-----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, AFewRrQbWbsP/BX6Z4Vqv27e35+6ztMS2BqHt/cQLatfIOcTGqoO0DpbEt14OJx6 pdR6XZ4cMZk3cXX67tO2qA== 0000950137-01-000270.txt : 20010124 0000950137-01-000270.hdr.sgml : 20010124 ACCESSION NUMBER: 0000950137-01-000270 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20010123 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: SEC FILE NUMBER: 333-53862 FILM NUMBER: 1513319 BUSINESS ADDRESS: STREET 1: 2700 SANDERS RD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 BUSINESS PHONE: 8475646996 MAIL ADDRESS: STREET 1: 2700 SANDERS ROAD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOUSEHOLD CAPITAL TRUST VI CENTRAL INDEX KEY: 0001132572 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-53862-01 FILM NUMBER: 1513320 BUSINESS ADDRESS: STREET 1: 2700 SANDERS RD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 BUSINESS PHONE: 8475646141 MAIL ADDRESS: STREET 1: 2700 SANDERS RD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 S-3/A 1 c59540a1s-3a.txt AMENDMENT #1 TO FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 23, 2001. REGISTRATION NOS. 333-53862 AND 333-53862-01 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ HOUSEHOLD INTERNATIONAL, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT) DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 36-3121988 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) HOUSEHOLD CAPITAL TRUST VI (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR GOVERNING DOCUMENT) DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) APPLIED FOR (I.R.S. EMPLOYER IDENTIFICATION NUMBER) 2700 SANDERS ROAD PROSPECT HEIGHTS, ILLINOIS 60070 847-564-5000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) JOHN W. BLENKE, VICE PRESIDENT-CORPORATE LAW HOUSEHOLD INTERNATIONAL, INC. 2700 SANDERS ROAD PROSPECT HEIGHTS, ILLINOIS 60070 847-564-6150 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ WITH A COPY TO: (UNDERWRITERS' COUNSEL) SCOTT N. GIERKE MCDERMOTT, WILL & EMERY 227 WEST MONROE STREET CHICAGO, ILLINOIS 60606 312-984-7521 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after the effective date of this Registration Statement, as determined by market conditions. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------------ THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION DATED JANUARY 23, 2001 PROSPECTUS 8,000,000 TRUST PREFERRED SECURITIES HOUSEHOLD CAPITAL TRUST VI % TRUST PREFERRED SECURITIES (LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY) FULLY AND UNCONDITIONALLY GUARANTEED BY HOUSEHOLD INTERNATIONAL, INC. ------------------------ THE TRUST: Household Capital Trust VI is a Delaware business trust which will: - sell Trust Preferred Securities to the public; - sell common interests to Household International; - use the proceeds from these sales to buy an equal principal amount of % Junior Subordinated Deferrable Interest Notes due , 2031 of Household International; and - distribute the cash payments it receives on the Notes to the holders of its Trust Preferred Securities and common interests. QUARTERLY DISTRIBUTIONS: - For each Trust Preferred Security that you own, you will receive cumulative cash distributions, accumulating from , 2001 at an annual rate of % of the liquidation amount of $25 per Trust Preferred Security, on , , and of each year beginning , 2001. - Household International may defer interest payments on the Notes at any time, and from time to time, for up to 20 consecutive quarters. If Household International does defer interest payments on the Notes, the Trust will also defer payment of distributions on the Trust Preferred Securities. However, deferred distributions will themselves accrue interest at an annual rate of %, to the extent permitted by law. REDEMPTION: - Household International may redeem the Notes on or after , 2006 or at any time upon the occurrence of specified changes in tax law at a redemption price equal to their principal amount plus any accrued and unpaid interest to the redemption date. If Household International does redeem the Notes, the Trust will use the cash it receives on redemption of the Notes to redeem the Trust Preferred Securities and the common interests. INVESTING IN THE TRUST PREFERRED SECURITIES INVOLVES CERTAIN RISKS WHICH ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS PROSPECTUS. We intend to list the Trust Preferred Securities on the New York Stock Exchange under the trading symbol "HIprF". We expect that the Trust Preferred Securities will begin trading on the New York Stock Exchange within 30 days after they are first issued. ------------------------
PER TRUST PREFERRED SECURITY TOTAL --------------- ----- Public Offering Price (1)................................... $ $ Underwriting Commission..................................... $(2) $(2) Proceeds, before expenses, to the Trust..................... $ $
