent hereunder. Nothing in this Warrant Agreement shall be deemed to prevent the Warrant Agent from acting as Trustee under the Indenture. (f) No Liability for Interest. The Warrant Agent shall have no ------------------------- liability for interest on any monies at any time received by it pursuant to any of the provisions of this Agreement or of the Warrant Certificates. (g) No Liability for Invalidity. The Warrant Agent shall have no --------------------------- liability with respect to any invalidity of this Agreement or any of the Warrant Certificates. (h) No Responsibility for Representations. The Warrant Agent shall ------------------------------------- not be responsible for any of the recitals or representations herein or in the Warrant Certificates (except as to 9 the Warrant Agent's countersignature thereon), all of which are made solely by the Company. (i) No Implied Obligations. The Warrant Agent shall be obligated to ---------------------- perform only such duties as are herein and in the Warrant Certificates specifically set forth and no implied duties or obligations shall be read into this Agreement or the Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be under any obligations to take any action hereunder which may tend to subject it to any expense or liability, reimbursement for which within a reasonable time is not, in its reasonable opinion, assured to it. The Warrant Agent shall not be accountable or responsible for the use by the Company of any of the Warrant Certificates authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Agreement or for the application by the Company of the proceeds of the Warrant Certificates. The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in the Warrant Certificates or in the case of the receipt of any written demand from a holder of a Warrant Certificate with respect to such default, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or, except as provided in Section 6.02 hereof, to make any demand upon the Company. SECTION 5.03. Resignation and Appointment of Successor. (a) The ---------------------------------------- Company agrees, for the benefit of the holders from time to time of the Warrant Certificates, that there shall at all times be a Warrant Agent hereunder until all the Warrant Certificates are no longer exercisable. (b) The Warrant Agent may at any time resign as such agent by giving written notice to the Company of such intention on its part, specifying the date on which its desired resignation shall become effective; provided that such date shall be not less than three months after the date on which such notice is given unless the Company otherwise agrees. The Warrant Agent hereunder may be removed at any time by the filing with it of an instrument in writing signed by or on behalf of the Company and specifying such removal and the date when it shall become effective. Such resignation or removal shall take effect upon the appointment by the Company, as hereinafter provided, of a successor Warrant Agent (which shall be a bank or trust company authorized under the laws of the jurisdiction of its organization to exercise corporate trust powers) and the acceptance of such appointment by such successor Warrant Agent. The obligation of the Company under Section 5.02(a) shall continue to the extent set forth therein, notwithstanding the resignation or removal of the Warrant Agent. (c) In case at any time the Warrant Agent shall resign, 10 or shall be removed, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall file a petition seeking relief under Title II of the United States Code, as now constituted or hereafter amended, or under any other applicable Federal or State bankruptcy law or similar law or make an assignment for the benefit of its creditors or shall consent to the appointment of a receiver or custodian of all or any substantial part of its property, or shall admit in writing its inability to pay or meet its debts as they mature, or if a receiver or custodian of it or of all or any substantial part of its property shall be appointed, or if an order of any court shall be entered for relief against it under the provisions of Title II of the United States Code, as now constituted or hereafter amended, or under any other applicable Federal or State bankruptcy or similar law, or if any public officer shall have taken charge or control of the Warrant Agent or of its property or affairs, for the purpose of rehabilitation, conservation or liquidation, a successor Warrant Agent, qualified as set forth in subsection (b) above, shall be appointed by the Company by an instrument in writing, filed with the successor Warrant Agent. Upon the appointment of a successor Warrant Agent and acceptance by the successor Warrant Agent of such appointment, the Warrant Agent shall cease to be Warrant Agent hereunder. (d) Any successor Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the Company an instrument accepting such appointment hereunder, and thereupon such successor Warrant Agent, without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such predecessor with like effect as if originally named as Warrant Agent hereunder, and such predecessor, upon payment of its charges and disbursements then unpaid, shall thereupon become obligated to transfer, deliver and pay over, and such successor Warrant Agent shall be entitled to receive, all monies, securities and other property on deposit with or held by such predecessor, as Warrant Agent hereunder. (e) Any corporation into which the Warrant Agent hereunder may be merged or converted or any corporation with which the Warrant Agent may be consolidated, or any corporation to which the Warrant Agent shall sell or otherwise transfer all or substantially all the assets and business of the Warrant Agent shall be the successor Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that it shall be qualified as set forth above in subsection (b). 11 ARTICLE VI Miscellaneous SECTION 6.01 Amendment. This Agreement may be amended by the parties --------- hereto, without the consent of the holder of any Warrant Certificate, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or making any other provisions with respect to matters or questions arising under this Agreement as the Company and the Warrant Agent may deem necessary or desirable; provided that such action shall not adversely affect the interests of the holders of the Warrant Certificates. SECTION 6.02. Notices and Demands to the Company and Warrant Agent. ---------------------------------------------------- If the Warrant Agent shall receive any notice or demand addressed to the Company by the holder of a Warrant Certificate pursuant to the provisions of the Warrant Certificates, the Warrant Agent shall promptly forward such notice or demand to the Company. SECTION 6.03. Addresses. Any communications from the Company to the --------- Warrant Agent with respect to this Agreement shall be addressed to , Attention: , and any communications from the Warrant Agent to the Company with respect to this Agreement shall be addressed to , Attention: (or such other address as shall be specified in writing by the Warrant Agent or by the Company). SECTION 6.04. Applicable Law. The validity, interpretation and -------------- performance of this Agreement and each Warrant Certificate issued hereunder and of the respective terms and provisions thereof shall be governed by, and construed in accordance with, the laws of the State of . SECTION 6.05. Delivery of Prospectus. The Company will furnish to ---------------------- the Warrant Agent sufficient copies of a prospectus relating to the Warrant Debt Securities deliverable upon exercise of Warrants (the "Prospectus"), and the Warrant Agent agrees that upon the exercise of any Warrant, the Warrant Agent will deliver to the holder of the Warrant Certificate evidencing such Warrant, prior to or concurrently with the delivery of the Warrant Debt Securities issued upon such exercise, a Prospectus. SECTION 6.06. Obtaining of Governmental Approvals. The Company will ----------------------------------- from time to time take all action which may be necessary to obtain and keep effective any and all permits, consents and approvals of governmental agencies and authorities and securities acts filings under United States Federal and State laws (including without limitation a registration statement in respect 12 of the Warrants and Warrant Debt Securities under the Securities Act of 1933), which may be or become requisite in connection with the issuance, sale, transfer and delivery of the Warrant Certificates, the exercise of the Warrants, the issuance, sale, transfer and delivery of the Warrant Debt Securities issued upon exercise of the Warrants or upon the expiration of the period during which the Warrants are exercisable. SECTION 6.07. Persons Having Rights under Warrant Agreement. Nothing --------------------------------------------- in this Agreement expressed or implied and nothing that may be inferred from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the Company, the Warrant Agent and the holders of the Warrant Certificates any right, remedy or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise or agreement hereof; and all covenants, conditions, stipulations, promises and agreements in this Agreement contained shall be for the sole and exclusive benefit of the Company and the Warrant Agent and their successors and of the holders of the Warrant Certificates. SECTION 6.08. Headings. The descriptive headings of the several -------- Articles and Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. SECTION 6.09. Counterparts. This Agreement may be executed in any ------------ number of counterparts, each of which as so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument. SECTION 6.10. Inspection of Agreement. A copy of this Agreement ----------------------- shall be available at all reasonable times at the principal corporate trust office of the Warrant Agent for inspection by the holder of any Warrant Certificate. The Warrant Agent may require such holder to submit his Warrant Certificate for inspection by it. 13 IN WITNESS WHEREOF, Household International, Inc. has caused this Agreement to be signed by one of its duly authorized officers, and its corporate seal to be affixed hereunto, and the same to be attested by its Secretary or one of its Assistant Secretaries, all as of the day and year first above written. HOUSEHOLD INTERNATIONAL, INC. By________________________________________ Attest: ____________________ By________________________________________ as Warrant Agent Attest: _____________________ 14 EXHIBIT A (FORM OF WARRANT CERTIFICATE) [Face of Warrant Certificate] [Form of Legend if Prior to this ----------------- Debt Securities with Warrant Certificate cannot - -------------------- Warrants which are not be transferred or exchanged - ---------------------- immediately detachable: unless attached to a [Title - ---------------------- of Offered Debt Securities] Exercisable Only if Countersigned By the Warrant Agent as Provided Herein Warrant Certificates representing Warrants to purchase [Title of Warrant Debt Securities] as described herein. HOUSEHOLD INTERNATIONAL, INC. Warrants to Purchase [Title of Warrant Debt Securities] Void After 5 P.M. Time on , 19 [No.] Warrants This certifies that [the bearer is the] [ or registered assigns is the registered] owner of the above-indicated number of Warrants, each Warrant entitling such [bearer] [owner] to purchase, at any time [after 5 P.M. time on , 19 and] on or before 5 P.M. time on , 19 , $ principal amount of [Title of Warrant Debt Securities] (the "Warrant Debt Securities"), of Household International, Inc. (the "Company"), issued and to be issued under the Indenture (as hereinafter defined), on the following basis:/*/ [on , 19 the exercise price of each Warrant is $ ; during the period from , 19 , through and including ____________________ /*/ Complete and modify the following provision as appropriate to reflect the ------------------------------------------------------------------------- exact terms of the Offered Warrants and the Warrant Debt Securities. - ------------------------------------------------------------------- , 19 , the exercise price of each Warrant will be $ plus [accrued amortization of the original issue discount] [accrued interest] from , 19 ; on , 19 the exercise price of each Warrant will be $ ; during the period from , 19 , through and including , 19 the exercise price of each Warrant will be $ plus [accrued amortization of the original issue discount] [accrued interest] from , 19 ; [in each case, the original issue discount will be amortized at a % annual rate, computed on an annual basis, using a 360-day year consisting of twelve 30-day months] (the "Warrant Price"). [The original issue discount for each $1,000 principal amount of Warrant Debt Securities is $ .] The holder may exercise the Warrants evidenced hereby by providing certain information set forth on the back hereof and by paying in full in lawful money of the United States of America, [in cash or by certified check or official bank check or by bank wire transfer, in each case,] [by bank wire transfer] in immediately available funds, the Warrant Price for each Warrant exercised to the Warrant Agent (as hereinafter defined) and by surrendering this Warrant Certificate, with the purchase form on the back hereof duly executed at the corporate trust office of [name of Warrant Agent], or its successor as warrant agent (the "Warrant Agent"), [or ] at the address specified on the reverse hereof and upon compliance with and subject to the conditions set forth herein and in the Warrant Agreement (as hereinafter defined). Any whole number of Warrants evidenced by this Warrant Certificate may be exercised to purchase Warrant Debt Securities in registered form in denominations of $ and any integral multiples thereof. Upon any exercise of fewer than all of the Warrants evidenced by this Warrant Certificate, there shall be issued to the holder hereof a new Warrant Certificate evidencing the number of Warrants remaining unexercised. This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of , 19 (the "Warrant Agreement"), between the Company and the Warrant Agent and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the holder of this Warrant Certificate consents by acceptance hereof. Copies of the Warrant Agreement are on file at the above-mentioned office of the Warrant Agent [and at ]. The Warrant Debt Securities to be issued and delivered upon the exercise of the Warrants evidenced by this Warrant Certificate will be issued under and in accordance with an Indenture dated as of (the "Indenture"), between the Company and , a organized and existing under the laws of , as Trustee, ( and any successor to such Trustee being hereinafter referred to as the "Trustee") and will be subject to the terms and provisions contained in the Indenture. 2 [In particular, issuance of unregistered Warrant Debt Securities upon exercise of Warrants shall be subject to such arrangements and procedures as shall be provided pursuant to Section of the Indenture.] Copies of the Indenture and the form of the Warrant Debt Securities are on file at the corporate office of the Trustee [and at ]. [If Offered Debt Securities with bearer Warrants which are not ------------------------------------------------------------- immediately detachable -- Prior to , 19 this Warrant Certificate may - ---------------------- be exchanged or transferred only together with the [Title of Offered Debt Securities] ("Offered Debt Securities") to which this Warrant Certificate was initially attached, and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Offered Debt Security. After such date, this [If Offered Debt Securities with bearer Warrants which are immediately --------------------------------------------------------------------- detachable -- This] Warrant Certificate, and all rights hereunder, may be - ---------- transferred by delivery, and the Company and the Warrant Agent may treat the bearer hereof as the owner for all purposes.] [If Offered Debt Securities with registered Warrants which are not ----------------------------------------------------------------- immediately detachable -- Prior to , 19 this Warrant Certificate may be - ---------------------- exchanged or transferred only together with the [Title of Offered Debt Securities] ("Offered Debt Securities") to which this Warrant Certificate was initially attached, and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Offered Debt Security. After such date, this [If Offered Debt Securities with registered Warrants which are immediately ------------------------------------------------------------------------- detachable -- This] Warrant Certificate may be transferred when surrendered at - ---------- the corporate trust office of the Warrant Agent [or ] by the registered owner or his assigns, in person or by an attorney duly authorized in writing, in the manner and subject to the limitations provided in the Warrant Agreement.] [If Offered Debt Securities with Warrants which are not immediately ------------------------------------------------------------------ detachable -- Except as provided in the immediately preceding paragraph, after] - ---------- [If Offered Debt Securities with Warrants which are immediately detachable -- ------------------------------------------------------------------------- After] countersignature by the Warrant Agent and prior to the expiration of this Warrant Certificate, this Warrant Certificate may be exchanged at the corporate trust office of the Warrant Agent for Warrant Certificates representing the same aggregate number of Warrants. This Warrant Certificate shall not entitle the holder hereof to any of the rights of a holder of the Warrant Debt Securities, including, without limitation, the right to receive payments of principal of (premium, if any) or interest, if any, on the Warrant Debt Securities or to enforce any of the covenants of the Indenture. 3 This Warrant Certificate shall not be valid or obligatory for any purpose until countersigned by the Warrant Agent. Dated as of , 19 . HOUSEHOLD INTERNATIONAL, INC. By______________________________________ Attest: ________________________ Countersigned: ________________________ As Warrant Agent By______________________ Authorized Signature 4 [Reverse of Warrant Certificate] (Instructions for Exercise of Warrant) To exercise the Warrants evidenced hereby, the holder must pay [in cash or by certified check or official bank check or by bank wire transfer] [by bank wire transfer] in immediately available funds the Warrant Price in full for Warrants exercised to [insert name of Warrant Agent] Corporate Trust Department [insert address of Warrant Agent], Attn. [or ], which [payment] [wire transfer] must specify the name of the holder and the number of Warrants exercised by such holder. In addition, the holder must complete the information required below and present this Warrant Certificate in person or by mail (registered mail is recommended) to the Warrant Agent at the addresses set forth below. This Warrant Certificate, completed and duly executed, must be received by the Warrant Agent within five business days of the [payment] [wire transfer]. [Form of Election to Purchase] (to be executed upon exercise of Warrant) The undersigned hereby irrevocably elects to exercise Warrants, evidenced by this Warrant Certificate, to purchase $ principal amount of the [Title of Debt Securities] (the "Warrant Debt Securities") of and represents that he has tendered payment for such Warrant Debt Securities [in cash or by certified check or official bank check or by bank wire transfer, in each case,] [by bank wire transfer] in immediately available funds to the order of Household International, Inc. c/o [insert name and address of Warrant Agent] in the amount of $ in accordance with the terms hereof. The undersigned requests that said principal amount of Warrant Debt Securities be in [bearer form in the authorized denominations] [fully registered form in the authorized denominations, registered in such names and delivered] all as specified in accordance with the instructions set forth below. If the number of Warrants exercised is less than all of the Warrants evidenced hereby, the undersigned requests that a new Warrant Certificate representing the remaining Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below. Dated: ________________________ ___________________________ Name_________________________________ (Insert Social Security (Please Print) or Other Identifying Number of Holder) Address______________________________ ______________________________ Signature____________________________ The Warrants evidenced hereby may be exercised at the following addresses: By hand at____________________________________________ ____________________________________________ ____________________________________________ ____________________________________________ By mail at____________________________________________ ____________________________________________ ____________________________________________ ____________________________________________ (Instructions as to form and delivery of Warrant Debt Securities and, if applicable, Warrant Certificates evidencing unexercised Warrants.) 2 Reverse of Warrant Certificate *[Certificate for Delivery of Bearer Bonds] HOUSEHOLD INTERNATIONAL, INC. Warrant Debt Securities TO: HOUSEHOLD INTERNATIONAL, INC. ________________________________________ This certificate is submitted in connection with our request that you deliver to us $ principal amount of Warrant Debt Securities in bearer form upon exercise of Warrants. We hereby certify that either (a) none of such Warrant Debt Securities will be held by or on behalf of a United States Person, or (b) if a United States Person will have a beneficial interest in such Warrant Debt Securities, such person is described in Section 165 (j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1954, as amended, and the regulations thereunder. As used herein, "United States Person" means 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 political subdivision thereof or an estate or trust whose income from sources without the United States is includible in gross income for United States Federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States. We understand that this certificate is required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings. Dated: _____________________________________ (Please print name) ___________________ * Subject to changes in accordance with changes in tax laws and regulations. ------------------------------------------------------------------------- [If registered Warrant] ASSIGNMENT (Form of Assignment to be Executed if Holder Desires to Transfer Warrants Evidenced Hereby) For Value Received hereby sells, assigns and transfers unto Please insert social security or other identifying number ______________________________________ ______________________________ (Please print name and address including zip code) _______________________________________________________________________________ the Warrants represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint Attorney, to transfer said Warrant Certificate on the books of the Warrant Agent with full power of substitution in the premises. Dated: ___________________________________________ Signature (Signature must conform in all respects to name of holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member broker of the New York or Chicago Stock Exchange.) Signature Guaranteed: ______________________________ EX-4.(D) 4 FORM OF DEPOSIT AGREEMENT Exhibit 4(d) HOUSEHOLD INTERNATIONAL, INC. As Depositary AND THE HOLDERS FROM TIME TO TIME OF THE DEPOSITARY RECEIPTS DESCRIBED HEREIN ------------------- Deposit Agreement ------------------- TABLE OF CONTENTS -----------------
Page ---- PARTIES .................................................................. 1 RECITALS ................................................................. 1 ARTICLE I Definitions Certificate............................................................... 1 Company................................................................... 1 Deposit Agreement......................................................... 1 Depositary................................................................ 1 Depositary Shares......................................................... 1 Depositary's Agent........................................................ 2 Depositary's Office....................................................... 2 Receipt................................................................... 2 Record Holder............................................................. 2 Registrar................................................................. 2 Stock..................................................................... 2 ARTICLE II Form of Receipts, Deposit of Stock, Execution and Delivery, Transfer, Surrender and Redemption of Receipts SECTION 2.01. Form and Transfer of Receipts.............................. 2 SECTION 2.02. Deposit of Stock; Execution and Delivery of Receipts in Respect Thereof............................. 4 SECTION 2.03. Redemption of Stock........................................ 4 SECTION 2.04. Registration of Transfer of Receipts....................... 6 SECTION 2.05. Split-ups and Combinations of Receipts; Surrender of Receipts and Withdrawal of Stock...................................................... 6 SECTION 2.06. Limitations on Execution and Delivery, Transfer, Surrender and Exchange of Receipts................................................... 7 SECTION 2.07. Lost Receipts, etc......................................... 8 SECTION 2.08. Cancellation and Destruction of Surrendered Receipts....................................... 8
ARTICLE III Certain Obligations of Holders of Receipts and the Company SECTION 3.01. Filing Proofs, Certificates and Other Information................................................ 8 SECTION 3.02. Payment of Taxes or Other Governmental Charges.................................................... 8 SECTION 3.03 Warranty as to Stock....................................... 9 ARTICLE IV The Deposited Securities; Notices SECTION 4.01. Cash Distributions......................................... 9 SECTION 4.02. Distributions Other Than Cash, Rights, Preferences or Privileges.................................. 9 SECTION 4.03. Subscription Rights, Preferences or Privileges................................................. 10 SECTION 4.04. Notice of Dividends; Fixing of Record Date for Holders of Receipts............................... 11 SECTION 4.05. Voting Rights.............................................. 11 SECTION 4.06. Changes Affecting Deposited Securities and Reclassifications, Recapitalizations, etc.................. 12 SECTION 4.07. Inspection of Reports...................................... 13 SECTION 4.08. Lists of Receipt Holders................................... 13 ARTICLE V The Depositary, the Depositary's Agents, the Registrar and the Company SECTION 5.01. Maintenance of Offices, Agencies and Transfer Books by the Depositary; Registrar ................................................. 13
SECTION 5.02. Prevention of or Delay in Performance by the Depositary, the Depositary's Agents, the Registrar or the Company....................... 14 SECTION 5.03. Obligations of the Depositary, the Depositary's Agents, the Registrar and the Company................................................ 15 SECTION 5.04. Resignation and Removal of the Depositary; Appointment of Successor Depositary........................ 15 SECTION 5.05. Corporate Notices and Reports.............................. 16 SECTION 5.06. Indemnification by the Company............................. 17 SECTION 5.07. Charges and Expenses....................................... 17 ARTICLE VI Amendment and Termination SECTION 6.01. Amendment ................................................ 17 SECTION 6.02. Termination .............................................. 18 ARTICLE VII Miscellaneous SECTION 7.01. Counterparts............................................... 18 SECTION 7.02. Exclusive Benefit of Parties............................... 18 SECTION 7.03. Invalidity of Provisions................................... 18 SECTION 7.04. Notices.................................................... 19 SECTION 7.05. Depositary's Agents........................................ 19 SECTION 7.06. Holders of Receipts Are Parties............................ 19 SECTION 7.07. Governing Law.............................................. 20 SECTION 7.08. Inspection of Deposit Agreement............................ 20 SECTION 7.09. Headings................................................... 20
DEPOSIT AGREEMENT dated as of ____________________, 199____, among HOUSEHOLD INTERNATIONAL, INC. a Delaware corporation, ______________________________, a _____________ corporation, and the holders from time to time of the Receipts described herein. WHEREAS it is desired to provide, as hereinafter set forth in this Deposit Agreement, for the deposit of shares of ____% Cumulative Preferred Stock, ___________________, without par value, of Household International, Inc. with the Depositary for the purposes set forth in this Deposit Agreement and for the issuance hereunder of Receipts evidencing Depositary Shares in respect of the Stock so deposited; and WHEREAS the Receipts are to be substantially in the form of Exhibit A annexed hereto, with appropriate insertions, modifications and omissions, as hereinafter provided in this Deposit Agreement; NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows: ARTICLE I Definitions The following definitions shall for all purposes, unless otherwise indicated, apply to the respective terms used in this Deposit Agreement: "Certificate" shall mean the certificate of designation filed with the Secretary of State of Delaware establishing the Stock as a series of preferred stock of the Company. "Company" shall mean Household International, Inc., a Delaware corporation, and its successors. "Deposit Agreement" shall mean this Deposit Agreement, as amended or supplemented from time to time. "Depositary" shall mean __________________________, and any successor as Depositary hereunder. "Depositary Shares" shall mean Depositary Shares, each representing 1/3,000 of a share of Stock and evidenced by a Receipt. 1 "Depositary's Agent" shall mean an agent appointed by the Depositary pursuant to Section 7.05. "Depositary's Office" shall mean the principal office of the Depositary in ___________________________, at which at any particular time its depositary receipt business shall be administered. "Receipt" shall mean one of the Depositary Receipts (each evidencing one Depositary Share) issued hereunder, whether in definitive or temporary form. "Record Holder" as applied to a Receipt shall mean the person in whose name a Receipt is registered on the books of the Depositary maintained for such purpose. "Registrar" shall mean any bank or trust company which shall be appointed to register ownership and transfers of Receipts as herein provided. "Stock" shall mean shares of the Company's ____% Cumulative Preferred Stock, _________________________, without par value. ARTICLE II Form of Receipts, Deposit of Stock, Execution and Delivery, Transfer, Surrender and Redemption of Receipts SECTION 2.01. Form and Transfer of Receipts. Definitive Receipts ----------------------------- shall be engraved or lithographed on steel-engraved borders and shall be substantially in the form set forth in Exhibit A annexed to this Deposit Agreement, with appropriate insertions, modifications and omissions, as hereinafter provided. Pending the preparation of definitive Receipts, the Depositary, upon the written order of the Company or any holder of Stock, as the case may be, delivered in compliance with Section 2.02, shall execute and deliver temporary Receipts which are printed, litho graphed, typewritten, mimeographed or otherwise substantially of the tenor of the definitive Receipts in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the persons executing such Receipts may determine, as evidenced by their execution of such Receipts. If temporary Receipts are issued, the Company will cause definitive Receipts to be prepared without unreasonable delay. After the preparation of definitive Receipts, the temporary Receipts shall be exchangeable for definitive Receipts upon surrender of the temporary Receipts at an office described in the last paragraph of Section 2.02, without charge to the holder. Upon surrender for cancellation of any one or more temporary Receipts, the Depositary shall execute and deliver in 2 exchange therefor definitive Receipts representing the same number of Depositary Shares as represented by the surrendered temporary Receipt or Receipts. Such exchange shall be made at the Company's expense and without any charge therefor. Until so exchanged, the temporary Receipts shall in all respects be entitled to the same benefits under this Agreement, and with respect to the Stock, as definitive Receipts. Receipts shall be executed by the Depositary by the manual signature of a duly authorized officer of the Depositary; provided, that such signature may be a facsimile if a Registrar for the Receipts shall have been appointed and such Receipts are countersigned by manual signature of a duly authorized officer of the Registrar. No Receipt shall be entitled to any benefits under this Deposit Agreement or be valid or obligatory for any purpose unless it shall have been executed manually by a duly authorized officer of the Depositary or, if a Registrar for the Receipts shall have been appointed, by manual or facsimile signature of a duly authorized officer of the Depositary and countersigned manually by a duly authorized officer of such Registrar. The Depositary or the Registrar, as applicable, shall record on its books each Receipt so signed and delivered as hereinafter provided. Receipts shall be in denominations of any number of whole Depositary Shares up to but not in excess of __________ Depositary Shares for any particular Receipt. Receipts may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Deposit Agreement as may be required by the Company or the Depositary or required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange upon which the Stock, the Depositary Shares or the Receipts may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Receipts are subject. Title to Depositary Shares evidenced by a Receipt which is properly endorsed, or accompanied by a properly executed instrument of transfer, shall be transferable by delivery with the same effect as in the case of a negotiable instrument; provided, however, that until transfer of a Receipt shall be registered on the books of the Depositary as provided in Section 2.04, the Depositary shall, notwithstanding any notice to the contrary, treat the record holder thereof at such time as the absolute owner thereof for the purpose of determining the person entitled to distributions of dividends or other distributions or to any notice provided for in this Deposit Agreement and for all other purposes. 3 SECTION 2.02. Deposit of Stock; Execution and Delivery of Receipts in ------------------------------------------------------- Respect Thereof. Subject to the terms and conditions of this Deposit Agreement, - --------------- the Company or any holder of Stock may from time to time deposit shares of the Stock under this Deposit Agreement by delivery to the Depositary of a certificate or certificates for the Stock to be deposited, properly endorsed or accompanied, if required by the Depositary, by a duly executed instrument of transfer or endorsement, in form satisfactory to the Depositary, together with all such certifications as may be required by the Depositary in accordance with the provisions of this Deposit Agreement, and together with a written order of the Company or such holder, as the case may be, directing the Depositary to execute and deliver to, or upon the written order of, the person or persons stated in such order a Receipt or Receipts for the number of Depositary Shares representing such deposited Stock. Deposited Stock shall be held by the Depositary at the Depositary's Office or at such other place or places as the Depositary shall determine. Upon receipt by the Depositary of a certificate or certificates for Stock deposited in accordance with the provisions of this Section, together with the other documents required as above specified, and upon proper registration of the Stock on the books of the Company in the name of the Depositary or its nominee, the Depositary, subject to the terms and conditions of this Deposit Agreement, shall execute and deliver, to or upon the order of the person or persons named in the written order delivered to the Depositary referred to in the first paragraph of this Section, a Receipt or Receipts for the number of Depositary Shares representing the Stock so deposited and registered in such name or names as may be requested by such person or persons. The Depositary shall execute and deliver such Receipt or Receipts at the Depositary's Office or such other offices, if any, as the Depositary may designate. Delivery at other offices shall be at the risk and expense of the person requesting such delivery. Other than in the case of splits, combinations or other reclassifications affecting the Stock, or in the case of dividends or other distributions of stock, if any, there shall be deposited hereunder not more than ______ shares of Stock. SECTION 2.03. Redemption of Stock. Whenever the Company shall ------------------- mandatorily redeem the shares of Stock in accordance with the provisions of the Certificate, it shall (unless otherwise agreed in writing with the Depositary) give the Depositary not less than 46 nor more than 91 days' notice of the date of such proposed redemption of Stock and of the number of shares held by the Depositary to be so redeemed, which notice shall be accompanies by a certificate from the Company stating 4 that such redemption of Stock is in accordance with the provisions of the Certificate. Such notice, if given more than 90 days prior to the redemption date, shall be in addition to the notice required to be given for redemption pursuant to the Certificate. On the date of such redemption, provided that the Company shall then have paid in full to the Depositary the redemption price of the Stock to be redeemed, plus any accrued and unpaid dividends thereon, the Depositary shall redeem the number of Depositary Shares representing such Stock. The Depositary shall mail notice of such redemption and the proposed simultaneous redemption of the number of Depositary Shares representing the Stock to be redeemed, first-class postage prepaid, not less than 45 and not more than 90 days prior to the date fixed for redemption of such Stock and Depositary Shares (the "Redemption Date") to the record holders of the Receipts evidencing the Depositary Shares to be so redeemed, at the addresses of such holders as they appear on the records of the Depositary; but neither the failure to mail any such notice to one or more such holders nor any defect in any notice to one or more such holders shall affect the sufficiency of the proceedings for redemption as to other holders. Each such notice shall state: (i) the Redemption Date; (ii) the number of Depositary Shares to be redeemed and, if less than all the Depositary Shares held by any such holder are to be redeemed, the number of such Depositary Shares held by such holder to be so redeemed; (iii) the redemption price; (iv) the place or places where Receipts evidencing Depositary Shares are to be surrendered for payment of the redemption price; and (v) that dividends in respect of the Stock represented by the Depositary Shares to be redeemed will cease to accumulate on such Redemption Date. In case less than all the outstanding Depositary Shares are to be redeemed, the Depositary Shares to be so redeemed shall be selected by lot or pro rata as may be determined by the Depositary to be equitable. Notice having been mailed by the Depositary as aforesaid, from and after the Redemption Date (unless the Company shall have failed to redeem the shares of Stock to be redeemed by it as set forth in the Company's notice provided for in the preceding paragraph) all dividends in respect of the shares of Stock so called for redemption shall cease to accumulate, the Depositary Shares being redeemed from such proceeds shall be deemed no longer to be outstanding, all rights of the holders of Receipts evidencing such Depositary Shares (except the right to receive the redemption price) shall, to the extent of such Depositary Shares, cease and terminate and, upon surrender in accordance with such notice of the Receipts evidencing any such Depositary Shares (properly endorsed or assigned for transfer, if the Depositary shall so require), such Depositary Shares shall be redeemed by the Depositary at a redemption price per Depositary Share equal to ____________ of the redemption price per share paid in respect of the shares of Stock plus all money and other property, if any, represented by such Depositary Shares, 5 including all amounts paid by the Company in respect of dividends which on the Redemption Date have accumulated on the shares of Stock to be so redeemed and have not theretofore been paid. If less than all the Depositary Shares evidenced by a Receipt are called for redemption, the Depositary will deliver to the holder of such Receipt upon its surrender to the Depositary, together with the redemption payment, a new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and not called for redemption. SECTION 2.04. Registration of Transfer of Receipts. Subject to the ------------------------------------ terms and conditions of this Deposit Agreement, the Depositary shall register on its books from time to time transfers of Receipts upon any surrender thereof by the holder in person or by duly authorized attorney, properly endorsed or accompanied by a properly executed instrument of transfer. Thereupon the Depositary shall execute a new Receipt or Receipts evidencing the same aggregate number of Depositary Shares as those evidenced by the Receipt or Receipts surrendered and deliver such new Receipt or Receipts to or upon the order of the person entitled thereto. SECTION 2.05. Split-ups and Combinations of Receipts; Surrender of ---------------------------------------------------- Receipts and Withdrawal of Stock. Upon surrender of a Receipt or Receipts at the - -------------------------------- Depositary's Office or at such other offices as it may designate for the purpose of effecting a split-up or combination of such Receipt or Receipts, and subject to the terms and conditions of this Deposit Agreement, the Depositary shall execute and deliver a new Receipt or Receipts in the authorized denomination or denominations requested, evidencing the aggregate number of Depositary Shares evidenced by the Receipt or Receipts surrendered. Any holder of a Receipt or Receipts representing any number of whole shares of Stock may withdraw the Stock and all money and other property, if any, represented thereby by surrendering such Receipt or Receipts, at the Depositary's Office or at such other offices as the Depositary may designate for such withdrawals. Thereafter, without unreasonable delay, the Depositary shall deliver to such holder, or to the person or persons designated by such holder as hereinafter provided, the number of whole shares of Stock and all money and other property, if any, represented by the Receipt or Receipts for such whole shares of Stock so surrendered for withdrawal, but holders of such whole shares of Stock will not thereafter be entitled to deposit such Stock hereunder or to receive Depositary Shares therefor. If a Receipt delivered by the holder to the Depositary in connection with such withdrawal shall evidence a number of Depositary Shares in excess of the number of Depositary Shares representing the number of whole shares of Stock to be so withdrawn, the Depositary shall at the same time, in addition to 6 such number of whole shares of Stock and such money and other property, if any, to be so withdrawn, deliver to such holder, or (subject to Section 2.03) upon his order, a new Receipt evidencing such excess number of Depositary Shares. Delivery of the Stock and money and other property being withdrawn may be made by the delivery of such certificates, documents of title and other instruments as the Depositary may deem appropriate. If the Stock and the money and other property being withdrawn are to be delivered to a person or persons other than the record holder of the Receipt or Receipts being surrendered for withdrawal of Stock, such holder shall execute and deliver to the Depositary a written order so directing the Depositary and the Depositary may require that the Receipt or Receipts surrendered by such holder for withdrawal of such shares of Stock be properly endorsed in blank or accompanied by a properly executed instrument of transfer. Delivery of the Stock and the money and other property, if any, represented by Receipts surrendered for withdrawal shall be made by the Depositary at the Depositary's Office, except that, at the request, risk and expense of the holder surrendering such Receipt or Receipts and for the account of the holder thereof, such delivery may be made at such other place as may be designated by such holder. SECTION 2.06. Limitations on Execution and Delivery, Transfer, ------------------------------------------------ Surrender and Exchange of Receipts. As a condition precedent to the execution - ---------------------------------- and delivery, registration of transfer, split-up, combination, surrender or exchange of any Receipt, the Depositary, any of the Depositary's Agents or the Company may require payment to it of a sum sufficient for the payment (or, in the event that the Depositary or the Company shall have made such payment, the reimbursement to it) of any charges or expenses payable by the holder of a Receipt pursuant to Section 5.07, may require the production of evidence satisfactory to it as to the identity and genuineness of any signature and may also require compliance with such regulations, if any, as the Depositary or the Company may establish consistent with the provisions of this Deposit Agreement. The deposit of Stock may be refused, the delivery of Receipts against Stock may be suspended, the registration of transfer of Receipts may be refused and the registration of transfer, surrender or exchange of outstanding Receipts may be suspended (i) during any period when the register of stockholders of the Company is closed or (ii) if any such action is deemed necessary or advisable by the Depositary, any of the Depositary's Agents or the Company at any time or from time to time because of any requirement of law or of any government or governmental body or commission or under any provision of this Deposit Agreement. Without limitation of the foregoing, the Depositary shall not 7 knowingly accept for deposit under this Deposit Agreement any shares of Stock which are required to be registered under the Securities Act of 1933, unless a registration statement under such Act is in effect as to such shares of Stock. SECTION 2.07. Lost Receipts, etc. In case any Receipt shall be ------------------- mutilated, destroyed, lost or stolen, the Depositary in its discretion may execute and deliver a Receipt of like form and tenor in exchange and substitution for such mutilated Receipt, or in lieu of and in substitution for such destroyed, lost or stolen Receipt, upon (i) the filing by the holder thereof with the Depositary of evidence satisfactory to the Depositary of such destruction or loss or theft of such Receipt, of the authenticity thereof and of his or her ownership thereof and (ii) the furnishing of the Depositary with reasonable indemnification satisfactory to it. SECTION 2.08. Cancellation and Destruction of Surrendered Receipts. ---------------------------------------------------- All Receipts surrendered to the Depositary or any Depositary's Agent shall be canceled by the Depositary. Except as prohibited by applicable law or regulation, the Depositary is authorized to destroy all Receipts so canceled. ARTICLE III Certain Obligations of Holders of Receipts and the Company SECTION 3.01. Filing Proofs, Certificates and Other Information. Any ------------------------------------------------- holder of a Receipt may be required from time to time to file such proof of residence, or other matters or other information, to execute such certificates and to make such representations and warranties as the Depositary or the Company may reasonably deem necessary or proper. The Depositary or the Company may withhold the delivery, or delay the registration of transfer, redemption or exchange, of any Receipt or the withdrawal of the Stock represented by the Depositary Shares evidenced by any Receipt or the distribution of any dividend or other distribution or the sale of any rights or of the proceeds thereof until such proof or other information is filed or such certificates are executed or such representations and warranties are made. SECTION 3.02. Payment of Taxes or Other Governmental Charges. ---------------------------------------------- Holders of Receipts shall be obligated to make payments to the Depositary of certain charges and expenses, as provided in Section 5.07. Registration of transfer of any Receipt or any withdrawal of Stock and all money or other property, if any, represented by the Depositary Shares evidenced by such Receipt may be refused until any such payment due is made, and any dividends, interest payments or other distributions 8 may be withheld or any part of or all the Stock or other property represented by the Depositary Shares evidenced by such Receipt and not theretofore sold may be sold for the account of the holder thereof (after attempting by reasonable means to notify such holder prior to such sale), and such dividends, interest payments or other distributions or the proceeds of any such sale may be applied to any payment of such charges or expenses, the holder of such Receipt remaining liable for any deficiency. SECTION 3.03. Warranty as to Stock. The Company hereby represents -------------------- and warrants that the Stock, when issued, will be validly issued, fully paid and nonassessable. Such representation and warranty shall survive the deposit of the Stock and the issuance of Receipts. ARTICLE IV The Deposited Securities; Notices SECTION 4.01. Cash Distributions. Whenever the Depositary shall ------------------ receive any cash dividend or other cash distribution on Stock, the Depositary shall, subject to Sections 3.01 and 3.02, distribute to record holders of Receipts pursuant to Section 4.04 such amounts of such dividend or distribution as are, as nearly as practicable, in proportion to the respective numbers of Depositary Shares evidenced by the Receipts held by such holders; provided, however, that in case the Company or the Depositary shall be required to withhold and does withhold from any cash dividend or other cash distribution in respect of the Stock an amount on account of taxes, the amount made available for distribution or distributed in respect of Depositary Shares shall be reduced accordingly. The Depositary shall not be required to attribute to any holder of Depositary Shares a fraction of one cent, and any amounts held by the Depositary in such event will be distributed to holders of Receipts in such reasonable manner as the Company and the Depositary determine. SECTION 4.02. Distributions Other Than Cash, Rights, Preferences or ----------------------------------------------------- Privileges. Whenever the Depositary shall receive any distribution other than - ---------- cash, rights, preferences or privileges upon Stock, the Depositary shall, subject to Sections 3.01 and 3.02, distribute to record holders of Receipts pursuant to Section 4.04 such amounts of the securities or property received by it as are, as nearly as practicable, in proportion to the respective numbers of Depositary Shares evidenced by the Receipts held by such holders, in any manner that the Depositary may deem equitable and practicable for accomplishing such distribution. If in the opinion of the Depositary such distribution cannot be made proportionately among such record holders, or if for any other reason (including any requirement that the Company or the Depositary withhold an amount on account 9 of taxes) the Depositary deems, after consultation with the Company, such distribution not to be feasible, the Depositary may, with the approval of the Company, adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including the sale (at public or private sale) of the securities or property thus received, or any part thereof, at such place or places and upon such terms as it may deem proper. The net proceeds of any such sale shall, subject to Sections 3.01 and 3.02, be distributed or made available for distribution, as the case may be, by the Depositary to record holders of Receipts as provided by Section 4.01 in the case of a distribution received in cash. The Company shall not make any distribution of such securities unless the Company shall have provided an opinion of counsel stating that such securities have been registered under the Securities Act of 1933 or do not need to be registered. SECTION 4.03. Subscription Rights, Preferences or Privileges. If the ---------------------------------------------- Company shall at any time offer or cause to be offered to the persons in whose names Stock is recorded on the books of the Company any rights, preferences or privileges to subscribe for or to purchase any securities or any rights, preferences or privileges of any other nature, such rights, preferences or privileges shall in each such instance be made available by the Depositary to the record holders of Receipts in such manner as the Depositary may determine, either by the issue to such record holders of warrants representing such rights, preferences or privileges or by such other method as may be approved by the Depositary in its discretion with the approval of the Company; provided, however, that (i) if at the time of issue or offer of any such rights, preferences or privileges the Depositary determines that it is not lawful or (after consultation with the Company) not feasible to make such rights, preferences or privileges available to holders of Receipts by the issue of warrants or otherwise, or (ii) if and to the extent so instructed by holders of Receipts who do not desire to exercise such rights, preferences or privileges, then the Depositary, in its discretion (with the approval of the Company, in any case where the Depositary has determined that it is not feasible to make such rights, preferences or privileges available), may, if applicable laws or the terms of such rights, preferences or privileges permit such transfer, sell such rights, preferences or privileges at public or private sale, at such place or places and upon such terms as it may deem proper. The net proceeds of any such sale shall, subject to Sections 3.01 and 3.02, be distributed by the Depositary to the record holders of Receipts entitled thereto as provided by Section 4.01 in the case of a distribution received in cash. The Company shall not make any distribution of any such rights, preferences or privileges unless the Company shall have provided an opinion of counsel stating that such rights, preferences or privileges have been registered under the Securities Act of 1933 or do not need to be registered. 10 If in order for holders of Receipts to be offered or sold the securities to which any rights, preferences or privileges relate, registration under the Securities Act of 1933 of the securities to which such rights, preferences or privileges relate is required, the Company will promptly file a registration statement pursuant to such Act with respect to such rights, preferences or privileges and securities and use its best efforts and take all steps available to it to cause such registration statement to become effective sufficiently in advance of the expiration of such rights, preferences or privileges to enable such holders to exercise such rights, preferences or privileges. In no event shall the Depositary make available to the holders of Receipts any right, preference or privilege to subscribe for or to purchase any securities unless and until such a registration statement shall have become effective, or unless the offering and sale of such securities to such holders are exempt from registration under the provisions of such Act. If any other action under the laws of any jurisdiction or any governmental or administrative authorization, consent or permit is required in order for such rights, preferences or privileges to be made available to holders of Receipts, the Company will use its best efforts to take such action or obtain such authorization, consent or permit sufficiently in advance of the expiration of such rights, preferences or privileges to enable such holders to exercise such rights, preferences or privileges. SECTION 4.04. Notice of Dividends; Fixing of Record Date for Holders ------------------------------------------------------ of Receipts. Whenever any cash dividend or other cash distribution shall become - ----------- payable or any distribution other than cash shall be made, or if rights, preferences or privileges shall at any time be offered, with respect to Stock, or whenever the Depositary shall receive notice of any meeting at which holders of Stock are entitled to vote or any meeting of which holders of Stock are entitled to notice, or whenever the Depositary and the Company shall decide it is appropriate, the Depositary shall in each such instance fix a record date (which shall be the same date as the record date fixed by the Company with respect to the Stock) for the determination of the holders of Receipts who shall be entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof, or to give instructions for the exercise of voting rights at any such meeting, or who shall be entitled to notice of such meeting or for any other appropriate reason. SECTION 4.05. Voting Rights. Upon receipt of notice of any meeting ------------- at which the holders of Stock are entitled to vote, the Depositary shall, as soon as practicable thereafter, mail to the record holders of Receipts a notice which shall contain (i) such information as is contained in such notice of 11 meeting and (ii) a statement that the holders may, subject to any applicable restrictions, instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Stock represented by their respective Depositary Shares (including an express indication that instructions may be given to the Depositary to give a discretionary proxy to a person designated by the Company) and a brief statement as to the manner in which such instructions may be given. Upon the written request of the holders of Receipts on the relevant record date, the Depositary shall endeavor insofar as practicable to vote or cause to be voted, in accordance with the instructions set forth in such requests, the maximum number of whole shares of Stock represented by the Depositary Shares evidenced by all Receipts as to which any particular voting instructions are received. The Company hereby agrees to take all action which may be deemed necessary by the Depositary in order to enable the Depositary to vote such Stock or cause such Stock to be voted. In the absence of specific instructions from the holder of a Receipt, the Depositary will abstain from voting (but, at its discretion, not from appearing at any meeting with respect to such Stock unless directed to the contrary by the holders of all the Receipts) to the extent of the Stock represented by the Depositary Shares evidenced by such Receipt. SECTION 4.06. Changes Affecting Deposited Securities and ------------------------------------------ Reclassifications, Recapitalizations, etc. Upon any change in par or stated - ----------------------------------------- value, split-up, combination or any other reclassification of the Stock, or upon any recapitalization, reorganization, merger, amalgamation or consolidation affecting the Company or to which it is a party, the Depositary may in its discretion with the approval of, and shall upon the instructions of, the Company, and (in either case) in such manner as the Depositary may deem equitable, (i) make such adjustments as are certified by the Company in (x) the fraction of an interest represented by one Depositary Share in one share of Stock and (y) the ratio of the redemption price per Depositary Share to the redemption price of a share of Stock, in each case as may be necessary fully to reflect the effects of such change in par or stated value, split-up, combination or other reclassification of Stock, or of such recapitalization, reorganization, merger, amalgamation or consolidation and (ii) treat any securities which shall be received by the Depositary in exchange for or upon conversion of or in respect of the Stock as new deposited securities under this Deposit Agreement, and Receipts then outstanding shall thenceforth represent the new deposited securities so received in exchange for or upon conversion or in respect of such Stock. In any such case the Depositary may in its discretion, with the approval of the Company, execute and deliver additional Receipts, or may call for the surrender of all outstanding Receipts to be exchanged for new Receipts specifically describing such new deposited securities. Anything to the contrary herein notwithstanding, holders of Receipts shall 12 have the right from and after the effective date of any such change in par or stated value, split-up, combination or other reclassification of the Stock or any such recapitalization, reorganization, merger, amalgamation or consolidation to surrender such Receipts to the Depositary with instructions to convert, exchange or surrender the Stock represented thereby only into or for, as the case may be, the kind and amount of shares of stock and other securities and property and cash into which the Stock represented by such Receipts might have been converted or for which such Stock might have been exchanged or surrendered immediately prior to the effective date of such transaction. SECTION 4.07. Inspection of Reports. The Depositary shall make --------------------- available for inspection by holders of Receipts at the Depositary's Office, and at such other places as it may from time to time deem advisable, any reports and communications received from the Company which are received by the Depositary as the holder of Stock. SECTION 4.08. Lists of Receipt Holders. Promptly upon request from ------------------------ time to time by the Company, the Depositary shall furnish to it a list, as of a recent date, of the names, addresses and holdings of Depositary Shares of all persons in whose names Receipts are registered on the books of the Depositary. ARTICLE V The Depositary, the Depositary's Agents, the Registrar and the Company SECTION 5.01. Maintenance of Offices, Agencies and Transfer Books by ------------------------------------------------------ the Depositary; Registrar. Upon execution of this Deposit Agreement, the - ------------------------- Depositary shall maintain at the Depositary's Office, or at the Registrar's Office, at which the Depositary shall have complete access to all books and records maintained on the Company's behalf, facilities for the execution and delivery, registration and registration of transfer, surrender and exchange of Receipts, and at the offices of the Depositary's Agents, if any, facilities for the delivery, registration of transfer, surrender and exchange of Receipts, all in accordance with the provisions of this Deposit Agreement. The Depositary shall keep books at the Depositary's Office for the registration and registration of transfer of Receipts, which books at all reasonable times shall be open for inspection by the record holders of Receipts; provided, that any such holder requesting to exercise such right shall certify to the Depositary that such inspection shall be for a proper purpose reasonably related to such person's interest as an owner of Depositary Shares evidenced by the Receipts. 13 The Depositary may close such books, at any time or from time to time, when deemed expedient by it in connection with the performance of its duties hereunder. The Depositary may, with the approval of the Company, appoint a Registrar for registration of the Receipts or the Depositary Shares evidenced thereby. If the Receipts or the Depositary Shares evidenced thereby or the Stock represented by such Depositary Shares shall be listed on the New York Stock Exchange, the Depositary will appoint a Registrar (acceptable to the Company) for registration of such Receipts or Depositary Shares in accordance with any requirements of such Exchange. Such Registrar (which may be the Depositary if so permitted by the requirements of such Exchange) may be removed and a substitute registrar appointed by the Depositary upon the request or with the approval of the Company. If the Receipts, such Depositary Shares or such Stock are listed on one or more other stock exchanges, the Depositary will, at the request of the Company, arrange such facilities for the delivery, registration, registration of transfer, surrender and exchange of such Receipts, such Depositary Shares or such Stock as may be required by law or applicable stock exchange regulation. SECTION 5.02. Prevention of or Delay in Performance by the -------------------------------------------- Depositary, the Depositary's Agents, the Registrar or the Company. Neither the - ----------------------------------------------------------------- Depositary nor any Depositary's Agent nor any Registrar nor the Company shall incur any liability to any holder of any Receipt if by reason of any provision of any present or future law, or regulation thereunder, of the United States of America or of any other governmental authority or, in the case of the Depositary, the Depositary's Agent or the Registrar, by reason of any provision, present or future, of the Company's Certificate of Incorporation (including the Certificate) or by reason of any act of God or war or other circumstance beyond the control of the relevant party, the Depositary, the Depositary's Agent, the Registrar or the Company shall be prevented or forbidden from, or subjected to any penalty on account of, doing or performing any act or thing which the terms of this Deposit Agreement provide shall be done or performed; nor shall the Depositary, any Depositary's Agent, any Registrar or the Company incur any liability to any holder of a Receipt (i) by reason of any nonperformance or delay, caused as aforesaid, in the performance of any act or thing which the terms of this Deposit Agreement provide shall or may be done or performed, or (ii) by reason of any exercise of, or failure to exercise, any discretion provided for in this Deposit Agreement except, in case of any such exercise or failure to exercise discretion not caused as aforesaid, if caused by the negligence or willful misconduct of the party charged with such exercise or failure to exercise. 14 SECTION 5.03. Obligations of the Depositary, the Depositary's Agents, ------------------------------------------------------- the Registrar and the Company. Neither the Depositary nor any Depositary's - ----------------------------- Agent nor any Registrar nor the Company assumes any obligation or shall be subject to any liability under this Deposit Agreement to holders of Receipts other than for its negligence or willful misconduct. Neither the Depositary nor any Depositary's Agent nor any Registrar nor the Company shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of the Stock, the Depositary Shares or the Receipts which in its opinion may involve it in expense or liability unless indemnity satisfactory to it against all expense and liability be furnished as often as may be required. Neither the Depositary nor any Depositary's Agent nor any Registrar nor the Company shall be liable for any action or any failure to act by it in reliance upon the written advice of legal counsel or accountants, or information from any person presenting Stock for deposit, any holder of a Receipt or any other person believed by it in good faith to be competent to give such information. The Depositary, any Depositary's Agent, any Registrar and the Company may each rely and shall each be protected in acting upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Depositary shall not be responsible for any failure to carry out any instruction to vote any of the shares of Stock or for the manner or effect of any such vote made, as long as any such action or non-action is in good faith. The Depositary undertakes, and any Registrar shall be required to undertake, to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Depositary or any Registrar. The Depositary will indemnify the Company against any liability which may arise out of acts performed or omitted by the Depositary or its agents due to its or their negligence or bad faith. The Depositary, the Depositary's Agents, and any Registrar may own and deal in any class of securities of the Company and its affiliates and in Receipts. The Depositary may also act as transfer agent or registrar of any of the securities of the Company and its affiliates. SECTION 5.04. Resignation and Removal of the Depositary; Appointment ------------------------------------------------------ of Successor Depositary. The Depositary may at any time resign as Depositary - ----------------------- hereunder by having notice of its election to do so delivered to the Company, such resignation to take effect upon the appointment of a successor Depositary and its acceptance of such appointment as hereinafter provided. 15 The Depositary may at any time be removed by the Company by notice of such removal delivered to the Depositary, such removal to take effect upon the appointment of a successor Depositary and its acceptance of such appointment as hereinafter provided. In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall, within 60 days after the delivery of the notice of resignation or removal, as the case may be, appoint a successor Depositary, which shall be a bank or trust company having its principal office in the United States of America and having a combined capital and surplus of at least $50,000,000. If no successor Depositary shall have been so appointed and have accepted appointment within 60 days after delivery of such notice, the resigning or removed Depositary may petition any court of competent jurisdiction for the appointment of a successor Depositary. Every successor Depositary shall execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor Depositary, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor and for all purposes shall be the Depositary under this Deposit Agreement, and such predecessor, upon payment of all sums due it and on the written request of the Company, shall execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, shall duly assign, transfer and deliver all right, title and interest in the Stock and any moneys or property held hereunder to such successor, and shall deliver to such successor a list of the record holders of all outstanding Receipts. Any successor Depositary shall promptly mail notice of its appointment to the record holders of Receipts. Any corporation into or with which the Depositary may be merged, consolidated or converted shall be the successor of such Depositary without the execution or filing of any document or any further act, and notice thereof shall not be required hereunder. Such successor Depositary may authenticate the Receipts in the name of the predecessor Depositary or in the name of the successor Depositary. SECTION 5.05. Corporate Notices and Reports. The Company agrees that ----------------------------- it will transmit to the record holders of Receipts, in each case at the addresses furnished to it pursuant to Section 4.08, all notices and reports (including without limitation financial statements) required by law, by the rules of any national securities exchange upon which the Stock, the Depositary Shares or the Receipts are listed or by the Company's Certificate of Incorporation (including the Certificate) to be furnished by the Company to holders of Stock. Such transmission will be at the Company's expense. 16 SECTION 5.06. Indemnification by the Company. The Company shall ------------------------------ indemnify the Depositary, any Depositary's Agent and any Registrar against, and hold each of them harmless from, any loss, liability or expense (including the costs and expenses of defending itself) which may arise out of (a) acts performed or omitted in connection with this Agreement and the Receipts (i) by the Depositary, any Registrar or any of their respective agents (including any Depositary's Agent), except for any liability arising out of negligence or bad faith on the respective parts of any such person or persons, or (ii) by the Company or any of its agents, or (b) the offer, sale or registration of the Receipts, Depositary Shares or the Stock pursuant to the provisions hereof. The obligations of the Company set forth in this Section 5.06 shall survive any succession of any Depositary, Registrar or Depositary's Agent. SECTION 5.07. Charges and Expenses. The Company shall pay all -------------------- transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. The Company shall pay all charges of the Depositary in connection with the initial deposit of the Stock and the initial issuance of the Depositary Shares, redemption of the Stock at the option of the Company and all withdrawals of shares of the Stock by owners of Depositary Shares. All other transfer and other taxes and governmental charges shall be at the expense of holders of Depositary Shares. If, at the request of a holder of Receipts, the Depositary incurs charges or expenses for which it is not otherwise liable hereunder, such holder will be liable for such charges and expenses. All other charges and expenses of the Depositary and any Depositary's Agent hereunder and of any Registrar (including, in each case, fees and expenses of counsel) incident to the performance of their respective obligations hereunder will be paid upon consultation and agreement between the Depositary and the Company as to the amount and nature of such charges and expenses. The Depositary shall present its statement for charges and expenses to the Company once every three months or at such other intervals as the Company and the Depositary may agree. ARTICLE VI Amendment and Termination SECTION 6.01. Amendment. The form of the Receipts and any provisions --------- of this Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary in any respect which they may deem necessary or desirable; provided, however, that no such amendment (other than any change in the fees of any Depositary or Registrar, which shall go into effect not sooner than three months after notice thereof to the holders of the Receipts) which 17 shall materially and adversely alter the rights of the holders of Receipts shall be effective unless such amendment shall have been approved by the holders of at least a majority of the Depositary Shares then outstanding. Every holder of an outstanding Receipt at the time any such amendment becomes effective shall be deemed, by continuing to hold such Receipt, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. SECTION 6.02. Termination. This Agreement may be terminated by the ----------- Company or the Depositary only after (i) all outstanding Depositary Shares shall have been redeemed pursuant to Section 2.03 or (ii) there shall have been made a final distribution in respect of the Stock in connection with any liquidation, dissolution or winding up of the Company and such distribution shall have been distributed to the holders of Depositary Shares pursuant to Section 4.01 or 4.02, as applicable. Upon the termination of this Deposit Agreement, the Company shall be discharged from all obligations under this Deposit Agreement except for its obligations to the Depositary, any Depositary's Agent and any Registrar under Sections 5.06 and 5.07. ARTICLE VII Miscellaneous SECTION 7.01. Counterparts. This Deposit Agreement may be executed ------------ in any number of counterparts, and by each of the parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed an original, but all such counterparts taken together shall constitute one and the same instrument. SECTION 7.02. Exclusive Benefit of Parties. This Deposit Agreement is ---------------------------- for the exclusive benefit of the parties hereto, and their respective successors hereunder, and shall not be deemed to give any legal or equitable right, remedy or claim to any other person whatsoever. SECTION 7.03. Invalidity of Provisions. In case any one or more of ------------------------ the provisions contained in this Deposit Agreement or in the Receipts should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby. 18 SECTION 7.04. Notices. Any and all notices to be given to the Company ------- hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail or telegram or telex confirmed by letter, addressed to the Company at 2700 Sanders Road, Prospect Heights, Illinois 60070, to the attention of the Office of the Secretary, or at any other address of which the Company shall have notified the Depositary in writing. Any and all notices to be given to the Depositary hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail or by telegram or telex confirmed by letter, addressed to the Depositary at the Depositary's Office, at _________ __________, or at any other address of which the Depositary shall have notified the Company in writing. Any and all notices to be given to any record holder of a Receipt hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail or by telegram or telex confirmed by letter, addressed to such record holder at the address of such record holder as it appears on the books of the Depositary, or if such holder shall have filed with the Depositary a written request that notices intended for such holder be mailed to some other address, at the address designated in such request. Delivery of a notice sent by mail or by telegram or telex shall be deemed to be effected at the time when a duly addressed letter containing the same (or a confirmation thereof in the case of a telegram or telex message) is deposited, postage prepaid, in a post office letter box. The Depositary or the Company may, however, act upon any telegram or telex message received by it from the other or from any holder of a Receipt, notwithstanding that such telegram or telex message shall not subsequently be confirmed by letter or as aforesaid. SECTION 7.05. Depositary's Agents. The Depositary may from time to ------------------- time appoint, with the prior approval of the Company, Depositary's Agents to act in any respect for the Depositary for the purposes of this Deposit Agreement and may at any time appoint additional Depositary's Agents and vary or terminate the appointment of such Depositary's Agents. The Company has also requested that the Depositary act as Registrar and Transfer Agent. SECTION 7.06. Holders of Receipts Are Parties. The holders of ------------------------------- Receipts from time to time shall be parties to this Deposit Agreement and shall be bound by all of the terms and conditions hereof and of the Receipts by acceptance of delivery thereof. 19 SECTION 7.07. Governing Law. This Deposit Agreement and the ------------- Receipts and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by, and construed in accordance with, the laws of the State of Illinois. SECTION 7.08. Inspection of Deposit Agreement. Copies of this ------------------------------- Deposit Agreement shall be filed with the Depositary and the Depositary's Agents and shall be open to inspection during business hours at the Depositary's Office and the respective offices of the Depositary's Agents, if any, by any holder of a Receipt. SECTION 7.09. Headings. The headings of articles and sections in -------- this Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto have been inserted for convenience only and are not to be regarded as a part of this Deposit Agreement or the Receipts or to have any bearing upon the meaning or interpretation of any provision contained herein or in the Receipts. IN WITNESS WHEREOF, the Company and the Depositary have duly executed this Agreement as of the day end year first above set forth, and all holders of Receipts shall become parties hereto by and upon acceptance by them of delivery of Receipts issued in accordance with the terms hereof. HOUSEHOLD INTERNATIONAL, INC. By___________________________ Attested by _________________________ [SEAL] ___________________________ as Depositary, By_________________________ Attested by _________________________ 20 EX-4.(F) 5 FORM OF PURCHASE CONTRACT AGREEMENT EXHIBIT 4(f) ================================================================================ HOUSEHOLD INTERNATIONAL, INC. AND ___________________, AS PURCHASE CONTRACT AGENT PURCHASE CONTRACT AGREEMENT DATED AS OF ___________, 1997 ================================================================================ TABLE OF CONTENTS ---------------
Page ---- ARTICLE 1 Definitions and Other Provisions of General Application Section 1.01. Definitions........................................................................ 1 Section 1.02. Compliance Certificates and Opinions............................................... 9 Section 1.03. Form of Documents Delivered to Agent............................................... 10 Section 1.04. Acts of Holders; Record Dates...................................................... 11 Section 1.05. Notices, Etc., to Agent and the Company............................................ 12 Section 1.06. Notice to Holders; Waiver.......................................................... 13 Section 1.07. Effect of Headings and Table of Contents........................................... 13 Section 1.08. Successors and Assigns............................................................. 14 Section 1.09. Separability Clause................................................................ 14 Section 1.10. Benefits of Agreement.............................................................. 14 Section 1.11. Governing Law...................................................................... 14 Section 1.12. Legal Holidays..................................................................... 14 Section 1.13. Counterparts....................................................................... 15 Section 1.14. Inspection of Agreement............................................................ 15 Section 1.15. Appointment of Financial Institution as Agent for the Company...................... 15 ARTICLE 2 Security Certificate Forms Section 2.01. Forms of Security Certificates Generally; Book-Entry............................... 15 Section 2.02. Form of Agent's Certificate of Authentication...................................... 18 ARTICLE 3 The Securities Section 3.01. Title and Terms; Denominations..................................................... 18 Section 3.02. Rights and Obligations Evidenced by the Security Certificates...................... 18 Section 3.03. Execution, Authentication, Delivery and Dating..................................... 19 Section 3.04. Temporary Security Certificates.................................................... 20 Section 3.05. Registration; Registration of Transfer and Exchange................................ 20 Section 3.06. Mutilated, Destroyed, Lost and Stolen Security Certificates........................ 22 Section 3.07. Persons Deemed Owners.............................................................. 23 Section 3.08. Cancellation....................................................................... 24 Section 3.09. Securities Not Separable........................................................... 25
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Page ---- Section 3.10. No Consent to Assumption........................................................... 25 Section 3.11. Cusip Numbers...................................................................... 25 ARTICLE 4 The Treasury Notes Section 4.01. Payment of Interest; Interest Rights Preserved..................................... 25 Section 4.02. Transfer of Treasury Notes upon Certain Events or Sale of Treasury Notes........... 26 ARTICLE 5 The Purchase Contracts Section 5.01. Purchase of Shares of Common Stock on the Final Settlement Date................... 28 Section 5.02. Contract Fees...................................................................... 29 Section 5.03. Deferral of Payment Dates for Contract Fees........................................ 30 Section 5.04. Payment of Purchase Price.......................................................... 31 Section 5.05. Issuance of Common Stock........................................................... 31 Section 5.06. Settlement Rate; Adjustment of Settlement Rate for Dividends, Distributions, Stock Splits, Etc........................................................ 32 Section 5.07. Notice of Adjustments and Certain Other Events..................................... 38 Section 5.08. Acceleration; Notice............................................................... 39 Section 5.09. Bankruptcy Event or Sale of Assets; Notice......................................... 42 Section 5.10. Holder's Early Settlement.......................................................... 43 Section 5.11. No Fractional Shares............................................................... 44 Section 5.12. Charges and Taxes.................................................................. 45 ARTICLE 6 Remedies Section 6.01. Unconditional Right of Holders to Receive Contract Fees and Purchase Common Stock................................................................... 45 Section 6.02. Restoration of Rights and Remedies................................................. 46 Section 6.03. Rights and Remedies Cumulative..................................................... 46 Section 6.04. Delay or Omission Not Waiver....................................................... 46 Section 6.05. Undertaking for Costs.............................................................. 46 Section 6.06. Waiver of Stay or Extension Laws................................................... 47
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Page ---- ARTICLE 7 The Agent Section 7.01. Certain Duties and Responsibilities................................................ 47 Section 7.02. Notice of Default.................................................................. 48 Section 7.03. Certain Rights of Agent............................................................ 48 Section 7.04. Not Responsible for Recitals or Issuance of Securities............................. 50 Section 7.05. May Hold Securities................................................................ 50 Section 7.06. Money Held in Custody.............................................................. 50 Section 7.07. Compensation and Reimbursement..................................................... 50 Section 7.08. Corporate Agent Required; Eligibility.............................................. 51 Section 7.09. Resignation and Removal; Appointment of Successor.................................. 52 Section 7.10. Acceptance of Appointment by Successor............................................. 53 Section 7.11. Preservation of Information; Communications to Holders............................. 53 Section 7.12. No Obligations of Agent............................................................ 54 Section 7.13. Tax Compliance..................................................................... 54 Section 7.14. Merger, Conversion, Consolidation or Succession to Business of Agent.............. 55 ARTICLE 8 Supplemental Agreements Section 8.01. Supplemental Agreements Without Consent of Holders................................. 55 Section 8.02. Supplemental Agreements with Consent of Holders.................................... 56 Section 8.03. Execution of Supplemental Agreements............................................... 57 Section 8.04. Effect of Supplemental Agreements.................................................. 57 Section 8.05. Reference to Supplemental Agreements............................................... 57 ARTICLE 9 Covenants Section 9.01. Performance under Purchase Contracts............................................... 58 Section 9.02. Maintenance of Office or Agency.................................................... 58 Section 9.03. Company to Reserve Common Stock.................................................... 59 Section 9.04. Covenants as to Common Stock....................................................... 59 Section 9.05. Statements of Officers of the Company as to Default................................ 59
iii EXHIBIT 4(f) PURCHASE CONTRACT AGREEMENT, dated as of _________________, between Household International, Inc., a Delaware corporation (the "COMPANY"), and ____________________, a _________________________, acting as purchase contract agent for the Holders of Securities from time to time (the "AGENT"). RECITALS The Company has duly authorized the execution and delivery of this Agreement and the Security Certificates evidencing the Securities. All things necessary to make the Company's obligations under the Securities, when the Security Certificates are executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Agent, as in this Agreement provided, the valid obligations of the Company, and to constitute these presents a valid agreement of the Company, in accordance with its terms, have been done. WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed as follows: ARTICLE 1 Definitions and Other Provisions of General Application Section 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; and (2) the words "HEREIN," "HEREOF" and "HEREUNDER" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. "ACT" when used with respect to any Holder, has the meaning specified in Section 1.04(a). "ACCELERATION" means either a "COMPANY ACCELERATION" or a "MANDATORY ACCELERATION." "ACCELERATION DATE" means either a "COMPANY ACCELERATION DATE" or a "MANDATORY ACCELERATION DATE." "ACCELERATION SETTLEMENT FUND" has the meaning specified in Section 5.05. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "CONTROL" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing. "AGENT" means the Person named as the "AGENT" in the first paragraph of this instrument until a successor Agent shall have become such pursuant to the applicable provisions of this Agreement, and thereafter "AGENT" shall mean the Person who is then the Agent hereunder. "AGREEMENT" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof. "APPLICANTS" has the meaning specified in Section 7.11. "AUTHORIZED NEWSPAPER" has the meaning set forth in Section 5.08(c). "BANKRUPTCY CODE" means title 11 of the United States Code, or any other law of the United States that from time to time provides a uniform system of bankruptcy laws. "BANKRUPTCY DATE" means the date, if any, on which a Bankruptcy Event occurs. "BANKRUPTCY EVENT" means the occurrence of any of the following events (whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order rule or regulation of any administration or governmental body): (i) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, 2 sequestrator (or similar official) of the Company or any substantial part of its property or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (ii) the Company shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or for any substantial part of its property, or make any general assignment for the benefit of creditors. "BENEFICIAL OWNER" means, with respect to a Book Entry Interest, a Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency). "BOARD OF DIRECTORS" means the board of directors of the Company or a duly authorized committee of that board. "BOARD RESOLUTION" means one or more resolutions of the Board of Directors, a copy of which has been certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Agent . "BOOK ENTRY INTEREST" means a beneficial interest in a Global Security Certificate registered in the name of a Clearing Agency or a nominee thereof, ownership and transfers of which shall be maintained and made through book entries by such Clearing Agency as described in Section 2.01. "BUSINESS DAY" means any day that is not a Saturday, Sunday or a day on which the NYSE or banking institutions or trust companies in The City of New York are authorized or obligated by law or executive order to be closed. "CLEARING AGENCY" means an organization registered as a "Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as depository for the Securities and in whose name or in the name of a nominee of that organization, shall be registered a Global Security Certificate and which shall undertake to effect book entry transfers and pledges of the Securities. 3 "CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency. "CLOSING PRICE"means on any day the closing sales price regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way, in each case on the New York Stock Exchange, or, if the Common Stock is not listed or admitted to trading on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading, or, if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices of the Common Stock on the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similarly generally accepted reporting service, or if not so available in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors of the Company for that purpose. "COLLATERAL AGENT" means The First National Bank of Chicago, as Collateral Agent under the Pledge Agreement until a successor Collateral Agent shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter "COLLATERAL AGENT" shall mean the Person who is then the Collateral Agent thereunder. "COMMON STOCK" means the Common Stock, par value $1.00 per share, of the Company. "COMPANY" means the Person named as the "COMPANY" in the first paragraph of this instrument until a successor shall have become such pursuant to the applicable provisions of this Agreement, and thereafter "COMPANY" shall mean such successor. "COMPANY ACCELERATION" has the meaning specified in Section 5.08. "COMPANY ACCELERATION DATE" has the meaning specified in Section 5.08. "COMPANY ACCELERATION PRICE" shall mean the per share price (payable in shares of Common Stock) at which the Company may accelerate settlement of the Securities, which shall be initially $______, declining by $_______ on each day following __________, 1997 (computed on the basis of a 360-day year of twelve 30-day months) to $_______ on _______________ and equal to $______ thereafter. 4 "CONTRACT FEES" means the fees payable by the Company on each Payment Date in respect of each Purchase Contract, equal to ___% per annum of the Stated Amount plus any Deferred Contract Fees accrued pursuant to Section 5.03, computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be, except that the Contract Fees payable on the first Payment Date will be adjusted so that the Contract Fees payable on such date will be $_______ per Security. "CORPORATE TRUST OFFICE" means the principal corporate trust office of the Agent at which, at any particular time, its corporate trust business shall be administered, which office at the date hereof is located at __________________ ______________________________________________________________________________ _________________. "CURRENT MARKET PRICE" has the meaning specified in Section 5.06(g). "DEFERRED CONTRACT FEES" has the meaning specified in Section 5.03. "DEPOSITARY" means a clearing agency registered under the Exchange Act that is designated to act as Depositary for the Securities as contemplated by Section 3.05. "DTC" has the meaning specified in Section 2.01. "EXCHANGE ACT" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder. "EXPIRATION DATE" has the meaning specified in Section 1.04(e). "EXPIRATION TIME" has the meaning specified in Section 5.06(f). "FINAL SETTLEMENT DATE" means __________, ____. "FINAL SETTLEMENT FUND" has the meaning specified in Section 5.05. "GLOBAL SECURITY CERTIFICATE" means a Security Certificate that evidences all or part of the Securities and is registered in the name of a Depositary or a nominee thereof. "HOLDER" when used with respect to a Security Certificate (or a Security), means a Person in whose name the Security evidenced by such Security Certificate 5 (or the Security Certificate evidencing such Security) is registered in the Security Register, subject to Section 3.07. "HOLDER'S EARLY SETTLEMENT" has the meaning specified in Section 5.10(a). "HOLDER'S EARLY SETTLEMENT AMOUNT" has the meaning specified in Section 5.10(a). "HOLDER'S EARLY SETTLEMENT DATE" has the meaning specified in Section 5.10(a). "INDENTURE" means the Prepaid Securities Indenture between the Company and The Bank of New York, as Trustee, dated as of November 1, 1996 as amended by the First Supplemental Indenture between the Company and The Bank of New York, as Trustee, dated as of November 6, 1996 specifically relating to the Prepaid Securities, as amended from time to time. "ISSUER ORDER" or "ISSUER REQUEST" means a written order or request signed in the name of the Company by its Chairman of the Board, any Vice Chairman, its President, any Vice President or any Treasurer and delivered to the Agent. "MANDATORY ACCELERATION" has the meaning specified in Section 5.08. "MANDATORY ACCELERATION DATE" has the meaning specified in Section 5.08. "MERGER OR CONSOLIDATION" has the meaning specified in Section 5.08. "NOTICE DATE" has the meaning specified in Section 5.08. "NYSE" means the New York Stock Exchange. "OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of the Board, any Vice Chairman of the Board, the President, any Vice President or any Treasurer and delivered to the Agent. "OPINION OF COUNSEL" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company and who shall be reasonably acceptable to the Agent. "OUTSTANDING SECURITIES" means, as of the date of determination, all Securities evidenced by then Outstanding Security Certificates, except: 6 (i) If a Bankruptcy Event has occurred, Securities for which the underlying Treasury Notes have been theretofore deposited with the Agent in trust for the Holders of such Securities; and (ii) On and after a Company Acceleration Date, Securities as to which the Company has elected to effect a Company Acceleration; provided, however, that in determining whether the Holders of the requisite number of Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be outstanding, except that, in determining whether the Agent shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Agent knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Agent the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any Affiliate of the Company. "OUTSTANDING SECURITY CERTIFICATES" means, as of the date of determination, all Security Certificates theretofore authenticated, executed and delivered under this Agreement, except: (i) Security Certificates theretofore canceled by the Agent or delivered to the Agent for cancellation; and (ii) Security Certificates in exchange for or in lieu of which other Security Certificates have been authenticated, executed on behalf of the Holder and delivered pursuant to this Agreement, other than any such Security Certificate in respect of which there shall have been presented to the Agent proof satisfactory to it that such Security Certificate is held by a bona fide purchaser in whose hands the Securities evidenced by such Security Certificate are valid obligations of the Company. "PAYMENT DATE" means each ________ and _________ commencing ________, 1997. "PERSON" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. 7 "PLEDGE" means the pledge under the Pledge Agreement of the Treasury Notes constituting a part of the Securities. "PLEDGE AGREEMENT" means the Pledge Agreement, dated as of the date hereof, among the Company, the Collateral Agent and the Agent, on its own behalf and as attorney-in-fact for the Holders from time to time of the Securities. "PREDECESSOR SECURITY CERTIFICATE" of any particular Security Certificate means every previous Security Certificate evidencing all or a portion of the rights and obligations of the Holder under the Securities evidenced thereby; and, for the purposes of this definition, any Security Certificate authenticated and delivered under Section 3.06 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security Certificate shall be deemed to evidence the same rights and obligations of the Holder as the mutilated, destroyed, lost or stolen Security Certificate. "PREPAID SECURITIES" means the series of securities issued under the Indenture and designated _____________________________________________________ ______________ to be issued upon a Holder's Early Settlement. "PURCHASE CONTRACT," when used with respect to any Security, means the contract obligating the Company to sell and the Holder of such Security to purchase Common Stock and to pay Contract Fees and Deferred Contract Fees, if any, on the terms and subject to the conditions set forth in Article 5 hereof. "PURCHASED SHARES" has the meaning specified in Section 5.06(g). "RECORD DATE" for the interest and Contract Fees payable on any Payment Date means, as to any Global Security Certificate, the Business Day next preceding such Payment Date, and as to any other Security Certificate, the 15th day of the month preceding such Payment Date. "RESPONSIBLE OFFICER," when used with respect to the Agent, means any officer of the Agent assigned by the Agent to administer its corporate trust matters. "SALE OF ASSETS" means a sale, assignment, transfer, lease or conveyance of all or substantially all of the properties and assets of the Company to any Person which results in a voluntary liquidation, dissolution or winding up of the Company. "SALE OF ASSETS DATE" means the date upon which a Sale of Assets is approved by the Board of Directors. 8 "SECURITY" means the collective rights and obligations of a Holder of a Security Certificate in respect of Treasury Notes with a principal amount equal to the Stated Amount, subject to the Pledge thereof, and a Purchase Contract. "SECURITY CERTIFICATE" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Securities specified on such certificate. "SECURITY REGISTER" AND "SECURITY REGISTRAR" have the respective meanings specified in Section 3.05. "SETTLEMENT DATE" means an Acceleration Date, a Holder's Early Settlement Date, a Sale of Assets Date or the Final Settlement Date, as applicable. "SETTLEMENT RATE" has the meaning specified in Article 5. "STATED AMOUNT" means $_____. "TIA" means the Trust Indenture Act of 1939, as amended, or any successor statute. "TRADING DAY" has the meaning specified in Section 5.06(g). "TREASURY NOTES" means _______________________________________________ ____. "UNDERWRITING AGREEMENT" means the Purchase Agreement dated __________, ____ between the Company and Morgan Stanley & Co. Incorporated and ___________ ______________________________________________________________________________, as representatives of the several Underwriters named therein (collectively, the "UNDERWRITERS"). "VICE PRESIDENT" means any vice president, whether or not designated by a number or a word or words added before or after the title "VICE PRESIDENT." Section 1.02. Compliance Certificates and Opinions. Except as otherwise expressly provided by this Agreement, upon any application or request by the Company to the Agent to take any action under any provision of this Agreement, the Company shall furnish to the Agent an Officers' Certificate stating that all conditions precedent, if any, provided for in this 9 Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement shall include: (a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. Form of Documents Delivered to Agent. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual 10 matters is in the possession of the Company unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. Acts of Holders; Record Dates. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Agent and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "ACT" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and (subject to Section 7.01) conclusive in favor of the Agent and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Agent deems sufficient. (c) The ownership of Securities shall be proved by the Security Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security Certificate evidencing such Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the 11 Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Security Certificate. (e) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Agreement to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite number of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite number of Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Agent in writing and to each Holder of Securities in the manner set forth in Section 1.06. With respect to any record date set pursuant to this Section, the Company may designate any date as the "EXPIRATION DATE" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the Agent in writing, and to each Holder of Securities in the manner set forth in Section 1.06, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the Company shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. Section 1.05. Notices, Etc., to Agent and the Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with, 12 (a) the Agent by any Holder or by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing and personally delivered or mailed, first- class postage prepaid, to the Agent at ________________________________________ _________________________________________________________________________, or at any other address previously furnished in writing by the Agent to the Holders and the Company, or (b) the Company by the Agent or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing and personally delivered or mailed, first- class postage prepaid, to the Company at Household International, Inc., 2700 Sanders Road, Prospect Heights, Illinois 60070, Attention: _______________, or at any other address previously furnished in writing to the Agent by the Company. Section 1.06. Notice to Holders; Waiver. Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Agent, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Agent shall constitute a sufficient notification for every purpose hereunder. Section 1.07. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. 13 Section 1.08. Successors and Assigns. All covenants and agreements in this Agreement by the Company shall bind its successors and assigns, whether so expressed or not. Section 1.09. Separability Clause. In case any provision in this Agreement or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof and thereof shall not in any way be affected or impaired thereby. Section 1.10. Benefits of Agreement. Nothing in this Agreement or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefits or any legal or equitable right, remedy or claim under this Agreement. The Holders from time to time shall be beneficiaries of this Agreement and shall be bound by all of the terms and conditions hereof and of the Securities evidenced by their Security Certificates by their acceptance of delivery thereof. Section 1.11. Governing Law. This Agreement and the Securities shall be governed by and construed in accordance with the laws of the State of New York without regard to conflict of laws. Section 1.12. Legal Holidays. In any case where any Payment Date or any Settlement Date shall not be a Business Day, then (notwithstanding any other provision of this Agreement or of the Securities) payment in respect of interest on Treasury Notes or Contract Fees or settlement of Purchase Contracts shall not be made, Purchase Contracts shall not be performed and settlement shall not be effected on such date, but such payments shall be made, or the Purchase Contracts shall be performed or settlement effected, as applicable, on the next succeeding Business Day with the same force and effect as if made on such Payment Date or Settlement Date, as the case may be; provided, that no interest shall accrue or be payable by the Company or any Holder for the period from and after any such Payment Date or Settlement Date, as the case may be. 14 Section 1.13. Counterparts. This Agreement may be executed in any number of counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall together constitute one and the same instrument. Section 1.14. Inspection of Agreement. A copy of this Agreement shall be available at all reasonable times at the Corporate Trust Office for inspection by any Holder. Section 1.15. Appointment of Financial Institution as Agent for the Company. The Company may appoint a financial institution (which may be the Collateral Agent) to act as its agent in performing its obligations, and in accepting and enforcing performance of the obligations of the Agent and the Holders, under this Agreement and the Purchase Contracts, by giving notice of such appointment in the manner provided in Section 1.05 hereof. Any such appointment shall not relieve the Company in any way from its obligations hereunder. ARTICLE 2 Security Certificate Forms Section 2.01. Forms of Security Certificates Generally; Book-Entry. The Security Certificates (including the form of Purchase Contracts forming part of the Securities evidenced thereby) shall be in substantially the form set forth in Exhibit A hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Securities are listed or Depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Security Certificates, as evidenced by their execution of the Security Certificates. The definitive Security Certificates (if any) shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing the Security Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof. 15 Every Global Security Certificate authenticated, executed on behalf of the Holders and delivered hereunder shall bear a legend in substantially the following form: THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (55 WATER STREET) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. The Securities will be issued in the form of one or more, fully registered Global Security Certificates, to be delivered to DTC, the initial Clearing Agency, by, or on behalf of, the Company. Such Global Security Certificates shall initially be registered on the books and records of the Company in the name of Cede & Co., the nominee of DTC, and no Holder will receive a definitive Security Certificate representing such Holder's interests in such Global Security Certificates, except as provided in this Section 2.01. Unless and until definitive, fully registered Security Certificates have been issued to a Holder pursuant to the provisions of this Section 2.01: (i) the provisions of this Section 2.01 shall be in full force and effect; 16 (ii) the Company and the Agent shall be entitled to deal with the Clearing Agency for all purposes of this Agreement (including the payment of any amounts on the Global Security Certificates and receiving approvals, votes or consents hereunder) as the Holder and the sole holder of the Global Security Certificates and shall have no obligation to the Beneficial Owner; (iii) to the extent that the provisions of this Section 2.01 conflict with any other provisions of this Agreement or the Purchase Contracts, the provisions of this Section 2.01 shall control; and (iv) the rights of the Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants. DTC will make book entry transfers among the Clearing Agency Participants and receive and transmit payments of amounts on the Global Security Certificates to such Clearing Agency Participants. Whenever a notice or other communication to the Holders is required to be given under this Agreement, unless and until definitive Security Certificates shall have been issued, the Company and the Agent shall give all such notices and communications, specified herein to be given to Holders, to the Clearing Agency and, with respect to any Security Certificate registered in the name of a Clearing Agency or the nominee of a Clearing Agency, the Company and the Agent shall have no notice obligations to the Holder. If any Clearing Agency elects to discontinue its services as securities depositary with respect to the Securities, the Company may, in their sole discretion, appoint a successor Clearing Agency with respect to the Securities. If (i) a Clearing Agency elects to discontinue its services as securities depositary with respect to the Securities and a successor Clearing Agency is not appointed within 90 days after such discontinuance or (ii) the Company elects after consultation with the Agent to terminate the book entry system through the Clearing Agency with respect to the Securities, then (x) definitive Security Certificates shall be prepared by the Agent on behalf of the Company with respect to such Securities and (y) upon surrender of the Global Security Certificates by the Clearing Agency, accompanied by registration instructions, the Agent shall cause definitive Security Certificates to be delivered to Holders in accordance with the instructions of the Clearing Agency. Neither the Agent nor the Company shall be liable for any delay in delivery of such instructions and each of them may conclusively rely on and shall be protected in relying on, such instructions. 17 Section 2.02. Form of Agent's Certificate of Authentication. The form of the Agent's certificate of authentication of the Securities shall be in substantially the form set forth on the form of the Security Certificates. ARTICLE 3 The Securities Section 3.01. Title and Terms; Denominations. The aggregate number of Securities evidenced by Security Certificates authenticated, executed on behalf of the Holders and delivered hereunder is limited to __________, with a Stated Amount of $_____ per Security, except for Security Certificates authenticated, executed and delivered upon registration of transfer of, in exchange for, or in lieu of, other Security Certificates pursuant to Section 3.04, 3.05, 3.06, 5.10 or 8.05. The Security Certificates shall be issuable only in registered form and only in denominations of a single Security and any integral multiple thereof. Section 3.02. Rights and Obligations Evidenced by the Security Certificates. Each Security Certificate shall evidence the number of Securities specified therein, with each such Security representing the ownership by the Holder thereof of Treasury Notes with a principal amount equal to the Stated Amount, subject to the Pledge of such Treasury Notes by such Holder pursuant to the Pledge Agreement, and the rights and obligations of the Holder under one Purchase Contract. The Agent as attorney-in-fact for, and on behalf of, the Holder shall pledge, pursuant to the Pledge Agreement, dated as of the date hereof, the Treasury Notes to the Collateral Agent and grant to the Collateral Agent a security interest in the right, title, and interest of such Holders in the Treasury Notes, for the benefit of the Company, to secure the obligation of the Holders under the Purchase Contracts to purchase the Common Stock of the Company. Prior to the purchase, if any, of shares of Common Stock under the Purchase Contracts, the Securities shall not entitle the Holders to any of the rights of a holder of shares of Common Stock, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as stockholders in respect of the meetings of stockholders or for the election of directors of the Company or for any other matter, or any other rights whatsoever as stockholders 18 of the Company, except to the extent otherwise expressly provided in this Agreement. Section 3.03. Execution, Authentication, Delivery and Dating. Upon the execution and delivery of this Agreement, at any time and from time to time thereafter, the Company may deliver Security Certificates executed by the Company to the Agent for authentication, execution on behalf of the Holders and delivery, together with its Issuer Order for authentication of such Security Certificates, and the Agent in accordance with such Issuer Order shall authenticate, execute on behalf of the Holder and make available for delivery such Security Certificates. The Security Certificates shall be executed on behalf of the Company by its Chairman of the Board, any Vice Chairman of the Board, its President or any Vice President or its Treasurer, under its corporate seal which may, but need not, be attested. The signature of any of these officers on the Security Certificates may be manual or facsimile. Security Certificates bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Security Certificates or did not hold such offices at the date of such Security Certificates. No Purchase Contract underlying a Security evidenced by a Security Certificate shall be valid until such Security Certificate has been executed on behalf of the Holder by the manual signature of an authorized signatory of the Agent, as such Holder's attorney-in-fact. Such signature by an authorized signatory of the Agent shall be conclusive evidence that the Holder of such Security Certificate has entered into the Purchase Contracts underlying the Securities evidenced by such Security Certificate. Each Security Certificate shall be dated the date of its authentication. No Security Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose unless there appears on such Security Certificate a certificate of authentication substantially in the form provided for herein executed by an authorized signatory of the Agent by manual signature, and such certificate upon any Security Certificate shall be conclusive evidence, and the only evidence, that such Security Certificate has been duly authenticated and made available for delivery hereunder. 