- --------------- (1) Plus accumulated distributions from , 2001, if settlement occurs after that date. (2) The underwriting commission of $ per Trust Preferred Security ($ per Trust Preferred Security sold to certain institutions) will be paid by Household International. The maximum total underwriting commission will be $ . Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. We expect that the Trust Preferred Securities will be ready for delivery in book-entry form through The Depository Trust Company on or about , 2001. ------------------------ MERRILL LYNCH & CO. A.G. EDWARDS & SONS, INC. PRUDENTIAL SECURITIES UBS WARBURG LLC ------------------------ The date of this prospectus is , 2001. 3 TABLE OF CONTENTS
PAGE ---- ABOUT THIS PROSPECTUS................. 2 SUMMARY INFORMATION -- QUESTIONS & ANSWERS............................. 2 RISK FACTORS.......................... 5 HOUSEHOLD CAPITAL TRUST VI............ 7 FINANCIAL STATEMENTS OF TRUST AND ACCOUNTING TREATMENT................ 8 HOUSEHOLD INTERNATIONAL, INC.......... 8 USE OF PROCEEDS....................... 9 RATIO OF EARNINGS TO FIXED CHARGES OF HOUSEHOLD........................... 9 SELECTED FINANCIAL INFORMATION OF HOUSEHOLD........................... 10 CAPITALIZATION OF HOUSEHOLD........... 11 DESCRIPTION OF TRUST PREFERRED SECURITIES.......................... 11
PAGE ---- DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE................ 22 DESCRIPTION OF THE NOTES.............. 25 EFFECT OF OBLIGATIONS UNDER THE NOTES AND THE PREFERRED SECURITIES GUARANTEE........................... 33 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.................... 34 CERTAIN ERISA CONSIDERATIONS.......... 37 UNDERWRITING.......................... 39 WHERE YOU CAN FIND MORE INFORMATION... 41 INCORPORATION OF INFORMATION WE FILE WITH THE SEC........................ 41 LEGAL MATTERS......................... 42 EXPERTS............................... 42
ABOUT THIS PROSPECTUS You should only rely on the information provided or incorporated by reference in this prospectus. We have not authorized anyone else to provide you with different information. We are not making an offer of the Trust Preferred Securities to any person in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of this document. SUMMARY INFORMATION -- QUESTIONS & ANSWERS This summary includes questions and answers that highlight selected information from the prospectus to help you understand the Trust Preferred Securities. This summary may not contain all the information that may be important to you. You should carefully read this prospectus to fully understand the terms of the Trust Preferred Securities, as well as the tax and other considerations that should be important to you in making a decision about whether to invest in the Trust Preferred Securities. You should pay special attention to the "Risk Factors" section to determine whether an investment in the Trust Preferred Securities is appropriate for you. You should also read the documents described under "Where You Can Find More Information" to learn more about Household's business. In this prospectus references to: - "Household International", "Household", "we", "us" and "our" are to Household International, Inc., - "Household Trust" or "Trust" are to Household Capital Trust VI, - "Notes" are to the % Junior Subordinated Deferrable Interest Notes due , 2031 of Household that are deposited with Household Trust, and - "Trust Preferred Securities" are to the % Trust Preferred Securities being offered by Household Trust through this prospectus. 2 4 Q: WHO IS HOUSEHOLD TRUST? A: Household Trust is a business trust established under Delaware law that exists for the sole purpose of issuing the Trust Preferred Securities and a set amount of common interests for cash. The proceeds from these securities will be used by the Trust to purchase the Notes from us. Q: WHAT ARE THE TRUST PREFERRED SECURITIES? A: Each Trust Preferred Security is a preferred undivided beneficial ownership interest in the assets of Household Trust. The common interests issued by the Trust are subordinate to the Trust Preferred Securities with respect to distributions made by the Trust in the event the Trust is liquidated or dissolved. We will own all of the common interests of Household Trust. The sole assets of Household Trust will be our capital contribution to Household Trust for the common interests and our Notes that will be purchased from us by Household Trust. Q: WHAT DISTRIBUTIONS WILL I RECEIVE ON THE TRUST PREFERRED SECURITIES? A: The Trust Preferred Securities provide for quarterly cash distributions at the annual rate of % or $ per quarter ($ per year) for each Trust Preferred Security you own. Distributions are payable on each , , and , beginning , 2001. Distributions will accumulate from the date Household Trust originally issues the Trust Preferred Securities, which is expected to be , 2001. The initial cash distribution payable on , 2001 will equal $ . for each Trust Preferred Security. Because the principal asset of Household Trust will be the Notes issued by us, Household Trust's ability to pay distributions on the Trust Preferred Securities is ultimately dependent upon our ability to make interest payments on those Notes. If we exercise our right to defer making an interest payment on our Notes, Household Trust will not be able to pay distributions to you