19 Section 3.04. Temporary Security Certificates. Pending the preparation of definitive Security Certificates, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holders, and deliver, in lieu of such definitive Security Certificates, temporary Security Certificates which are in substantially the form set forth in Exhibit A hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Securities are listed, or as may, consistently herewith, be determined by the officers of the Company executing such Security Certificates, as evidenced by their execution of the Security Certificates. If temporary Security Certificates are issued, the Company will cause definitive Security Certificates to be prepared without unreasonable delay. After the preparation of definitive Security Certificates, the temporary Security Certificates shall be exchangeable for definitive Security Certificates upon surrender of the temporary Security Certificates at the Corporate Trust Office, at the expense of the Company and without charge to the Holder. Upon surrender for cancellation of any one or more temporary Security Certificates, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver in exchange therefor, one or more definitive Security Certificates of authorized denominations and evidencing a like number of Securities as the temporary Security Certificate or Security Certificates so surrendered. Until so exchanged, the temporary Security Certificates shall in all respects evidence the same benefits and the same obligations with respect to the Securities evidenced thereby as definitive Security Certificates. Section 3.05. Registration; Registration of Transfer and Exchange. The Agent shall keep at the Corporate Trust Office a register (the register maintained in such office being herein referred to as the "SECURITY REGISTER") in which, subject to such reasonable regulations as it may prescribe, the Agent shall provide for the registration of Security Certificates and of transfers of Security Certificates (the Agent, in such capacity, the "SECURITY REGISTRAR"). Upon surrender for registration of transfer of any Security Certificate at the Corporate Trust Office, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the designated transferee or transferees, and deliver, in the name of the designated transferee or transferees, one or more new Security Certificates of any authorized denominations and evidencing a like number of Securities. 20 At the option of the Holder, if definitive Security Certificates are issued, Security Certificates may be exchanged for other Security Certificates, of any authorized denominations and evidencing a like number of Securities, upon surrender of the Security Certificates to be exchanged at the Corporate Trust Office. Whenever any Security Certificates are so surrendered for exchange, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver the Security Certificates which the Holder making the exchange is entitled to receive. All Security Certificates issued upon any registration of transfer or exchange of a Security Certificate shall evidence the ownership of the same number of Securities and be entitled to the same benefits and subject to the same obligations, under this Agreement as the Securities evidenced by the Security Certificate surrendered upon such registration of transfer or exchange. Every Security Certificate presented or surrendered for registration of transfer or for exchange shall (if so required by the Agent) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Agent duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of a Security Certificate, but the Company and the Agent may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Security Certificates, other than any exchanges pursuant to Sections 3.04, 3.06, 5.10, and 8.05 not involving any transfer. Notwithstanding the foregoing, the Company shall not be obligated to execute and deliver to the Agent, and the Agent shall not be obligated to authenticate, execute on behalf of the Holder and deliver any Security Certificate presented or surrendered for registration of transfer or for exchange on or after the Final Settlement Date, an earlier Acceleration Date with respect to the Securities evidenced by such Certificates, a Holder's Early Settlement Date with respect to the Securities evidenced by such Certificates or after the Purchase Contracts have terminated. In lieu of the delivery of a replacement Security Certificate following the Final Settlement Date or an earlier Acceleration Date with respect to the Securities evidenced by such Certificates, the Agent, upon satisfaction of any conditions set forth herein, will deliver the Common Stock issuable pursuant to the Purchase Contracts included in the Securities evidenced by such Certificate, or, if the Purchase Contracts have terminated prior to the Final Settlement Date or a Holder's Early Settlement Date has occurred, upon satisfaction of any conditions 21 set forth herein, transfer the Treasury Notes included in the Securities evidenced by such Certificate. The provisions of Clauses (a), (b), (c) and (d) below shall apply only to Global Security Certificates: (a) Each Global Security Certificate authenticated and executed on behalf of the Holders under this Agreement shall be registered in the name of Cede & Co., as nominee of DTC as set forth in Section 2.01. (b) Notwithstanding any other provision in this Agreement, no Global Security Certificate may be exchanged in whole or in part for Security Certificates registered, and no transfer of a Global Security Certificate in whole or in part may be registered, in the name of any Person other than DTC for such Global Security Certificate or a nominee thereof unless (A) DTC (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security Certificate or (ii) has ceased to be a Clearing Agency registered under the Exchange Act or (B) there shall have occurred and be continuing a default by the Company in respect to its obligations under one or more Purchase Contracts. (c) Subject to clause (b) above, any exchange of a Global Security Certificate for other Security Certificates may be made in whole or in part, and all Security Certificates issued in exchange for a Global Security Certificate or any portion thereof shall be registered in such names as DTC shall direct. (d) Every Security Certificate authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security Certificate or any portion thereof, whether pursuant to this Section, Section 3.04, 3.06, 5.10 or 8.05 or otherwise, shall be authenticated, executed on behalf of the Holders and delivered in the form of, and shall be, a Global Security Certificate, unless such Security Certificate is registered in the name of a Person other than the Depositary for such Global Security Certificate or a nominee thereof. Section 3.06. Mutilated, Destroyed, Lost and Stolen Security Certificates. If any mutilated Security Certificate is surrendered to the Agent, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and make available for delivery in exchange therefor, a new Security Certificate, evidencing the same number of Securities and bearing a number not contemporaneously outstanding. 22 If there shall be delivered to the Company and the Agent (i) evidence to their satisfaction of the destruction, loss or theft of any Security Certificate, and (ii) such security or indemnity as may be required by them to save each of them and any agent of any of them harmless, then, in the absence of notice to the Company or the Agent that such Security Certificate has been acquired by a bona fide purchaser, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and make available for delivery to the Holder, in lieu of any such destroyed, lost or stolen Security Certificate, a new Security Certificate, evidencing the same number of Securities and bearing a number not contemporaneously outstanding. Notwithstanding the foregoing, the Company shall not be obligated to execute and deliver to the Agent, and the Agent shall not be obligated to authenticate, execute on behalf of the Holder, and deliver to the Holder, a Security Certificate on or after a Bankruptcy Date or a Settlement Date. Upon the issuance of any new Security Certificate under this Section, the Company and the Agent may require the payment by the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Agent) connected therewith. Every new Security Certificate issued pursuant to this Section 3.04 in lieu of any destroyed, lost or stolen Security Certificate shall constitute an original additional contractual obligation of the Company and of the Holder, whether or not the destroyed, lost or stolen Security Certificate shall be at any time enforceable by anyone, and shall be entitled to all the benefits and be subject to all the obligations of this Agreement equally and proportionately with any and all other Security Certificates delivered hereunder. The provisions of this Section 3.04 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or settlement of mutilated, destroyed, lost or stolen Security Certificates. Section 3.07. Persons Deemed Owners. Prior to due presentment of a Security Certificate for registration of transfer, the Company and the Agent, and any agent of the Company or the Agent, may treat the Person in whose name such Security Certificate is registered as the owner of the Securities evidenced thereby, for the purpose of receiving payments of interest on the Treasury Notes, receiving payments of Contract Fees and any Deferred Contract Fees, delivery of the Treasury Notes, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not the 23 payment of interest on the Treasury Notes or any Contract Fees payable in respect of the Purchase Contracts constituting a part of the Securities evidenced thereby shall be overdue and notwithstanding any notice to the contrary, and neither the Company nor the Agent, nor any agent of the Company or the Agent, shall be affected by notice to the contrary. Notwithstanding the foregoing, with respect to any Global Security Certificate, nothing herein shall prevent the Company, the Agent or any agent of the Company or the Agent, from giving effect to any written certification, proxy or other authorization furnished by DTC, as a Holder, with respect to such Global Security Certificate or impair, as between DTC and the Beneficial Owners, the operation of customary practices governing the exercise of rights of DTC as Holder of such Global Security Certificate. Section 3.08. Cancellation. All Security Certificates surrendered for delivery of shares of Common Stock on or after the Final Settlement Date or an earlier Acceleration Date, transfer of Treasury Notes after the occurrence of a Bankruptcy Event or Sale of Assets or pursuant to a Holder's Early Settlement or registration of transfer or exchange shall, if surrendered to any Person other than the Agent, be delivered to the Agent and, if not already cancelled, shall be promptly cancelled by it. The Company may at any time deliver to the Agent for cancellation any Security Certificates previously authenticated, executed and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Security Certificates so delivered shall, upon Issuer Order, be promptly cancelled by the Agent. No Security Certificates shall be authenticated, executed on behalf of the Holder and delivered in lieu of or in exchange for any Security Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Security Certificates held by the Agent shall be disposed of as directed by Issuer Order, except the Agent itself shall not be required to destroy the Security Certificates. If the Company or any Affiliate of the Company shall acquire any Security Certificate, such acquisition shall not operate as a cancellation of such Security Certificate unless and until such Security Certificate is delivered to the Agent cancelled or for cancellation. Section 3.09. Securities Not Separable. Notwithstanding anything contained herein or in the Security Certificates to the contrary, for so long as the Purchase Contract comprising a portion of a Security remains in effect, such Security shall not be separable into its constituent 24 parts, for purposes of transfer or exchange of such Security, and the rights and obligations of the Holder of such Security in respect of the Treasury Notes and Purchase Contracts comprising such Security may be acquired, and may be transferred and exchanged, only as a Security. Other than a Security Certificate evidencing a Security, no Holder of a Security, or any transferee thereof, shall be entitled to receive a certificate evidencing the ownership of Treasury Notes or the rights and obligations of the Holder and the Company under a Purchase Contract for so long as the Purchase Contract underlying the Security remains in effect. Section 3.10. No Consent to Assumption. Each Holder of a Security, by acceptance thereof, shall be deemed expressly to have withheld any consent to the assumption under Section 365 of the Bankruptcy Code or otherwise, of the Purchase Contract by the Company or its trustee in the event that the Company becomes the debtor under the Bankruptcy Code. Section 3.11. Cusip Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Agent shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state -------- that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of Acceleration and that reliance may be placed only on the other identification numbers printed on the Securities, and any such Acceleration shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Agent of any change in the CUSIP numbers. ARTICLE 4 The Treasury Notes Section 4.01. Payment of Interest; Interest Rights Preserved. Interest on any Treasury Note which is paid on any Payment Date shall, subject to receipt thereof by the Agent from the Collateral Agent as provided by the terms of the Pledge Agreement, be paid to the Person in whose name the Security Certificate (or one or more Predecessor Security Certificates) of which such Treasury Note is a part is registered at the close of business on the Record Date next preceding such Payment Date. On the first Payment Date, the Agent shall pay, subject to receipt from the Collateral Agent, to the Holders the accrued interest on the Treasury Notes for the period from __________, 1997 to __________, 1997 as part of the interest payment on the Treasury Notes. 25 Each Security Certificate evidencing Treasury Notes delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of any other Security Certificate shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by the Treasury Notes underlying such other Security Certificate. In the case of any Security with respect to which settlement of the underlying Purchase Contract is effected on a Settlement Date after any Record Date and on or prior to the next succeeding Payment Date, interest on the Treasury Notes underlying such Security otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such settlement, and such interest shall, subject to receipt thereof by the Agent, be paid to the Person in whose name the Security Certificate (or one or more Predecessor Security Certificates) is registered at the close of business on the Record Date. Section 4.02. Transfer of Treasury Notes upon Certain Events or Sale of Treasury Notes. (a) Upon the occurrence of a Bankruptcy Event or Sale of Assets and the transfer to the Agent of the Treasury Notes underlying the Securities pursuant to the terms of the Pledge Agreement, the Agent shall request transfer instructions with respect to such Treasury Notes from each Holder of Securities by written request mailed to such Holder at his address as it appears in the Security Register, in respect of the Treasury Notes underlying the Security Certificate held by such Holder. Upon surrender to the Agent of a Security Certificate with such transfer instructions in proper form for transfer of the Treasury Notes by Federal Reserve Bank-Wire or other appropriate procedure, subject to the receipt of the Treasury Notes, the Agent shall transfer the Treasury Notes evidenced by such Security Certificate to such Holder in accordance with such instructions within three Business Days. If a Security Certificate is not duly surrendered to the Agent with appropriate transfer instructions, the Agent shall hold the Treasury Notes evidenced by such Security Certificate as custodian for the Holder of such Security Certificate. (b) In the event of an Acceleration of Securities, Holders of Securities so accelerated may elect to pay to the Company through the Agent by no later than 5:00 p.m., New York City time on the third Business Day immediately preceding the Acceleration Date in immediately available funds an amount in U.S. dollars equal to the Stated Amount per Security so accelerated. Holders may make the election provided in this paragraph (b) only in integral multiples of 400 Securities. Upon Surrender to the Agent of a Security Certificate with such transfer instructions in proper form for transfer of the Treasury Notes by Federal Reserve Bank-Wire or other appropriate procedure, along with the payment described in 26 the previous sentence, subject to receipt from the Collateral Agent, the Agent shall transfer the Treasury Notes evidenced by such Security Certificate to such Holder in accordance with such instructions within three Business Days of such payment. If payment is made in accordance with the first sentence of this paragraph (b), the Company will issue the number of shares of Common Stock equal to the Stated Amount for the Securities accelerated on the Acceleration Date. The Company will also pay in cash on the Acceleration Date accrued Contract Fees and Deferred Contract Fees, if any, to holders of Securities who elect to pay the Stated Amount in cash upon an Acceleration as provided in this Section. (c) Because Holders may only elect to make a payment in cash pursuant to paragraph (b) above in integral multiples of ___ Securities, Treasury Notes shall be transferred only in denominations of $______ and integral multiples thereof. Any Securities accelerated which are not in integral multiples of ___ shall be settled in shares of Common Stock pursuant to Section 5.08. (d) In the case of an Acceleration of Securities, the Agent on behalf of each Holder (other than Holders that, pursuant to an election made in accordance with paragraph (b) of this Section, have paid the Stated Amount in immediately available funds not later than 5:00 p.m., New York City time on the third Business Day immediately preceding the Acceleration Date) will sell on the second Business Day immediately preceding the Acceleration Date the Treasury Notes underlying each such Holder's Securities to or through one or more U.S. government securities dealers selected by the Company at the then prevailing prices and automatically apply on the Acceleration Date, out of the proceeds of such sale (excluding premium and accrued interest on the Treasury Notes), an amount equal to the Stated Amount to satisfy in full each such Holder's obligation to purchase the Common Stock from the Company on the Acceleration Date. Any excess proceeds (in respect of premium on the sale of the Treasury Notes) will be paid to such Holder. In the event that the proceeds from the sale of such Treasury Notes (exclusive of accrued interest on the Treasury Notes) is less than the Stated Amount, such proceeds nevertheless will satisfy in full each such Holder's obligation to purchase the Common Stock from the Company on the Acceleration Date. Amounts in respect of accrued interest on the Treasury Notes will be paid to each such Holder on the Acceleration Date. The proceeds of such sales shall be after deduction by the Agent of all commissions and other out-of-pocket transaction costs incurred in connection with the sale of such Treasury Notes and, until the net proceeds of such sale or sales have been distributed to Holders of the Securities, the Agent shall hold such proceeds as custodian for the Holders of Securities. Such proceeds shall be held by the Agent uninvested without liability to any Person for interest or other compensation thereon. 27 ARTICLE 5 The Purchase Contracts Section 5.01. Purchase of Shares of Common Stock on the Final Settlement Date. Each Purchase Contract shall obligate the Holder of the related Security to purchase, and the Company to sell, on the Final Settlement Date at a price equal to the Stated Amount, a number of shares of Common Stock equal to the Settlement Rate on the Final Settlement Date, unless, on or prior to the Final Settlement Date, there shall have occurred a Bankruptcy Event , Sale of Assets, an Acceleration or a Holder's Early Settlement with respect to the Security of which such Purchase Contract is a part. Each Holder of a Security Certificate evidencing Securities, by his acceptance thereof, authorizes the Agent to enter into and perform the related Purchase Contracts on his behalf as his attorney-in-fact, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform his obligations under such Purchase Contracts, consents to the provisions hereof, authorizes the Agent as his attorney-in-fact to enter into and perform the Pledge Agreement on his behalf as his attorney-in-fact, and consents to and agrees to be bound by the Pledge of the Treasury Notes underlying such Security Certificate pursuant to the Pledge Agreement. Each Holder of a Security, by his acceptance thereof, further covenants and agrees, that, to the extent and in the manner provided in Section 5.04 and the Pledge Agreement, but subject to the terms thereof, payments in respect of principal of the Treasury Notes on the Final Settlement Date shall be paid by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments. Upon registration of transfer of a Security Certificate evidencing Purchase Contracts, the transferee shall be bound (without the necessity of any other action on the part of such transferee), under the terms of this Agreement, the Purchase Contracts evidenced thereby and the Pledge Agreement and the transferor shall be released from the obligations under the Purchase Contracts evidenced by the Security Certificates so transferred. The Company covenants and agrees, and each Holder of a Security Certificate, by his acceptance thereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. 28 Section 5.02. Contract Fees. Subject to Section 5.03, the Company shall pay by 12:00 noon New York City time to the Agent, on each Payment Date, the Contract Fees payable in respect of each Purchase Contract for the benefit of the Person in whose name the Security Certificate (or one or more Predecessor Security Certificates) evidencing such Purchase Contract is registered at the close of business on the Record Date next preceding such Payment Date. The Contract Fees will be payable at the office of the Agent in The City of New York maintained for that purpose or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such address as it appears on the Security Register. Each Security Certificate delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of any other Security Certificate shall carry the rights to Contract Fees accrued and unpaid, and to accrue, which were carried by the Purchase Contracts evidenced by such other Security Certificate. In the case of any Security with respect to which settlement of the underlying Purchase Contract is effected on a Settlement Date after any Record Date and on or prior to the next succeeding Payment Date, Contract Fees otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such settlement, and such Contract Fees shall be paid to the Person in whose name the Security Certificate evidencing such Security (or one or more Predecessor Security Certificates) is registered at the close of business on such Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security with respect to which settlement of the underlying Purchase Contract is effected on a Settlement Date (other than a Holder's Early Settlement Date), Contract Fees that would otherwise be payable after such Settlement Date with respect to the Purchase Contract underlying such Security shall not be payable. The right to receive Contract Fees including accrued and unpaid Contract Fees and Deferred Contract Fees, if any, shall terminate upon the occurrence of a Bankruptcy Event, and the Company shall have no further obligations with respect thereto. The Company's obligations with respect to Contract Fees shall rank equally and pari passu with all other senior and unsubordinated liabilities of the Company. Section 5.03. Deferral of Payment Dates for Contract Fees. The Company shall have the right, at any time prior to the Final Settlement Date, an Acceleration Date applicable to a Holder's Securities or Sale of Assets Date, to defer the payment of any or all of the Contract Fees otherwise payable on 29 any Payment Date (on a pro rata basis among all Outstanding Securities), but only if the Company shall give the Holders and the Agent written notice of its election to defer such payment (specifying the amount to be deferred and the period of deferment) at least ten Business Days prior to the earlier of (i) the next succeeding Payment Date or (ii) the date the Company is required to give notice of the Record Date or Payment Date with respect to payment of such Contract Fees to the NYSE or other applicable self-regulatory organization or to Holders of the Securities, but in any event not less than two Business Days prior to such Record Date. Any Contract Fees so deferred shall bear additional Contract Fees thereon at the rate of ___% per annum (computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be), compounding on each succeeding Payment Date, until paid in full (such deferred installments of Contract Fees together with the additional Contract Fees accrued thereon, are referred to herein as the "DEFERRED CONTRACT FEES"). Deferred Contract Fees shall be due on the next succeeding Payment Date except to the extent that payment is deferred further in the notice of election pursuant to this Section. The Company may pay Deferred Contract Fees in whole or in part on any Payment Date (on a pro rata basis among all Outstanding Securities). No Contract Fees or Deferred Contract Fees may be deferred to a date that is after the Final Settlement Date or a Sale of Assets Date or, with respect to any particular Purchase Contract, the Acceleration thereof. In the event the Company elects to defer the payment of Contract Fees on the Purchase Contract until the Final Settlement Date, a Sale of Assets Date, a Company Acceleration Date or a Mandatory Acceleration Date (or a date prior to such dates as set forth in its written notice referred to in the preceding paragraph) the Company shall make a cash payment, on the date such Deferred Contract Fees become due and payable, equal to the aggregate amount of Deferred Contract Fees payable to a Holder. In the event the Company exercises its option to defer the payment of Contract Fees, then, until the Deferred Contract Fees have been paid in full, the Company shall not declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of its capital stock (other than (i) purchase or acquisitions of shares of Common Stock in connection with the satisfaction by the Company of its obligations under any employee benefit plans now or hereafter in effect or the satisfaction by the Company of its obligations pursuant to any contract or security now or hereafter outstanding requiring the Company to purchase shares of Common Stock, (ii) as a result of a reclassification of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock (iii) the purchase of fractional shares in shares of the Company's capital stock pursuant to the conversion or exchange 30 provisions of such capital stock or the security being converted or exchanged, (iv) the payment of accrued dividends (and cash in lieu of fractional shares) upon the conversion of any shares of preferred stock of the Company as may be outstanding from time to time, in accordance with the terms of such stock or (v) dividends on its capital stock paid in shares of capital stock) or make any guarantee payments with respect to the foregoing. Section 5.04. Payment of Purchase Price. Unless a Holder settles the underlying Purchase Contract through the early delivery of cash to the Agent in the manner described in Sections 4.02, 5.08 or 5.10, the purchase price for the shares of Common Stock purchased pursuant to a Purchase Contract shall be paid by application of payments received by the Company on the Final Settlement Date or an earlier Acceleration Date from, as the case may be, either (i) the Collateral Agent pursuant to the Pledge Agreement in respect of the principal of the Treasury Notes Pledged to secure the obligations of the relevant Holder under such Purchase Contract or (ii) the proceeds of the sale of the Treasury Notes underlying the Holder's Securities pursuant to Section 4.02(d). Such application shall satisfy in full (whether or not the principal amount of the Treasury Notes then equals the Stated Amount) the obligations under such Purchase Contract of the Holder of the Security of which such Purchase Contract is a part. The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment in full of the aggregate purchase price for the shares of Common Stock to be purchased thereunder in the manner herein set forth. Section 5.05. Issuance of Common Stock. Unless a Bankruptcy Event or Sale of Assets shall have occurred on or prior to the Final Settlement Date or an earlier Acceleration Date, on the Final Settlement Date or an earlier Acceleration Date, upon the Company's receipt of payment in full of the purchase price for the shares of Common Stock purchased by the Holders (whether by application of the principal of the Treasury Notes on the Final Settlement Date or the proceeds of the sale of Treasury Notes as provided in Section 4.02(d) or the Holder's election to pay the Stated Amount for such Holder's Securities in cash pursuant to Section 4.02(b)), and in payment of consideration set forth in Section 5.08, if any, and, if the Company has elected to make such payment in shares of Common Stock to the Holders, the Company shall issue and deposit with the Agent, for the benefit of the Holders, one or more certificates representing the shares of Common Stock registered in the name of the Agent (or its nominee) as custodian for the Holders (such certificates for shares of Common Stock, together with any dividends or distributions with 31 respect thereto, being hereinafter referred to as the "FINAL SETTLEMENT FUND" or "ACCELERATION SETTLEMENT FUND" as applicable) to which the Holders are entitled hereunder. Subject to the foregoing, upon surrender of a Security Certificate to the Agent on or after the Final Settlement Date or earlier Acceleration Date, together with settlement instructions thereon duly completed and executed, the Holder of such Security Certificate shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of Common Stock which such Holder is entitled to receive pursuant to the provisions of this Article Five (after taking into account all Securities then held by such Holder) together with cash in lieu of fractional shares as provided in Section 5.11 or any other cash payments and any dividends or distributions with respect to such shares constituting part of the Final Settlement Fund or Acceleration Settlement Fund, as applicable, but without any interest thereon, and the Security Certificate so surrendered shall forthwith be canceled. Such shares shall be registered in the name of the Holder or the Holder's designee as specified in the settlement instructions on the Security Certificate. If any shares of Common Stock issued in respect of a Purchase Contract are to be registered to a Person other than the Person in whose name the Security Certificate evidencing such Purchase Contract is registered, no such registration shall be made unless the Person requesting such registration has paid any transfer and other taxes required by reason of such registration in a name other than that of the registered Holder of the Security Certificate evidencing such Purchase Contract or has established to the satisfaction of the Company that such tax either has been paid or is not payable. Section 5.06. Settlement Rate; Adjustment of Settlement Rate for Dividends, Distributions, Stock Splits, Etc. (a) The Settlement Rate to be used to determine the number of shares of Common Stock to be delivered on the Final Settlement Date or a Mandatory Acceleration Date pursuant to Sections 5.01 and 5.08(b), respectively, shall be initially one share of Common Stock for each Purchase Contract, provided however, that such Settlement Rate shall be subject to adjustment from time to time as provided below in this Section 5.06. All adjustments to the Settlement Rate shall be calculated to the nearest 1/100th of a share of Common Stock (with 5/1000th of a share being rounded to the next lower 1/100th of a share). Such rate in effect at any time is herein called the "SETTLEMENT RATE". (b) If the Company shall either: (i) pay a dividend or make a distribution with respect to Common Stock in shares of Common Stock, (ii) subdivide or split its outstanding shares of Common Stock, 32 (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Common Stock any shares of Common Stock of the Company then, in any such event, the Settlement Rate in effect immediately prior thereto shall be adjusted so that the holder of a Security shall be entitled to receive on settlement of a Security, the number of shares of Common Stock which such Holder would have owned or been entitled to receive after the happening of any of the events described above had such Security been settled at the Settlement Rate in effect immediately prior to such time. Such adjustment shall become effective at the opening of business on the Business Day next following the record date for determination of stockholders entitled to receive such dividend or distribution in the case of a dividend or distribution and shall become effective immediately after the effective time in case of a subdivision, split, combination or reclassification. Any shares of Common Stock issuable in payment of a dividend or distribution shall be deemed to have been issued immediately prior to the close of business on the record date for such dividend or distribution for purposes of calculating the number of outstanding shares of Common Stock under clauses (c) and (d) below. (c) If the Company shall issue rights or warrants to all holders of its Common Stock entitling them (for a period not exceeding 45 days from the date of such issuance) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of the Common Stock on the record date for the determination of stockholders entitled to receive such rights or warrants, then in each case the Settlement Rate shall be adjusted by multiplying the Settlement Rate in effect immediately prior thereto by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants immediately prior to such issuance, plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at the Current Market Price per share of the Common Stock on the record date for determining stockholders entitled to receive such right or warrants (determined by multiplying such total number of shares by the exercise price of such rights or warrants and dividing the product so obtained by such Current Market Price). Shares of Common Stock owned by or held for the account of the Company or another company of which a majority of the shares entitled to vote in the election of directors are held, directly or indirectly, by the Company shall not 33 be deemed to be outstanding for purposes of such computation. Such adjustment shall become effective at the opening of business on the Business Day next following the record date for the determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Settlement Rate shall be readjusted to the Settlement Rate which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock actually delivered. (d) If the Company shall pay a dividend or make a distribution to all holders of its Common Stock of evidences of its indebtedness or other assets (including shares of capital stock of the Company but excluding any cash dividends or any distributions and dividends referred to in clause (b) above), or shall distribute to all holders of its Common Stock rights or warrants to subscribe for or purchase securities of the Company or any of its subsidiaries (other than those referred to in clause (c) above), then in each such case the Settlement Rate shall be adjusted by multiplying the Settlement Rate in effect immediately prior to the date of such dividend or distribution by a fraction, of which the numerator shall be the Current Market Price per share of Common Stock on the record date for the determination of stockholders entitled to receive such dividend or distribution, and of which the denominator shall be such Current Market Price per share of Common Stock less the fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) as of such record date of the portion of the assets or evidences of indebtedness so distributed, or of such subscription rights or warrants, applicable to one share of Common Stock. Such adjustment shall become effective on the opening of business on the Business Day next following the record date for the determination of stockholders entitled to receive such dividend or distribution. (e) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding (x) any quarterly cash dividend on the Common Stock to the extent that the aggregate cash dividend per share of Common Stock in any fiscal quarter does not exceed the greater of (A) the amount per share of Common Stock of the next preceding quarterly cash dividend on the Common Stock to the extent that such preceding quarterly dividend did not require an adjustment of the Settlement Rate pursuant to this Section 5.06(e) (as adjusted to reflect subdivisions or combinations of the Common Stock), and (B) ____% of the arithmetic average of the Closing Price of the Common Stock during the ten consecutive Trading Days immediately prior to the date of declaration of such dividend, and (y) any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary), then, in such case, the Settlement Rate shall be increased so that the 34 same shall equal the rate determined by multiplying the Settlement Rate in effect immediately prior to the close of business on such record date by a fraction of which the numerator shall be the Current Market Price of the Common Stock, and the denominator shall be the Current Market Price of the Common Stock on the record date less the amount of cash so distributed (and not excluded as provided above) applicable to one share of Common Stock, such increase to be effective immediately prior to the opening of business on the day following the record date; provided, however, that in the event the portion of the cash so -------- ------- distributed applicable to one share of Common Stock of the Company is equal to or greater than the Current Market Price of the Common Stock of the Company on the record date, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of a Security shall have the right to receive upon settlement of the Securities the amount of cash such Holder would have received had such Holder settled each Security on the record date. In the event that such dividend or distribution is not so paid or made, the Settlement Rate shall again be adjusted to be the Settlement Rate which would then be in effect if such dividend or distribution had not been declared. If any adjustment is required to be made as set forth in this Section 5.06(e) as a result of a distribution that is a quarterly dividend, such adjustment shall be based upon the amount by which such distribution exceeds the amount of the quarterly cash dividend permitted to be excluded pursuant hereto. If an adjustment is required to be made as set forth in this Section 5.06(e) above as a result of a distribution that is not a quarterly dividend, such adjustment shall be based upon the full amount of the distribution. (f) In case of a tender or exchange offer made by a Person other than the Company or any subsidiary of the Company for an amount which increases the offeror's ownership of Common Stock of the Company to more than __% of the Common Stock outstanding and shall involve the payment by such Person of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors of the Company, whose determination shall be conclusive, and described in a Board Resolution) at the last time (the "EXPIRATION TIME") tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, and in which, as of the Expiration Time, the Board of Directors of the Company is recommending acceptance of the offer, the Settlement Rate shall be increased so that the same shall equal the price determined by multiplying the Settlement Rate in effect immediately prior to the Expiration Time by a fraction of which the numerator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being 35 referred to as the "PURCHASED SHARES") and (y) the product of the number of shares of Common Stock of the Company outstanding (less any Purchased Shares) on the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator shall be the number of shares of Common Stock of the Company outstanding (including any tendered or exchanged shares) on the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such increase to become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that such Person is obligated to purchase shares pursuant to any such tender or exchange offer, but such Person is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Settlement Rate shall again be adjusted to be the Settlement Rate which would then be in effect if such tender or exchange offer had not been made. Notwithstanding the foregoing, the adjustment described in this Section 5.06(f) shall not be made if, as of the Expiration Time, the offering documents with respect to such offer disclose a plan or intention to cause the Company to engage in a consolidation or merger of the Company or a sale of all or substantially all of the assets of the Company. (g) The "CURRENT MARKET PRICE" per share of Common Stock on any date of determination means the average of the daily Closing Prices for the five consecutive Trading Days ending on and including the date of determination of the Current Market Price (appropriately adjusted to take into account the occurrence during said five-day period of any event that results in an adjustment of the Settlement Rate); provided, however, that if the Closing Price for the Trading Day next following such five-day period (the "NEXT-DAY CLOSING PRICE") is less than __% of such average, then the Current Market Price per share of Common Stock on such date of determination will be the next-day closing price; and provided, further, that, for purposes of calculating the Current Market Price in connection with any settlement of Securities or any determination of an amount in cash payable in lieu of a fraction of a share of Common Stock, if any adjustment of the Settlement Rate pursuant to this Section 5.06 is effective as of any date during the period beginning during the period beginning on the day after the date of determination of the Current Market Price and ending on the date on which Securities are to be settled with Common Stock, then the Current Market Price as determined pursuant to the foregoing will be appropriately adjusted to reflect such adjustment. If the Current Market Price is adjusted pursuant to the immediately preceding proviso as a result of the effectiveness of an adjustment to the Settlement Rate but the event requiring an adjustment of the Settlement Rate does not occur prior to the settlement of the Securities, then the Company may in its sole discretion elect to defer the following until after the occurrence of such event: (1) issuing to the Holder of any Securities settled the additional shares of Common Stock issuable upon such settlement over and above the shares of 36 Common Stock issuable upon such settlement on the basis of the Current Market Price prior to adjustment; and (2) paying to such Holder any amount in cash in lieu of a fractional share of Common Stock pursuant to this Section 5.11. Notwithstanding the foregoing provision of this Section 5.08(g) for purposes of any computation under Section 506, the Current Market Price of the Common Stock of the Company on any date shall be deemed to be the average of the daily Closing Prices per share of Common Stock for such day and the next two succeeding Trading Days. A "TRADING DAY" means a day on which the Common Stock (i) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (ii) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock. (h) Anything in this Section 5.06 notwithstanding, the Company shall be entitled to make such upward adjustments in the Settlement Rate, in addition to those required by this Section 5.06, as the Company in its discretion shall determine to be advisable, in order that any stock dividends, subdivision of shares, distribution of rights to purchase stock or securities, or a distribution of securities convertible into or exchangeable for stock (or any transactions which could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended) hereafter made by the Company to its stockholders shall not be taxable. (i) In any case in which this Section 5.06 shall require that an adjustment in the Settlement Rate as a result of any event become effective at the opening of business on the Business Day next following a Record Date and Mandatory Acceleration Date or the Final Settlement Date pursuant to Sections 5.08(b) and 5.01, respectively, occurs after such Record Date, but before the occurrence of such event, the Company may in its sole discretion elect to defer the following until after the occurrence of such event: (i) issuing to the Holder of any Securities settled the additional shares of Common Stock issuable upon such settlement over and above the shares of Common Stock issuable upon such settlement on the basis of the Settlement Rate prior to adjustment; and (ii) paying to such holder any amount in cash in lieu of a fractional share of Common Stock pursuant to Section 5.11. 37 (a) Whenever the Settlement Rate is adjusted as herein provided, the Company shall: (i) forthwith compute the adjusted Settlement Rate in accordance with Section 5.06 and prepare a certificate signed by the Chief Executive Officer, the Chairman, the President, any Vice President or the Treasurer of the Company setting forth the adjusted Settlement Rate, the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based, and file such certificate forthwith with the Agent for the Securities and the transfer agent or agents for the Common Stock; and (ii) mail a notice stating that the Settlement Rate has been adjusted, the facts requiring such adjustment and upon which such adjustment is based and setting forth the adjusted Settlement Rate to the Agent and the Holders of record of the outstanding Securities at or prior to the time the Company mails an interim statement to its stockholders covering the quarter-yearly period during which the facts requiring such adjustment occurred, but in any event within 45 days of the end of such quarter-yearly period. (b) The Agent shall not at any time be under any duty or responsibility to any holder of Securities to determine whether any facts exist which may require any adjustment of the Settlement Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at the time be issued or delivered with respect to any Purchase Contract; and the Agent makes no representation with respect thereto. The Agent shall not be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock pursuant to a Purchase Contract or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. Section 5.08. Acceleration; Notice. (a) Prior to a Mandatory Acceleration Date, a Bankruptcy Event Date, Sale of Assets Date or the Final Settlement Date, the Company shall have the right at any time or from time to time to accelerate, in whole or in part, the outstanding Securities (a "COMPANY ACCELERATION") (subject to the notice provisions set forth in this Section). The Company may not exercise its right to accelerate the 38 Securities unless the Current Market Price determined as of the second Business Day immediately preceding the Notice Date is equal to or exceeds the Company Acceleration Price applicable to such Notice Date. Upon the effective date of such acceleration ( a "COMPANY ACCELERATION DATE"), the Agent shall sell, pursuant to Section 4.02(d), at the direction of the Company subject to receipt thereof, the Treasury Notes underlying the Securities accelerated unless the Holder has paid the Stated Amount in cash in accordance with an election made pursuant to Section 402. The Company shall then deliver to the Agent for the benefit of the Holders thereof in exchange for each such Security accelerated, (i) a number of fully paid and non-assessable shares of Common Stock determined by dividing the Company Acceleration Price in effect on the Company Acceleration Date by the Current Market Price of the Common Stock determined as of the second Business Day immediately preceding the Notice Date applicable to such Company Acceleration Date and (ii) an amount in cash equal to all accrued and unpaid Contract Fees and Deferred Contract Fees, if any, on such Security to and including such Company Acceleration Date (and Contract Fees and Deferred Contract Fees, if any, shall cease to accrue on each Security accelerated as of such date). Accrued interest on the Treasury Notes (and premium in respect of the sale of Treasury Notes) shall be paid to Holders as provided in Section 4.02(d). (b) Immediately prior to the effectiveness of a merger or consolidation of, or a statutory share exchange involving, the Company that results in the conversion or exchange of the Common Stock into, or the right to receive, other securities or other property (whether of the Company or any other entity) (any such merger, consolidation or share exchange being referred to herein as a "MERGER OR CONSOLIDATION"), each outstanding Security shall automatically be settled for (a "MANDATORY ACCELERATION"), unless sooner accelerated: (i) fully paid and non-assessable shares of Common Stock at the Settlement Rate in effect on the effective time on the date of any Merger or Consolidation (the "MANDATORY ACCELERATION DATE"); plus (ii) an amount in cash equal to all accrued and unpaid Contract Fees and Deferred Contract Fees, if any, on such Securities to but excluding the Mandatory Acceleration Date (and Contract Fees and Deferred Contract Fees shall cease to accrue as of the Mandatory Acceleration Date); plus (iii) an amount in cash (except as provided below) initially equal to $_____, declining by $_______ on each day following __________, _____ (computed on the basis of a 360-day year of twelve 30-day months) to $_____ on _________, ____ and equal to zero thereafter, in each case determined with reference to the Mandatory Acceleration Date. 39 Accrued interest on the Treasury Notes shall be paid to Holders as provided in Section 4.02(d). At the option of the Company and provided that the Company has sufficient authorized and reserved shares of Common Stock, it may deliver to the Agent, for the benefit of the Holders, on the Mandatory Acceleration Date in lieu of some or all of the cash consideration described in clause (iii) above, fully paid and non-assessable shares of Common Stock. The number of shares of Common Stock to be delivered in lieu of any cash consideration described in such clause (iii) shall be determined by dividing the amount of cash consideration that the Company has elected to deliver in Common Stock by the Current Market Price of the Common Stock determined as of the second Business Day immediately preceding the Notice Date applicable to such Mandatory Acceleration Date. (c) The Company will provide notice of the Final Settlement Date or any earlier Acceleration of Securities (including any potential acceleration upon the effectiveness of a Merger or Consolidation) to the Agent and Holders of record of the Securities to be accelerated not less than 30 nor more than 60 days prior to the Final Settlement Date or the date fixed for such Acceleration; provided, however, that if the effectiveness of a Merger or Consolidation makes it impracticable to provide at least 30 days' notice, the Company shall provide such notice as soon as practicable prior to such effectiveness. Such notice shall be provided by mailing notice of the Final Settlement Date or any earlier Acceleration first class postage prepaid, to each Holder of record of the Securities to be accelerated, at such Holder's address as it appears on the Security Register of the Company, and by publishing notice thereof in The Wall Street Journal or The New York Times or, if neither such newspaper is then being published, any other daily newspaper of national circulation (each, an "AUTHORIZED NEWSPAPER"). Each such mailed or published notice shall state, as appropriate, the following: (i) the Final Settlement Date or the Acceleration Date; (ii) the number of Securities to be accelerated and, if less than all the Securities held by any Holder are to be accelerated, the number of such Securities to be accelerated; (iii) the Settlement Rate or the Company Acceleration Price, as applicable, and, if applicable, the Current Market Price to be used to calculate the number of shares of Common Stock deliverable upon Acceleration; (iv) whether the Company is exercising any option to deliver shares of Common Stock in lieu of any cash (in the case of a Mandatory 40 Acceleration) and the Current Market Price to be used to calculate the number of such shares of Common Stock; (v) the place or places where certificates for such Securities are to be surrendered for Acceleration; (vi) whether the Company is depositing with a bank or trust company on or before the Acceleration Date, the shares of Common Stock, and cash, if any, payable by the Company pursuant to this Section 5.08 and the proposed date of such deposit; and (vii) the amount of accrued and unpaid Contract Fees (and Deferred Contract Fees, if any) payable per Security to be accelerated, and that Contract Fees and Deferred Contract Fees on Securities to be accelerated will cease to accrue on such Acceleration Date. (d) The Company's obligation to deliver shares of Common Stock and provide funds in accordance with this Section 508 shall be deemed fulfilled if, on or before an Acceleration Date, the Company shall deposit, with a bank or trust company having an office or agency and doing business in the Borough of Manhattan in The City of New York and having a capital and surplus of at least $50,000,000, such number of shares of Common Stock and funds as are required to be delivered by the Company pursuant to this Section 508 upon the occurrence of the related Acceleration (including the payment of fractional share amounts), together with funds sufficient to pay all accrued and unpaid Contract Fees and Deferred Contract Fees, if any, to be settled as required by this Section 5.08, in trust for the account of the Holders of the Securities to be settled (and so as to be and continue to be available therefor), with irrevocable written instructions and authority to such bank or trust company that such shares and funds be delivered upon settlement of the Securities. Any shares of Common Stock and funds so deposited and unclaimed by Holders of Securities at the end of six years after such Acceleration Date (together with any interest thereon which shall be allowed by the bank or trust company with which such deposit was made) shall be paid by such bank or trust company to the Company, after which the Holder or Holders of such Securities so settled shall look only to the Company for delivery of such shares of Common Stock or funds. Each holder of Securities to be settled shall surrender the certificates evidencing such shares to the Company at the place designated in the notice of such Acceleration and shall thereupon be entitled to receive certificates evidencing shares of Common Stock, and cash, if any, payable pursuant to this Section 508, following such surrender and following the date of such Acceleration. In case fewer than all the Securities represented by any such surrendered certificate are 41 accelerated, a new certificate shall be issued at the expense of the Company representing the unaccelerated Securities. If such notice of Acceleration shall have been duly given, and if on the date fixed for Acceleration, shares of Common Stock and funds, if any, necessary for the settlement of Securities on such date shall have been either set aside by the Company separate and apart from its other funds or assets in trust for the account of the Holders of the Securities so to be settled (and so as to be and continue to be available therefor) or deposited with a bank or trust company as provided above, then, notwithstanding that the certificates evidencing any Securities settled shall not have been surrendered, the Securities represented thereby so settled shall be deemed no longer outstanding, Contract Fees and Deferred Contract Fees, if any, with respect to the Securities so settled shall cease to accrue after the date fixed for Acceleration and all rights with respect to the Securities so settled shall forthwith after such date cease and terminate, except for the right of the Holders to receive the shares of Common Stock and cash, if any, payable pursuant to this Section 508, without interest upon surrender of their certificates therefor. (e) If fewer than all outstanding Securities are to be accelerated, the Securities to be accelerated shall be selected by the Agent by lot. Section 5.09. Bankruptcy Event or Sale of Assets; Notice. The Purchase Contracts and the obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive and the obligation of the Company to pay any Contract Fees or any Deferred Contract Fees, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Final Settlement Date or an earlier Acceleration Date with respect to any particular Security, a Bankruptcy Event or Sale of Assets shall have occurred; provided that, in the event of a Sale of Assets, the Company will pay all accrued and unpaid Contract Fees and Deferred Contract Fees, if any, to Holders on the tenth Business Day following the Sale of Assets Date. Upon and after the occurrence of a Bankruptcy Event or Sale of Assets, the Securities shall thereafter represent the right to receive and take possession of the Treasury Notes forming a part of such Securities in accordance with the provisions of Section 402 and the Pledge Agreement. Upon the occurrence of a Bankruptcy Event or Sale of Assets, the Company shall promptly but in no event after two Business Days thereafter give written notice to the Agent, the Collateral Agent and to the Holders, at their addresses as they appear in the Security Register. 42 Section 5.10. Holder's Early Settlement. (a) Subject to and upon compliance with the provisions of this Section 510, at the option of the Holder thereof, any Purchase Contracts in integral multiples of ___ Securities may be settled early ("HOLDER'S EARLY SETTLEMENT") as provided herein. In order to exercise the right to effect Holder's Early Settlement, the Holder of the Security Certificate shall deliver such Security Certificate to the Agent at the Corporate Trust Office duly endorsed for transfer to the Company or in blank with the form (or a writing substantially similar to the form) of Election to Settle Early on the reverse thereof duly completed and accompanied by payment in the form of a certified or cashier's check payable to the order of the Company in immediately available funds in a U.S. dollar amount or by wire transfer of Federal funds (the "HOLDER'S EARLY SETTLEMENT AMOUNT") equal to the product of (A) the Stated Amount times (B) the number of Purchase Contracts with respect to which the Holder has elected to effect Holder's Early Settlement. If such delivery is made with respect to any Securities during the period from the close of business on any Record Date next preceding any Payment Date to the opening of business on such Payment Date, the amount equal to the sum of (x) the Contract Fees and Deferred Contract Fees, if any, payable on such Payment Date with respect to such Purchase Contracts plus (y) the interest on the related Treasury Notes payable on such Payment Date shall be paid on the next succeeding Payment Date applicable to the Prepaid Securities. If the foregoing requirements are first satisfied with respect to Purchase Contracts underlying any Securities at or prior to 5:00 p.m., New York City time, on a Business Day, such day shall be the "HOLDER'S EARLY SETTLEMENT DATE" with respect to such Securities and if such requirements are first satisfied after 5:00 p.m., New York City time, on a Business Day or on a day that is not a Business Day, the "HOLDER'S EARLY SETTLEMENT DATE" with respect to such Securities shall be the next succeeding Business Day. (b) The Company shall cause the Treasury Notes deliverable upon a Holder's Early Settlement to be released from the Pledge by the Collateral Agent and transferred to the Agent, for delivery to the Holder thereof or its designee, no later than 5:00 p.m. on the third Business Day after the applicable Holder's Early Settlement Date. (c) Upon Holder's Early Settlement and subject to receipt from the Collateral Agent of the Treasury Notes, the Agent shall, in accordance with the written instructions provided by the Holder thereof on the form (or a writing substantially similar to the form) of Election to Settle Early on the reverse of the Security Certificate evidencing the related Securities, transfer the Treasury Notes forming a part of such Securities to the applicable Holder as provided in paragraph (b) above. 43 (d) Upon a Holder's Early Settlement, the Company shall issue and deliver to the Agent at the Corporate Trust Office a certificate or certificates representing a face amount of Prepaid Securities equal to the aggregate Stated Amount of the Securities subject to such Holder's Early Settlement and bearing all rights in respect of accrued and unpaid Contract Fees and Deferred Contract Fees, if any; and the Agent shall transfer such Prepaid Securities to the Holders no later than 5:00 p.m. on the third Business Day after the applicable Holder's Early Settlement Date. (e) Upon the transfer of Treasury Notes as provided in paragraph (c) of this Section and the delivery of Prepaid Securities as provided in paragraph (d) of this Section, the Purchase Contract which has been thereby settled shall cease to be in effect. (f) In the event that a Holder's Early Settlement is effected with respect to less than all the Securities evidenced by a Security Certificate upon such Holder's Early Settlement, the Company shall execute and the Agent shall authenticate, countersign and deliver to the Holder thereof, at the expense of the Company, a Security Certificate evidencing the Securities as to which Holder's Early Settlement was not effected. Section 5.11. No Fractional Shares. No fractional shares or scrip representing fractional shares of Common Stock shall be issued or delivered on the Final Settlement Date or earlier Acceleration Date upon settlement of the Purchase Contracts or with respect to the payment of any amounts in shares of Common Stock pursuant to clause (iii) of Section 5.08(b) on a Mandatory Acceleration (if the Company elects to pay such amounts in shares of Common Stock in lieu of cash). If Security Certificates evidencing more than one Purchase Contract shall be surrendered for settlement at one time by the same Holder, the number of full shares of Common Stock which shall be delivered upon settlement shall be computed on the basis of the aggregate number of Purchase Contracts evidenced by the Security Certificates so surrendered. Instead of any fractional share of Common Stock which would otherwise be deliverable upon settlement of any Purchase Contracts on the Final Settlement Date or an earlier Acceleration Date or with respect to the payment of any amounts in shares of Common Stock pursuant to clause (iii) of Section 5.08(b) on a Mandatory Acceleration (if the Company elects to pay such amounts in shares of Common Stock in lieu of cash), the Company, through the Agent, shall make a cash payment in respect of such fractional interest in an amount equal to the value of such fractional shares at the Current Market Price of the Common Stock determined as of the second Business Day immediately preceding the relevant Notice Date or Final Settlement Date, as applicable. The Company shall provide 44 the Agent from time to time with sufficient funds to permit the Agent to make all cash payments required by this Section 5.11 in a timely manner. Section 5.12. Charges and Taxes. The Company will pay all stock transfer and similar taxes attributable to the initial issuance and delivery of the shares of Common Stock pursuant to the Purchase Contracts and in payment of any amounts in shares of Common Stock pursuant to clause (iii) of Section 5.08(b) (in the case of the Company's election to pay such amounts in Common Stock upon a Mandatory Acceleration) or the Company Acceleration Prices; provided, however, that the Company shall not be required to pay any such tax or taxes which may be payable in respect of any exchange of or substitution for a Security Certificate evidencing a Purchase Contract or any issuance of a share of Common Stock in a name other than that of the registered Holder of a Security Certificate surrendered in respect of the Purchase Contracts evidenced thereby, other than in the name of the Agent, as custodian for such Holder, and the Company shall not be required to issue or deliver such share certificates or Security Certificates unless or until the Person or Persons requesting the transfer or issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. ARTICLE 6 Remedies Section 6.01. Unconditional Right of Holders to Receive Contract Fees and Purchase Common Stock. The Holder of any Security shall have the right, which is absolute and unconditional (subject to the right of the Company to defer payment thereof pursuant to Section 5.03), to receive payment of each installment of the Contract Fees with respect to the Purchase Contract constituting a part of such Security on the respective Payment Date for such Security and to purchase Common Stock pursuant to the terms of such Purchase Contract and, in each such case, to institute suit for the enforcement of any such payment and right to purchase Common Stock, and such rights shall not be impaired without the consent of such Holder. 45 Section 6.02. Restoration of Rights and Remedies. If any Holder of Securities has instituted any proceeding to enforce any right or remedy under this Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Holder, then and in every such case, subject to any determination in such proceeding, the Company and such Holder shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of such Holder shall continue as though no such proceeding had been instituted. Section 6.03. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement of mutilated, destroyed, lost or stolen Security Certificates in the last paragraph of Section 3.06, no right or remedy herein conferred upon or reserved to the Holders of Securities is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 6.04. Delay or Omission Not Waiver. No delay or omission of any Holder to exercise any right or remedy shall impair any such right or remedy or constitute a waiver of any such right. Every right and remedy given by this Article or by law to the Holders may be exercised from time to time, and as often as may be deemed expedient, by such Holders. Section 6.05. Undertaking for Costs. All parties to this Agreement agree, and each Holder of any Security by his acceptance of the Security Certificate evidencing such Security shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Agent for any action taken, suffered or omitted by it as Agent, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Agent, to any suit instituted by any Holder of Securities, or group of Holders, holding in the aggregate more than ___% 46 of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the interest on any Treasury Note or the Contract Fees or Deferred Contract Fees, if any, on any Purchase Contract on or after the respective Payment Date therefor constituting a part of the Securities held by such Holder, or for enforcement of the right to purchase shares of Common Stock under the Purchase Contracts constituting a part of the Securities held by such Holder. Section 6.06. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Agreement; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Agent or the Holders, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 The Agent Section 7.01. Certain Duties and Responsibilities. (a) (i) The Agent undertakes to perform, with respect to the Securities, such duties and only such duties as are specifically set forth in this Agreement and those duties which relate to the Agent in the Pledge Agreement, and no implied covenants or obligations shall be read into this Agreement against the Agent; (ii) in the absence of bad faith or negligence on its part, the Agent may, with respect to the Securities, conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Agent and conforming to the requirements of this Agreement, but in the case of any certificates or opinions which by any provision hereof are specifically required to be furnished to the Agent, the Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement (but need not confirm or investigate the accuracy of mathematical calculations stated therein); and 47 (iii) in case of a Bankruptcy Event, the Agent shall exercise such of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) No provision of this Agreement shall be construed to relieve the Agent from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (i) this subsection shall not be construed to limit the effect of subsection (a) of this Section; (ii) the Agent shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Agent was negligent in ascertaining the pertinent facts; and (iii) no provision of this Agreement shall require the Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it. (c) Whether or not therein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Agent shall be subject to the provisions of this Section. Section 7.02. Notice of Default. Within 30 days after the occurrence of any default by the Company hereunder, of which a Responsible Officer of the Agent has actual knowledge, the Agent shall transmit by mail to all Holders of Securities, as their names and addresses appear in the Security Register, notice of such default hereunder, unless such default shall have been cured or waived. Section 7.03. Certain Rights of Agent. Subject to the provisions of Section 7.10: (a) the Agent may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of 48 indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer Request, and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Agreement the Agent shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Agent (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company; (d) the Agent may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Agent, in its discretion, may make reasonable further inquiry or investigation into such facts or matters related to the issuance of the Securities and the execution, delivery and performance of the Purchase Contracts as it may see fit, and, if the Agent shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and promises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation; (f) the Agent may execute any of its powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or an Affiliate and the Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney or an Affiliate appointed with due care by it hereunder; (g) the Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Holders pursuant to this Agreement, unless such Holders shall have offered to the Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; and 49 (h) the Agent shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement. Section 7.04. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Security Certificates shall be taken as the statements of the Company and the Agent assumes no responsibility for their accuracy. The Agent makes no representations as to the validity or sufficiency of either this Agreement or of the Securities, or of the Pledge Agreement or the Pledge. The Agent shall not be accountable for the use or application by the Company of the proceeds in respect of the Purchase Contracts. Section 7.05. May Hold Securities. Any Security Registrar or any other agent of the Company, or the Agent and its Affiliates, in their individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company, the Collateral Agent or any other Person with the same rights it would have if it were not Security Registrar or such other agent, or the Agent. Section 7.06. Money Held in Custody. Money held by the Agent in custody hereunder need not be segregated from the other funds except to the extent required by law. The Agent shall be under no obligation to invest or pay interest on any money received by it hereunder except pursuant to the provisions of Section 4.01 or as otherwise agreed in writing with the Company. Section 7.07. Compensation and Reimbursement. The Company agrees: (a) to pay to the Agent from time to time reasonable compensation for all services rendered by it hereunder as the Company and the Agent shall, from time to time, agree in writing (which compensation shall be limited by any applicable provisions of law); (b) except as otherwise expressly provided herein, to reimburse the Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Agent in accordance with any provision of this Agreement (including the reasonable compensation and the expenses and disbursements of its 50 agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; (c) to indemnify the Agent and any predecessor Agent for, and to hold each of them harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder; (d) anything in this Agreement to the contrary notwithstanding, in no event shall the Agent or its officers, employees or agents be liable under this Agreement to any third party for indirect, special, punitive, or consequential loss or damage of any kind whatsoever, including lost profits, whether or not the likelihood of such loss or damage was known to the Agent, or any of them, incurred without any act or deed that is found to be attributable to negligence on the part of the Agent; and (e) The provisions of this Section 7.07 shall survive the termination of this Agreement. Section 7.08. Corporate Agent Required; Eligibility. There shall at all times be an Agent hereunder which shall be a Company organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having (or being a member of a bank holding company having) a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or State authority and having a Corporate Trust Office in the Borough of Manhattan, The City of New York, if there be such a corporation in the Borough of Manhattan, The City of New York qualified and eligible under this Article and willing to act on reasonable terms. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. 51 Section 7.09. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Agent and no appointment of a successor Agent pursuant to this Article shall become effective until the acceptance of appointment by the successor Agent in accordance with the applicable requirements of Section 7.10. (b) The Agent may resign at any time by giving written notice thereof to the Company 60 days prior to the effective date of such resignation. If the instrument of acceptance by a successor Agent required by Section 7.10 shall not have been delivered to the Agent within 30 days after the giving of such notice of resignation, the resigning Agent may petition any court of competent jurisdiction for the appointment of a successor Agent. (c) The Agent may be removed at any time by Act of the Holders of a majority in number of the Outstanding Securities delivered to the Agent and the Company. (d) If at any time (i) the Agent fails to comply with Section 310(b) of the TIA, as if the Agent were an indenture trustee under an indenture qualified under the TIA, after written request therefor by the Company or by any holder who has been a bona fide Holder of a Security for at least six months, or (ii) the Agent shall cease to be eligible under Section 7.08 and shall fail to resign after written request therefor by the Company or by any such Holder, or (iii) the Agent shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Agent or of its property shall be appointed or any public officer shall take charge or control of the Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Agent and the appointment of a successor Agent. (e) If the Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Agent for any cause, the Company, by a 52 Board Resolution, shall promptly appoint a successor Agent and shall comply with the applicable requirements of Section 7.10. If no successor Agent shall have been so appointed by the Company and accepted appointment in the manner required by Section 7.10, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Agent. (f) The Company shall give, or shall cause such successor Agent to give, notice of each resignation and each removal of the Agent and each appointment of a successor Agent by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Agent and the address of its Corporate Trust Office. Section 7.10. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Agent, every such successor Agent so appointed shall execute, acknowledge and deliver to the Company and to the retiring Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Agent shall become effective and such successor Agent, without any further act, deed or conveyance, shall become vested with all the rights, powers, agencies and duties of the retiring Agent; but, on the request of the Company or the successor Agent, such retiring Agent shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Agent all the rights, powers and trusts of the retiring Agent and shall duly assign, transfer and deliver to such successor Agent all property and money held by such retiring Agent hereunder. (b) Upon request of any such successor Agent, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Agent all such rights, powers and agencies referred to in paragraph (a) of this Section. (c) No successor Agent shall accept its appointment unless at the time of such acceptance such successor Agent shall be qualified and eligible under this Article. Section 7.11. Preservation of Information; Communications to Holders. (a) The Agent shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders received by the Agent in its capacity as Security Registrar. 53 (b) If three or more Holders (herein referred to as "APPLICANTS") apply in writing to the Agent, and furnish to the Agent reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Agreement or under the Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Agent shall, within five Business Days after the receipt of such application, afford such applicants access to the information preserved at the time by the Agent in accordance with Section 7.11(a). (c) Every Holder of Securities, by receiving and holding the Security Certificates evidencing the same, agrees with the Company and the Agent that none of the Company, the Agent nor any agent of any of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 7.11(b), regardless of the source from which such information was derived. Section 7.12. No Obligations of Agent. Except to the extent otherwise provided in this Agreement, the Agent assumes no obligations and shall not be subject to any liability under this Agreement, the Pledge Agreement or any Purchase Contract in respect of the obligations of the Holder of any Security thereunder. The Company agrees, and each Holder of a Security Certificate, by his acceptance thereof, shall be deemed to have agreed, that the Agent's execution of the Security Certificates on behalf of the Holders shall be solely as agent and attorney-in-fact for the Holders, and that the Agent shall have no obligation to perform such Purchase Contracts on behalf of the Holders, except to the extent expressly provided in Article 5 hereof. Section 7.13. Tax Compliance. (a) The Agent, at the direction of the Company, will comply with all applicable certification, information reporting and withholding (including "backup" withholding) requirements imposed by applicable tax laws, regulations or administrative practice with respect to (i) any payments made with respect to the Securities or (ii) the issuance, delivery, holding, transfer, redemption or exercise of rights under the Securities. Such compliance shall include, without limitation, the preparation and timely filing of required returns and the timely payment of all amounts required to be withheld to the appropriate taxing authority or its designated agent. 54 (b) The Agent shall comply with any direction received from the Company with respect to the application of such requirements to particular payments or Holders or in other particular circumstances, and may for purposes of this Agreement rely on any such direction in accordance with the provisions of Section 7.01(a)(ii) hereof. (c) The Agent shall maintain all appropriate records documenting compliance with such requirements, and shall make such records available, on written request, to the Company or to its authorized representative within a reasonable period of time after receipt of such request. Section 7.14. Merger, Conversion, Consolidation or Succession to Business of Agent. Any corporation into which the Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Agent shall be a party or any corporation succeeding to all or substantially all of the corporate trust business of the Agent, shall be the successor of the Agent hereunder, provided such corporation shall be otherwise qualified and eligible under this Article 7, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Agent then in office, any successor by merger, conversion or consolidation to such authenticating Agent may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Agent had itself authenticated such Securities. ARTICLE 8 Supplemental Agreements Section 8.01. Supplemental Agreements Without Consent of Holders. Without the consent of any Holders, the Company and the Agent, at any time and from time to time, may enter into one or more agreements supplemental hereto, in form satisfactory to the Company and the Agent, for any of the following purposes: (a) to evidence the succession of another Person to the Company, and the assumption by any such successor of the obligations of the Company herein and in the Security Certificates; or 55 (b) to add covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (c) to evidence and provide for the acceptance of appointment hereunder by a successor Agent or Collateral Agent; or (d) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, provided such action shall not adversely affect the interests of the Holders. Section 8.02. Supplemental Agreements with Consent of Holders. With the consent of the Holders of not less than ______% of the Outstanding Securities, by Act of said Holders delivered to the Company and the Agent, the Company when authorized by a Board Resolution, and the Agent may enter into an agreement or agreements supplemental hereto for the purpose of modifying in any manner the terms of the Securities, or the provisions of this Agreement or the Pledge Agreement or the rights of the Holders in respect of the Securities; provided, however, that no such supplemental agreement shall, without the consent of the Holder of each Outstanding Security affected thereby, (a) change any Payment Date; (b) change the amount or type of Treasury Notes underlying a Security, impair the right of the Holder of any Security to receive interest payments on the underlying Treasury Notes or otherwise adversely affect the Holder's rights in or to such Treasury Notes; (c) change the place or currency of payment or reduce any Contract Fees or any Deferred Contract Fees; (d) impair the right to institute suit for the enforcement of any Purchase Contract; (e) reduce the amount of Common Stock purchasable on settlement of any Purchase Contract, increase the price to purchase shares of Common Stock upon settlement of any Purchase Contract, or change the Company Acceleration Price or change the Final Settlement Date; or (f) reduce the above-stated percentage of the Outstanding Securities the consent of whose Holders is required for the modification or amendment of the provisions of the Purchase Contracts, this Agreement or the Pledge Agreement. 56 It shall not be necessary for any Act of Holders under this Section 8.02 to approve the particular form of any proposed modification or amendment, but it shall be sufficient if such Act shall approve the substance thereof. Section 8.03. Execution of Supplemental Agreements. In executing, or accepting the additional agencies created by, any supplemental agreement permitted by this Article or the modifications thereby of the agencies created by this Agreement, the Agent shall be entitled to receive and (subject to Section 7.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. The Agent may, but shall not be obligated to, enter into any such supplemental agreement which affects the Agent's own rights, duties or immunities under this Agreement or otherwise. Section 8.04. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Holder of Security Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered hereunder shall be bound thereby. Section 8.05. Reference to Supplemental Agreements. Security Certificates authenticated, executed on behalf of the Holders and delivered after the execution of any supplemental agreement pursuant to this Article may, and shall if required by the Agent, bear a notation in form approved by the Agent as to any matter provided for in such supplemental agreement. If the Company shall so determine, new Security Certificates so modified as to conform, in the opinion of the Agent and the Company, to any such supplemental agreement may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Agent in exchange for Outstanding Security Certificates. 57 ARTICLE 9 Covenants Section 9.01. Performance under Purchase Contracts. The Company covenants and agrees for the benefit of the Holders from time to time of the Securities that it will duly and punctually perform its obligations under the Purchase Contracts in accordance with the terms of the Purchase Contracts and this Agreement. Section 9.02. Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York an office or agency where Security Certificates may be presented or surrendered for acquisition of shares of Common Stock upon the Final Settlement Date or earlier Acceleration Date and for transfer of Treasury Notes upon occurrence of a Bankruptcy Event, Sale of Assets or a Holder's Early Settlement, where Security Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Agreement may be served. The Company will give prompt written notice to the Agent of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Agent with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Company hereby appoints the Agent as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where Security Certificates may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Agent of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates as the place of payment for the Securities the Corporate Trust Office and appoints the Agent at its Corporate Trust Office as paying agent in such city. 58 Section 9.03. Company to Reserve Common Stock. The Company shall at all times prior to the Final Settlement Date or an applicable Acceleration Date reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock the full number of shares of Common Stock issuable against tender of payment in respect of all Purchase Contracts constituting a part of the Securities evidenced by Outstanding Security Certificates. Section 9.04. Covenants as to Common Stock. The Company covenants that all shares of Common Stock which may be issued against tender of payment in respect of any Purchase Contract constituting a part of the Outstanding Securities will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable. Section 9.05. Statements of Officers of the Company as to Default. The Company will deliver to the Agent, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions hereof, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. 59 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. HOUSEHOLD INTERNATIONAL, INC. Attested by: By:________________________ ___________________________ Name: Title Title: ___________________________ By:________________________ Name: Title: 60 EXHIBIT A HOUSEHOLD INTERNATIONAL, INC. ______________________________ _________________________ (STATED AMOUNT $_____ PER SECURITY) CUSIP NO. _________ NO. SECURITIES This Security Certificate certifies that is the registered Holder of the number of Securities set forth above. Each Security represents (i) ownership by the Holder of ___% United States Treasury Notes due __________, ____ ("TREASURY NOTES") with a principal amount equal to the Stated Amount, subject to the Pledge of such Treasury Notes by such Holder pursuant to the Pledge Agreement, and (ii) the rights and obligations of the Holder under one Purchase Contract with Household International, Inc., a Delaware corporation (the "COMPANY"). The Treasury Notes represented by this Security Certificate were acquired by the Underwriters on behalf of the Holders with the proceeds of the offering of this Security Certificate and other funds provided by the Company and are being conveyed to the Holder of this Security Certificate and pledged pursuant to the Pledge Agreement simultaneously therewith. Pursuant to the Pledge Agreement, the Treasury Notes constituting part of each Security evidenced hereby have been pledged to the Collateral Agent to secure the obligations of the Holder under the Purchase Contract comprising a portion of such Security. The Pledge Agreement provides that all payments of principal of, or interest on, any Treasury Notes comprising a portion of the Securities received by the Collateral Agent shall be paid by the Collateral Agent by wire transfer in same day funds no later than 12:00 noon, New York City time, on the Business Day such payment is received by the Collateral Agent (provided that in the event such payment is received by the Collateral Agent on a day that is not a Business Day, then such payment shall be made no later than 10:00 a.m., New York City time, on the next succeeding Business Day) (i) in the case of (A) interest payments and (B) any principal payments with respect to any Treasury Notes that have been released from the Pledge pursuant to the Pledge Agreement, to the Agent to the account designated by it for such purpose and (ii) in the case of principal payments on any Pledged Treasury Notes (as defined in the Pledge Agreement), to the Company, in full satisfaction of the respective obligations of the Holders of the Securities of which such Pledged Treasury Securities are a part under the Purchase Contracts forming a part of such Securities. Interest on any Treasury Note forming part of a A-1 Security evidenced hereby which is paid on any ________ or __________, commencing ________, 1997 (a "PAYMENT DATE"), shall, subject to receipt thereof by the Agent from the Collateral Agent, be paid to the Person in whose name this Security Certificate (or a Predecessor Security Certificate) is registered at the close of business on the Record Date next preceding such Payment Date. On the first Payment Date, the Agent shall pay, subject to receipt from the Collateral Agent, to the Holders the accrued interest on the Treasury Notes for the period from __________, 1997 to __________, 1997 as part of the interest payment on the Treasury Notes. Each Purchase Contract evidenced hereby obligates the Holder of this Security Certificate to purchase, and the Company to sell, on __________, ____ (the "FINAL SETTLEMENT DATE"), at a price equal to $_____ (the "STATED AMOUNT"), a number of shares of Common Stock, par value $1.00 per share ("COMMON STOCK"), of the Company, equal to the Settlement Rate on the Final Settlement Date, unless on or prior to the Final Settlement Date, there shall have occurred a Bankruptcy Event, Sales of Assets, an Acceleration or a Holder's Early Settlement with respect to the Security of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. The purchase price for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if not paid earlier pursuant to the terms of the Purchase Contract Agreement, shall be paid on the Final Settlement Date by application of payment received in respect of the principal of the Treasury Notes pledged to secure the obligations under such Purchase Contract of the Holder of the Security of which such Purchase Contract is a part. The Company shall pay or accrue, on each Payment Date, in respect of each Purchase Contract forming part of a Security evidenced hereby an amount (the "CONTRACT FEES") equal to ___% per annum of the Stated Amount, computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be, subject to deferral at the option of the Company as provided in the Purchase Contract Agreement and more fully described on the reverse hereof; except that the Contract Fees payable on the first Payment Date will be adjusted so that the Contract Fees payable on such date will be $_______ per Security. Subject to the provisions of the Purchase Contract Agreement, such Contract Fees shall be payable to the Person in whose name this Security Certificate (or a Predecessor Security Certificate) is registered at the close of business on the Record Date next preceding such Payment Date. Interest on the Treasury Notes and the Contract Fees will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto as such address appears on the Security Register. A-2 Reference is hereby made to the further provisions set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Agent by manual signature, this Security Certificate shall not be entitled to any benefit under the Pledge Agreement or the Purchase Contract Agreement or be valid or obligatory for any purpose. A-3 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. HOUSEHOLD INTERNATIONAL, INC. By: _________________________ Name: Title: Attested by: ________________________ Dated: This is one of the Securities Certificates referred to in the within mentioned Purchase Contract Agreement. ____________________ as Agent By:_______________________ Authorized Signatory A-4 (FORM OF REVERSE OF SECURITY CERTIFICATE] Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of __________, 1997 (the "PURCHASE CONTRACT AGREEMENT"), between the Company and ____________________, as Purchase Contract Agent (herein called the "AGENT"), to which Purchase Contract Agreement and supplemental agreements thereto reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Agent, the Company, and the Holders and of the terms upon which the Security Certificates are, and are to be, executed and delivered. Each Purchase Contract evidenced hereby shall obligate the Holder of this Security Certificate to purchase, and the Company to sell, on the Final Settlement Date at a price equal to the Stated Amount, a number of shares of Common Stock of the Company equal to the Settlement Rate on the Final Settlement Date, unless, on or prior to the Final Settlement Date, there shall have occurred a Bankruptcy Event, Sale of Assets, an Acceleration or a Holder's Early Settlement with respect to the Security of which such Purchase Contract is a part. The "SETTLEMENT RATE" is initially one share of Common Stock, in each case subject to adjustment as provided in the Purchase Contract Agreement. No fractional shares of Common Stock will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement. Unless a Holder settles the Purchase Contract evidenced hereby through the early delivery of cash to the Agent in the manner described in the Purchase Contract Agreement, the purchase price for the shares of Common Stock purchased pursuant to each Purchase Contract shall be paid by application of payments received by the Company on the Final Settlement Date or an earlier Acceleration Date from, as the case may be, either (i) the Collateral Agent pursuant to the Pledge Agreement in respect of the principal of the Treasury Notes pledged to secure the obligations of the relevant Holder under such Purchase Contract or (ii) the proceeds of the sale of the Treasury Notes underlying the Holder's Securities pursuant to the provisions of the Purchase Contract Agreement. Such application shall satisfy in full (whether or not the principal amount of the Treasury Notes then equals the Stated Amount) the obligations under such Purchase Contract of the Holder of this Security of which such Purchase Contract is a part. The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment in full of the aggregate purchase price for the A-5 shares of Common Stock to be purchased thereunder in the manner set forth in the Purchase Contract Agreement. Subject to the next succeeding paragraph and the provisions of the Purchase Contract Agreement, the Company shall pay by 12:00 noon New York City time to the Agent, on each Payment Date, the Contract Fees payable in respect of each Purchase Contract for the benefit of the Person in whose name the Security Certificate (or one or more Predecessor Security Certificates) evidencing such Purchase Contract is registered at the close of business on the Record Date next preceding such Payment Date. The Contract Fees will be payable at the office of the Agent in The City of New York maintained for that purpose or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such address as it appears on the Security Register. The right to receive Contract Fees including accrued and unpaid Contract Fees and Deferred Contract Fees, if any, shall terminate upon the occurrence of a Bankruptcy Event, and the Company shall have no further obligation with respect thereto. The Company shall have the right, at any time prior to the Final Settlement Date, an Acceleration Date applicable to a Holder's Securities or Sale of Assets Date, to defer the payment of any or all of the Contract Fees otherwise payable on any Payment Date (on a pro rata basis among all Outstanding Securities), but only if the Company shall give the Holders and the Agent written notice of its election to defer such payment (specifying the amount to be deferred and the period of deferment) as provided in the Purchase Contract Agreement. Any Contract Fees so deferred shall bear additional Contract Fees thereon at the rate of ___% per annum (computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be), compounding on each succeeding Payment Date, until paid in full (such deferred installments of Contract Fees together with the additional Contract Fees accrued thereon, are referred to herein as the "DEFERRED CONTRACT FEES"). Deferred Contract Fees shall be due on the next succeeding Payment Date except to the extent that payment is deferred further in the notice of election pursuant to the Purchase Contract Agreement. The Company may pay Deferred Contract Fees in whole or in part on any Payment Date (on a pro rata basis among all Outstanding Securities). No Contract Fees or Deferred Contract Fees may be deferred to a date that is after the Final Settlement Date or a Sale of Assets Date or, with respect to any particular Purchase Contract, the Acceleration thereof. In the event the Company elects to defer the payment of Contract Fees on the Purchase Contract until the Final Settlement Date, a Sale of Assets Date or a Company Acceleration Date or a Mandatory Acceleration Date (or a date prior to A-6 such dates as set forth in its written notice referred to in the preceding paragraph), the Company shall make a cash payment, on the date such Deferred Contract Fees become due and payable, equal to the aggregate amount of Deferred Contract Fees payable to a Holder. In the event the Company exercises its option to defer the payment of Contract Fees, then, until the Deferred Contract Fees have been paid in full, the Company shall not declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of its capital stock (other than (i) purchase or acquisitions of shares of Common Stock in connection with the satisfaction by the Company of its obligations under any employee benefit plans now or hereafter in effect or the satisfaction by the Company of its obligations pursuant to any contract or security now or hereafter outstanding requiring the Company to purchase shares of Common Stock, (ii) as a result of a reclassification of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock, (iii) the purchase of fractional shares in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged (iv) the payment of accrued dividends (and cash in lieu of fractional shares) upon the conversion of any shares of preferred stock of the Company as may be outstanding from time to time, in accordance with the terms of such stock or (v) dividends on its capital stock paid in shares of capital stock) or make any guarantee payments with respect to the foregoing. The Purchase Contracts and the obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive and the obligation of the Company to pay any Contract Fees or any Deferred Contract Fees, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Final Settlement Date or an earlier Acceleration Date with respect to a particular Security, a Bankruptcy Event or Sale of Assets shall have occurred; provided that, in the event of a Sale of Assets, the Company will pay all accrued and unpaid Contract Fees and Deferred Contract Fees, if any, to Holders on the tenth Business Day following the Sale of Assets Date. Upon and after the occurrence of a Bankruptcy Event or Sale of Assets, the Securities shall thereafter represent the right to receive and take possession of the Treasury Notes forming a part of such Securities in accordance with the provisions of the Purchase Contract Agreement and the Pledge Agreement. Upon the occurrence of a Bankruptcy Event or Sale of Assets, the Company shall promptly but in no event after two Business Days thereafter give written notice to the Agent, the Collateral Agent and to the Holders, at their addresses as they appear in the Security Register. A-7 Prior to a Mandatory Acceleration Date, a Bankruptcy Event Date, Sale of Assets Date or the Final Settlement Date, the Company shall have the right at any time and from time to time to accelerate, in whole or in part, the Outstanding Securities (a "COMPANY ACCELERATION") (subject to the notice provisions set forth in the Purchase Contract Agreement). "COMPANY ACCELERATION PRICE" shall mean the per share price (payable in shares of Common Stock) at which the Company may accelerate settlement of the Securities, which shall be initially $______ declining by $______ on each day following __________, 1997 (computed on the basis of a 360-day year of twelve 30-day months) to $_______ on _________, ____ and equal to $______ thereafter. The Company may not exercise its right to accelerate the Securities unless the Current Market Price determined as of the second Business Day immediately preceding the Notice Date is equal to or exceeds the Company Acceleration Price applicable to such Notice Date. Upon the effective date of such acceleration ( a "COMPANY ACCELERATION DATE"), the Agent shall sell, pursuant to Section 4.02(d) of the Purchase Contract Agreement, at the direction of the Company subject to receipt thereof and pursuant to the Purchase Contract Agreement, the Treasury Notes underlying the Securities accelerated unless the Holder has paid the Stated Amount in cash pursuant to Section 4.02(b) of the Purchase Contract Agreement. The Company shall then deliver, subject to the terms of the Purchase Contract Agreement, to the Agent for the benefit of the Holders thereof in exchange for each such Security accelerated, (i) a number of fully paid and non-assessable shares of Common Stock determined by dividing the Company Acceleration Price in effect on the Company Acceleration Date by the Current Market Price of the Common Stock determined as of the second Business Day immediately preceding the Notice Date applicable to such Company Acceleration Date and (ii) an amount in cash equal to all accrued and unpaid Contract Fees and Deferred Contract Fees, if any, on such Security to and including such Company Acceleration Date (and Contract Fees and Deferred Contract Fees, if any, shall cease to accrue on each Security accelerated as of such date). Accrued interest on the Treasury Notes (and premium in respect of the Sale of Treasury Notes) shall be paid to Holders as provided in the Purchase Contract Agreement. Immediately prior to the effectiveness of a merger or consolidation of, or a statutory share exchange involving, the Company that results in the conversion or exchange of the Common Stock into, or the right to receive, other securities or other property (whether of the Company or any other entity) (any such merger, consolidation or share exchange being referred to herein as a "MERGER OR CONSOLIDATION"), each Outstanding Security shall automatically be settled for (a "MANDATORY ACCELERATION"), unless sooner accelerated: A-8 (i) fully paid and non-assessable shares of Common Stock at the Settlement Rate in effect on the effective time on the date of any Merger or Consolidation (the "MANDATORY ACCELERATION DATE"); plus (ii) an amount in cash equal to all accrued and unpaid Contract Fees and Deferred Contract Fees, if any, on such Securities to but excluding the Mandatory Acceleration Date (and Contract Fees and Deferred Contract Fees shall cease to accrue as of the Mandatory Acceleration Date); plus (iii) an amount in cash (except as provided below) initially equal to $_____, declining by $_______ on each day following __________, 1997 (computed on the basis of a 360-day year of twelve 30-day months) to $_____ on _________, ____ and equal to zero thereafter, in each case determined with reference to the Mandatory Acceleration Date. Accrued interest on the Treasury Notes shall be paid to Holders as provided in the Purchase Contract Agreement. At the option of the Company and provided that the Company has sufficient authorized and reserved shares of Common Stock, it may deliver to the Agent, for the benefit of the Holders, on the Mandatory Acceleration Date in lieu of some or all of the cash consideration described in clauses (iii) above, fully paid and non-assessable shares of Common Stock. The number of shares of Common Stock to be delivered in lieu of any cash consideration described in such clauses (iii) shall be determined by dividing the amount of cash consideration that the Company has elected to deliver in Common Stock by the Current Market Price of the Common Stock determined as of the second Business Day immediately preceding the Notice Date applicable to such Mandatory Acceleration Date. Notice shall be given for a Mandatory Acceleration as set forth in the Purchase Contract Agreement. If fewer than all outstanding Securities are to be accelerated, the Securities to be accelerated shall be selected by the Agent by lot. Upon the occurrence of a Bankruptcy Event or Sale of Assets and the transfer to the Agent of the Treasury Notes underlying the Securities pursuant to the terms of the Pledge Agreement, the Agent shall request transfer instructions with respect to such Treasury Notes from each Holder of Securities by written request mailed to such Holder at his address as it appears in the Security Register, in respect of the Treasury Notes underlying the Security Certificate held by such Holder. Upon surrender to the Agent of a Security Certificate with such transfer instructions in proper form for transfer of the Treasury Notes by Federal Reserve Bank-Wire or other appropriate procedure, subject to the receipt of the Treasury Notes, the Agent shall transfer the Treasury Notes evidenced by such Security A-9 Certificate to such Holder in accordance with such instructions within three Business Days. If a Security Certificate is not duly surrendered to the Agent with appropriate transfer instructions, the Agent shall hold the Treasury Notes evidenced by such Security Certificate as custodian for the Holder of such Security Certificate. In the event of an Acceleration of Securities, Holders of Securities so accelerated may elect to pay to the Company through the Agent by no later than 5:00 p.m., New York City time on the third Business Day immediately preceding the Acceleration Date in immediately available funds an amount in U.S. dollars equal to the Stated Amount per Security so accelerated. Holders may make the election provided in this paragraph only in integral multiples of ___ Securities. Upon Surrender to the Agent of a Security Certificate with such transfer instructions in proper form for transfer of the Treasury Notes by Federal Reserve Bank-Wire or other appropriate procedure, along with the payment described in the previous sentence, subject to receipt from the Collateral Agent, the Agent shall transfer the Treasury Notes evidenced by such Security Certificate to such Holder in accordance with such instructions within three Business Days of such payment. If payment is made in accordance with the first sentence of this paragraph, the Company will issue the number of shares of Common Stock equal to the Stated Amount for the Securities accelerated on the Acceleration Date. The Company will also pay in cash on the Acceleration Date accrued Contract Fees and Deferred Contract Fees, if any, to holders of Securities who elect to pay the Stated Amount in cash upon an Acceleration as provided in the Purchase Contract Agreement. Because Holders may only elect to make a payment in cash pursuant to the Purchase Contract Agreement in integral multiples of ___ Securities Treasury Notes shall be transferred only in denominations of $______ and integral multiples thereof. Any Securities accelerated which are not in integral multiples of ___ shall be settled in shares of Common Stock pursuant to the Purchase Contract Agreement. In the case of an Acceleration of Securities, the Agent on behalf of each Holder (other than Holders that, pursuant to an election made in accordance with the Purchase Contract Agreement, have paid the Stated Amount in immediately available funds not later than 5:00 p.m., New York City time on the third Business Day immediately preceding the Acceleration Date) will sell on the second Business Day immediately preceding the Acceleration Date the Treasury Notes underlying each such Holder's Securities to or through one or more U.S. government securities dealers selected by the Company at the then prevailing prices and automatically apply on the Acceleration Date, out of the proceeds of such sale (excluding premium and accrued interest on the Treasury Notes), an amount equal to the Stated Amount to satisfy in full each such Holder's obligation to purchase A-10 the Common Stock from the Company on the Acceleration Date. Any excess proceeds (in respect of premium on the sale of the Treasury Notes) will be paid to such Holder. In the event that the proceeds from the sale of such Treasury Notes (exclusive of accrued interest on the Treasury Notes) is less than the Stated Amount, such proceeds nevertheless will satisfy in full each such Holder's obligation to purchase the Common Stock from the Company on the Acceleration Date. Amounts in respect of accrued interest on the Treasury Notes will be paid to each such Holder on the Acceleration Date. The proceeds of such sales shall be after deduction by the Agent of all commissions and other out-of-pocket transaction costs incurred in connection with the sale of such Treasury Notes and, until the net proceeds of such sale or sales have been distributed to Holders of the Securities, the Agent shall hold such proceeds as custodian for the Holders of Securities. Such proceeds shall be held by the Agent uninvested without liability to any Person for interest or other compensation thereon. Subject to and upon compliance with the provisions of the Purchase Contract Agreement, at the option of the Holder thereof, Purchase Contracts in integral multiples of ___ Securities may be settled early ("HOLDER'S EARLY SETTLEMENT") as provided in the Purchase Contract Agreement. In order to exercise the right to effect Holder's Early Settlement with respect to any Purchase Contracts evidenced by this Security Certificate, the Holder of this Security Certificate shall deliver this Security Certificate to the Agent at the Corporate Trust Office duly endorsed for transfer to the Company or in blank with the form (or a writing substantially similar to the form) of Election to Settle Early set forth below duly completed and accompanied by payment in the form of a certified or cashier's check payable to the order of the Company in immediately available funds in a U.S. dollar amount or by wire transfer of Federal funds (the "HOLDER'S EARLY SETTLEMENT AMOUNT") equal to the product of (A) the Stated Amount times (B) the number of Purchase Contracts with respect to which the Holder has elected to effect a Holder's Early Settlement. If such delivery is made with respect to any Purchase Contracts during the period from the close of business on any Record Date next preceding any Payment Date to the opening of business on such Payment Date, the amount equal to the sum of (x) the Contract Fees and Deferred Contract Fees, if any, payable on such Payment Date with respect to such Purchase Contracts plus (y) the interest on the related Treasury Notes payable on such Payment Date shall be paid on the next succeeding Payment Date applicable to the Prepaid Securities. The Company shall cause the Treasury Notes deliverable upon a Holder's Early Settlement to be released from the Pledge by the Collateral Agent and transferred to the Agent, for delivery to the Holder thereof or its designee, no later than 5:00 p.m. on the third Business Day after the applicable Holder's Early Settlement Date. A-11 Upon Holder's Early Settlement and subject to receipt from the Collateral Agent of the Treasury Notes, the Agent shall, in accordance with the written instructions provided by the Holder thereof on the form (or a writing substantially similar to the form) of Election to Settle Early of this Security Certificate evidencing the related Securities, transfer the Treasury Notes forming a part of such Securities to the applicable Holder as provided in the Purchase Contract Agreement. Upon a Holder's Early Settlement, the Company shall issue and deliver to the Agent at the Corporate Trust Office a certificate or certificates representing a face amount of Prepaid Securities equal to the aggregate Stated Amount of the Securities subject to such Holder's Early Settlement and bearing all rights in respect of accrued and unpaid Contract Fees and Deferred Contract Fees, if any; and the Agent shall transfer such Prepaid Securities to the Holders no later than 5:00 p.m. on the third Business Day after the applicable Holder's Early Settlement Date. Upon the transfer of Treasury Notes and the delivery of Prepaid Securities pursuant to the Purchase Contract Agreement, the Purchase Contract which has been thereby settled shall cease to be in effect. This Security is issued in the form of one or more, fully registered, Global Security Certificates, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of the Company as set forth in the Purchase Contract Agreement. If definitive, fully registered Security Certificates are issued pursuant to the Purchase Contract Agreement, such Security Certificates will be issuable only in registered form and only in denominations of a single Security and any integral multiple thereof. The transfer of any Security Certificate will be registered and Security Certificates may be exchanged as provided in the Purchase Contract Agreement. The Security Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents permitted by the Purchase Contract Agreement. No service charge shall be required for any such registration of transfer or exchange, but the Company and the Agent may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. For so long as the Purchase Contract underlying a Security remains in effect, such Security shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Security in respect of the Treasury Notes and Purchase Contract constituting such Security may be transferred and exchanged only as a Security. Upon registration of transfer of this Security Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee, except as may be required by the Agent pursuant to the Purchase Contract A-12 Agreement), under the terms of the Purchase Contract Agreement and the Purchase Contracts evidenced hereby and the transferor shall be released from the obligations under the Purchase Contracts evidenced by this Security Certificate. The Company covenants and agrees, and the Holder, by his acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. The Holder of this Security Certificate, by his acceptance hereof, authorizes the Agent to enter into and perform the related Purchase Contracts forming part of the Securities evidenced hereby on his behalf as his attorney- in-fact, expressly withholds any consent to the assumption (i.e., affirmance) of the Purchase Contracts by the Company or its trustee in the event that the Company becomes the subject of a case under the Bankruptcy Code, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform his obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, authorizes the Agent to enter into and perform the Pledge Agreement on his behalf as his attorney-in-fact, and consents to the Pledge of the Treasury Notes underlying this Security Certificate pursuant to the Pledge Agreement. The Holder further covenants and agrees, that, to the extent and in the manner provided in the Purchase Contract Agreement and the Pledge Agreement, but subject to the terms thereof, payments in respect of principal of the Treasury Notes on the Final Settlement Date shall be paid by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments. Subject to certain exceptions, the provisions of the Purchase Contract Agreement may be amended with the consent of the Holders of at least ______% of the Outstanding Securities. All terms used herein which are defined in the Purchase Contract Agreement have the meanings set forth therein. The Purchase Contracts shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York without regard to conflicts of law. Prior to due presentment of a Security Certificate for registration of transfer, the Company and the Agent and any agent of the Company or the Agent may treat the Person in whose name this Security Certificate is registered as the owner of the Securities evidenced hereby for the purpose of receiving payments of interest on the Treasury Notes, receiving payments of Contract Fees and any Deferred Contract Fees, delivery of the Treasury Notes, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not the A-13 payment of interest on the Treasury Notes or any Contract Fees payable in respect thereof shall be overdue and notwithstanding any notice to the contrary, and neither the Company, the Agent nor any such agent shall be affected by notice to the contrary. The Purchase Contracts shall not, prior to the settlement thereof, entitle the Holder to any of the rights of a holder of shares of Common Stock. A copy of the Purchase Contract Agreement is available for inspection at the offices of the Agent. A-14 SETTLEMENT INSTRUCTIONS The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon settlement on or after an Acceleration Date or the Final Settlement Date of the Purchase Contracts underlying the number of Securities evidenced by this Security Certificate be registered in the name of, and delivered, together with a check in payment for any fractional share, to the undersigned at the address indicated below unless a different name and address have been indicated below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated:________________________ ___________________________ Signature If shares are to be registered in the REGISTERED HOLDER name of and delivered to a Person other than the Holder, please print such Person's name and address: Please print name and address of Registered Holder: ______________________________ ___________________________ Name Name ______________________________ ___________________________ Address Address Social Security or other Taxpayer Identification Number, if any ___________________________ A-15 HOLDER'S ELECTION TO SETTLE EARLY The undersigned Holder of this Security Certificate hereby irrevocably exercises the option to effect Holder's Early Settlement in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Securities evidenced by this Security Certificate specified below. The undersigned Holder directs that a certificate for Prepaid Securities deliverable upon such Holder's Early Settlement be registered in the name of, and delivered with any Security Certificate representing any Securities evidenced hereby as to which Holder's Early Settlement of the related Purchase Contracts is not effected, to the undersigned at the address indicated below unless a different name and address have been indicated below. HOLDERS MAY MAKE THE ELECTION REFERRED TO THIS PARAGRAPH AND IN THE PURCHASE CONTRACT AGREEMENT ONLY IN INTEGRAL MULTIPLES OF ___ SECURITIES. Treasury Notes deliverable upon such Holder's Early Settlement will be transferred in accordance with the transfer instructions set forth below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated:_______________________ _________________________ Signature A-16 Number of Securities evidenced hereby as to which Holder's Early Settlement of the related Purchase Contracts is being elected: If shares or Security Certificates are to REGISTERED HOLDER be registered in the name of and delivered to and Treasury Notes are to be transferred to a Person other than the Holder, please print such Person's name and address: Please print name and address of Registered Holder: _____________________________ ___________________________ Name Name _____________________________ __________________________ Address Address Social Security or other Taxpayer Identification Number, if any __________________________ Transfer Instructions for Treasury Notes Transferable Upon Holder's Early Settlement: __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ A-17 EX-4.