until we resume making interest payments on those Notes. Q: WHO IS HOUSEHOLD? A: Household is a holding company. Our subsidiary companies provide consumer lending, credit cards and credit insurance products in the United States, the United Kingdom and Canada. Our principal executive offices are located at 2700 Sanders Road, Prospect Heights, Illinois 60070. Our telephone number is (847) 564-5000. For information about us, see the section "Household International, Inc." in this prospectus. You should also read the other documents we have filed with the SEC, which you can find by referring to the section entitled "Where You Can Find More Information" in this prospectus. Q: WHAT ARE THE NOTES? A: The Notes are unsecured, junior subordinated debt obligations of Household. They rank below any of our senior debt, including normal day-to-day business expenses. We may exercise our right to defer interest payments on the Notes for a period of not more than 20 consecutive quarters. We cannot, however, defer any payments on the Notes beyond their stated maturity which is , 2031. In certain circumstances we can elect to liquidate Household Trust and distribute the Notes to you. Q: CAN THE TRUST PREFERRED SECURITIES BE REDEEMED? A: The Trust must redeem the Trust Preferred Securities when the Notes are paid at maturity or if Household redeems the Notes early. Household can redeem the Notes in whole or in part from time to time on or after , 2006. Also, Household can redeem the Notes at any time if there is a tax event as described in this prospectus. In the event of any redemption, you will be entitled to receive $25 per Trust Preferred Security plus accrued and unpaid distributions to the redemption date. The trustees of Household Trust can elect to liquidate Household Trust and distribute the Notes to you if at any time there is a specified tax event or a change in U.S. investment company law as described in this prospectus. Neither the Notes nor the Trust Preferred Securities can be redeemed at any time at the option of their holders. Q: ARE THERE ANY RISKS ASSOCIATED WITH MY INVESTMENT? A: Yes, an investment in the Trust Preferred Securities is subject to risk. Please refer to the section entitled "Risk Factors" in this prospectus for a description of these risks. Q: WHAT HAPPENS IF HOUSEHOLD TRUST DOESN'T PAY DISTRIBUTIONS ON THE TRUST PREFERRED SECURITIES? A: If your distributions are deferred, you will still accumulate distributions at the annual rate of 3 5 % plus you will be entitled to additional distributions at the same rate, compounded quarterly, on any deferred distribution that remains unpaid. If distributions are deferred, during that period until all scheduled quarterly distributions which are due and owing are paid or set aside for payment to you, we may not, except in limited circumstances, declare or pay dividends on, acquire, or make a liquidation payment with respect to, any of our outstanding capital stock. This limitation prevents us from paying cash or other dividends to our shareholders if payments are not being made on the Trust Preferred Securities, the Notes or the guarantee issued by us in connection with the Trust Preferred Securities. However, these provisions will not restrict: - our ability to pay dividends or distributions on our capital stock in shares of, or options, warrants or rights to subscribe for or purchase shares of our capital stock; - our ability to convert or exchange our common stock or preferred stock of one class into our common stock or preferred stock of another class; - our ability to redeem or purchase any rights under a rights agreement applicable to our common stock or issue preferred stock under those rights; and - our ability to purchase our capital stock in the open market or in private transactions for employee benefit or similar purposes. Q: WHAT IS THE GUARANTEE? A: We will guarantee, to the extent described in this prospectus: - distribution of quarterly payments on the Trust Preferred Securities by Household Trust to you to the extent Household Trust receives distributions on the Notes; - the redemption amount due to you if Household Trust redeems the Trust Preferred Securities; and - the liquidation amount of the Trust Preferred Securities if Household Trust is liquidated. Our obligations under the guarantee, like our Notes, are subordinate and junior in right of payment to all other of our liabilities and rank equally with our most senior preferred stock and similar guarantees of ours with respect to previous and future issues of securities that are similar to the Trust Preferred Securities. Q: CAN HOUSEHOLD TRUST BE LIQUIDATED? A: Household has the right to liquidate the Trust under certain circumstances and cause cash or the Notes to be distributed to you as part of the Trust liquidation. If Household Trust is liquidated and cash is to be distributed, you will be entitled to receive $25 plus any accumulated and unpaid distributions per Trust Preferred Security before we can receive any payment for our common interests. If Household Trust is liquidated and the Notes are distributed, you will be entitled to receive $25 principal amount of Notes plus accumulated and unpaid distributions per Trust Preferred Security. Q: DO I HAVE VOTING RIGHTS? A: Except in limited circumstances you will not have any voting rights. The holders of a majority of the Trust Preferred Securities, however, have the right to direct the time, method and place of conducting any proceeding for any remedy available to the property trustee, or direct the exercise of any trust power conferred upon the property trustee. Q: IN WHAT FORM WILL THE TRUST PREFERRED SECURITIES BE ISSUED? A: The Trust Preferred Securities will be issued in the form of a global certificate or certificates registered in the name of Cede & Co., as nominee for The Depository Trust Company also known as DTC. This means you will not receive a certificate for your Trust Preferred Securities. Your interests in the Trust Preferred Securities will be evidenced by, and transfers of the Trust Preferred Securities will be effected only through, records maintained by the participants in DTC. Q: WILL THE TRUST PREFERRED SECURITIES BE LISTED ON A STOCK EXCHANGE? A: We intend to list the Trust Preferred Securities on the New York Stock Exchange. If approved for listing, trading on the New York Stock Exchange will begin within 30 days after the issuance of the Trust Preferred Securities. The listing of the Trust Preferred Securities will not necessarily ensure that a liquid trading market will be available for the Trust Preferred Securities. 4 6 RISK FACTORS Your investment in the Trust Preferred Securities will involve risks. You should carefully consider the following discussion of risks before deciding whether an investment in the Trust Preferred Securities is suitable for you. YOU WILL ONLY RECEIVE DISTRIBUTIONS IF PAYMENTS ON THE NOTES ARE MADE Household Trust's ability to pay distributions on the Trust Preferred Securities to you is dependent upon its receipt of payments on the Notes it holds. We may defer interest payments on the Notes for up 20 consecutive quarters. If we fail to make the payments of interest or principal on the Notes the Trust will lack the funds necessary to pay distributions on the Trust Preferred Securities. If Household Trust does not make payments to you on the Trust Preferred Securities, we will be restricted from, among other things, paying cash or certain other dividends on our capital stock. THERE MAY BE TAX CONSEQUENCES TO YOU IF WE FAIL TO PAY YOU DISTRIBUTIONS As a holder of the Trust Preferred Securities, each of which represents a preferred ownership interest in the assets of Household Trust, if we defer the payment of interest and principal on the Notes you will be required to accrue income, for U.S. federal income tax purposes, on the cumulative deferred distributions and accumulated interest allocable to your Trust Preferred Securities. As a result, you will recognize income for U.S. federal income tax purposes in advance of the receipt of cash and will not receive the cash from Household Trust related to that distribution if you dispose of your Trust Preferred Securities before the record date for the date on which those distributions are made. OUR OBLIGATIONS UNDER THE GUARANTEE AND OUR NOTES ARE SUBORDINATED Our obligations under the guarantee are unsecured and will rank in priority of payment: - subordinate and junior in right of payment to all of our other liabilities; and - equally with any of our most senior preferred stock issued from time to time, and similar guarantees of ours with respect to previous and future issues of securities that are similar to the Trust Preferred Securities. This means that our obligations under the guarantee will not be paid unless we can satisfy in full all of our other obligations ranking senior to the guarantee. Our obligations under our Notes issued to Household Trust are subordinate and junior in right of payment to all of our senior indebtedness, including our day-to-day expenses. At December 31, 2000, we had outstanding senior indebtedness aggregating approximately $3.9 billion which would have ranked senior to our obligations under the guarantee and our Notes. In addition, because we are a holding company, our obligations under the Notes and the guarantee are effectively subordinated to all existing and future liabilities of our subsidiaries. There are no terms in the Trust Preferred Securities, the guarantees or the Notes that limit our ability to incur additional indebtedness, including indebtedness that ranks senior to the Notes or the guarantee. REDEMPTION OF THE TRUST PREFERRED SECURITIES OR NOTES MAY AFFECT YOUR RETURN Under certain circumstances involving a tax event or a change in U.S. investment company law, we may dissolve Household Trust, pay its creditors, if any, and distribute the Notes to you in exchange for the Trust Preferred Securities. If your Trust Preferred Securities are exchanged for the Notes, - the trading value of the Notes may be lower than the trading value of the Trust Preferred Securities, which may result in a lower return upon your sale of the Notes; and - any resulting loss might not be deductible for tax purposes. 