(G) 6 FORM OF PLEDGE AGREEMENT EXHIBIT 4(g) PLEDGE AGREEMENT PLEDGE AGREEMENT, dated as of _______ __, 1997 (this "Agreement"), among Household International, Inc., a Delaware corporation (the "Company"), _________ __________, a ____________________________, not individually but solely as collateral agent (in such capacity, together with its successors in such capacity, the "Collateral Agent") and as "depositary" (as defined in 31 C.F.R (S)306, as amended) and as "securities intermediary" (as defined in Section 8-102(a)(14) of the 1994 Official Text of the Uniform Commercial Code and in 31 C.F.R. (S)357.2, as amended (in such capacity, together with its successors in such capacity, the "Securities Intermediary")) for the collateral account and for any Treasury Notes credited to the collateral account, and _______________ ____, not individually but solely as purchase contract agent and as attorney-in- fact of the Holders (as hereinafter defined) from time to time of the Securities (as hereinafter defined) (in such capacity, together with its successors in such capacity, the "Purchase Contract Agent") under the Purchase Contract Agreement (as hereinafter defined). RECITALS The Company and the Purchase Contract Agent are parties to the Purchase Contract Agreement, dated as of the date hereof (as modified and supplemented and in effect from time to time, the "Purchase Contract Agreement"), pursuant to which there will be issued __________________________________________________ _____ (the "Securities"). Each Security consists of (a) one Purchase Contract (as hereinafter defined) and (b) ______________________________________________________ ("Treasury Notes") having a principal amount equal to $_____ (the "Stated Amount") and maturing on __________, ____ (the "Final Settlement Date"), subject to the pledge of such Treasury Notes created hereby. The Company has caused the Underwriters, on its behalf, to purchase the Treasury Notes, to be settled on _______ __, 1997, with the proceeds of the offering of the Securities and other funds to be provided by the Company. The Company will convey such Treasury Notes to the Holders as a part of the Securities. Pursuant to the terms of the Purchase Contract Agreement and the Purchase Contracts, the Holders (as defined in the Purchase Contract Agreement) from time to time of the Securities have authorized the Purchase Contract Agent, as attorney-in-fact of such Holders, among other things to execute and deliver this Agreement on behalf of such Holders and to grant the pledge provided hereby of the Treasury Notes constituting part of such Securities as provided herein and subject to the terms hereof. Accordingly, the Company, the Collateral Agent and the Purchase Contract Agent, on its own behalf and as attorney-in-fact of the Holders from time to time of the Securities, agree as follows: Section 1. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; and (b) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. "Acceleration" has the meaning specified in the Purchase Contract Agreement. "Act" has the meaning specified in the Purchase Contract Agreement. "Agreement" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof. "Applicable Treasury Regulations" means Subpart O- Book-Entry Procedure of Title 31 of the Code of Federal Regulations (31 C.F.R. (S) 306.115 et. seq.) and any other regulations of the United States Treasury Department from time to time applicable to the transfer or pledge of book-entry U.S. Treasury Securities. "Bankruptcy Code" means title 11 of the United States Code, or any other law of the United States that from time to time provides a uniform system of bankruptcy laws. "Bankruptcy Event" has the meaning specified in the Purchase Contract Agreement. "Board Resolution" has the meaning specified in the Purchase Contract Agreement. 2 "Business Day" means any day that is not a Saturday, a Sunday or a day on which the New York Stock Exchange or banking institutions or trust companies in The City of New York are authorized or obligated by law or executive order to be closed. "Collateral Agent" has the meaning specified in the first paragraph of this instrument. "Collateral Account" means the account maintained at ___________________ _______________ in the name ___________________________________ as Collateral Agent of Household International, Inc. as pledgee of ____________________ as Purchase Contract Agent". "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor shall have become such, and thereafter "Company" shall mean such successor. "Final Settlement Date" has the meaning specified in the Recitals. "Holder" when used with respect to a Security, or a Purchase Contract constituting a part thereof, has the meaning specified in the Purchase Contract Agreement. "Holder's Early Settlement" has the meaning specified in the Purchase Contract Agreement. "Holder's Early Settlement Amount" has the meaning specified in the Purchase Contract Agreement. "Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company and who shall be reasonably acceptable to the Collateral Agent or the Purchase Contract Agent, as the case may be. "Outstanding Securities" has the meaning specified in the Purchase Contract Agreement. "Outstanding Security Certificates" has the meaning specified in the Purchase Contract Agreement. "Payment Date" has the meaning specified in the Purchase Contract Agreement. 3 Exhibit 4(g) "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Pledge" has the meaning specified in Section 2 hereof. "Pledged Treasury Notes" has the meaning specified in Section 2 hereof. "Purchase Contract" has the meaning specified in the Purchase Contract Agreement. "Purchase Contract Agent" has the meaning specified in the first paragraph of this instrument. "Sale of Assets" has the meaning specified in the Purchase Contract Agreement. "Security" has the meaning specified in the Recitals. "Security Certificate" has the meaning specified in the Purchase Contract Agreement. "Stated Amount" has the meaning specified in the Recitals. "Treasury Notes" has the meaning specified in the Recitals. "Underwriters" means the several Underwriters named in the Underwriting Agreement dated _______ __, 1997 between the Company and ____________________ _______________________________________________________________________________ _____________________________ as representatives of the several Underwriters named herein. Section 2. The Pledge. The Holders from time to time of the Securities acting through the Purchase Contract Agent, as their attorney-in-fact, hereby pledge and grant to the Collateral Agent for the benefit of the Company, as collateral security for the performance when due by such Holders of their respective obligations under the Purchase Contracts comprising a portion of such Securities, a security interest in all of the right, title and interest of such Holders in the Treasury Notes credited to the Collateral Account. Concurrently with the execution and delivery of the Securities (i) Morgan Stanley & Co., Incorporated shall cause the Treasury Notes to be credited to an account of the Securities Intermediary at the ________________ 4 _______________ by Federal Reserve Bank-Wire and (ii) the Securities Intermediary shall credit the Treasury Notes to the Collateral Account, in each case pursuant to Applicable Treasury Regulations and to the Uniform Commercial Code to the extent such laws are applicable and pursuant to instructions from the Purchase Contract Agent on behalf of the Holders. The pledge provided in this Section 2 is herein referred to as the "Pledge" and the Treasury Notes subject to the Pledge, excluding any Treasury Notes released from the Pledge as provided in Section 4 hereof, are hereinafter referred to as the "Pledged Treasury Notes." Subject to the Pledge, and to the provisions of Article 4 of the Purchase Contract Agreement, the Holders from time to time of the Securities shall have full beneficial ownership of the Treasury Notes credited to the Collateral Account and all securities entitlements (as defined in 31 C.F.R. (S)357.2 or any similar provision of state law or Revised Article 8 (as defined in 31 C.F.R. (S)357)) in respect thereof. Notwithstanding any other provision of this Agreement, the Securities Intermediary hereby agrees that (a) it will comply with "entitlement orders" (within the meaning of Section 8-102(a)(8) of Revised Article 8) relating to the Collateral Account issued by the Collateral Agent without further consent by the Purchase Contract Agent or any Holder and (b) it hereby waives any right of set- off or recoupment that it may have with respect to the Collateral Account. The Securities Intermediary hereby represents that it has not entered into, and hereby agrees that until the termination of the Purchase Contract Agreement it will not enter into, any agreement with any of the parties hereto specifying any jurisdiction other than the State of New York as its jurisdiction for purposes of 31 C.F.R (S)357.11(b), as amended, and any similar state law, or with any other person relating to the Collateral Account pursuant to which it has agreed to comply with entitlement orders made by such person. Section 3. Distribution of Principal and Interest. (a) All payments of principal of, or interest on, any Treasury Notes constituting part of the Securities received by the Collateral Agent shall be paid by the Collateral Agent by wire transfer in same day funds no later than 12:00 p.m., New York City time, on the Business Day such interest payment is received by the Collateral Agent (provided that in the event such interest payment is received by the Collateral Agent on a day that is not a Business Day, then such payment shall be made no later than 10:00 a.m., New York City time, on the next succeeding Business Day) (i) in the case of (A) interest payments and (B) any principal payments with respect to any Treasury Notes that have been released from the Pledge pursuant to Section 4 hereof, to the Purchase Contract Agent to the account designated by it for such purpose and (ii) in the case of principal payments on any Pledged Treasury Notes, the Collateral Agent is hereby authorized to make such payments to the Company, in full satisfaction of the respective obligations of 5 the Holders of the Securities of which such Pledged Treasury Notes are a part under the Purchase Contracts forming a part of such Securities. All such payments received by the Purchase Contract Agent as provided herein shall be applied by the Purchase Contract Agent pursuant to the provisions of the Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase Contract Agent shall receive any payments of principal on account of any Pledged Treasury Notes, the Purchase Contract Agent shall hold the same as trustee of an express trust for the benefit of the Company (and promptly deliver over to the Company) for application to the obligations of the Holders of the Securities of which such Treasury Notes are a part under the Purchase Contracts relating to the Securities of which such Treasury Notes are a part, and such Holders shall acquire no right, title or interest in any such payments of principal so received. Section 4. Release of Pledged Treasury Notes. (a) Upon written notice to the Collateral Agent by the Company or the Purchase Contract Agent that there has occurred a Bankruptcy Event or Sale of Assets, resulting in the termination of the Purchase Contracts in accordance with Section 5.09 of the Purchase Contract Agreement, the Collateral Agent shall release all Pledged Treasury Notes from the Pledge and shall transfer all such Treasury Notes, free and clear of any lien, pledge or security interest created hereby, to the Purchase Contract Agent. If such Bankruptcy Event or Sale of Assets shall result from the Company's becoming a debtor under the Bankruptcy Code, and if the Collateral Agent shall for any reason fail immediately to effectuate the release and transfer of all Pledged Treasury Notes as provided by this Section 4(a), the Purchase Contract Agent shall, subject to Section 6(m), and provided, however, that the Company shall have offered to the Purchase Contract Agent such reasonable indemnity as it may require against the costs, liabilities and expenses to be incurred herein (i) use its best efforts to obtain an opinion of a nationally recognized law firm reasonably acceptable to the Collateral Agent to the effect that, as a result of the Company's being the debtor in such a bankruptcy case, the Collateral Agent will not be prohibited from releasing or transferring the Treasury Notes as provided in this Section 4(a), and shall deliver such opinion to the Collateral Agent within ten days after the occurrence of such Bankruptcy Event or Sale of Assets, and if (y) the Purchase Contract Agent shall be unable to obtain such opinion within ten days after the occurrence of such Bankruptcy Event or Sale of Assets or (z) the Collateral Agent shall continue, after delivery of such opinion, to refuse to effectuate the release and transfer of all Pledged Treasury Notes as provided in this Section 4(a), then the Purchase Contract Agent shall within fifteen days after the occurrence of such Bankruptcy Event or Sale of Assets commence an action or proceeding in the court with jurisdiction of the Company's case under the 6 Bankruptcy Code seeking an order requiring the Collateral Agent to effectuate the release and transfer of all Pledged Treasury Notes as provided by this Section 4(a) or (ii) commence an action or proceeding like that described in the immediately preceding subsection hereof within ten days after the occurrence of such Bankruptcy Event or Sale of Assets. (b) Upon written notice to the Collateral Agent and the Company by the Purchase Contract Agent that one or more Holders of Securities have elected to effect Holder's Early Settlement of their respective obligations under the Purchase Contracts forming a part of such Securities in accordance with the terms of the Purchase Contracts and the Purchase Contract Agreement (setting forth the number of such Purchase Contracts as to which such Holders have elected to effect Holder's Early Settlement), and that the Purchase Contract Agent has received from such Holders, and paid to the Company, the related Holder's Early Settlement Amounts pursuant to the terms of the Purchase Contracts and the Purchase Contract Agreement and that all conditions to such Holder's Early Settlement have been satisfied, then the Company shall direct the Collateral Agent to release from the Pledge and transfer all such Treasury Notes, free and clear of any lien, pledge or security interest created hereby, to the Purchase Contract Agent with a principal amount equal to the product of (i) the Stated Amount times (ii) the number of such Purchase Contracts as to which such Holders have elected to effect Holder's Early Settlement. (c) Upon written notice to the Collateral Agent by the Company of an Acceleration in accordance with the terms of the Purchase Contracts and the Purchase Contract Agreement (setting forth the number of Securities to be accelerated), and that all conditions to such Acceleration have been satisfied, then the Collateral Agent shall release from the Pledge and shall transfer all such Treasury Notes, free and clear of any lien, pledge or security interest created hereby, to the Purchase Contract Agent with a principal amount equal to the product of (i) the Stated Amount times (ii) the number of Securities to be accelerated. (d) Transfers of Treasury Notes pursuant to Section 4(a), (b) or (c) shall be by Federal Reserve Bank-Wire or in another appropriate manner, (i) if the Collateral Agent shall have received such notification at or prior to 11:00 a.m., New York City time, on a Business Day, then no later than 2:00 p.m., New York City time, on such Business Day and (ii) if the Collateral Agent shall have received such notification on a day that is not a Business Day or after 11:00 a.m., New York City time, on a Business Day, then no later than 10:00 a.m., New York City time, on the next succeeding Business Day. Section 5. Rights and Remedies. 7 (a) The Collateral Agent shall have all of the rights and remedies with respect to the Pledged Treasury Notes of a secured party under the Uniform Commercial Code as in effect in the State of New York (the "Code") (whether or not the Code is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted. (b) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, in the event the Collateral Agent is unable to make payments to the Company on account of principal payments of any Pledged Treasury Notes as provided in Section 3 hereof in satisfaction of the obligations of the Holder of the Securities of which such Pledged Treasury Notes are a part under the Purchase Contracts forming a part of such Securities, the Collateral Agent shall have and may exercise, with reference to such Pledged Treasury Notes and such obligations of such Holder, any and all of the rights and remedies available to a secured party under the Code after default by a debtor, and as otherwise granted herein or under any other law. (c) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably authorized to receive and collect all payments of principal of or interest on the Pledged Treasury Notes. (d) The Purchase Contract Agent agrees that, from time to time, upon the written request of the Collateral Agent, the Purchase Contract Agent shall execute and deliver such further documents and do such other acts and things as the Collateral Agent may reasonably request in order to maintain the Pledge, and the perfection and priority thereof, and to confirm the rights of the Collateral Agent hereunder; provided that, except as expressly set forth herein or in accordance with this subsection (d), the Purchase Contract Agent shall have no obligation or liability with respect to the maintenance or perfection of the Pledge. Section 6. The Collateral Agent and the Purchase Contract Agent. It is hereby agreed as follows: (a) Appointment, Powers and Immunities. The Collateral Agent shall act as ---------------------------------- agent for the Company hereunder with such powers as are specifically vested in the Collateral Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. The Collateral Agent: (i) shall have no duties or responsibilities except those expressly set forth in this Agreement and no implied covenants or obligations shall be inferred from this Agreement against the 8 Collateral Agent, nor shall the Collateral Agent be bound by the provisions of any agreement by any party hereto beyond the specific terms hereof; (ii) shall not be responsible for any recitals contained in this Agreement, or in any certificate or other document referred to or provided for in, or received by it under, this Agreement, the Securities or the Purchase Contract Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement (other than as against the Collateral Agent), the Securities or the Purchase Contract Agreement or any other document referred to or provided for herein or therein or for any failure by the Company or any other Person (except the Collateral Agent) to perform any of its obligations hereunder or thereunder; (iii) shall not be required to initiate or conduct any litigation or collection proceedings hereunder (except pursuant to directions furnished under Section 6(b) hereof); (iv) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other document or instrument referred to or provided for herein or in connection herewith or therewith, except for its own gross negligence; and (v) shall not be required to advise any party as to selling or retaining, or taking or refraining from taking any action with respect to, any securities or other property deposited hereunder. Subject to the foregoing, during the term of this Agreement, the Collateral Agent shall take all reasonable action in connection with the safe keeping and preservation of the Pledged Treasury Notes hereunder. No provision of this Agreement shall require the Collateral Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. In no event shall the Collateral Agent be liable for any amount in excess of the value of the Pledged Treasury Notes. (b) Instructions of the Company. The Company shall have the right, by one --------------------------- or more instruments in writing executed and delivered to the Collateral Agent, to direct the time, method and place of conducting any proceeding for any right or remedy available to the Collateral Agent, or of exercising any power conferred on the Collateral Agent, or to direct the taking or refraining from taking of any action authorized by this Agreement; provided, however, that (i) such direction shall not conflict with the provisions of any law or of this Agreement and (ii) the Collateral Agent shall be adequately indemnified as provided herein. Nothing in this Section 6(b) shall impair the right of the Collateral Agent in its discretion to take any action or omit to take any action which it deems proper and which is not inconsistent with such direction. (c) Reliance by Collateral Agent. The Collateral Agent shall be entitled ---------------------------- to rely upon any certification, order, judgment, opinion, notice or other communication (including, without limitation, any thereof by telephone, telecopy, telex, telegram or cable) reasonably believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons (without 9 being required to determine the correctness of any fact stated therein), and upon advice and statements of legal counsel and other experts selected by the Collateral Agent. As to any matters not expressly provided for by this Agreement, the Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions given by the Company in accordance with this Agreement. (d) Rights in Other Capacities. The Collateral Agent and its affiliates -------------------------- may (without having to account therefor to the Company) accept deposits from, lend money to, make investments in and generally engage in any kind of banking, trust or other business with the Purchase Contract Agent and any Holder of Securities (and any of their subsidiaries or affiliates) as if it were not acting as the Collateral Agent, and the Collateral Agent and its affiliates may accept fees and other consideration from the Purchase Contract Agent and any Holder of Securities without having to account for the same to the Company, provided that the Collateral Agent covenants and agrees with the Company that the Collateral Agent shall not accept, receive or permit there to be created in its favor any security interest, lien or other encumbrance of any kind in or upon the Pledged Treasury Notes. (e) Non-Reliance on Collateral Agent. The Collateral Agent shall not be -------------------------------- required to keep itself informed as to the performance or observance by the Purchase Contract Agent or any Holder of Securities of this Agreement, the Purchase Contract Agreement, the Securities or any other document referred to or provided for herein or therein or to inspect the properties or books of the Purchase Contract Agent or any Holder of Securities. The Collateral Agent shall not have any duty or responsibility to provide the Company with any credit or other information concerning the affairs, financial condition or business of the Purchase Contract Agent or any Holder of Securities (or any of their affiliates) that may come into the possession of the Collateral Agent or any of its affiliates. (f) Compensation and Indemnity by Company. The Company agrees: (i) to pay ------------------------------------- the Collateral Agent from time to time reasonable compensation for all services rendered by it hereunder and (ii) to indemnify the Collateral Agent and the Purchase Contract Agent for, and to hold them harmless against, any loss, liability or expense incurred without gross negligence or bad faith on their part, arising out of or in connection with the acceptance or administration of their powers and duties under this Agreement, including the costs and expenses (including reasonable fees and expenses of counsel) of defending themselves against any claim or liability in connection with the exercise or performance of such powers and duties. 10 (g) Compensation and Indemnity by Holders. The Holders agree (i) to ------------------------------------- indemnify the Purchase Contract Agent for, and to hold it harmless against, any loss, liability or expense incurred without gross negligence or bad faith on its part, arising out of or in connection with the institution of suit on behalf of the Holders pursuant to Section 4(a) above and (ii) to compensate the Purchase Contract Agent for the reasonable costs and expenses (including reasonable fees and expenses of counsel) incurred by it in instituting such suit. (h) Failure to Act. In the event of any ambiguity in the provisions of -------------- this Agreement or any dispute between or conflicting claims by or among the parties hereto and/or any other Person with respect to any funds or property deposited hereunder, the Collateral Agent shall be entitled, at its sole option, to refuse to comply with any and all claims, demands or instructions with respect to such property or funds so long as such dispute or conflict shall continue, and the Collateral Agent shall not be or become liable in any way to any of the parties hereto for its failure or refusal to comply with such conflicting claims, demands or instructions. The Collateral Agent shall be entitled to refuse to act until either (i) such conflicting or adverse claims or demands shall have been finally determined by a court of competent jurisdiction or settled by agreement between the conflicting parties as evidenced in a writing, satisfactory to the Collateral Agent or (ii) the Collateral Agent shall have received security or an indemnity satisfactory to the Collateral Agent sufficient to save the Collateral Agent harmless from and against any and all loss, liability or expense which the Collateral Agent may incur by reason of its acting. The Collateral Agent may in addition elect to commence an interpleader action or seek other judicial relief or orders as the Collateral Agent may deem necessary. Notwithstanding anything contained herein to the contrary, the Collateral Agent shall not be required to take any action that is in its opinion contrary to law or to the terms of this Agreement, or which would in its opinion subject it or any of its officers, employees or directors to liability. (i) Resignation of Collateral Agent. Subject to the appointment and ------------------------------- acceptance of a successor Collateral Agent as provided below, (a) the Collateral Agent may resign at any time by giving notice thereof to the Company and the Purchase Contract Agent, (b) the Collateral Agent may be removed at any time by the Company and (c) if the Collateral Agent fails to perform any of its material obligations hereunder in any material respect for a period of not less than 20 days after receiving written notice of such failure by the Purchase Contract Agent and such failure shall be continuing, the Collateral Agent may be removed by the Purchase Contract Agent at the written direction of __% in aggregate principal amount of Holders of the Securities. The Purchase Contract Agent shall promptly notify the Company of any removal of the Collateral Agent pursuant to clause (c) of the immediately preceding sentence. Upon any such resignation or removal, the Company shall have the right to appoint a successor Collateral Agent. If no 11 successor Collateral Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Collateral Agent's giving of notice of resignation or such removal, then the retiring Collateral Agent may at the expense of the Company petition any court of competent jurisdiction for the appointment of a successor Collateral Agent. The Collateral Agent shall be a bank which has an office in New York, New York and a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall take all appropriate action to transfer any money and property held by it hereunder (including the Pledged Treasury Notes) to such successor Collateral Agent. The retiring Collateral Agent shall, upon such succession, be discharged from its duties and obligations as Collateral Agent hereunder. After any retiring Collateral Agent's resignation hereunder as Collateral Agent, the provisions of this Section 6 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Collateral Agent. Promptly following the removal or resignation of the Collateral Agent the Company shall give written notice thereof to _______________________________. (j) Right to Appoint Agent or Advisor. The Collateral Agent shall have the --------------------------------- right to appoint agents or advisors in connection with any of its duties hereunder, and the Collateral Agent shall not be liable for any action taken or omitted by such agents or advisors selected in good faith. (k) Survival. The provisions of this Section 6 shall survive termination -------- of this Agreement and the resignation or removal of the Collateral Agent. (l) Anything in this Agreement to the contrary notwithstanding, in no event shall the Collateral Agent or its officers, employees or agents be liable under this Agreement to any third party for indirect, special, punitive, or consequential loss or damage of any kind whatsoever, including lost profits, whether or not the likelihood of such loss or damage was known to the Collateral Agent, or any of its officers, employees or agents, incurred without any act or deed that is found to be attributable to gross negligence on the part of the Collateral Agent, its officers, employees or agents. (m) The Purchase Contract Agent. The duties and responsibilities of the --------------------------- Purchase Contract Agent under this Agreement shall in each case be governed by Article VII of the Purchase Contract Agreement. Section 7. Amendment. 12 (a) Amendment Without Consent of Holders. Without the consent of any ------------------------------------ Holders, the Company, the Collateral Agent and the Purchase Contract Agent, at any time and from time to time, may amend this Agreement, in form satisfactory to the Company, the Collateral Agent and the Purchase Contract Agent, for any of the following purposes: (i) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company; or (ii) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (iii) to evidence and provide for the acceptance of appointment hereunder by a successor Collateral Agent or Purchase Contract Agent; or (iv) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other such provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, provided such action shall not adversely affect the interests of the Holders. (b) Amendment with Consent of Holders. With the consent of the Holders of --------------------------------- not less than ______% of the Outstanding Securities, by Act of said Holders delivered to the Company, the Purchase Contract Agent and the Collateral Agent, the Company when authorized by a Board Resolution, the Purchase Contract Agent and the Collateral Agent may amend this Agreement for the purpose of modifying in any manner the provisions of this Agreement or the rights of the Holders in respect of the Securities; provided, however, that no such supplemental agreement shall, without the consent of the Holder of each Outstanding Security affected thereby, (i) change the amount or type of Treasury Notes underlying a Security, impair the right of the Holder of any Security to receive interest payments on the underlying Treasury Notes or otherwise adversely affect the Holder's rights in or to such Treasury Notes; or (ii) change any Payment Date; (iii) impair the right to institute suit for the enforcement of any Purchase Contract. 13 (iv) otherwise effect any action that would require the consent of the Holder of each Outstanding Security affected thereby pursuant to the Purchase Contract Agreement if such action were effected by an agreement supplemental thereto; or (v) reduce the percentage of Outstanding Securities the consent of whose Holders is required for any such amendment. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such Act shall approve the substance thereof. (c) Execution of Amendments. In executing any amendment permitted by this ----------------------- Section, the Collateral Agent and the Purchase Contract Agent shall be entitled to receive and (subject to Section 6(a) hereof, with respect to the Collateral Agent, and Section 7.01 of the Purchase Contract Agreement, with respect to the Purchase Contract Agent) shall be fully protected in relying upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to such execution and delivery have been satisfied. (d) Effect of Amendments. Upon the execution of any amendment under this -------------------- Section, this Agreement shall be modified in accordance therewith, and such amendment shall form a part of this Agreement for all purposes; and every Holder of Security Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered under the Purchase Contract Agreement shall be bound thereby. (e) Reference to Amendments. Security Certificates authenticated, executed ----------------------- on behalf of the Holders and delivered after the execution of any amendment pursuant to this Section may, and shall if required by the Collateral Agent or the Purchase Contract Agent, bear a notation in a form approved by the Purchase Contract Agent and the Collateral Agent as to any matter provided for in such amendment. If the Company shall so determine, new Security Certificates so modified as to conform, in the opinion of the Collateral Agent, the Purchase Contract Agent and the Company, to any such amendment may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Purchase Contract Agent in accordance with the Purchase Contract Agreement in exchange for Outstanding Security Certificates. Section 8. Miscellaneous. 14 (a) No Waiver. No failure on the part of the Collateral Agent or any of --------- its agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Collateral Agent or any of its agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law. (b) Governing Law. THIS AGREEMENT, THE COLLATERAL ACCOUNT, AND PERFECTION ------------- AND THE EFFECT OF PERFECTION OR NON-PERFECTION AND THE PRIORITY OF THE SECURITY INTEREST IN THE TREASURY NOTES OR ANY SECURITY ENTITLEMENT WITH RESPECT THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE SECURITIES INTERMEDIARY'S JURISDICTION WILL BE THE STATE OF NEW YORK FOR PURPOSES OF 31 C.F.R. (S)357.11(b), AS AMENDED, AND ANY SIMILAR STATE LAW. The Company, the Collateral Agent and the Holders from time to time of the Securities, acting through the Purchase Contract Agent as their attorney- in-fact, hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Company, the Collateral Agent and the Holders from time to time of the Securities, acting through the Purchase Contract Agent as their attorney-in- fact, irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. (c) Notices. All notices, requests, consents and other communications ------- provided for herein (including, without limitation, any modifications of, or waivers or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof or, as to any party, at such other address as shall be designated by such party in a notice to the other parties. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. (d) Successors and Assigns. This Agreement shall be binding upon and inure ---------------------- to the benefit of the respective successors and assigns of the Company, the 15 Collateral Agent and the Purchase Contract Agent, and the Holders from time to time of the Securities, by their acceptance of the same, shall be deemed to have agreed to be bound by the provisions hereof and to have ratified the agreements of, and the grant of the Pledge hereunder by, the Purchase Contract Agent. (e) Counterparts. This Agreement may be executed in any number of ------------ counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. (f) Severability. If any provision hereof is invalid and unenforceable in ------------ any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction. (g) Expenses, etc. The Company agrees to reimburse the Collateral Agent -------------- for: (a) all reasonable out-of-pocket costs and expenses of the Collateral Agent (including, without limitation, the reasonable fees and expenses of counsel to the Collateral Agent), in connection with (i) the negotiation, preparation, execution and delivery or performance of this Agreement and (ii) any modification, supplement or waiver of any of the terms of this Agreement; (b) all reasonable costs and expenses of the Collateral Agent (including, without limitation, reasonable fees and expenses of counsel) in connection with (i) any enforcement or proceedings resulting or incurred in connection with causing any Holder of Securities to satisfy its obligations under the Purchase Contracts forming a part of the Securities and (ii) the enforcement of this Section 8(g); and (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any other document referred to herein and all costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated hereby. (h) Security Interest Absolute. All rights of the Collateral Agent and -------------------------- security interests hereunder, and all obligations of the Holders from time to time of the Securities hereunder, shall be absolute and unconditional irrespective of: (i) any lack of validity or enforceability of any provision of the Purchase Contracts or the Securities or any other agreement or instrument relating thereto; 16 (ii) any change in the time, manner or place of payment of, or any other term of, or any increase in the amount of, all or any of the obligations of Holders of Securities under the related Purchase Contracts, or any other amendment or waiver of any term of, or any consent to any departure from any requirement of, the Purchase Contract Agreement or any Purchase Contract or any other agreement or instrument relating thereto; or (iii) any other circumstance which might otherwise constitute a defense available to, or discharge of, a borrower, a guarantor or a pledgor. 17 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. Household International, Inc. By: _______________________________ Name: Title: Address for Notices: Household International, Inc. 2700 Sanders Road Prospect Heights, Illinois 60070 Attention: _____________ Telecopy: (847) ________ ____________________ as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Securities By: _______________________________ Name: _________________________ Title: ________________________ Address for Notices: ____________________ ____________________ ____________________ ____________________ Attention: ______________________ ______________________ Telecopy: (___)__________________ __________________________________ as Collateral Agent and Securities Intermediary with respect to the Collateral Account and as Securities Intermediary with respect to any Treasury Notes credited to the Collateral Account By: ______________________________ Name: ________________________ Title: _______________________ Address for Notices: __________________________________ __________________________________ __________________________________ __________________________________ Attention: _______________ _______________ Telecopy: (___)___________ EX-4.(I) 7 FORM OF PREPAID SECURITIES INDENTURE EXHIBIT 4(i) ======================================================= HOUSEHOLD INTERNATIONAL, INC. AND ____________________, as Trustee Prepaid Security Indenture Dated as of __________, 1997 __________ ======================================================= TABLE OF CONTENTS _________
Page PARTIES................................................... 1 RECITALS.................................................. 1 Authorization of Indenture........................... 1 Compliance with Legal Requirements................... 1 Purpose of and Consideration for Indenture........... 1 ARTICLE ONE DEFINITIONS SECTION 1.1 Certain Terms Defined...................... 1 ARTICLE TWO SECURITIES SECTION 2.1 Forms Generally............................ 8 SECTION 2.2 Form of Trustee's Certificate of Authentication............................ 8 SECTION 2.3 Amount Unlimited; Issuable in Series....... 9 SECTION 2.4 Authentication and Delivery of Securities................................. 12 SECTION 2.5 Execution of Securities.................... 16 SECTION 2.6 Certificate of Authentication.............. 17 SECTION 2.7 Denomination and Date of Securities; Payments of Interest...................... 17 SECTION 2.8 Registration, Transfer and Exchange........ 19 SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities.................... 23 SECTION 2.10 Cancellation of Securities; Destruction Thereof................................... 25 SECTION 2.11 Temporary Securities........................ 25 SECTION 2.12 CUSIP Numbers............................... 26
Page ---- ARTICLE THREE COVENANTS OF THE ISSUER SECTION 3.1 Payment of Principal and Interest........... 26 SECTION 3.2 Offices for Payments, etc................... 27 SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee................................. 29 SECTION 3.4 Paying Agents............................... 29 SECTION 3.5 Written Statement to Trustee................ 30 SECTION 3.6 Luxembourg Publications..................... 30 SECTION 3.7 SEC Reports................................. 30 SECTION 3.8 Applicability of Article.................... 31 ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE SECTION 4.1 Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders............................ 31 SECTION 4.2 Preservation and Disclosure of Securityholders Lists...................... 31 SECTION 4.3 Reports by the Issuer....................... 31 SECTION 4.4 Reports by the Trustee...................... 32 ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default............. 30 SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt..................... 35 SECTION 5.3 Application of Proceeds..................... 38 SECTION 5.4 Suits for Enforcement....................... 39 SECTION 5.5 Restoration of Rights on Abandonment of Proceedings................................ 39 SECTION 5.6 Limitations on Suits by Securityholders..... 40
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Page ---- SECTION 5.7 Unconditional Right of Securityholders to Institute Certain Suits................. 41 SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default.......... 41 SECTION 5.9 Control by Holders of Securities............ 41 SECTION 5.10 Waiver of Past Defaults..................... 42 SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances.. 43 SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs................... 43 SECTION 5.13 Applicability of Article.................... 44 ARTICLE SIX CONCERNING THE TRUSTEE SECTION 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default.. 44 SECTION 6.2 Certain Rights of the Trustee............... 46 SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof......... 47 SECTION 6.4 Trustee and Agents May Hold Securities or Coupons; Collections, etc.................. 48 SECTION 6.5 Moneys Held by Trustee...................... 48 SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior Claim................ 48 SECTION 6.7 Right of Trustee to Rely on Officer's Certificate, etc........................... 49 SECTION 6.8 Indentures Not Creating Potential Conflicting Interests for the Trustee.................................... 49 SECTION 6.9 Persons Eligible for Appointment as Trustee................................. 49 SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee....................... 50 SECTION 6.11 Acceptance of Appointment by Successor Trustee.................................... 52 SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee....... 54 SECTION 6.13 This Section intentionally left blank....... 55 SECTION 6.14 Appointment of Authenticating Agent......... 55 SECTION 6.15 Preferential Collection of Claims........... 56
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Page ---- ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.1 Evidence of Action Taken by Securityholders............................ 56 SECTION 7.2 Proof of Execution of Instruments and of Holding of Securities...................... 57 SECTION 7.3 Holders to be Treated as Owners............. 58 SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding................................ 59 SECTION 7.5 Right of Revocation of Action Taken......... 59 ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.1 Supplemental Indentures Without Consent of Securityholders......................... 60 SECTION 8.2 Supplemental Indentures With Consent of Securityholders............................ 62 SECTION 8.3 Effect of Supplemental Indenture............ 64 SECTION 8.4 Documents to Be Given to Trustee............ 64 SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures.................... 64 ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1 Issuer May Consolidate, Etc., Only on Certain Terms.............................. 65 SECTION 9.2 Successor Corporation Substituted........... 66 ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 10.1 Satisfaction and Discharge of Indenture.................................. 66 SECTION 10.2 Application by Trustee of Funds Deposited for Payment of Securities........ 71
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Page SECTION 10.3 Repayment of Moneys Held by Paying Agent............................... 71 SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years....... 71 SECTION 10.5 Indemnity for U.S. Government Obligations................................ 72 ARTICLE ELEVEN MISCELLANEOUS PROVISIONS SECTION 11.1 Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability....................... 72 SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities and Coupons..................... 73 SECTION 11.3 Successors and Assigns of Issuer Bound by Indenture............................... 73 SECTION 11.4 Notices and Demands on Issuer, Trustee and Holders of Securities and Coupons...... 73 SECTION 11.5 Officer's Certificates and Opinions of Counsel; Statements to Be Contained Therein.................................... 74 SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays................................... 75 SECTION 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act of 1939........... 76 SECTION 11.8 New York Law to Govern...................... 76 SECTION 11.9 Counterparts................................ 76 SECTION 11.10 Effect of Headings.......................... 76 SECTION 11.11 Securities in a Foreign Currency or in ECU.................................. 76 SECTION 11.12 Judgment Currency........................... 77 ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS SECTION 12.1 Applicability of Article.................... 78 SECTION 12.2 Notice of Redemption; Partial Redemptions................................ 78 SECTION 12.3 Payment of Securities Called for Redemption................................. 81 SECTION 12.4 Exclusion of Certain Securities from
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Page ---- Eligibility for Selection for Redemption................................. 82 SECTION 12.5 Mandatory and Optional Sinking Funds........ 82
TESTIMONIUM SIGNATURES -vi- THIS INDENTURE, dated as of __________, 1997 between HOUSEHOLD INTERNATIONAL, INC., a Delaware corporation (the "Issuer") ____________________, a _________________ corporation, as trustee (the "Trustee"), W I T N E S S E T H : WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture; WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture to provide, among other things, for the authentication, delivery and administration of the Securities; and WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Securities by the holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities and of the coupons, if any, appertaining thereto as follows: ARTICLE ONE DEFINITIONS ----------- SECTION 1.1 Certain Terms Defined. The following terms (except as --------------------- otherwise expressly provided herein or in any supplemental indenture or form of Security for a particular series or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939 or the definitions of which in the Securities Act of 1933 are referred to in the Trust Indenture Act of 1939, including terms defined therein by reference to the Securities Act of 1933 (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term "generally accepted accounting ----------------------------- principles" means such accounting principles as are generally accepted at the - ---------- time of any computation. The words "herein", "hereof" and "hereunder" and other ------ ------ --------- words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular. "Authenticating Agent" shall have the meaning set forth in Section 6.14. -------------------- "Authorized Newspaper" means a newspaper (which, in the case of The City of -------------------- New York, will, if practicable, be The Wall Street Journal (Eastern Edition), and in the case of the United Kingdom, will, if practicable, be the Financial Times (London Edition) published at least once a day for at least five days in each calendar week and of general circulation in The City of New York or the United Kingdom as applicable. "Board of Directors" means either the Board of Directors of the Issuer or ------------------ any committee of such Board duly authorized to act on its behalf. "Board Resolution" means a copy of one or more resolutions, certified by ---------------- the secretary or an assistant secretary of the Issuer to have been duly adopted or consented to by the Board of Directors and to be in full force and effect, and delivered to the Trustee. 2 "Business Day" means any day that is not a Saturday, Sunday or a day on ------------ which the NYSE or banking institutions or trust companies in the City of New York are authorized or obligated by law or executive order to be closed. "Commission" means the Securities and Exchange Commission, as from time to ---------- time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Corporate Trust Office" means the office of the Trustee at which the ---------------------- corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date as of which this Indenture is dated, located in the City of ________, State of ________. "Coupon" means any interest coupon appertaining to an Unregistered ------ Security. "Covenant Defeasance" shall have the meaning set forth in Section 10.1(C). ------------------- "Depositary" means, with respect to the Securities of any series issuable ---------- or issued in the form of one or more Registered Global Securities, the Person designated as Depositary by the Company pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Registered Global Securities of that series. "Dollar" means the coin or currency of the United States of America as at ------ the time of payment is legal tender for the payment of public and private debts. "ECU" means the European Currency Unit as defined and revised from time to --- time by the Council of European Communities. "Event of Default" means any event or condition specified as such in ---------------- Section 5.1. 3 "Foreign Currency" means a currency issued by the government of a country ---------------- other than the United States. "Holder", "Holder of Securities", "Securityholder" or other similar terms ------ -------------------- -------------- mean (a) in the case of any Registered Security, the person in whose name such Security is registered in the security register kept by the Issuer for that purpose in accordance with the terms hereof, and (b) in the case of any Unregistered Security, the bearer of such Security, or any Coupon appertaining thereto, as the case may be. "Indenture" means this instrument as originally executed and delivered or, --------- if amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular series of Securities established as contemplated hereunder. "Issuer" means (except as otherwise provided in Article Six) Household ------ International, Inc., a Delware corporation and, subject to Article Nine, its successors and assigns. "Issuer Order" means a written statement, request or order of the Issuer ------------ signed in its name by the chairman or vice chairman of the Board of Directors, the president, any executive, senior or other vice president or the treasurer of the Issuer. "Judgment Currency" shall have the meaning set forth in Section 11.12. ----------------- "Officer's Certificate" means a certificate signed by the chairman or vice --------------------- chairman of the Board of Directors, the president or any executive, senior or other vice president or the treasurer of the Issuer and delivered to the Trustee. Each such certificate shall comply with Section 314 of the Trust Indenture Act of 1939 and include the statements provided for in Section 11.5. "Opinion of Counsel" means an opinion in writing signed by the General ------------------ Counsel of the Issuer or by such other legal counsel who may be an employee of or counsel to the Issuer and who shall be satisfactory to the Trustee. Each such opinion shall comply with Section 314 of the Trust Indenture Act of 1939 and include the statements provided for in Section 11.5. "Original Issue Date" of any Security (or portion ------------------- 4 thereof) means the earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution. "Original Issue Discount Security" means any Security that provides for an -------------------------------- amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Outstanding" when used with reference to Securities, shall, subject to the ----------- provisions of Section 7.4, mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except (a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Securities, or portions thereof, for the payment or redemption of which moneys or U.S. Government Obligations (as provided for in Section 10.1(A) and (B)) in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the Holders of such Securities (if the Issuer shall act as its own paying agent), provided that if such Securities, or portions thereof, are to be -------- redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities that shall have been paid or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a person in whose hands such Security is a legal, valid and binding obligation of the Issuer) or Securities converted pursuant hereto or Securities not deemed outstanding pursuant to Section 12.2. In determining whether the Holders of the requisite principal amount of Outstanding Securities of any or all series have given any request, demand, authorization, 5 direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Periodic Offering" means an offering of Securities of a series from time ----------------- to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities. "Person" means any individual, corporation, partnership, joint venture, ------ association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Principal" whenever used with reference to the Securities or any Security --------- or any portion thereof, shall be deemed to include "and premium, if any". "Record Date" shall have the meaning set forth in Section 2.7. ----------- "Registered Global Security", means a Security evidencing all or a part of -------------------------- a series of Registered Securities, issued to the Depositary for such series in accordance with Section 2.4, and bearing the legend prescribed in Section 2.4. "Registered Security" means any Security registered on the Security ------------------- register of the Issuer. "Required Currency" shall have the meaning set forth in Section 11.12. ----------------- "Responsible Officer" when used with respect to the Trustee means the ------------------- chairman of the board of directors, any vice chairman of the board of directors, the chairman of the trust committee, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president, (whether or not designated by numbers or words added before or after the title "vice president") the cashier, the secretary, the treasurer, any trust officer, 6 any assistant trust officer, any assistant vice president, any assistant cashier, any assistant secretary, any assistant treasurer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. "Security" or "Securities" (except as otherwise provided in Section 7.4) -------- ---------- has the meaning stated in the first recital of this Indenture, or, as the case may be, Securities that have been authenticated and delivered under this Indenture. "Trust Indenture Act of 1939" (except as otherwise provided in Sections 8.1 --------------------------- and 8.2) means the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was originally executed. "Trustee" means the Person identified as "Trustee" in the first paragraph ------- hereof and, subject to the provisions of Article Six, shall also include any successor trustee. "Trustee" shall also mean or include each Person who is then a trustee hereunder and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the trustee with respect to the Securities of such series. "Unregistered Security" means any Security other than a Registered --------------------- Security. "U.S. Government Obligations" shall have the meaning set forth in Section --------------------------- 10.1(A). "Yield to Maturity" means the yield to maturity on a series of securities, ----------------- calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice. 7 ARTICLE TWO SECURITIES ---------- SECTION 2.1 Forms Generally. The Securities of each series and the --------------- Coupons, if any, to be attached thereto shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to one or more Board Resolutions (as set forth in a Board Resolution or, to the extent established pursuant to rather than set forth in a Board Resolution, an Officer's Certificate detailing such establishment) or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of such Securities and Coupons. The definitive Securities and Coupons, if any, shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of such Securities and Coupons, if any. SECTION 2.2 Form of Trustee's Certificate of Authentication. The ----------------------------------------------- Trustee's certificate of authentication on all Securities shall be in substantially the following form: "This is one of the Securities referred to in the within-mentioned Subordinated Indenture. ______________________, as Trustee By_____________________ Authorized Signatory" If at any time there shall be an Authenticating Agent 8 appointed with respect to any series of Securities, then the Trustee's Certificate of Authentication to be borne by the Securities of each such series shall be substantially as follows: "This is one of the Securities referred to in the within-mentioned Subordinated Indenture. _________________________, as Authenticating Agent By_____________________ Authorized Signatory" SECTION 2.3 Amount Unlimited; Issuable in Series. The aggregate principal ------------------------------------ amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series and each such series shall rank equally and pari passu with the Securities of each other series and all other senior and unsubordinated debt of the Issuer. There shall be established in or pursuant to one or more Board Resolutions (and to the extent established pursuant to rather than set forth in a Board Resolution, in an Officer's Certificate detailing such establishment) or established in one or more indentures supplemental hereto, prior to the initial issuance of Securities of any series, (1) the designation of the Securities of the series, which shall distinguish the Securities of the Series from the Securities of all other series; (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3); (3) if other than Dollars, the coin or currency in which the Securities of that series are denominated (including, but not limited to, any Foreign Currency or ECU); (4) the date or dates on which the principal of 9 the Securities of the series is payable; (5) the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and (in the case of Registered Securities) on which a record shall be taken for the determination of Holders to whom interest is payable and/or the method by which such rate or rates or date or dates shall be determined, and any provisions for the deferral of interest payments; (6) the place or places where the principal of and any interest on Securities of the series shall be payable (if other than as provided in Section 3.2); (7) the right, if any, of the Issuer to redeem Securities, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which Securities of the series may be so redeemed, pursuant to any sinking fund or otherwise; (8) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and any terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; (9) if other than denominations of $1,000 and any integral multiple thereof in the case of Registered Securities, or $1,000 and $5,000 in the case of Unregistered Securities, the denominations in which Securities of the series shall be issuable; (10) if other than the principal amount thereof, the portion of the principal amount of Securities of the series that shall be payable upon declaration of acceleration of the maturity thereof; (11) if other than the coin or currency in which the Securities of that series are denominated, the coin or currency in which payment of the principal of or interest on the Securities of such series shall be 10 payable; (12) if the principal of or interest on the Securities of such series are to be payable, at the election of the Issuer or a Holder thereof, in a coin or currency other than that in which the Securities are denominated, the period or periods within which, and the terms and conditions upon which, such election may be made; (13) if the amount of payments of principal of and interest on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities of the series are denominated, the manner in which such amounts shall be determined; (14) whether the Securities of the series will be issuable as Registered Securities (and if so, whether such Securities will be issuable as Registered Global Securities) or Unregistered Securities (with or without Coupons), or any combination of the foregoing, any restrictions applicable to the offer, sale or delivery of Unregistered Securities or the payment of interest thereon and, if other than as provided in Section 2.8, the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and vice versa; (15) whether and under what circumstances the Issuer will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Issuer will have the option to redeem such Securities rather than pay such additional amounts; (16) if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions; (17) any trustees, depositaries, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Securities of such 11 series; (18) any additional terms relating to events of default or covenants (or the defeasance thereof) with respect to the Securities of such series, including without limitation any terms inconsistent with the provisions of this Indenture relating to events of default or covenants (or the defeasance thereof); (19) if the Securities of such series are to be convertible or exchangeable into any cash, securities or property, at the option of the Holder or the Issuer or upon the happening of some event or otherwise, all terms relating to such convertibility, including without limitation any term inconsistent with the provisions of this Indenture relating to conversion or exchange; (20) any additional definitions with respect to the Securities of such series, including without limitation any definitions inconsistent with the provisions of this Indenture; and (21) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series and Coupons, if any, appertaining thereto, shall be substantially identical, except in the case of Registered Securities as to denomination and except as may otherwise be provided by or pursuant to the Board Resolution or Officer's Certificate referred to above or as set forth in any such indenture supplemental hereto. All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to such Board Resolution, such Officer's Certificate or in any such indenture supplemental hereto. SECTION 2.4 Authentication and Delivery of Securities. The Issuer may ----------------------------------------- deliver Securities of any series having attached thereto appropriate Coupons, if any, executed by the Issuer to the Trustee for authentication together with the applicable documents referred to below in this Section, and the Trustee shall thereupon authenticate and make available for delivery such Securities to or upon the order of the Issuer (contained in the Issuer Order referred to 12 below in this Section) or pursuant to such procedures acceptable to the Trustee and to such recipients as may be specified from time to time by an Issuer Order. The maturity date, original issue date, interest rate and any other terms of the Securities of such series and Coupons, if any, appertaining thereto shall be determined by or pursuant to such Issuer Order and procedures. If provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral instructions from the Issuer or its duly authorized agent, which instructions shall be promptly confirmed in writing. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive (in the case of subparagraphs 2, 3 and 4 below only at or before the time of the first request of the Issuer to the Trustee to authenticate Securities of such series) and (subject to Section 6.1) shall be fully protected in relying upon, unless and until such documents have been superseded or revoked: (1) an Issuer Order requesting such authentication and setting forth delivery instructions if the Securities and Coupons, if any, are not to be delivered to the Issuer, provided that, with respect to Securities of a series subject to a Periodic Offering, (a) such Issuer Order may be delivered by the Issuer to the Trustee prior to the delivery to the Trustee of such Securities for authentication and delivery, (b) the Trustee shall authenticate and make available for delivery Securities of such series for original issue from time to time, in an aggregate principal amount not exceeding the aggregate principal amount established for such series, pursuant to an Issuer Order or pursuant to procedures acceptable to the Trustee as may be specified from time to time by an Issuer Order, (c) the maturity date or dates, original issue date or dates, interest rate or rates and any other terms of Securities of such series shall be determined by an Issuer Order or pursuant to such procedures and (d) if provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral or electronic instructions from the Issuer or its duly authorized agent or agents, which oral instructions shall be promptly confirmed in writing; (2) any Board Resolution, Officer's Certificate and/or executed supplemental indenture referred to in 13 Sections 2.1 and 2.3 by or pursuant to which the forms and terms of the Securities and Coupons, if any, were established; (3) an Officer's Certificate setting forth the form or forms and terms of the Securities and Coupons, if any, stating that the form or forms and terms of the Securities and Coupons, if any, have been established pursuant to Sections 2.1 and 2.3 and comply with this Indenture, and covering such other matters as the Trustee may reasonably request; and (4) At the option of the Issuer, either one or more Opinions of Counsel, or a letter addressed to the Trustee permitting it to rely on one or more Opinions of Counsel, substantially to the effect that: (a) the forms of the Securities and Coupons, if any, have been duly authorized and established in conformity with the provisions of this Indenture; (b) in the case of an underwritten offering, the terms of the Securities have been duly authorized and established in conformity with the provisions of this Indenture, and, in the case of an offering that is not underwritten, certain terms of the Securities have been established pursuant to a Board Resolution, an Officer's Certificate or a supplemental indenture in accordance with this Indenture, and when such other terms as are to be established pursuant to procedures set forth in an Issuer Order shall have been established, all such terms will have been duly authorized by the Issuer and will have been established in conformity with the provisions of this Indenture; (c) when the Securities and Coupons, if any, have been executed by the Issuer and authenticated by the Trustee in accordance with the provisions of this Indenture and delivered to and duly paid for by the purchasers thereof, they will have been duly issued under this Indenture, will be entitled to the benefits of this Indenture, and will be valid and binding obligations of the Issuer, enforceable in accordance with their respective terms except as (i) the enforceability thereof may 14 be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) rights of acceleration, if any, and the availability of equitable remedies may be limited by equitable principles of general applicability; and (d) the execution and delivery by the Issuer of, and the performance by the Issuer of its obligations under, the Securities and Coupons, if any, will not contravene any provision of any material applicable law or the certificate of incorporation or by-laws of the Issuer or any agreement or other instrument binding upon the Issuer or any of its "significant subsidiaries" (as defined in Article 1 of Regulation S-X under the Securities Act of 1933) that is material to the Issuer and its subsidiaries, taken as a whole, or, to the best of such counsel's knowledge, any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Issuer or any "significant subsidiary" (as defined above), and no consent, approval, authorization or order of or qualification with any governmental body or agency is required for the performance by the Issuer of its obligations under the Securities and Coupons, if any, except such as are specified and have been obtained and such as may be required by the securities or blue sky laws of the various states in connection with the offer and sale of the Securities and Coupons, if any. In rendering such opinions, any counsel may qualify any opinions as to enforceability by stating that such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium and other similar laws affecting the rights and remedies of creditors and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Such counsel may rely upon opinions of other counsel (copies of which shall be delivered to the Trustee), who shall be counsel reasonably satisfactory to the Trustee, in which case the opinion shall state that such counsel believes he and the Trustee are entitled so to rely. Such counsel may also state that, insofar as such opinion involves factual matters, he has relied, to the extent he deems proper, upon certificates of officers of the Issuer and its subsidiaries and certificates of public officials. 15 The Trustee shall have the right to decline to authenticate and make available for delivery any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors or board of trustees, executive committee, or a trust committee of directors or trustees or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders or would affect the Trustee's own rights, duties or immunities under the Securities, this Indenture or otherwise. If the Issuer shall establish pursuant to Section 2.3 that the Securities of a series are to be issued in the form of one or more Registered Global Securities, then the Issuer shall execute and the Trustee shall, in accordance with this Section and the Issuer Order with respect to such series, authenticate and make available for delivery one or more Registered Global Securities that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Securities of such series issued and not yet cancelled, (ii) shall be registered in the name of the Depositary for such Registered Global Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions and (iv) shall bear a legend substantially to the following effect: "Unless and until it is exchanged in whole or in part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary." Each Depositary designated pursuant to Section 2.3 must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation. SECTION 2.5 Execution of Securities. The Securities and, if applicable, ----------------------- each Coupon appertaining thereto shall be signed on behalf of the Issuer by the chairman or vice chairman of its Board of Directors or its president or any executive, senior or other vice president or its treasurer, under its corporate seal (except in the case of Coupons), 16 which may, but need not, be attested. Such signatures may be the manual or facsimile signatures of the present or any future such officers. The seal of the Issuer may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee. In case any officer of the Issuer who shall have signed any of the Securities or Coupons, if any, shall cease to be such officer before the Security or Coupon so signed (or the Security to which the Coupon so signed appertains) shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Security or Coupon nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security or Coupon had not ceased to be such officer of the Issuer; and any Security or Coupon may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Security or Coupon, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such an officer. SECTION 2.6 Certificate of Authentication. Only such Securities as shall ----------------------------- bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized signatories, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. No Coupon shall be entitled to the benefits of this Indenture or shall be valid and obligatory for any purpose until the certificate of authentication on the Security to which such Coupon appertains shall have been duly executed by the Trustee. The execution of such certificate by the Trustee upon any Security executed by the Issuer shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture. SECTION 2.7 Denomination and Date of Securities; Payments of Interest. --------------------------------------------------------- The Securities of each series shall be issuable as Registered Securities or Unregistered Securities in denominations established as contemplated by Section 2.3 or, with respect to the Registered Securities of any series, if not so established, in denominations of $1,000 and any integral multiple thereof. If denominations of Unregistered Securities of any series are not so established, such Securities shall be issuable in denominations of 17 $1,000 and $5,000. The Securities of each series shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine with the approval of the Trustee, as evidenced by the execution and authentication thereof. Each Registered Security shall be dated the date of its authentication. Each Unregistered Security shall be dated as provided in the resolution or resolutions of the Board of Directors of the Issuer referred to in Section 2.3. The Securities of each series shall bear interest, if any, from the date, and such interest shall be payable on the dates, established as contemplated by Section 2.3. The person in whose name any Registered Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Registered Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest shall be paid to the persons in whose names Outstanding Registered Securities for such series are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the Holders of Registered Securities not less than 15 days preceding such subsequent record date. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) for the Securities of any series shall mean the date specified as such in the terms of the Registered Securities of such series established as contemplated by Section 2.3, or, if no such date is so established, if such interest payment date is the first day of a calendar month, the fifteenth day of the next preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month, whether or not such record date is a Business Day. 18 SECTION 2.8 Registration, Transfer and Exchange. The Issuer will keep at ----------------------------------- each office or agency to be maintained for the purpose as provided in Section 3.2 for each series of Securities a register or registers in which, subject to such reasonable regulations as it may prescribe, it will provide for the registration of Registered Securities of such series and the registration of transfer of Registered Securities of such series. Such register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. At all reasonable times such register or registers shall be open for inspection by the Trustee. Upon due presentation for registration of transfer of any Registered Security of any series at any such office or agency to be maintained for the purpose as provided in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and make available for delivery in the name of the transferee or transferees a new Registered Security or Registered Securities of the same series, maturity date, interest rate and original issue date in authorized denominations for a like aggregate principal amount. Unregistered Securities (except for any temporary global Unregistered Securities) and Coupons (except for Coupons attached to any temporary global Unregistered Securities) shall be transferable by delivery. At the option of the Holder thereof, Registered Securities of any series (other than a Registered Global Security, except as set forth below) may be exchanged for a Registered Security or Registered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Registered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 and upon payment, if the Issuer shall so require, of the charges hereinafter provided. If the Securities of any series are issued in both registered and unregistered form, except as otherwise specified pursuant to Section 2.3, at the option of the Holder thereof, Unregistered Securities of any series may be exchanged for Registered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2, with, in the case of Unregistered Securities that have Coupons attached, all 19 unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. At the option of the Holder thereof, if Unregistered Securities of any series, maturity date, interest rate and original issue date are issued in more than one authorized denomination, except as otherwise specified pursuant to Section 2.3, such Unregistered Securities may be exchanged for Unregistered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. Registered Securities of any series may not be exchanged for Unregistered Securities of such series unless (1) otherwise specified pursuant to Section 2.3 and (2) the Issuer has delivered to the Trustee an Opinion of Counsel that (x) the Issuer has received from the Internal Revenue Service a ruling or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that the inclusion of terms permitting Registered Securities to be exchanged for Unregistered Securities would result in no adverse Federal income tax effect to the Issuer or to any Holder. Whenever any Securities are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive. All Securities and Coupons surrendered upon any exchange or transfer provided for in this Indenture shall be promptly canceled by the Trustee and the Trustee will return the canceled Securities to the Issuer. All Registered Securities presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed by the Holder or his attorney duly authorized in writing. The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of 20 transfer of Securities. No service charge shall be made for any such transaction. The Issuer shall not be required to exchange or register a transfer of (a) any Securities of any series for a period of 15 days next preceding the first mailing of notice of redemption of Securities of such series to be redeemed or (b) any Securities selected, called or being called for redemption, in whole or in part, except, in the case of any Security to be redeemed in part, the portion thereof not so to be redeemed. Notwithstanding any other provision of this Section 2.8, unless and until it is exchanged in whole or in part for Securities in definitive registered form, a Registered Global Security representing all or a portion of the Securities of a series may not be transferred except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. If at any time the Depositary for any Registered Securities of a series represented by one or more Registered Global Securities notifies the Issuer that it is unwilling or unable to continue as Depositary for such Registered Securities or if at any time the Depositary for such Registered Securities shall no longer be eligible under Section 2.4, the Issuer shall appoint a successor Depositary eligible under Section 2.4 with respect to such Registered Securities. If a successor Depositary eligible under Section 2.4 for such Registered Securities is not appointed by the Issuer within 90 days after the Issuer receives such notice or becomes aware of such ineligibility, the Issuer's election pursuant to Section 2.3 that such Registered Securities be represented by one or more Registered Global Securities shall no longer be effective and the Issuer will execute, and the Trustee, upon receipt of an Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and make available for delivery, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities in exchange for such Registered Global Security or Securities. 21 The Issuer may at any time and in its sole discretion determine that the Registered Securities of any series issued in the form of one or more Registered Global Securities shall no longer be represented by a Registered Global Security or Securities. In such event the Issuer will execute, and the Trustee, upon receipt of an Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and make available for delivery, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities, in exchange for such Registered Global Security or Securities. If specified by the Issuer pursuant to Section 2.3 with respect to Securities represented by a Registered Global Security, the Depositary for such Registered Global Security may surrender such Registered Global Security in exchange in whole or in part for Securities of the same series in definitive registered form on such terms as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer shall execute, and the Trustee shall authenticate and make available for delivery, without service charge, (i) to the Person specified by such Depositary a new Registered Security or Securities of the same series, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Registered Global Security; and (ii) to such Depositary a new Registered Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Registered Global Security and the aggregate principal amount of Registered Securities authenticated and delivered pursuant to clause (i) above. Upon the exchange of a Registered Global Security for Securities in definitive registered form without coupons, in authorized denominations, such Registered Global Security shall be canceled by the Trustee or an agent of the Issuer or the Trustee. Securities in definitive registered form without coupons issued in exchange for a Registered Global Security pursuant to this Section 2.8 shall be registered in such names and in such authorized denominations as the 22 Depositary for such Registered Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Issuer or the Trustee. The Trustee or such agent shall deliver such Securities to or as directed by the Persons in whose names such Securities are so registered. All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Notwithstanding anything herein or in the terms of any series of Securities to the contrary, none of the Issuer, the Trustee or any agent of the Issuer or the Trustee (any of which, other than the Issuer, shall rely on an Officer's Certificate and an Opinion of Counsel) shall be required to exchange any Unregistered Security for a Registered Security if such exchange would result in adverse Federal income tax consequences to the Issuer (such as, for example, the inability of the Issuer to deduct from its income, as computed for Federal income tax purposes, the interest payable on the Unregistered Securities) under then applicable United States Federal income tax laws. SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities. In --------------------------------------------------------- case any temporary or definitive Security or any Coupon appertaining to any Security shall become mutilated, defaced or be destroyed, lost or stolen, the Issuer in its discretion may execute, and upon the request of any officer of the Issuer, the Trustee shall authenticate and make available for delivery a new Security of the same series, maturity date, interest rate and original issue date, bearing a number or other distinguishing symbol not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen with Coupons corresponding to the Coupons appertaining to the Securities so mutilated, defaced, destroyed, lost or stolen, or in exchange or substitution for the Security to which such mutilated, defaced, destroyed, lost or stolen Coupon appertained, with Coupons appertaining thereto corresponding to the Coupons so mutilated, defaced, destroyed, lost or stolen. In every case the applicant for a substitute Security or Coupon shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may 23 be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof and in the case of mutilation or defacement shall surrender the Security and related Coupons to the Trustee or such agent. Upon the issuance of any substitute Security or Coupon, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) or its agent connected therewith. In case any Security or Coupon that has matured or is about to mature, has been called for redemption in full or is being converted in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may instead of issuing a substitute Security, pay or authorize the payment or conversion of the same or the payment of the relevant Coupon (without surrender thereof except in the case of a mutilated or defaced Security or Coupon), if the applicant for such payment shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof. Every substitute Security or Coupon of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Security or Coupon is destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Security or Coupon shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities or Coupons of such series duly authenticated and delivered hereunder. All Securities and Coupons shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Securities and Coupons and shall preclude any and all other rights or remedies notwithstanding any law or 24 statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.10 Cancellation of Securities; Destruction Thereof. All ----------------------------------------------- Securities and Coupons surrendered for payment, redemption, registration of transfer or exchange, conversion or for credit against any payment in respect of a sinking or analogous fund, if surrendered to the Issuer or any agent of the Issuer or the Trustee or any agent of the Trustee, shall be delivered to the Trustee or its agent for cancellation or, if surrendered to the Trustee, shall be canceled by it; and no Securities or Coupons shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee or its agent shall return canceled Securities and Coupons to the Issuer. If the Issuer or its agent shall acquire any of the Securities or Coupons, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities or Coupons unless and until the same are delivered to the Trustee or its agent for cancellation. SECTION 2.11 Temporary Securities. Pending the preparation of definitive -------------------- Securities for any series, the Issuer may execute and the Trustee shall authenticate and make available for delivery temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable as Registered Securities without coupons, or as Unregistered Securities with or without coupons attached thereto, of any authorized denomination, and substantially in the form of the definitive Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Issuer with the concurrence of the Trustee as evidenced by the execution and authentication thereof. Temporary Securities may contain such references to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Issuer shall execute and shall furnish definitive Securities of such series and thereupon temporary Registered Securities of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2 and, in 25 the case of Unregistered Securities, at any agency maintained by the Issuer for such purpose as specified pursuant to Section 2.3, and the Trustee shall authenticate and make available for delivery in exchange for such temporary Securities of such series an equal aggregate principal amount of definitive Securities of the same series having authorized denominations and, in the case of Unregistered Securities, having attached thereto any appropriate Coupons. Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series, unless otherwise established pursuant to Section 2.3. The provisions of this Section are subject to any restrictions or limitations on the issue and delivery of temporary Unregistered Securities of any series that may be established pursuant to Section 2.3 (including any provision that Unregistered Securities of such series initially be issued in the form of a single global Unregistered Security to be delivered to a depositary or agency located outside the United States and the procedures pursuant to which definitive or global Unregistered Securities of such series would be issued in exchange for such temporary global Unregistered Security). SECTION 2.12 CUSIP Numbers. The Issuer in issuing the Securities may use ------------- "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided -------- that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Issuer will promptly notify the Trustee of any change in the CUSIP numbers. ARTICLE THREE COVENANTS OF THE ISSUER ----------------------- SECTION 3.1 Payment of Principal and Interest. The Issuer covenants and --------------------------------- agrees for the benefit of each series of Securities that it will duly and punctually pay or cause 26 to be paid the principal of, and interest on, each of the Securities of such series (together with any additional amounts payable pursuant to the terms of such Securities) at the place or places, at the respective times and in the manner provided in such Securities and in the Coupons, if any, appertaining thereto and in this Indenture. The interest on Securities with Coupons attached (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only upon presentation and surrender of the several Coupons for such interest installments as are evidenced thereby as they severally mature. If any temporary Unregistered Security provides that interest thereon may be paid while such Security is in temporary form, the interest on any such temporary Unregistered Security (together with any additional amounts payable pursuant to the terms of such Security) shall be paid, as to the installments of interest evidenced by Coupons attached thereto, if any, only upon presentation and surrender thereof, and, as to the other installments of interest, if any, only upon presentation of such Securities for notation thereon of the payment of such interest, in each case subject to any restrictions that may be established pursuant to Section 2.3. The interest on Registered Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only to or upon the written order of the Holders thereof and, at the option of the Issuer, may be paid by wire transfer or by mailing checks for such interest payable to or upon the written order of such Holders at their last addresses as they appear on the registry books of the Issuer. SECTION 3.2 Offices for Payments, etc. So long as any Registered -------------------------- Securities are authorized for issuance pursuant to this Indenture or are outstanding hereunder, the Issuer will maintain in the City of _____________, State of ________, an office or agency where the Registered Securities of each series may be presented for payment, where the Securities of each series may be presented for exchange or conversion as is provided in this Indenture and, if applicable, pursuant to Section 2.3 and where the Registered Securities of each series may be presented for registration of transfer as in this Indenture provided. The Issuer will maintain one or more offices or agencies in a city or cities located outside the United States (including any city in which such an agency is required to be maintained under the rules of any stock 27 exchange on which the Securities of such series are listed) where the Unregistered Securities, if any, of each series and Coupons, if any, appertaining thereto may be presented for payment. No payment on any Unregistered Security or Coupon will be made upon presentation of such Unregistered Security or Coupon at an agency of the Issuer within the United States nor will any payment be made by transfer to an account in, or by mail to an address in, the United States unless pursuant to applicable United States laws and regulations then in effect such payment can be made without adverse tax consequences to the Issuer. Notwithstanding the foregoing, payments in Dollars of Unregistered Securities of any series and Coupons appertaining thereto that are payable in Dollars may be made at an agency of the Issuer maintained in the The City of ________ if such payment in Dollars at each agency maintained by the Issuer outside the United States for payment on such Unregistered Securities is illegal or effectively precluded by exchange controls or other similar restrictions. The Issuer will maintain in the The City of ___________, an office or agency where notices and demands to or upon the Issuer in respect of the Securities of any series, the Coupons appertaining thereto or this Indenture may be served. The Issuer will give to the Trustee written notice of the location of each such office or agency and of any change of location thereof. In case the Issuer shall fail to maintain any agency required by this Section to be located in the The City of ________, or shall fail to give such notice of the location or of any change in the location of any of the above agencies, presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. The Issuer may from time to time designate one or more additional offices or agencies where the Securities of a series and any Coupons appertaining thereto may be presented for payment, where the Securities of that series may be presented for exchange as provided in this Indenture and pursuant to Section 2.3 and where the Registered Securities of that series may be presented for registration of transfer as in this Indenture provided, and the Issuer may from time to time rescind any such designation, as the Issuer may deem desirable or expedient; provided, however, that no such designation or rescission shall in -------- ------- any manner relieve the Issuer of its obligation to maintain the agencies provided 28 for in this Section. The Issuer will give to the Trustee prompt written notice of any such designation or rescission thereof. SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee. The -------------------------------------------------- Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder. SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint a paying ------------- agent other than the Trustee with respect to the Securities of any series, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section, (a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Securities of such series (whether such sums have been paid to it by the Issuer or by any other obligor on the Securities of such series) in trust for the benefit of the Holders of the Securities of such series, or Coupons appertaining thereto, if any, or of the Trustee, (b) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Securities of such series) to make any payment of the principal of or interest on the Securities of such series when the same shall be due and payable, and (c) that it will pay any such sums so held in trust by it to the Trustee upon the Trustee's written request at any time during the continuance of the failure referred to in clause (b) above. The Issuer will, on or prior to each due date of the principal of or interest on the Securities of such series, deposit with the paying agent a sum sufficient to pay such principal or interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly notify the Trustee of any failure to take such action. If the Issuer shall act as its own paying agent with respect to the Securities of any series, it will, on or before each due date of the principal of or interest on the 29 Securities of such series, set aside, segregate and hold in trust for the benefit of the Holders of the Securities of such series or the Coupons appertaining thereto a sum sufficient to pay such principal or interest so becoming due. The Issuer will promptly notify the Trustee of any failure to take such action. Anything in this Section to the contrary notwithstanding, but subject to Section 10.1, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Issuer or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained. Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 10.3 and 10.4. SECTION 3.5 Written Statement to Trustee. The Issuer will furnish to the ---------------------------- Trustee on or before January 31 in each year (beginning with January 31, 1997) a brief certificate (which need not comply with Section 11.5) from the principal executive, financial or accounting officer of the Issuer stating that in the course of the performance by the signer of his duties as an officer of the Issuer he would normally have knowledge of any default or non-compliance by the Issuer in the performance of any covenants or conditions contained in this Indenture, stating whether or not he has knowledge of any such default or non- compliance and, if so, describing each such default or non-compliance of which the signer has knowledge and the nature thereof. SECTION 3.6 OMITTED ------- SECTION 3.7 SEC Reports. The Issuer shall file with the Trustee, within ----------- 15 days after it files such annual and 30 quarterly reports, information, documents and other reports with the Commission, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) that the Issuer is required to file with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. SECTION 3.8 Applicability of Article. The provisions of this Article ------------------------ shall be applicable to the Securities of any series except as otherwise specified as contemplated by Section 2.3 for Securities of such series. ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE ---------------------------------------- SECTION 4.1 Issuer to Furnish Trustee Information as to Names and ----------------------------------------------------- Addresses of Securityholders. If and so long as the Trustee shall not be the - ---------------------------- Security registrar for the Securities of any series, the Issuer and any other obligor on the Securities will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Registered Securities of such series pursuant to Section 312 of the Trust Indenture Act of 1939 (a) semi-annually not more than 5 days after each record date for the payment of interest on such Registered Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 2.3 for non-interest bearing Registered Securities in each year, and (b) at such other times as the Trustee may request in writing, within thirty days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished. SECTION 4.2 Preservation and Disclosure of Securityholders Lists. ---------------------------------------------------- This Section intentionally left blank. SECTION 4.3 Reports by the Issuer. The Issuer covenants to file with the --------------------- Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, 31 documents, and other reports that the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 or pursuant to Section 314 of the Trust Indenture Act of 1939. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 4.4 Reports by the Trustee. Any Trustee's report required under ---------------------- Section 313(a) of the Trust Indenture Act of 1939 shall be transmitted on or before _______ in each year beginning _______,_____, as provided in Section 313(c) of the Trust Indenture Act of 1939, so long as any Securities are Outstanding hereunder, and shall be dated as of a date convenient to the Trustee no more than 60 days prior thereto. A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange, if any, upon which the Securities are listed, with the Commission and with the Issuer. The Issuer will promptly notify the Trustee when the Securities are listed on any stock exchange. ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT ------------------------------------------- SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of ------------------------------------------------------------- Default. "Event of Default" with respect to Securities of any series wherever - ------- used herein, means each one of the following events that shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) a court having jurisdiction in the premises 32 shall enter a decree or order for relief in respect of the Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer or any substantial part of its property or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) the Issuer shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer or for any substantial part of its property, or make any general assignment for the benefit of creditors; or (c) any other Event of Default provided in the supplemental indenture under which such series of Securities is issued or in the form of Security for such series. If an Event of Default described in clause (a), (b) or (c) (unless, in the case of an Event of Default described in clause (c), otherwise provided in the relevant supplemental indenture or form of Security with respect to such series) occurs and is continuing, then, and in each and every such case, except for any series of Securities the principal of which shall have already become due and payable, the entire principal amount (or, if the Securities of any such affected series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all Securities of all series, and the interest accrued thereon, if any, shall automatically become immediately due and payable, without any demand or other notice or act on behalf of the Trustee, the Holders or any other Person. The foregoing provisions, however, are subject to the condition that if, at any time after the principal (or, if the Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of the Securities of any series (or of all the 33 Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of such series (or of all the Securities, as the case may be) and the principal of any and all Securities of each such series (or of all the Securities, as the case may be) that shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of each such series (or at the respective rates of interest or Yields to Maturity of all the Securities, as the case may be) to the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, its agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, its agents, attorneys and counsel except as a result of negligence or bad faith, and if any and all Events of Default under the Indenture, other than the non-payment of the principal of Securities that shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein --then and in every such case the Holders of a majority in aggregate principal amount of all the Securities of each such series, or of all the Securities, in each case voting as a single class, then Outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults with respect to each such series (or with respect to all the Securities, as the case may be), but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, 34 and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities. SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt. ------------------------------------------------------------- The Issuer covenants that (a) in case default shall be made in the payment of any installment of interest on any of the Securities of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of any of the Securities of any series when the same shall have become due and payable, whether upon maturity of the Securities of such series or upon any redemption or by declaration or otherwise -- then upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of the Securities of such series the whole amount that then shall have become due and payable on all Securities of such series, and such Coupons, for principal or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, its agents, attorneys and counsel except as a result of its negligence or bad faith. Until such demand is made by the Trustee, the Issuer may pay the principal of and interest on the Securities of any series to the registered holders, whether or not the Securities of such Series be overdue. In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment 35 or final decree, and may enforce any such judgment or final decree against the Issuer or other obligor upon the Securities and collect in the manner provided by law out of the property of the Issuer or other obligor upon the Securities, wherever situated the moneys adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Issuer or any other obligor upon the Securities under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal and interest (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Securities of any series, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Securityholders allowed in any judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor, (b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the 36 Securities of any series in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Securityholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, or under any of the Securities of any series or Coupons appertaining to such Securities, may be enforced by the Trustee without the possession of any of the Securities of such series or Coupons appertaining to such Securities or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securities or Coupons appertaining to such Securities in respect of which such action was taken. 37 In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Securities or Coupons appertaining to such Securities in respect to which such action was taken, and it shall not be necessary to make any Holders of such Securities or Coupons appertaining to such Securities parties to any such proceedings. SECTION 5.3 Application of Proceeds. Any moneys collected by the Trustee ----------------------- pursuant to this Article in respect of any series shall, subject to the subordination provisions hereof, be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Securities and Coupons appertaining to such Securities in respect of which monies have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, or upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses applicable to such series in respect of which monies have been collected, including reasonable compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, its agents and attorneys except as a result of negligence or bad faith; SECOND: In case the principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; 38 THIRD: In case the principal of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and interest or Yield to Maturity, without preference or priority of principal over interest or Yield to Maturity, or of interest or Yield to Maturity over principal, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest or Yield to Maturity; and FOURTH: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto. SECTION 5.4 Suits for Enforcement. In case an Event of Default has --------------------- occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. SECTION 5.5 Restoration of Rights on Abandonment of Proceedings. In case --------------------------------------------------- the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer and the Trustee shall be restored respectively to their former positions and rights 39 hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Securityholders shall continue as though no such proceedings had been taken. SECTION 5.6 Limitations on Suits by Securityholders. No Holder of any --------------------------------------- Security of any series or of any Coupon appertaining thereto shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than 25% in aggregate principal amount of the Securities of each affected series then Outstanding (treated as a single class) shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security or Coupon with every other taker and Holder and the Trustee, that no one or more Holders of Securities of any series or Coupons appertaining to such Securities shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holder of Securities or Coupons appertaining to such Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the applicable series and Coupons appertaining to such Securities. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. 40 SECTION 5.7 Unconditional Right of Securityholders to Institute Certain ----------------------------------------------------------- Suits. Notwithstanding any other provision in this Indenture and any provision - ----- of any Security, the right of any Holder of any Security or Coupon to receive payment of the principal of and interest on such Security or Coupon on or after the respective due dates expressed in such Security or Coupon, or to institute suit for the enforcement of any such payment on or after such respective dates, or the right to convert such Security, if any, or to institute suit therefor shall not be impaired or affected without the consent of such Holder. SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver ------------------------------------------------------------ of Default. Except as provided in Section 5.6, no right or remedy herein - ---------- conferred upon or reserved to the Trustee or to the Holders of Securities or Coupons is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Trustee or of any Holder of Securities or Coupons to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to Section 5.6, every power and remedy given by this Indenture or by law to the Trustee or to the Holders of Securities or Coupons may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders of Securities or Coupons. SECTION 5.9 Control by Holders of Securities. The Holders of a majority -------------------------------- in aggregate principal amount of the Securities of each series affected (with all such series voting as a single class) at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided that such direction shall not be otherwise than in accordance with law - -------- and the provisions of this Indenture and provided further that (subject to the -------- ------- 41 provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all series so affected not joining in the giving of said direction, it being understood that (subject to Section 6.1) the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and that is not inconsistent with such direction or directions by Securityholders. SECTION 5.10 Waiver of Past Defaults. Prior to the acceleration of the ----------------------- maturity of any Securities as provided in Section 5.1, the Holders of a majority in aggregate principal amount of the Securities of all series at the time Outstanding with respect to which an event of default shall have occurred and be continuing (voting as a single class) may on behalf of the Holders of all such Securities waive any past default or Event of Default described in Section 5.1 and its consequences, except a default in respect of a covenant or provision hereof that cannot be modified or amended without the consent of the Holder of each Security affected. In the case of any such waiver, the Issuer, the Trustee and the Holders of all such Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. 