5 7 Because you may receive Notes upon the occurrence of a tax event or a change in U.S. investment company law, in connection with your investment decision with regard to the Trust Preferred Securities you are also making an investment decision with regard to the Notes. You should carefully review all the information regarding the Notes contained in this prospectus. ENFORCEMENT OF YOUR RIGHTS BY OR ON YOUR BEHALF IS LIMITED If at any time: - you have not received a distribution on the Trust Preferred Securities for six consecutive quarters; or - an event of default occurs and is continuing on the Notes; then: - you will be entitled to elect one trustee of the Trust; - you would rely on the enforcement by the property trustee of its rights, as a holder of the Notes, against us; and - the property trustee, under our guarantee of the Trust Preferred Securities, will have the right to enforce the terms of the guarantee. Our guarantee only guarantees payments to you in the event Household Trust has the funds to make such payments. If your Trust Preferred Securities are exchanged for the Notes, you would only look to the Notes for repayment. Except in the case of failure by us to pay interest on principal on the Notes, you will not be able to proceed directly against us to enforce the Notes or the guarantee unless the property trustee or the trustee for the guarantee fail to do so. YOU HAVE LIMITED VOTING RIGHTS As a holder of the Trust Preferred Securities you will have limited voting rights and will not be entitled to vote to appoint, change, or to increase or decrease the number of trustees of Household Trust appointed by us. Since we own all of Household Trust's common interests, those rights are ours exclusively. THERE IS NO PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES This series of Trust Preferred Securities constitutes a new issue of securities with no established trading market. Household Trust intends to list the Trust Preferred Securities on the New York Stock Exchange. There can be no assurance that an active market for the Trust Preferred Securities will develop or be sustained in the future on the New York Stock Exchange. Although the underwriters have indicated to us that they intend to make a market in the Trust Preferred Securities, as permitted by applicable laws and regulations, they are not obligated to do so and may discontinue any market-making activities at any time without notice. Accordingly, there is no assurance that a trading market for the Trust Preferred Securities will exist and no assurance as to the liquidity of any trading market. POTENTIAL TAX LAW CHANGES Certain tax law changes have been proposed from time to time which could affect the deductibility of interest paid on the Notes. None of these proposals have become law. If they were to become law, however, that event could result in the early redemption of the Trust Preferred Securities. 6 8 HOUSEHOLD CAPITAL TRUST VI The Trust is a statutory business trust formed under Delaware law pursuant to the filing of a certificate of trust with the Delaware Secretary of State on January 17, 2001. The Trust's business is defined in a Declaration of Trust, executed by Household International, as sponsor and the Household International trustees. The Declaration of Trust will be amended and restated in its entirety (as so amended and restated, the "Declaration") substantially in the form filed as an exhibit to the registration statement of which this prospectus forms a part. The Declaration will be qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Trust will issue only the Trust Preferred Securities and the common interests (together, the "Trust Securities"). Upon issuance of the Trust Preferred Securities, the purchasers thereof will own all of the Trust Preferred Securities. Household International will acquire all of the common interests in the Trust for an aggregate liquidation value equal to 3% of the total capital of the Trust. The Trust exists for the exclusive purposes of (i) issuing the Trust Securities representing undivided beneficial interest in the assets of the Trust, (ii) investing the gross proceeds of the Trust Securities in the Notes and (iii) engaging in only those other activities necessary or incidental thereto. The Trust has a term of approximately 55 years, but may terminate earlier as provided in the Declaration. The Trust's business and affairs will be conducted by the trustees appointed by Household International, as holder of the common interests. The duties and obligations of the Household International trustees shall be governed by the Declaration. Pursuant to the Declaration, the number of Household International trustees will initially be five. Three of the Household International trustees (the "Regular Trustees") will be persons who are employees or officers of, or affiliated with Household International. The fourth trustee will be a financial institution which maintains a principal place of business in the State of Delaware and which is unaffiliated with Household International. The fifth trustee will serve as property trustee under the Declaration and as indenture