42 SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in ------------------------------------------------------ Certain Circumstances. The Trustee shall, within ninety days after the - --------------------- occurrence of a default with respect to the Securities of any series, give notice of all defaults with respect to that series known to the Trustee (i) if any Unregistered Securities of that series are then Outstanding, to the Holders thereof, by publication at least once in an Authorized Newspaper in the The City of _________ and at least once in an Authorized Newspaper in London and (ii) to all Holders of Securities of such series in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act of 1939, unless in each case such defaults shall have been cured before the mailing or publication of such notice (the term "defaults" for the purpose of this Section being hereby defined to mean any event or condition that is, or with notice or lapse of time or both would become, an Event of Default); provided that, except in the case of default in the payment of the principal of or interest on any of the Securities of such series, or in the payment of any sinking fund installment on such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders of such series. SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs. ------------------------------------------------------------ All parties to this Indenture agree, and each Holder of any Security or Coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any series holding in the aggregate more than __% in aggregate principal amount of the Securities of such series, or, in the case of any suit 43 relating to or arising under clause (d) or (h) of Section 5.1 (if the suit relates to Securities of more than one but less than all series), __% in aggregate principal amount of Securities then Outstanding and affected thereby or 10% in aggregate principal amount of all Securities then Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security on or after the due date expressed in such Security or any date fixed for redemption. SECTION 5.13 Applicability of Article. The provisions of this Article ------------------------ shall be applicable to the Securities of any series except as otherwise specified as contemplated by Section 2.3 for Securities of such series. ARTICLE SIX CONCERNING THE TRUSTEE ---------------------- SECTION 6.1 Duties and Responsibilities of the Trustee; During Default; ----------------------------------------------------------- Prior to Default. With respect to the Holders of any series of Securities - ---------------- issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Securities of a particular series and after the curing or waiving of all Events of Default that may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Securities of a series has occurred (which has not been cured or waived) the Trustee shall exercise with respect to such series of Securities such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that (a) prior to the occurrence of an Event of Default with respect to the Securities of any series and after the curing or waiving of all such Events of Default with respect to such series that may have occurred: 44 (i) the duties and obligations of the Trustee with respect to the Securities of any series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 5.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. 45 The provisions of this Section 6.1 are in furtherance of and subject to Section 315 of the Trust Indenture Act of 1939. SECTION 6.2 Certain Rights of the Trustee. In furtherance of and subject ----------------------------- to the Trust Indenture Act of 1939, and subject to Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officer's Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer; (c) the Trustee may consult with counsel of its choice and any written advice or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in reliance thereon in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; 46 (f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Securities of all series affected then Outstanding; provided -------- that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor Trustee, shall be repaid by the Issuer upon demand. The Trustee shall incur no liability or additional liability of any kind by reason of such inquiry or investigation; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of ---------------------------------------------------- Securities or Application of Proceeds Thereof. The recitals contained herein - --------------------------------------------- and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Securities or Coupons. The Trustee shall not be accountable for the use or application by the Issuer of any of the Securities or of the proceeds thereof. 47 SECTION 6.4 Trustee and Agents May Hold Securities or Coupons; -------------------------------------------------- Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in its - ---------------- individual or any other capacity, may become the owner or pledgee of Securities or Coupons with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent. SECTION 6.5 Moneys Held by Trustee. Subject to the provisions of Section ---------------------- 10.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder. SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior --------------------------------------------------------- Claim. The Issuer covenants and agrees to pay to the Trustee from time to time, - ----- and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Issuer under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction 48 and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities or Coupons, and the Securities are hereby subordinated to such senior claim. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(a) or Section 5.1(b), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive the termination of this Indenture. SECTION 6.7 Right of Trustee to Rely on Officer's Certificate, etc. ------------------------------------------------------- Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officer's Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. SECTION 6.8 Indentures Not Creating Potential Conflicting Interests for ----------------------------------------------------------- the Trustee. The following indentures are hereby specifically described for the - ----------- purposes of Section 310(b)(1) of the Trust Indenture Act of 1939: this Indenture with respect to the Securities of any other series. SECTION 6.9 Persons Eligible for Appointment as Trustee. The Trustee for ------------------------------------------- each series of Securities hereunder shall at all times be a corporation or banking association organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at 49 least $5,000,000, and that is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal, State or District of Columbia authority. Such corporation or banking association shall have a place of business in the The City of ________ if there be such a corporation in such location willing to act upon reasonable and customary terms and conditions. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.10. The provisions of this Section 6.9 are in furtherance of and subject to Section 310(a) of the Trust Indenture Act of 1939. SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee. --------------------------------------------------------- (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving written notice of resignation to the Issuer and (i) if any Unregistered Securities of a series affected are then Outstanding, by giving notice of such resignation to the Holders thereof, by publication at least once in an Authorized Newspaper in The City of ________, and at least once in an Authorized Newspaper in London, (ii) if any Unregistered Securities of a series affected are then Outstanding, by mailing notice of such resignation to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939 at such addresses as were so furnished to the Trustee and (iii) by mailing notice of such resignation to the Holders of then Outstanding Registered Securities of each series affected at their addresses as they shall appear on the registry books. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of 50 which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide Holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur: (i) the Trustee shall fail to comply with the provisions of Section 310(b) of the Trust Indenture Act of 1939 with respect to any series of Securities after written request therefor by the Issuer or by any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.9 and Section 310(a) of the Trust Indenture Act of 1939 and shall fail to resign after written request therefor by the Issuer or by any Securityholder; or (iii) the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, the Issuer may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Issuer, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the 51 successor trustee, or, subject to the provisions of Section 315(e) of the Trust Indenture Act of 1939, any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Securities of each series at the time outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to the Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders. (d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 6.11. SECTION 6.11 Acceptance of Appointment by Successor Trustee. Any ---------------------------------------------- successor trustee appointed as provided in Section 6.10 shall execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any 52 such successor trustee, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.6. If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Issuer, the predecessor Trustee and each successor trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto, which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of any series as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures. No successor trustee with respect to any series of Securities shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor trustee shall be qualified under Section 310(b) of the Trust Indenture Act of 1939 and eligible under the provisions of Section 6.9. Upon acceptance of appointment by any successor trustee as provided in this Section 6.11, the Issuer shall give notice thereof (a) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof, by publication of such notice at least once in an Authorized Newspaper in The City of ________ and at least once in an Authorized Newspaper in London, (b) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939, by mailing such notice to such Holders at such addresses as were so furnished to the 53 Trustee (and the Trustee shall make such information available to the Issuer for such purpose) and (c) to the Holders of Registered Securities of each series affected, by mailing such notice to such Holders at their addresses as they shall appear on the registry books. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Issuer fails to give such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be given at the expense of the Issuer. SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business ----------------------------------------------------------- of Trustee. Any corporation into which the Trustee may be merged or converted - ---------- or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall -------- be qualified under Section 310(b) of the Trust Indenture Act of 1939 and eligible under the provisions of Section 6.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities of any series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any series shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force that it is anywhere in the Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; provided, that the right to adopt the certificate of authentication -------- of any predecessor Trustee or to authenticate Securities of any series in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. 54 SECTION 6.13 This Section intentionally left blank. SECTION 6.14 Appointment of Authenticating Agent. As long as any ----------------------------------- Securities of a series remain Outstanding, the Trustee may, by an instrument in writing, appoint with the approval of the Issuer an authenticating agent (the "Authenticating Agent"), which shall be authorized to act on behalf of the Trustee to authenticate Securities, including Securities issued upon exchange, registration of transfer, partial redemption or pursuant to Section 2.9. Securities of each such series authenticated by such Authenticating Agent shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee. Whenever reference is made in this Indenture to the authentication and delivery of Securities of any series by the Trustee or to the Trustee's Certificate of Authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent for such series and a Certificate of Authentication executed on behalf of the Trustee by such Authenticating Agent. Such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $_________ (determined as provided in Section 6.9 with respect to the Trustee) and subject to supervision or examination by Federal or State authority. Any corporation into which any Authenticating Agent may be merged or converted, or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent with respect to all series of Securities for which it served as Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. Any Authenticating Agent may at any time, and if it shall cease to be eligible shall, resign by giving written notice of resignation to the Trustee and to the Issuer. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any 55 Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.14 with respect to one or more series of Securities, the Trustee shall upon receipt of an Issuer Order appoint a successor Authenticating Agent and the Issuer shall provide notice of such appointment to all Holders of Securities of such series in the manner and to the extent provided in Section 11.4. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent. The Issuer agrees to pay to the Authenticating Agent for such series from time to time reasonable compensation. The Authenticating Agent for the Securities of any series shall have no responsibility or liability for any action taken by it as such at the direction of the Trustee. Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any Authenticating Agent. SECTION 6.15 Preferential Collection of Claims. If and when the Trustee --------------------------------- shall be or become a creditor of the Issuer (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Issuer (or any such other obligor). ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS ------------------------------ SECTION 7.1 Evidence of Action Taken by Securityholders. Any request, ------------------------------------------- demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 56 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article. SECTION 7.2 Proof of Execution of Instruments and of Holding of --------------------------------------------------- Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument by a Securityholder or his agent or proxy may be proved in the following manner: (a) The fact and date of the execution by any Holder of any instrument may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the person executing such instruments acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or other such officer. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute sufficient proof of the authority of the person executing the same. The fact of the holding by any Holder of an Unregistered Security of any series, and the identifying number of such Security and the date of his holding the same, may be proved by the production of such Security or by a certificate executed by any trust company, bank, banker or recognized securities dealer wherever situated satisfactory to the Trustee, if such certificate shall be deemed by the Trustee to be satisfactory. Each such certificate shall be dated and shall state that on the date thereof a Security of such series bearing a specified identifying number was deposited with or exhibited to such trust company, bank, banker or recognized securities dealer by the person named in such certificate. Any such certificate may be issued in respect of one or more Unregistered Securities of one or more series specified therein. The holding by the person named in any such certificate of any Unregistered Securities of any series specified therein shall be presumed to continue for a period of one year from the date of such certificate unless at the time of any determination of such holding (1) another certificate bearing a later date issued in respect of the same Securities shall be produced, or (2) the Security of such series specified in such certificate shall be produced by some other person, or (3) the Security of such series specified in such certificate shall have ceased to be Outstanding. Subject to Sections 6.1 and 6.2, the fact and date of 57 the execution of any such instrument and the amount and numbers of Securities of any series held by the person so executing such instrument and the amount and numbers of any Security or Securities for such series may also be proven in accordance with such reasonable rules and regulations as may be prescribed by the Trustee for such series or in any other manner that the Trustee for such series may deem sufficient. (b) In the case of Registered Securities, the ownership of such Securities shall be proved by the Security register or by a certificate of the Security registrar. The Issuer may set a record date for purposes of determining the identity of Holders of Registered Securities of any series entitled to vote or consent to any action referred to in Section 7.1, which record date may be set at any time or from time to time by notice to the Trustee, for any date or dates (in the case of any adjournment or reconsideration) not more than 60 days nor less than five days prior to the proposed date of such vote or consent, and thereafter, notwithstanding any other provisions hereof, with respect to Registered Securities of any series, only Holders of Registered Securities of such series of record on such record date shall be entitled to so vote or give such consent or revoke such vote or consent. SECTION 7.3 Holders to be Treated as Owners. The Issuer, the Trustee and ------------------------------- any agent of the Issuer or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Security register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Holder of any Unregistered Security and the Holder of any Coupon as the absolute owner of such Unregistered Security or Coupon (whether or not such Unregistered Security or Coupon shall be overdue) for the purpose of receiving payment thereof or on account thereof and for all other purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or the 58 Trustee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Unregistered Security or Coupon. SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding. In ------------------------------------------------- determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have concurred in any direction, consent or waiver under this Indenture, Securities that are owned by the Issuer or any other obligor on the Securities with respect to which such determination is being made or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities that the Trustee knows are so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officer's Certificate listing and identifying all Securities, if any, known by the Issuer to be owned or held by or for the account of any of the above- described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officer's Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. SECTION 7.5 Right of Revocation of Action Taken. At any time prior to ----------------------------------- (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate 59 principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action. ARTICLE EIGHT SUPPLEMENTAL INDENTURES ----------------------- SECTION 8.1 Supplemental Indentures Without Consent of Securityholders. ---------------------------------------------------------- The Issuer, when authorized by a resolution of its Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto, which comply with the Trust Indenture Act of 1939, as then in effect, for one or more of the following purposes: (a) to add to the covenants of the Issuer for the benefit of the Holders, and to make the occurrence, or the occurrence and the continuance, of a default in any such additional covenants an Event of Default, or to surrender any right or power herein conferred upon the Issuer; or (b) to evidence and provide for the acceptance of 60 appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.11; or (c) to establish the forms or terms of Securities of any series or of the Coupons appertaining to such Securities as permitted by Sections 2.1 and 2.3; or (d) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provisions herein, or to make any other provisions with respect to such matters or questions arising under this Indenture, provided such action shall not adversely affect the interests of the Holders. (e) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.11; and (f) to make any changes to the terms of this Indenture to clarify inconsistencies with the provisions of the prospectus supplement dated October 31, 1996 (which prospectus supplement relates to the Company's Premium Equity Redemption Cumulative Security Units--PERCS Units), including, without limitation, to insert additional provisions inconsistent with any existing provisions hereof. The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions 61 of this Section may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 8.2. SECTION 8.2 Supplemental Indentures With Consent of Securityholders. With ------------------------------------------------------- the consent (evidenced as provided in Article Seven) of the Holders of not less than 66 2/3% in aggregate principal amount of the Securities at the time Outstanding of all series affected by such supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto, which comply with the Trust Indenture Act of 1939, as then in effect, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series or of the Coupons appertaining to such Securities, except that no such supplemental indenture shall (a) extend the final maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof, or make the principal thereof (including any amount in respect of original issue discount), or interest thereon payable in any coin or currency other than that provided in the Securities and Coupons or in accordance with the terms thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy pursuant to Section 5.2, or alter the provisions of Section 11.11 or 11.12 or impair or affect the right of any Securityholder to institute suit for the payment or conversion (if applicable) thereof or, if the Securities provide therefor, any right of repayment at the option of the Securityholder and any right to convert, in each case without the consent of the Holder of each Security so affected, or (b) reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected. 62 A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities, or that modifies the rights of Holders of Securities of such series, or of Coupons appertaining to such Securities, with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series or of the Coupons appertaining to such Securities. Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order) certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Holders of the Securities as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall give notice thereof (i) to the Holders of then Outstanding Registered Securities of each series affected thereby, by mailing a notice thereof by first-class mail to such Holders at their addresses as they shall appear on the Security register, (ii) if any Unregistered Securities of a series affected thereby are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939, by mailing a notice thereof by first-class mail to such Holders at such addresses as were so furnished to the Trustee and (iii) if any Unregistered Securities of a series 63 affected thereby are then Outstanding, to all Holders thereof, by publication of a notice thereof at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London (and, if required by Section 3.6, at least once in an Authorized Newspaper in Luxembourg), and in each case such notice shall set forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 8.3 Effect of Supplemental Indenture. Upon the execution of any -------------------------------- supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 8.4 Documents to Be Given to Trustee. The Trustee, subject to the -------------------------------- provisions of Sections 6.1 and 6.2, may receive an Officer's Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture. SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures. ------------------------------------------------------------ Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken by Securityholders. If the Issuer or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, authenticated by the Trustee and made available for delivery in exchange for the Securities of such series then Outstanding. 64 ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE ----------------------------------------- SECTION 9.1 Issuer May Consolidate, Etc., Only on Certain Terms. The --------------------------------------------------- Issuer shall not consolidate with or merge into any other Person or transfer or lease its properties and assets substantially as an entirety to any Person, and the Issuer shall not permit any other Person to consolidate with or merge into the Issuer, unless: (a) either the Issuer shall be the continuing corporation, or the corporation (if other than the Issuer) formed by such consolidation or into which the Issuer is merged or to which the properties and assets of the Issuer substantially as an entity are transferred or leased shall be a corporation organized and existing under the laws of the United States of America or any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Issuer under the Securities and this Indenture); (b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (c) the Issuer has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, transfer or lease and any such supplemental indenture comply with this Article and that all conditions precedent provided for herein relating to such transaction have been complied with. SECTION 9.2 Successor Corporation Substituted. The successor corporation --------------------------------- formed by such consolidation or into which the Issuer is merged or to which such transfer or lease is made shall succeed to and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such successor corporation had been named as the Issuer herein, and thereafter (except in the case of a lease to another Person) the predecessor corporation shall be relieved of all 65 obligations and covenants under the Indenture and the Securities and, in the event of such conveyance or transfer, any such predecessor corporation may be dissolved and liquidated. ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS ---------------------------------------- SECTION 10.1 Satisfaction and Discharge of Indenture. (A) If at any time --------------------------------------- (a) the Issuer shall have paid or caused to be paid the principal of and interest on all the Securities of any series Outstanding hereunder and all unmatured Coupons appertaining thereto (other than Securities of such series and Coupons appertaining thereto that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.9) as and when the same shall have become due and payable, or (b) the Issuer shall have delivered to the Trustee for cancellation all Securities of any series theretofore authenticated and all unmatured Coupons appertaining thereto (other than any Securities of such series and Coupons appertaining thereto that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.9) or (c) in the case of any series of Securities where the exact amount (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (ii) below, (i) all the Securities of such series and all unmatured Coupons appertaining thereto not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any paying agent to the Issuer in accordance with Section 10.4) or, in the case of any series of Securities the payments on which may only be made in Dollars, direct obligations of the United States of America, backed by its full faith and credit ("U.S. Government Obligations"), maturing as to principal and interest at such times and in such amounts as will insure the availability of cash, or a combination 66 thereof, sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal or interest is due and payable and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer and exchange of Securities of such Series and of Coupons appertaining thereto and the Issuer's right of optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of holders of Securities and Coupons appertaining thereto to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the Holders of Securities of such series and Coupons appertaining thereto as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, and (vi) the obligations of the Issuer under Section 3.2) and the Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture; provided, that the rights of Holders of the Securities and Coupons to -------- receive amounts in respect of principal of and interest on the Securities and Coupons held by them shall not be delayed longer than required by then- applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities of such series. (B) The following provisions shall apply to the Securities of each series unless specifically otherwise provided in a Board Resolution, Officer's Certificate or 67 indenture supplemental hereto provided pursuant to Section 2.3. In addition to discharge of the Indenture pursuant to the next preceding paragraph, in the case of any series of Securities the exact amounts (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (a) below, the Issuer shall be deemed to have paid and discharged the entire indebtedness on all the Securities of such a series and the Coupons appertaining thereto on the date of the deposit referred to in subparagraph (a) below, and the provisions of this Indenture with respect to the Securities of such series and Coupons appertaining thereto shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities of such series and of Coupons appertaining thereto and the Issuer's right of optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of Holders of Securities and Coupons appertaining thereto to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the Holders of Securities of such series and Coupons appertaining thereto as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them and (vi) the obligations of the Issuer under Section 3.2) and the Trustee, at the expense of the Issuer, shall at the Issuer's request, execute proper instruments acknowledging the same, if (a) with reference to this provision the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series and Coupons appertaining thereto (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in Dollars, U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest on all Securities of such series 68 and Coupons appertaining thereto on each date that such principal or interest is due and payable and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (b) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Issuer is a party or by which it is bound; (c) the Issuer has delivered to the Trustee an Opinion of Counsel based on the fact that (x) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that, and such opinion shall confirm that, the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; and (d) the Issuer has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this provision have been complied with. (C) The Issuer shall be released from its obligations under Section 9.1 with respect to the Securities of any series, and any Coupons appertaining thereto, Outstanding on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities of any series, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in such Section, whether directly or indirectly by reason of any reference elsewhere herein to such Section or by reason of any reference in such Section to any other provision herein or in any other document and such omission to comply shall not constitute an Event of Default under Section 5.1, but 69 the remainder of this Indenture and such Securities and Coupons shall be unaffected thereby. The following shall be the conditions to application of this subsection (C) of this Section 10.1: (a) The Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Securities of such series and coupons appertaining thereto, (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in Dollars, U.S. Government Obligations maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest on all Securities of such series and Coupons appertaining thereto and (B) any mandatory sinking fund payments on the day on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (b) No Event of Default or event that with notice or lapse of time or both would become an Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit; (c) Such covenant defeasance shall not cause the Trustee to have a conflicting interest as defined in Section 6.8 and for purposes of the Trust Indenture Act of 1939 with respect to any securities of the Issuer; (d) Such covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Issuer is a party or by which it is bound; (e) Such covenant defeasance shall not cause any Securities then listed on any registered national securities exchange under the Securities Exchange Act of 1934, as amended, to be delisted; (f) The Issuer shall have delivered to the 70 Trustee an Officer's Certificate and Opinion of Counsel to the effect that the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and (g) The Issuer shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the covenant defeasance contemplated by this provision have been complied with. SECTION 10.2 Application by Trustee of Funds Deposited for Payment of -------------------------------------------------------- Securities. Subject to Section 10.4, all moneys deposited with the Trustee (or - ---------- other trustee) pursuant to Section 10.1 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Issuer acting as its own paying agent), to the Holders of the particular Securities of such series and of Coupons appertaining thereto for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. SECTION 10.3 Repayment of Moneys Held by Paying Agent. In connection with ---------------------------------------- the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys. SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed ----------------------------------------------------------- for Two Years. Any moneys deposited with or paid to the Trustee or any paying - ------------- agent for the payment of the principal of or interest on any Security of any series or Coupons attached thereto and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Issuer and 71 unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series or such paying agent, and the Holder of the Securities of such series and of any Coupons appertaining thereto shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment that such Holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease; provided, however, that the -------- ------- Trustee or such paying agent, before being required to make any such repayment with respect to moneys deposited with it for any payment (a) in respect of Registered Securities of any series, shall at the expense of the Issuer, mail by first-class mail to Holders of such Securities at their addresses as they shall appear on the Security register, and (b) in respect of Unregistered Securities of any series, shall at the expense of the Issuer cause to be published once, in an Authorized Newspaper in The City of _________and once in an Authorized Newspaper in London notice, that such moneys remain and that, after a date specified therein, which shall not be less than thirty days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. SECTION 10.5 Indemnity for U.S. Government Obligations. The Issuer shall ----------------------------------------- pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 10.1 or the principal or interest received in respect of such obligations. ARTICLE ELEVEN MISCELLANEOUS PROVISIONS ------------------------ SECTION 11.1 Incorporators, Stockholders, Officers and Directors of Issuer ------------------------------------------------------------- Exempt from Individual Liability. No recourse under or upon any obligation, - -------------------------------- covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer or director, as such, of the 72 Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities and the Coupons appertaining thereto by the Holders thereof and as part of the consideration for the issue of the Securities and the Coupons appertaining thereto. SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties and ----------------------------------------------------------- Holders of Securities and Coupons. Nothing in this Indenture, in the Securities - --------------------------------- or in the Coupons appertaining thereto, expressed or implied, shall give or be construed to give to any person, firm or corporation, other than the parties hereto and their successors and the holders of Senior Indebtedness and the Holders of the Securities or Coupons, if any, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors, the holders of the Senior Indebtedness and the Holders of the Securities or Coupons, if any. SECTION 11.3 Successors and Assigns of Issuer Bound by Indenture. All the --------------------------------------------------- covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer shall bind its successors and assigns, whether so expressed or not. SECTION 11.4 Notices and Demands on Issuer, Trustee and Holders of ----------------------------------------------------- Securities and Coupons. Any notice or demand that by any provision of this - ---------------------- Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities or Coupons to or on the Issuer may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to Household International, Inc., 2700 Sanders Road, Prospect Heights, Illinois 60070, Attention: Secretary. Any notice, direction, request or demand by the Issuer or any Holder of Securities or Coupons to or upon the Trustee shall be deemed to have been sufficiently given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Trustee is filed by the Trustee with the Issuer) to The Bank 73 _______________________________, Attention:_________________ Where this Indenture provides for notice to Holders of Registered Securities, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security register. In any case where notice to such Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be reasonably satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. SECTION 11.5 Officer's Certificates and Opinions of Counsel; Statements to ------------------------------------------------------------- Be Contained Therein. Upon any application or demand by the Issuer to the - -------------------- Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person 74 making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer or officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with and directed to the Trustee shall contain a statement that such firm is independent. SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays. If the date ----------------------------------------------- of maturity of interest on or 75 principal of the Securities of any series or any Coupons appertaining thereto or the date fixed for redemption or repayment of any such Security or Coupon shall not be a Business Day, then payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date. SECTION 11.7 Conflict of Any Provision of Indenture with Trust Indenture ----------------------------------------------------------- Act of 1939. If and to the extent that any provision of this Indenture limits, - ----------- qualifies or conflicts with the duties imposed by, or with another provision (an "incorporated provision") included in this Indenture by operation of, Sections 310 to 318, inclusive, of the Trust Indenture Act of 1939, such imposed duties or incorporated provision shall control. SECTION 11.8 New York Law to Govern. This Indenture and each Security and ---------------------- Coupon shall be deemed to be a contract under the laws of the State of New York without regard to the conflicts of law principles thereof, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law. SECTION 11.9 Counterparts. This Indenture may be executed in any number ------------ of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 11.10 Effect of Headings. The Article and Section headings herein ------------------ and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 11.11 Securities in a Foreign Currency or in ECU. Unless ------------------------------------------ otherwise specified in an Officer's Certificate delivered pursuant to Section 2.3 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all series or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any series that are denominated in a coin or currency other than Dollars (including ECUs), then the principal amount of Securities of such series that shall be deemed to be Outstanding for the 76 purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate. For purposes of this Section 11.11, Market Exchange Rate shall mean the noon Dollar buying rate in New York City for cable transfers of that currency as published by the Federal Reserve Bank of New York; provided, however, in the case of ECUs, Market -------- ------- Exchange Rate shall mean the rate of exchange determined by the Commission of the European Communities (or any successor thereto) as published in the Official Journal of the European Communities (such publication or any successor publication, the "Journal"). If such Market Exchange Rate is not available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange as published in the Journal, as of the most recent available date, or quotations or, in the case of ECUs, rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question, which for purposes of the ECU shall be Brussels, Belgium, or such other quotations or, in the case of ECU, rates of exchange as the Trustee shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture. All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all purposes and irrevocably binding upon the Issuer and all Holders. SECTION 11.12 Judgment Currency. The Issuer agrees, to the fullest extent ----------------- that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest on the Securities of any series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable 77 judgment is entered, unless such day is not a New York Banking Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or required by law or executive order to close. ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS ------------------------------------------ SECTION 12.1 Applicability of Article. The provisions of this Article ------------------------ shall be applicable to the Securities of any series that are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series. SECTION 12.2 Notice of Redemption; Partial Redemptions. Notice of ----------------------------------------- redemption to the Holders of Registered Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of 78 Securities of such series at their last addresses as they shall appear upon the registry books. Notice of redemption to the Holders of Unregistered Securities to be redeemed as a whole or in part, who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939 shall be given by mailing notice of such redemption, by first class mail, postage prepaid, at least 30 days and not more than 60 prior to the date fixed for redemption, to such Holders at such addresses as were so furnished to the Trustee (and, in the case of any such notice given by the Issuer, the Trustee shall make such information available to the Issuer for such purpose). Notice of redemption to all other Holders of Unregistered Securities shall be published in an Authorized Newspaper in the Borough of Manhattan, The City of New York and in an Authorized Newspaper in London (and, if required by Section 3.6, in an Authorized Newspaper in Luxembourg), in each case, once in each of three successive calendar weeks, the first publication to be not less than 30 nor more than 60 days prior to the date fixed for redemption. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series. The notice of redemption to each such Holder shall specify, the principal amount and CUSIP numbers of each Security of such series held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Securities and, in the case of Securities with Coupons attached thereto, of all Coupons appertaining thereto maturing after the date fixed for redemption, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue and will specify any conversion price then in effect and when any right to convert such Security on part thereof to be redeemed will expire. In case any Security of a series is to be redeemed in part only the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, 79 upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. On or before the redemption date specified in the notice of redemption given as provided in this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Securities of such series so called for redemption (other than those, if any, theretofore surrendered for conversion) at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If any Security called for redemption is converted pursuant hereto, any money deposited with the Trustee or any paying agent or so segregated and held in trust for the redemption of such Security shall be paid to the Issuer upon the Issuer's request, or, if then held by the Issuer, shall be discharged from such trust. The Issuer will deliver to the Trustee at least __ days prior to the date fixed for redemption an Officer's Certificate stating the aggregate principal amount and CUSIP numbers of Securities to be redeemed and the date fixed for redemption. In case of a redemption at the election of the Issuer prior to the expiration of any restriction on such redemption, the Issuer shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders pursuant to this Section, an Officer's Certificate stating that such restriction has been complied with. If less than all the Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Securities of such Series to be redeemed in whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions 80 relating to the redemption of Securities of any series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed. If any Security selected for partial redemption is surrendered for conversion after such selection, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption. Upon any redemption of less than all the Securities of any series, the Issuer and the Trustee may treat as outstanding any Securities of such series surrendered for conversion during the period of __ days next preceding the mailing of a notice of redemption, and need not treat as outstanding any Security authenticated and delivered during such period in exchange for the unconverted portion of any Security of such series converted in part during such period. SECTION 12.3 Payment of Securities Called for Redemption. If notice of ------------------------------------------- redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue, and the unmatured Coupons, if any, appertaining thereto shall be void, and, except as provided in Sections 6.5 and 10.4, such Securities shall cease from and after the date fixed for redemption to be convertible or entitled to any other benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, together with all Coupons, if any, appertaining thereto maturing after the date fixed for redemption, said Securities or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that payment of interest -------- becoming due on or prior to the date fixed for redemption shall be payable in the case of Securities with Coupons attached thereto, to the Holders of the Coupons for such interest upon surrender thereof, and in the case of Registered Securities, to the Holders of such 81 Registered Securities registered as such on the relevant record date subject to the terms and provisions of Sections 2.3 and 2.7 hereof. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by such Security and such Security shall remain convertible in accordance with its terms until paid or duly provided for. If any Security with Coupons attached thereto is surrendered for redemption and is not accompanied by all appurtenant Coupons maturing after the date fixed for redemption, the surrender of such missing Coupon or Coupons may be waived by the Issuer and the Trustee, if there be furnished to each of them such security or indemnity as they may require to save each of them harmless. Upon presentation of any Security redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and make available for delivery to or on the order of the Holder thereof, at the expense of the Issuer, a new Security or Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented. SECTION 12.4 Exclusion of Certain Securities from Eligibility for ---------------------------------------------------- Selection for Redemption. Securities shall be excluded from eligibility for - ------------------------ selection for redemption if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. SECTION 12.5 Mandatory and Optional Sinking Funds. The minimum amount of ------------------------------------ any sinking fund payment provided for by the terms of the Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of the Securities of any series is herein referred to 82 as an "optional sinking fund payment". The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date". In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Issuer may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Issuer or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer or converted and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Issuer through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities. On or before the 60th day next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee an Officer's Certificate (which need not contain the statements required by Section 11.5) (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series and the basis for such credit, (b) stating that none of the Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment that the Issuer intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid that have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such Officer's Certificate (or reasonably promptly thereafter if acceptable to the Trustee). Such Officer's Certificate shall be irrevocable and upon its receipt by the 83 Trustee the Issuer shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such 60th day, to deliver such Officer's Certificate and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section. If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or the equivalent thereof in any Foreign Currency or ECU) or a lesser sum in Dollars (or the equivalent thereof in any Foreign Currency or ECU) if the Issuer shall so request with respect to the Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $50,000 (or the equivalent thereof in any Foreign Currency or ECU) or less and the Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 (or the equivalent thereof in any Foreign Currency or ECU) is available. The Trustee shall select, in the manner provided in Section 12.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities shall be excluded from eligibility for redemption under this Section if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 60 days prior to the sinking fund payment date as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such Officer's Certificate as directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. The Trustee, in the name and at the 84 expense of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 12.2 (and with the effect provided in Section 12.3) for the redemption of Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such series at maturity. The Issuer's obligation to make a mandatory or optional sinking fund payment shall automatically be reduced by an amount equal to the sinking fund redemption price allocable to any Securities or portions thereof called for redemption pursuant to the preceding paragraph on any sinking fund payment date and converted; provided, that if the -------- Trustee is not the conversion agent for the Securities, the Issuer or such conversion agent shall give the Trustee written notice prior to the date fixed for redemption of the principal amount of Securities or portions thereof so converted. On or before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date. The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or give any notice of redemption of Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the giving of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall 85 occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities. 86 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of ________________. HOUSEHOLD INTERNATIONAL, INC. By ___________________________ Name: ____________________ Title:____________________ [CORPORATE SEAL] Attest: By _______________________ Name: ----------------- Title: ---------------- ______________________________ as Trustee By ___________________________ Name: ___________________ Title: ___________________ [CORPORATE SEAL] Attest: By _______________________ Name: ----------------- Title: ---------------- STATE OF ____________ ) ) ss.: COUNTY OF ___________ ) On this ___ day of ________, 1997 before me personally came ________________, to me personally known, who, being by me duly sworn, did depose and say that he resides at ____________________________________________________, that he is the ________________________ of Household International, Inc., one of the corporations described in and that executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] _______________________ Notary Public STATE OF ___________ ) ) ss.: COUNTY OF __________ ) On this ___ day of ________, 1997 before me personally came ______________, to me personally known, who, being by me duly sworn, did depose and say that she resides at ____________________________________________, that she is an ________________________ of ____________________, one of the corporations described in and that executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] _____________________ Notary Public EX-5 8 OPINION & CONSENT OF JOHN W. BLENKE EXHIBIT 5(a) and EXHIBIT 23(b) May 23, 1997 Household International, Inc. 2700 Sanders Road Prospect Heights, Illinois 60070 Re: Household International, Inc. Registration Statement on Form S-3, for up to $950 million of Debt Securities, Warrants to Purchase Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Stock Purchase Contracts and Stock Purchase Units, or any combination of the foregoing Gentlemen: As Vice President-Corporate Law and Assistant Secretary of Household International, Inc., a Delaware corporation ("Household"), I am generally familiar with the proceedings in connection with Household's Registration Statement on Form S-3 (which also constitutes a Post-Effective Amendment to Household's Registration Statements Nos. 33-50619 and 33-57249) in which up to $950,000,000 aggregate principal amount of Debt Securities, Warrants to Purchase Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Stock Purchase Contracts and Stock Purchase Units, or any combination of the foregoing, of Household are being registered. Debt Securities, which constitute senior unsecured debt of Household, will be issuable under an Indenture dated as of October 1, 1993, between Household, and The First National Bank of Maryland, as Trustee (the "First National Indenture"), or an Indenture to be dated as of January 1, 1995, between Household and Harris Trust and Savings Bank, as Trustee (the "Harris Indenture"). The foregoing indentures, or forms thereof, have been included as exhibits to the Registration Statement as filed with the Securities and Exchange Commission (the "Commission"). Warrants to purchase Debt Securities, if authorized by Household, will be issuable under a duly executed Warrant Agreement, the form of which was filed with the Commission as an exhibit to the Registration Statement. Based upon my review of the records and documents of Household, I am of the opinion that: 1. Household is a corporation duly incorporated and validly existing under the laws of the State of Delaware. Household International, Inc. May 23, 1997 Page 2 2. The First National Indenture constitutes and each of the Harris Indenture and any Warrant Agreement will, after being duly authorized, executed and delivered by Household, constitute a valid and legally binding instrument of Household enforceable in accordance with its terms, except as enforcement of the provisions thereof may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3. When (i) the Registration Statement on Form S-3 filed by Household with respect to the Debt Securities and Warrants to Purchase Debt Securities shall have become effective under the Securities Act of 1933, as amended (the "Act"), (ii) the issuance of Debt Securities and Warrants to Purchase Debt Securities have been duly authorized by the appropriate corporate action, and (iii) such Debt Securities and/or Warrants to Purchase Debt Securities have been duly executed, authenticated, issued and delivered against payment of the agreed consideration therefor in accordance with the appropriate Indenture or Warrant Agreement and as described in the Registration Statement, including the Prospectus and any Prospectus Supplement relating to such Debt Securities and/or Warrants to Purchase Debt Securities, the such Debt Securities and Warrants to Purchase Debt Securities will be legally and validly issued and will be the legal and binding obligations of Household enforceable in accordance with their terms, except as enforcement of the provisions thereof may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Household International, Inc. May 23, 1997 Page 3 4. When (i) the Registration Statement on Form S-3 filed by Household with respect to the Preferred Stock and the Depositary Shares shall have become effective under the Act, (ii) the Deposit Agreement, if required to be entered by Household and the Depositary for the Preferred Stock, if Depositary Shares are issued, shall have been duly authorized, executed and delivered, and (iii) the Preferred Stock and Depositary Shares, as the case may be, shall have been validly authorized, executed, and delivered by Household, the Transfer Agent, the Registrar or the Depositary and full payment therefore received, the Preferred Stock will be validly issued, fully paid and non- assessable and the Depositary Shares will be validly issued, outstanding and entitled to the benefits afforded by the Deposit Agreement. 5. When (i) the Registration Statement on Form S-3 filed by Household with respect to the Common Stock shall have become effective under the Act, and (ii) the Common Stock shall have been issued, sold and delivered as authorized by the appropriate corporate action, the Common Stock shall be validly issued, fully paid and non-assessable and no personal liability for the debts of Household will attach to the holders of the Common Stock under the laws of the State of Delaware where Household is incorporated and the laws of the State of Illinois where its principal place of business is located. 6. When (i) the Registration Statement on Form S-3 filed by Household with respect to the Stock Purchase Contracts shall have become effective under the Act, (ii) the Purchase Contract Agreement relating to the Stock Purchase Contracts (the "Stock Purchase Agreement") has been duly authorized, executed and delivered, (iii) the terms of the Stock Purchase Contracts and their issuance and sale have been duly established in conformity with the Stock Purchase Agreement so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon Household and so as to comply with any Household International, Inc. May 23, 1997 Page 4 requirement or restriction imposed by any court or governmental or regulatory body having jurisdiction over Household and (iv) the Stock Purchase Contracts have been duly executed and issued in accordance with the Stock Purchase Agreement relating to such Stock Purchase Contracts, and issued and sold in the form and in the manner contemplated in the Registration Statement and any prospectus supplement relating thereto, such Stock Purchase Contracts will constitute valid and binding obligations of Household, enforceable in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 7. When (i) the Registration Statement on Form S-3 filed by Household with respect to the Stock Purchase Units shall have become effective under the Act, (ii) the Stock Purchase Agreement relating to the Stock Purchase Contracts comprising a part of the Stock Purchase Units has been duly executed and delivered, (iii) the terms of the Stock Purchase Contracts and their issuance and sale have been duly established in conformity with the Stock Purchase Agreement so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon Household and so as to comply with any requirement or restriction imposed by any court or governmental or regulatory body having jurisdiction over Household, (iv) the terms of the collateral arrangements relating to such Stock Purchase Units have been duly established and the agreement(s) relating thereto has been duly executed and delivered, in each case so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon Household, and so as to comply with any requirement or restriction Household International, Inc. May 23, 1997 Page 5 imposed by any court or governmental or regulatory body having jurisdiction over Household, and the collateral has been deposited with the collateral agent in accordance with such arrangements, and (v) the Stock Purchase Contracts have been duly executed and issued in accordance with the Stock Purchase Agreement relating to such Purchase Contracts, and issued and sold in the form and in the manner contemplated in the Registration Statement and any prospectus supplement relating thereto, such Stock Purchase Units will constitute valid and binding obligations of Household enforceable in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, or other similar laws relating to or affecting the enforcement of creditors' rights or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to me under the heading "Legal Opinions" in any Preliminary Prospectus, Prospectus or Prospectus Supplement forming a part of the Registration Statement. In giving said consent, I do not admit that I am in the category of persons where consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, John W. Blenke EX-25.(A) 9 FORM T-1--THE FIRST NATIONAL BANK OF MARYLAND Registration No. 333-27305 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ____________________ THE FIRST NATIONAL BANK OF MARYLAND (Exact name of trustee as specified in its charter) UNITED STATES 52-0312840 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or formation) 25 SOUTH CHARLES STREET BALTIMORE, MARYLAND 21201 (Address of principal (Zip code) executive offices JACOB H. SMITH, IV THE FIRST NATIONAL BANK OF MARYLAND 25 SOUTH CHARLES STREET BALTIMORE, MARYLAND 21201 (410) 244-4000 (Name, address and telephone number of agent for service of process) HOUSEHOLD INTERNATIONAL, INC. (Exact name of obligor as specified in its charter) DELAWARE 36-3121988 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or formation) 2700 SANDERS ROAD PROSPECT HEIGHTS, ILLINOIS 60070 (Address of principal (Zip code) executive offices NOTES IN SERIES (Title of the indenture securities) ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency, Washington, D.C. 20219. Federal Reserve Bank of Richmond, Richmond, Virginia 23261. Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each such affiliation. None. (Because responses from the obligor and the underwriters have not yet been received, Item 2 is at the date hereof based upon incomplete information but is believed to be correct and may be considered to be complete unless modified by an amendment to this Form T-1). ITEM 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this statement of eligibility. Exhibit - ------- 1 A copy of the articles of association of the trustee as now in effect is filed herewith 2 A copy of the certificate of authority of the trustee to commence business is hereby incorporated by reference to Exhibit T1-2 to Form T-1 (Exhibit 26 to the Registration Statement on Form S-2, Registration No. 2-98697) 3 A copy of the authorization of the trustee to exercise corporate trust powers is hereby incorporated by reference to Exhibit T1-3 of Amendment No. 1 to Form T-1 (Exhibit 26 to the Registration Statement on Form S-3, Registration No. 33-18373) 4 A copy of the existing bylaws of the trustee is filed herewith 5 Not applicable 6 The consent of the trustee required by Section 321(b) of the Act 7 A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority 8 Not applicable 9 Not applicable SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The First National Bank of Maryland, a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Baltimore and State of Maryland, on May 22, 1997. THE FIRST NATIONAL BANK OF MARYLAND By: JACOB H. SMITH, IV ------------------------------ Jacob H. Smith, IV Assistant Vice President Exhibit 1 --------- THE FIRST NATIONAL BANK OF MARYLAND AMENDED AND RESTATED ARTICLES OF ASSOCIATION For the purpose of organizing an Association to carry on the business of banking under the laws of the United States, the undersigned do enter into the following Articles of Association: FIRST: The title of this association (hereinafter called the "Association") ----- shall be the "The First National Bank of Maryland". SECOND: The main office of the Association shall be in the City of ------ Baltimore, State of Maryland. The general business of the Association shall be conducted at its main office and its branches. THIRD: The Board of Directors of the Association shall consist of not ----- less than five nor more than twenty-five persons, the exact number of Directors within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board of Directors or by resolution of the shareholders at any annual or special meeting thereof. Unless otherwise provided by the laws of the United States, any vacancy in the Board of Directors for any reason, including an increase in the number thereof, may be filled by action of the Board of Directors. The By-Laws may fix as a mandatory retirement date for directors the annual meeting next following the reaching of the age of 70 years. FOURTH: The annual meeting of the shareholders for the election of ------ directors and the transaction of whatever other business may be brought before said meeting shall be held at the main office of the Association or such other place as the Board of Directors may designate, on the day of each year specified therefor in the By-Laws, but if no election is held on that day, it may be held on any subsequent day according to the provisions of law; and all elections shall be held according to such lawful regulations as may be prescribed by the Board of Directors. FIFTH: The authorized amount of capital stock of the Association shall ----- be 4,500,00 shares of Common Stock of the par value of $5.00 each, but said capital stock may be increased or decreased from time to time, in accordance with the provisions of the laws of the United States. No holder of shares of the capital stock of any class of the Association shall have any preemptive or preferential right of subscription to any shares of any class of stock of the Association, whether now or hereafter authorized, or to any obligations convertible into stock of the Association, issued, or sold, nor any right of subscription to any thereof other than such, if any, as the Board of Directors in its discretion may from time to time determine and at such price as the Board of Directors may from time to time fix. The Association, at any time and from time to time, may authorize and issue debt obligations, whether or not subordinated, without the approval of the shareholders. SIXTH: The Board of Directors shall appoint one of its members President ----- of the Association, who shall be Chairman of the Board, unless the Board appoints another director to be the Chairman. The Board of Directors may also appoint another director to be Vice Chairman of the Board. The Board of Directors shall have the power to appoint one or more Vice Presidents; and to appoint a Cashier and such other officers and employees as may be required to transact business of the Association. The Board of Directors shall have the power to define the duties of the officers and employees of the Association; to fix the salaries to be paid to them; to require bonds from them and to fix the penalty thereof; to regulate the manner in which any increase of the capital of the Association shall be made; to manage and administer the business and affairs of the Association; to make all By-Laws that it may be lawful for them to make; and generally to do and perform all acts that it may be legal for a Board of Directors to do and perform. SEVENTH: The Board of Directors shall have the power to change the ------- location of the main office to any other place within the limits of Baltimore City, Maryland, without the approval of the shareholders but subject to the approval of the Comptroller of the Currency; and shall have the power to establish or change the location of any branch or branches of the Association to any other location without the approval of the shareholders but subject to the approval of the Comptroller of the Currency. EIGHTH: The corporate existence of the Association shall continue until ------ terminated in accordance with the laws of the United States. NINTH: The Board of Directors of the Association, or any one or more ----- shareholders owning, in the aggregate, not less than twenty-five percent of the stock of the Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the laws of the United States, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed at least ten days prior to the date of such meeting to each shareholder of record at his address as shown upon the books of the Association. TENTH: The Association shall indemnify its directors, officers and other ----- institution affiliated parties as provided in the By-Laws of the Association as amended from time to time. ELEVENTH: These Articles of Association may be amended at any regular or -------- special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of the Association, unless the vote of the holders of a greater amount of stock is required by law, and in that case by the vote of the holders of such greater amount. IN WITNESS WHEREOF, we have hereunto set our hands this 1st day of October 1973. /s/ Charles W. Cole, Jr. /s/ J. Owen Cole /s/ Adrian L. McCardell /s/ Robert W. Schaefer /s/ William T. Murray, III Exhibit 4 --------- THE FIRST NATIONAL BANK OF MARYLAND BY-LAWS (as amended and restated effective April 22, 1997) ARTICLE I. SHAREHOLDERS SECTION 1.01. Annual Meeting. The Association shall hold an annual -------------- meeting of its shareholders to elect directors and transact any other business within its powers, either at 11:45 a.m. on the third Tuesday of March in each year if not a legal holiday, or at such other time on such other day falling on or before the 60th day thereafter as shall be set by the Board of Directors. Except as the Articles of Association or statute provides otherwise, any business may be considered at an annual meeting without the purpose of the meeting having been specified in the notice. Failure to hold an annual meeting does not invalidate the Association's existence or affect any otherwise valid corporate acts. SECTION 1.02. Special Meeting. The Chairman of the Board, President, --------------- a majority of the Board of Directors, or shareholders owning, in the aggregate, not less than 25% of the stock of the Association may call a special meeting of shareholders at any time in the interval between annual meetings. SECTION 1.03. Place of Meetings. Meetings of shareholders shall be ----------------- held at such place in the United States as may be designated from time to time by the Board of Directors. In the absence of such designation, the meetings shall be held at the main office of the Association. SECTION 1.04. Notice of Meetings; Waiver of Notice. Not less than ------------------------------------ ten nor more than 90 days before each shareholders' meeting, the Secretary or an Assistant Secretary shall give written notice of the meeting to each shareholder entitled to vote at the meeting. The notice shall state the time and place of the meeting and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose of the meet ing. Notice is given to a shareholder when it is personally delivered to him or mailed to him at his address as it appears on the records of the Association. Notice of the time, place, and purpose of shareholders' meetings shall also be given by publication thereof when required by the laws of the United States. A meeting of shareholders convened on the date for which it was called may be adjourned from time to time without further notice 3 to a date not more than 120 days after the original record date. (Amended August 2, 1988) SECTION 1.05. Nominations for Director. Nominations for election to ------------------------ the Board of Directors may be made by the Board of Directors or by any holder of shares entitled to vote for the election of directors. Nominations not made in accordance herewith may be disregarded by the chairman of the meeting. SECTION 1.06. Quorum; Voting. Unless statute or the Articles of -------------- Association provide otherwise, at a meeting of shareholders the presence in person or by proxy of shareholders entitled to cast a majority of all the votes entitled to be cast at the meeting constitutes a quorum, and a majority of all the votes cast at a meeting at which a quorum is present is sufficient to approve any matter which properly comes before the meeting. In the absence of a quorum, the shareholders present in person or by proxy, by majority vote and without notice other than by announcement, may adjourn the meeting from time to time until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. In the event that at any meeting a quorum exists for the transaction of some business but does not exist for the transaction of other business, the business as to which a quorum is present may be transacted by the holders of stock present in person or by proxy who are entitled to vote thereon. SECTION 1.07. General Right to Vote; Proxies. Unless the Articles of ------------------------------ Association provide for a greater or lesser number of votes per share or limit or deny voting rights, each outstanding share of stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of shareholders. In all elections for directors, each share of stock may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted with cumulative voting permitted. A shareholder may vote the stock he owns of record either in person or by written proxy signed by the shareholder or by his duly authorized attorney in fact, but no officer or employee of the Association shall act as proxy. Proxies shall be valid only for one meeting, to be specified therein, and any adjournments of such meeting. Proxies shall be dated and shall be filed with the records of the meeting. SECTION 1.08. Conduct of Voting. At all meetings of shareholders, ----------------- unless the voting is conducted by judges, the proxies and ballots shall be received, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided, by the chairman of the meeting. 4 ARTICLE II. BOARD OF DIRECTORS SECTION 2.01. Function of Directors. The business and affairs of the --------------------- Association shall be managed under the direction of its Board of Directors. All powers of the Association may be exercised by or under authority of the Board of Directors, except as conferred on or reserved to the shareholders by statute or by the Articles of Association or By-Laws. SECTION 2.02. Number of Directors. The Association shall have at ------------------- least five directors and no more than 25 directors. A majority of the entire Board of Directors, or the shareholders, may alter the number of directors within the range permitted herein, but the action, if taken by the directors, may not affect the tenure of office of any director. SECTION 2.03. Qualification of Directors. No person shall qualify or -------------------------- continue to serve as a director of the Association unless he is a citizen of the United States (or an alien to the extent permitted by the National Banking Act) and owns shares of stock of the Association or a company which has control of the Association as may be required by applicable law. At least two-thirds of the directors of the Association shall reside (and shall have resided for at least one year immediately preceding their election) in Maryland or within 100 miles of the main office of the Association. No person shall be eligible to stand for election as a director after attaining 70 years of age. (Amended December 20, 1988). SECTION 2.04. Election and Tenure of Directors. At each annual -------------------------------- meeting, the shareholders shall elect directors to hold office until the next annual meeting and until their successors are elected and qualify. SECTION 2.05. Removal of Director. The shareholders may remove any ------------------- director, with or without cause, by the affirmative vote of a majority of all the votes entitled to be cast for the election of directors. SECTION 2.06. Vacancy on Board. The shareholders may elect a ---------------- successor to fill a vacancy on the Board of Directors which results from the removal of a director. A majority of the remaining directors, whether or not sufficient to constitute a quorum, may fill a vacancy on the Board of Directors which results from any cause except an increase in the number of directors, and a majority of the entire Board of Directors may fill a vacancy which results from an increase in the number of directors. A director elected by the Board of Directors to fill a vacancy serves until the next annual meeting of shareholders 6 and until his successor is elected and qualifies. A director elected by the shareholders to fill a vacancy which results from the removal of a director serves for the balance of the term of the removed director. SECTION 2.07. Regular Meetings. After each meeting of shareholders at ---------------- which a Board of Directors shall have been elected, the Board of Directors so elected shall meet as soon as practicable to take their oaths, organize and transact other business; and in the event that no other time or place is designated by the shareholders, the Board of Directors shall meet immediately following the close of such shareholders' meeting at the main office of the Association. No notice of the first regular meeting shall be necessary if held as hereinabove provided. Thereafter, regular meetings of the Board of Directors shall be held, without notice, at the main office, on the schedule established by the Board at the first regular meeting, or on such other schedule or at such other place as the Board may from time to time designate. SECTION 2.08. Special Meetings. Special meetings of the Board of ---------------- Directors may be called at any time by the Chairman of the Board or the President or by a majority of the Board of Directors by vote at a meeting, or in writing with or without a meeting. A special meeting of the Board of Directors shall be held on such date and at such time and place as may be designated from time to time by the Board of Directors. In the absence of such designation the meeting shall be held at the main office of the Association. SECTION 2.09. Notice of Special Meetings. The Secretary, an Assistant -------------------------- Secretary, or the secretary to the Board shall give notice to each director of each special meeting of the Board of Directors. The notice shall state the time and place of the meeting. Notice is given to a director when it is delivered personally to him, left at his residence or usual place of business, or sent by telegraph or telephone, at least 24 hours before the time of the meeting or, in the alternative by mail to his address as it shall appear on the records of the Association, at least 72 hours before the time of the meeting. The notice need not state the business to be transacted at or the purposes of any special meeting of the Board of Directors. Any meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement. (Amended August 2, 1988) SECTION 2.10. Action by Directors. Unless statute or the Articles of ------------------- Association or By-Laws require a greater proportion, the action of a majority of the directors present at a meeting at which a quorum is present is action of the Board of Directors. A 7 majority of the entire Board of Directors shall constitute a quorum for the transaction of business. In the absence of a quorum, the directors present by majority vote and without notice other than by announcement may adjourn the meeting from time to time until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting. SECTION 2.11. Compensation. The Association may provide compensation and ------------ reimbursement of expenses for service on the Board of Directors or on committees thereof, pursuant to a resolution of directors. A director who serves the Association in any other capacity also may receive compensation for such other services, pursuant to a resolution of the directors. SECTION 2.12. Advisory Boards. The Chairman of the Board may establish --------------- one or more Advisory Boards and appoint the members. The members of Advisory Boards shall be appointed annually in March, although new Advisory Boards may be established and members may be appointed to new or existing Advisory Boards at any time. No one shall be appointed a member of an Advisory Board after attaining the age of 70 years. Appointments to Advisory Boards shall be reported to the Board of Directors. ARTICLE III. COMMITTEES SECTION 3.01. Committees. The Board of Directors may appoint an ---------- Executive Committee, a Trust Investment Committee, an Audit Committee, a Management and Compensation Committee and such other committees, composed of two or more directors and may delegate to these committees any of the powers of the Board of Directors, except the power to declare dividends or other distributions on stock, elect directors, issue stock, recommend to the shareholders any action which requires shareholder approval, and amend the By- Laws. (Amended November 19, 1985) SECTION 3.02. Executive Committee. The Executive Committee shall be ------------------- composed of not less than six nor more than nine directors, as the Board of Directors shall deem proper, of which the Chairman of the Board and the President shall be members. The members of the Executive Committee shall serve at the pleasure of the Board of Directors, and the Chairman of the Board and the President shall each have the power to make temporary appointments to the Executive Committee of members of the Board of Directors to act in the place and stead of members of the Executive Committee who temporarily cannot 8 attend its meetings. The Executive Committee shall have and may exercise all of the powers of the Board of Directors during intervals between meetings thereof, except functions reserved to the Board by Section 3.01 hereof. Regular meetings of the Executive Committee shall be held, without notice, at the main office of the Association on the schedule established by the Board at the first regular meeting following the annual meeting of shareholders, or on such other schedule or at such other place as the Board may from time to time designate. Special meetings of the Executive Committee may be held at any time and place upon call of the Chairman of the Board or the President or any two other members of the Committee, and upon such notice as the Committee may prescribe. SECTION 3.03. Trust Investment Committee. The Trust Investment -------------------------- Committee shall be composed of at least seven members, three of whom shall be directors of the Association, appointed by the Board annually. The Trust Investment Committee shall be responsible for the proper exercise of the fiduciary powers of the Association, including the determination of policies, the investment and disposition of property held in a fiduciary capacity and the direction and review of the actions of all officers and employees of the Trust Division. The Trust Investment Committee or its designees shall approve the acceptance, and establish the procedures for relinquishment or closing out, of all fiduciary accounts, and a written record shall be made of such acceptances and relinquishments. All investments of funds held in a fiduciary capacity shall be made, retained or disposed of with the approval of the Trust Investment Committee or its designees in accordance with procedures established by the Committee. The Committee or its designees shall, promptly after the acceptance of an account for which the Association has investment responsibility, review the assets thereof to determine the advisability of retaining or disposing of such assets. The Committee or its designees shall conduct a similar review at least once during each calendar year thereafter and within 15 months of the last such review. The Committee or its designees shall keep minutes of all of its meetings showing the disposition of all matters considered and passed upon by it. (Amended December 18, 1984) SECTION 3.04. Audit Committee. The Audit Committee shall be composed --------------- of at least three directors, none of whom may be an officer of the Association. The Audit Committee shall at least once each 12 months meet to make suitable examinations of the Trust Division, or cause suitable examinations to be made by auditors responsible only to the Board of Directors. The examination shall ascertain whether the Trust 9 Division has been administered in accordance with law, the regulations of the Comptroller of the Currency, and sound fiduciary principles. The Audit Committee at least once during each calendar year and within 15 months of the last such examination shall also make an examination into the affairs of the Association, or cause suitable examinations to be made by auditors responsible only to the Board of Directors, and report the result of such examination in writing to the Board at the next regular meeting thereafter. Such report shall state whether the Association is in sound condition and whether adequate internal controls and procedures are being maintained, and shall recommend to the Board such changes in the manner of conducting the affairs of the Association as shall be deemed advisable. SECTION 3.05. Management and Compensation Committee. The Management and ------------------------------------- Compensation Committee shall be composed of at least three directors none of whom may be an officer of the Association. The Management and Compensation Committee shall advise the chief executive officer on major policy decisions, review and recommend appropriate compensation for executive officers, be responsible for nominating the individuals to serve on the Board of Directors and assume such other duties as may be assigned by the Board of Directors from time to time. SECTION 3.06. Committee Procedure. Each committee may fix rules of ------------------- procedure for its business. A majority of the members of a committee shall constitute a quorum for the transaction of business and the act of a majority of those present at a meeting at which a quorum is present shall be the act of the committee. In addition to temporary appointments permitted by Section 3.02, the members of a committee present at any meeting, whether or not they constitute a quorum, may appoint a director to act in the place of an absent member. The minutes of meetings of each committee shall be submitted to the Board of Directors at the next regular meeting of the Board. SECTION 3.07. Emergency. In the event of a state of disaster of --------- sufficient severity to prevent the conduct and management of the affairs and business of the Association by its directors and officers as contemplated by the Articles of Association and the By-Laws, any two or more available members of the then incumbent Executive Committee shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Association in accordance with the provisions of Section 3.01. In the event of the unavailability, at such time, of a minimum of two members of the then incumbent Executive Committee, the available directors shall elect an Executive Committee consisting of any 10 two members of the Board of Directors, whether or not they be officers of the Association, which two members shall constitute the Executive Committee for the full conduct and management of the affairs of the Association in accordance with the aforegoing provisions of this Section. This Section shall be subject to implementation by resolution of the Board of Directors passed from time to time for that purpose, and any provisions of the By-Laws (other than this Section) and any resolutions which are contrary to the provisions of this Section or to the provisions of any such implementary resolutions shall be suspended until it shall be determined by any interim Executive Committee acting under this Section that it shall be to the advantage of the Association to resume the conduct and management of its affairs and business under all the other provisions of the By- Laws. ARTICLE IV. OFFICERS SECTION 4.01. Executive and Other Officers. The Association shall ---------------------------- have a President and one or more Executive Vice-Presidents who shall be the executive officers of the Association. It may have a Chairman of the Board and a Vice Chairman of the Board. The Chairman of the Board and Vice Chairman of the Board shall be executive officers if they are designated as executive officers by the Board of Directors of the Association. The Board of Directors may designate who will serve as the chief executive officer, having general supervision of the business and affairs of the Association, or as chief operating officer, having general supervision of the operations of the Association; in the absence of designation, the President shall serve as chief executive officer and chief operating officer. It shall also have a Secretary and may also have such Vice-Presidents, assistant officers, and subordinate officers as may be established by the Board of Directors. A person may hold more than one office in the Association but may not serve concurrently as both President and Vice-President or as President and Secretary of the Association. The Chairman of the Board and the President shall be directors; the other officers may be directors. (Amended May 15, 1984, January 21, 1986, August 2, 1988) SECTION 4.02. Chairman of the Board. The Chairman of the Board, if --------------------- one be elected, shall preside at all meetings of the Board of Directors and of the shareholders at which he shall be present; and, in general, he shall perform all duties as are from time to time assigned to him by the Board of Directors. (Amended May 15, 1984) 11 SECTION 4.03. Chairman of the Executive Committee. The Chairman of the ----------------------------------- Executive Committee, if one be elected, shall preside at all meetings of the Executive Committee at which he shall be present; and, in general, he shall perform all duties as are from time to time assigned to him by the Board of Directors. (Added May 15, 1984) SECTION 4.04. President. The President, in the absence of the --------- Chairman of the Board, shall preside at all meetings of the Board of Directors and of the shareholders at which he shall be present; he may on behalf of the Association grant secured or unsecured loans, purchase or discount bills, notes and trade paper, borrow money and pledge assets, purchase or sell securities, accept trust appointments and delegate any such powers to other officers and employees; and, in general, he shall perform all duties usually performed by a president of a corporation and such other duties as are from time to time assigned to him by the Board of Directors or the chief executive officer of the Association. (Amended May 15, 1984) SECTION 4.05. Vice-Presidents. The Vice-President or Vice-Presidents, --------------- at the request of the Board of Directors, the chief executive officer or the President or in the President's absence or during his inability to act, shall perform the duties and exercise the functions of the President, and when so acting shall have the powers of the President. If there are more than one Vice- Presidents, the Board of Directors may determine which one or more of the Vice- Presidents shall perform any of such duties or exercise any of such functions, or if such determination is not made by the Board of Directors, the chief executive officer or President may make such determination; otherwise any of the Vice-Presidents may perform any of such duties or exercise any of such functions. The Vice-President or Vice-Presidents shall have such other powers and perform such other duties, and have such additional descriptive designations in their titles (if any), as are from time to time assigned to them by the Board of Directors, the chief executive officer, or the President. (Amended May 15, 1984) SECTION 4.06. Secretary. The Secretary shall keep the minutes of the --------- meetings of the stockholders, of the Board of Directors, and of any committees, in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of the By-Laws or as required by law; he shall be the custodian of the records of the Association; he may witness all documents on behalf of the Association, the execution of which is duly authorized, see that the corporate seal is affixed where such document is required to be under its seal, and, when so affixed, may 12 attest the same; and, in general, he shall perform all duties incident to the office of a secretary of a bank, and such other duties as are from time to time assigned to him by the Board of Directors, chief executive officer, or the President. (Amended May 15, 1984, August 2, 1988) SECTION 4.07. Assistant and Subordinate Officers. The assistant and ---------------------------------- subordinate officers of the Association are all officers below the office of Vice-President or Secretary. The assistant or subordinate officers shall have such duties as are from time to time assigned to them by the Board of Directors, the chief executive officer, or the President, or the officer in charge of the Division, Region, or Department of the Association to which the assistant or subordinate officer is assigned. (Amended May 15, 1984, August 2, 1988) SECTION 4.08. Election, Appointment, Tenure and Removal of Officers. ----------------------------------------------------- The Board of Directors shall elect the officers. The Board of Directors may from time to time authorize any committee or officer to appoint assistant and subordinate officers. The Chairman of the Board and the President serve for one year. All other officers shall be elected or appointed to hold their offices, respectively, during the pleasure of the Board. The Board of Directors (or, as to any assistant or subordinate officer, any committee or officer authorized by the Board) may remove an officer at any time. The removal of an officer does not prejudice any of his contract rights. The Board of Directors (or, as to any assistant or subordinate officer, any committee or officer authorized by the Board) may fill a vacancy which occurs in any office for the unexpired portion of the term. (Amended July 31, 1987, September 15, 1987) SECTION 4.09. Compensation. The Board of Directors shall have power to ------------ fix the salaries and other compensation and remuneration, of whatever kind, of all officers of the Association. It may authorize any committee or officer of the Association to fix the salaries, compensation and remuneration. (Amended July 31, 1987, September 15, 1987) ARTICLE V. CAPITAL STOCK SECTION 5.01. Certificates for Stock. Each shareholder is entitled to ---------------------- certificates which represent and certify the shares of stock he holds in the Association. Each stock certificate shall include on its face the name and location of the Association, the name of the shareholder or other person to whom it is issued, and the class of stock and 13 number of shares it represents. It shall be in such form, not inconsistent with law or with the Articles of Association, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairman of the Board, the President, or a Vice-President, and countersigned by the Secretary or an Assistant Secretary. Each certificate may be sealed with the actual seal of the Association or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. Each certificate shall recite on its face that the stock represented thereby is transferable only upon the books of the Association properly endorsed. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. (Amended August 2, 1988). SECTION 5.02. Stock Ledger and Transfers. The Association shall -------------------------- maintain a stock ledger which contains the name and address of each shareholder and the number of shares of stock of each class which the shareholder holds. Shares of stock shall be transferable only on the books of the Association, and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all rights of the prior holder of such shares. SECTION 5.03. Record Date and Closing of Transfer Books. The Board ----------------------------------------- may prescribe a period prior to any shareholders' meeting, not exceeding 22 days, during which no transfer of stock on the books of the Association may be made. Transfers of stock shall not be suspended preparatory to the declaration or payment of dividends. Cash dividends shall be paid to the shareholders in whose name the stock shall stand on the books of the Association at the date of the declaration of such cash dividend or at such later date as the Board may fix. ARTICLE VI. SUNDRY PROVISIONS SECTION 6.01. Fiscal Year. The fiscal year of the Association shall ----------- be the 12 calendar months period ending December 31 in each year, unless otherwise provided by the Board of Directors. SECTION 6.02. Books and Records. The Association shall keep correct ----------------- and complete books and records of its 14 accounts and transactions and minutes of the proceedings of its shareholders and Board of Directors and of any committee thereof when exercising any of the powers of the Board of Directors. The books and records of the Association may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. SECTION 6.03. Corporate Seal. The Board of Directors shall provide a -------------- seal, bearing the name of the Association, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. (Amended August 2, 1988) SECTION 6.04. Bonds. All officers and employees of the Association ----- shall be bonded by responsible corporate sureties and in such sums as may be determined by the Board of Directors. SECTION 6.05. Voting Upon Shares in Other Corporations. Stock of ---------------------------------------- other corporations or associations, registered in the name of the Association, may be voted by the Chairman of the Board, the President, a Vice-President, or a proxy appointed by any of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution. SECTION 6.06. Mail. Any notice or other document which is required by ---- these By-Laws to be mailed shall be deposited in the United States mails, postage prepaid. SECTION 6.07. Execution of Documents. All agreements, indentures, ---------------------- mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments or documents may be signed, executed, acknowledged, verified, delivered, or accepted on behalf of the Association by the Chairman of the Board, or the President, or any Vice-President, or the Secretary. By resolution, the Board of Directors may grant additional specific or general authority relating to any signing, execution, acknowledgment, verification, delivery, or acceptance on behalf of the Association. A person who holds more than one office in the Association may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be 15 executed, acknowledged, or verified by more than one officer. (Amended June 20, 1989) SECTION 6.08. Banking Hours. The Board of Directors shall designate, ------------- or delegate to an officer the authority to designate, the hours that each office of the Association shall be open for the transaction of business. SECTION 6.09. Inspection. A copy of the By-Laws, with all amendments ---------- thereto, shall at all times be kept in a convenient place at the main office of the Association, and shall be open for inspection to all shareholders, during banking hours. SECTION 6.10. Amendments. Subject to the special provisions of ---------- Section 2.02, (a) any and all provisions of these By-Laws may be altered or repealed and new by-laws may be adopted at any annual meeting of the shareholders, or at any special meeting called for that purpose, and (b) the Board of Directors shall have the power, at any meeting thereof, to make and adopt new by-laws, or to amend, alter or repeal any of the By-Laws of the Association. SECTION 6.11. Indemnification of Directors and Officers. ----------------------------------------- (a) With respect to any administrative proceeding or civil action not initiated by a federal banking agency, the Association shall indemnify (i) its directors to the fullest extent permitted by the laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures provided by such laws; (ii) its officers to the same extent as its directors; (iii) its officers who are not directors to such further extent as shall be authorized by the affirmative vote of a majority of its Board of Directors and be consistent with such laws; and (iv) its other employees and agents to the extent as shall be authorized by the affirmative vote of a majority of its Board of Directors and be consistent with such laws. (b) With respect to any administrative proceeding or civil action initiated by a federal banking agency against any director, officer or other institution affiliated party of the Association (as defined in 12 U.S.C. 1813(u) as amended from time to time), the Association shall make such indemnification payments to such person as are (i) reasonable and consistent with the provisions of 12 U.S.C. 1828(k) and the implementing regulations thereunder each as amended from time to time and (ii) permitted by the laws of the State of Maryland now or hereafter in force. 16 (c) The Association may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Association to the extent as shall be authorized by the affirmative vote of a majority of its Board of Directors and be consistent with the general laws of the State of Maryland now or hereafter in force; however, the Association shall not purchase of maintain insurance on behalf of its directors, officers, employees or agents against expenses, penalties, or other payments incurred in an administrative proceeding or action instituted by an appropriate bank regulatory agency which proceeding or action results in a final order assessing civil money penalties or requiring affirmative action by a director, officer, employee or agent in the form of payments to the Association. 17 Exhibit 6 --------- Consent of Trustee ------------------ Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, in connection with the issuance by Household International, Inc. of its Notes in Series, we hereby consent that reports of examination by Federal, state, territorial or district authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. THE FIRST NATIONAL BANK OF MARYLAND By: JACOB H. SMITH, IV ------------------------------ Jacob H. Smith, IV Assistant Vice President 18 Exhibit 7 --------- Report of Condition Consolidating Domestic and Foreign Subsidiaries of The First National Bank of Maryland, Baltimore, Maryland at the close of business on March 31, 1997 published in response to call made by Comptroller of the Currency, under Title 12, United States Code, Section 161, Charter No. 04822, Comptroller of the Currency, Richmond District. CONSOLIDATED REPORT OF CONDITION (Dollars in Thousands) ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin...................................... $ 836,707 Interest-bearing balances.................................... 194 Securities: Held-to-maturity securities.................................. -0- Available-for-sale securities................................ 2,140,463 Federal funds sold and securities purchased under agreements to resell................................... 606,670 Loans and lease financing receivables: Loans and leases, net of unearned income..................... 5,451,457 LESS: Allowance for loan and lease losses.................... 99,425 LESS: Allocated transfer risk reserve........................ 3,800 Loans and leases, net of unearned income, allowance, and reserve..................................... 5,348,232 Trading assets................................................. 67,883 Premises and fixed assets (including capitalized leases).......................................... 74,569 Other real estate owned........................................ 8,639 Investments in unconsolidated subsidiaries and associated companies..................................... 2,000 Customers' liability to this bank on acceptances outstanding................................... 8,876 Intangible assets.............................................. 52,669 Other assets................................................... 195,143 TOTAL ASSETS................................................. $9,342,045 ==========
19 LIABILITIES Deposits: In domestic offices....................................... $6,374,952 Noninterest-bearing..................................... 2,335,368 Interest-bearing........................................ 4,039,584 In foreign offices, Edge and Agreement subsidiaries, and IBFs.................................. 713,546 Noninterest-bearing..................................... 166 Interest-bearing........................................ 713,380 Federal funds purchased and securities sold under agreements to repurchase....................... 612,785 Demand notes issued to the U.S. Treasury.................... 6,485 Trading liabilities......................................... 123,661 Other borrowed money: With original maturity of one year or less................ 435,000 With original maturity of more than one year.............. 50,000 Bank's liability on acceptances executed and outstanding.................................. 8,876 Subordinated notes and debentures........................... 174,000 Other liabilities........................................... 252,897 TOTAL LIABILITIES......................................... $8,752,202 ---------- EQUITY CAPITAL Common Stock................................................ 18,448 Surplus..................................................... 211,106 Undivided profits and capital reserves...................... 371,740 Net unrealized holding gains (losses) on available-for-sale securities.......................... (11,451) TOTAL EQUITY CAPITAL...................................... $ 589,843 ---------- TOTAL LIABILITIES AND EQUITY CAPITAL...................... $9,342,045 ==========
20 EX-25.(B) 10 FORM T-1--HARRIS TRUST & SAVINGS BANK Securities and Exchange Commission Washington, D.C. 20549 FORM T-1 Statement of Eligibility Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) --------------- Harris Trust and Savings Bank (Name of Trustee) Illinois 36-1194448 (State of Incorporation) (I.R.S. Employer Identification No.) 111 West Monroe Street; Chicago, Illinois 60603 (Address of principal executive offices) Carolyn C. Potter; Harris Trust and Savings Bank; 311 West Monroe Street; Chicago, Illinois, 60606 312/461-2531 (Name, address and telephone number for agent for service) Household International, Inc. (Name of obligor) Delaware (State of Incorporation) 36-3121988 (I.R.S. Employer Identification Number) 2700 Sanders Road Prospect Heights, Illinois 60070 (Address of principal executive offices) Debt Securities (Title of Indenture Securities) 1. GENERAL INFORMATION. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. Commissioner of Banks and Trust Companies, State of Illinois, Springfield, Illinois; Chicago Clearing House Association, 164 West Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance Corporation, Washington, D.C.; The Board of Governors of the Federal Reserve System,Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Harris Trust and Savings Bank is authorized to exercise corporate trust powers. 2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee, describe each such affiliation. The Obligor is not an affiliate of the Trustee. 3. thru 15. NO RESPONSE NECESSARY 16. LIST OF EXHIBITS. 1. A copy of the articles of association of the Trustee is now in effect which includes the authority of the trustee to commence business and to exercise corporate trust powers. A copy of the Certificate of Merger dated April 1, 1972 between Harris Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which constitutes the articles of association of the Trustee as now in effect and includes the authority of the Trustee to commence business and to exercise corporate trust powers was filed in connection with the Registration Statement of Louisville Gas and Electric Company, File No. 2-44295, and is incorporated herein by reference. 2. A copy of the existing by-laws of the Trustee. A copy of the existing by-laws of the Trustee was filed in connection with the Registration Statement of Commercial Federal Corporation; File No. 333-207-11, and is incorporated herein by reference. 3. The consents of the Trustee required by Section 321(b) of the Act. (included as Exhibit A on page 2 of this statement) 4. A copy of the latest report of condition of the Trustee published pursuant to law or the requirements of its supervising or examining authority. (included as Exhibit B on page 3 of this statement) SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the laws of the State of Illinois, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago, and State of Illinois, on the 6th day of May, 1997. Harris Trust and Savings Bank By: ------------------------- Carolyn C. Potter Assistant Vice President EXHIBIT A The consents of the Trustee required by Section 321(b) of the Act. Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that reports of examinations of said trustee by Federal and State authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. Harris Trust and Savings Bank By: ------------------------- Carolyn C. Potter Assistant Vice President EXHIBIT B Attached is a true and correct copy of the statement of condition of Harris Trust and Savings Bank as of March 31, 1997, as published in accordance with a call made by the State Banking Authority and by the Federal Reserve Bank of the Seventh Reserve District. [LOGO OF HARRIS BANK] Harris Trust and Savings Bank 111 West Monroe Street Chicago, Illinois 60603 of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of business on March 31, 1997, a state banking institution organized and operating under the banking laws of this State and a member of the Federal Reserve System. Published in accordance with a call made by the Commissioner of Banks and Trust Companies of the State of Illinois and by the Federal Reserve Bank of this District. Bank's Transit Number 71000288
THOUSANDS ASSETS OF DOLLARS Cash and balances due from depository institutions: Non-interest bearing balances and currency and coin........... $ 1,594,951 Interest bearing balances..................................... $ 620,847 Securities...................................................... $ 0 a. Held-to-maturity securities............................... $ 3,674,321 b. Available-for-sale securities Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's: Federal funds sold............................................ $ 447,375 Securities purchased under agreements to resell............... $ 0 Loans and lease financing receivables: Loans and leases, net of unearned income...................... $ 8,499,011 LESS: Allowance for loan and lease losses.................. $ 110,978 ------------- Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b).................................. $ 8,388.033 Assets held in trading accounts............................... $ 126,309 Premises and fixed assets (including capitalized leases)...... $ 188,993
Other real estate owned...................................... $ 446 Investments in unconsolidated subsidiaries and associated.... $ 53 companies............................................... Customer's liability to this bank on acceptances outstanding. $ 66,859 Intangible assets.......................................... $ 292,918 Other assets................................................. $ 495,997 ----------- TOTAL ASSETS $15,897,102 ===========
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LIABILITIES Deposits: In domestic offices................... $ 8,252,773 Non-interest bearing............. $ 3,414,150 Interest bearing................. $ 4,838,623 In foreign offices, Edge and Agreement subsidiaries, and IBF's..... $ 1,989,792 Non-interest bearing............. $ 54,391 Interest bearing................. $ 1,935,401 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's: Federal funds purchased.& securities sold under agreements to repurchase.. $ 2,896,616 Trading Liabilities..................... 81,381 Other borrowed money: a. With remaining maturity of one year or less............................. $ 991,442 b. With remaining maturity of more than one year....................... $ 0 Bank's liability on acceptances executed and outstanding................ $ 66,859 Subordinated notes and debentures....... $ 310,000 Other liabilities....................... $ 138,427 ----------- TOTAL LIABILITIES....................... $14,727,290 =========== EQUITY CAPITAL Common stock............................ $ 100,000 Surplus................................. $ 600,566 a. Undivided profits and capital reserves............................ $ 519,518 b. Net unrealized holding gains (losses) on available-for-sale securities.......................... ($50,272) ----------- TOTAL EQUITY CAPITAL.................... $ 1,169,812
=========== Total liabilities, limited-life preferred stock, and equity capital.... $15,897,102 ===========
I, Steve Neudecker, Vice President of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. STEVE NEUDECKER 4/30/97 We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and, to the best of our knowledge and belief, has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and the Commissioner of Banks and Trust Companies of the State of Illinois and is true and correct. EDWARD W. LYMAN, ALAN G. McNALLY, MARIBETH S. RAHE Directors. 4 -----END PRIVACY-ENHANCED MESSAGE-----