trustee for purposes of the Trust Indenture Act. The Bank of New York (Delaware) will act as the trustee with a principal place of business in the State of Delaware. The Bank of New York, an affiliate of The Bank of New York (Delaware), will be the other trustee and will act as the property trustee until removed or replaced by Household. The Bank of New York will also act as indenture trustee under the Preferred Securities Guarantee (the "Preferred Guarantee Trustee"). See "Description of the Preferred Securities Guarantee." In certain circumstances, the holders of a majority of the Trust Preferred Securities will be entitled to appoint one Regular Trustee (a "Special Regular Trustee"), who need not be an officer or employee of, or otherwise affiliated with, Household International. See "Description of Trust Preferred Securities -- Voting Rights." The property trustee will hold title to the Notes for the benefit of the holders of the Trust Preferred Securities and will have the power to exercise all rights, powers and privileges under the Indenture as the holder of the Notes. In addition, the property trustee will maintain exclusive control of a segregated non-interest bearing trust bank account (the "Property Account") to hold all payments made in respect of the Notes for the benefit of the holders of the Trust Preferred Securities. The property trustee will make payments of distributions and payments on liquidation, redemption and otherwise to the holders of the Trust Securities out of funds from the Property Account. The Preferred Guarantee Trustee will hold the Preferred Securities Guarantee for the benefit of the holders of the Trust Preferred Securities. Subject to the right of the holders of the Trust Preferred Securities to appoint a Special Regular Trustee, Household International, as the holder of all the common interests, will have the right to appoint, remove or replace any Household International trustee and to increase the number of Household International trustees. Household International will pay all fees and expenses related to the Trust and the offering of the Trust Securities. See "Description of the Notes -- Miscellaneous." The rights of the holders of the Trust Preferred Securities, including economic rights, rights to information and voting rights, are as set forth in the Declaration, the Delaware Business Trust Act (the "Delaware Trust Act") and the Trust Indenture Act. See "Description of Trust Preferred Securities." 7 9 The Trust's registered office in the State of Delaware is c/o The Bank of New York (Delaware), White Clay Center, Newark, Delaware 19711. The principal place of business of the Trust shall be c/o Household International, 2700 Sanders Road, Prospect Heights, Illinois 60070 (telephone number (847) 564-5000). FINANCIAL STATEMENTS OF TRUST AND ACCOUNTING TREATMENT The financial statements of the Trust will be consolidated with Household International's financial statements, with the Trust Preferred Securities shown as "Company obligated mandatorily redeemable preferred securities of subsidiary trusts." There are no separate financial statements of Household Trust in this prospectus. We do not believe such financial statements would be helpful because: - The Trust is a direct wholly-owned subsidiary of Household International, which files consolidated financial information under the Exchange Act. - The Trust does not have any independent operations other than the issuing of the Trust Preferred Securities and common interests, and purchasing the Notes. - The obligations of Household International under the Notes and the Preferred Securities Guarantee have the effect of providing a full, irrevocable and unconditional guarantee of the Trust's obligations under the Trust Preferred Securities. Holders of Trust Preferred Securities may, under certain circumstances, enforce these obligations directly against Household International. The Trust is not, and will not become, subject to the information reporting requirements of the Exchange Act. HOUSEHOLD INTERNATIONAL, INC. Household International was formed in 1981 as a holding company for various subsidiaries which operated in the financial services, manufacturing, transportation and merchandising industries. In 1985 we initiated a restructuring program that has resulted in the disposition of our merchandising, transportation and manufacturing businesses. This has enabled Household to focus its resources in the consumer finance industry. Our principal executive office is located at 2700 Sanders Road, Prospect Heights, Illinois 60070 (telephone: 847-564-5000). Through subsidiaries, such as Household Finance Corporation, Beneficial Corporation, Household Bank, f.s.b., Household Automotive Finance Corporation, Household Retail Services, Inc., Household Bank (Nevada), National Association, Household Bank (S.B.), National Association, Household Financial Corporation Limited, and HFC Bank plc, we offer numerous consumer finance products, including home equity credit lines, revolving and closed-end unsecured personal loans, non-prime automobile loans, private label credit cards, MasterCard* and VISA* credit cards and tax refund anticipation loans. Also, in conjunction with this business, and where applicable laws permit, we make credit life, credit accident and health, and household contents insurance available to our customers. This insurance is generally directly written by or reinsured with one of our insurance subsidiaries. Household International is principally a holding company whose primary source of funds is cash received from its subsidiaries primarily in the form of dividends and borrowings under intercorporate agreements. Dividend distributions to Household from its savings and loan, banking and insurance subsidiaries may be restricted by federal and state laws and regulations. Dividend distributions from our foreign subsidiaries may also be restricted by exchange controls of the country in which the subsidiary is located. Also, as a holding company, the rights of any creditors or stockholders of Household International to participate in the assets of any subsidiary upon the latter's liquidation or recapitalization will be subject to the prior claims of the subsidiary's creditors, except to the extent that Household may itself be a creditor with recognized claims against the subsidiary. Nevertheless, there are no restrictions that currently materially limit our ability to make - --------------- * MasterCard and VISA are registered trademarks of MasterCard International Incorporated and VISA, USA, Inc., respectively. 8 10 payments to our creditors or to pay dividends on our preferred stock or common stock at current levels nor are there any restrictions which we reasonably believe are likely to limit materially such payments in the future. USE OF PROCEEDS The proceeds from the sale of the Trust Preferred Securities will be used by the Trust to purchase the Notes. Household International will use the net proceeds from the sale of such Notes for the repayment of indebtedness we incurred in the normal and ordinary course of our business and for other general corporate purposes, including advances or capital contributions to our subsidiaries. RATIO OF EARNINGS TO FIXED CHARGES OF HOUSEHOLD The ratio of earnings to fixed charges for Household International and subsidiaries for the periods indicated below was as follows:
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31, -------------- -------------------------------- 2000 1999 1999 1998 1997 1996 1995 ----- ----- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges................. 1.64 1.76 1.79 1.37 1.58 1.54 1.42
For purposes of calculating the above ratios, earnings consist of net income to which has been added income taxes and fixed charges. Fixed charges consist of interest on all indebtedness (including capitalized interest) and one-third of rental expense (approximate portion representing interest). The 1998 ratio has been negatively impacted by one-time merger and integration related costs associated with the merger of Household International and Beneficial Corporation. Excluding the merger and integration related costs of $751 million after-tax, the December 31, 1998 ratio would have been 1.75. 9 11 SELECTED FINANCIAL INFORMATION OF HOUSEHOLD The financial information which is set forth below as of and for the three years ended December 31, 1999 has been derived from the consolidated financial statements and notes thereto of Household International and subsidiaries which have been audited by Arthur Andersen LLP, independent certified public accountants. All consolidated financial information of Household International and subsidiaries presented below should be read in conjunction with the detailed financial statements included in documents on file with the Commission and listed under "Incorporation of Information We File with the SEC" in this prospectus. The selected financial information for the nine months ended September 30, 2000 and 1999 are unaudited and should be read in conjunction with Household's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2000, which is incorporated by reference herein. Operating results for the nine months ended September 30, 2000 should not be considered indicative of results for any future periods or the year ending December 31, 2000. All dollar amounts stated below are in millions.
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31, ------------------- ------------------------------------ 2000 1999 1999 1998 1997 -------- -------- --------- --------- --------- (UNAUDITED) STATEMENT OF INCOME DATA: Finance income..................................... $6,252.3 4,776.3 $ 6,549.5 $ 5,604.2 $ 5,131.0 Other interest income.............................. 26.4 25.3 33.4 57.1 49.8 Interest expense................................... 2,811.9 2,013.8 2,776.6 2,517.0 2,358.4 -------- -------- --------- --------- --------- Net interest margin.............................. 3,466.8 2,787.8 3,806.3 3,144.3 2,822.4 Provision for credit losses on owned receivables... 1,542.1 1,263.2 1,716.4 1,516.8 1,493.0 -------- -------- --------- --------- --------- Net interest margin after provision for credit losses........................................... 1,924.7 1,524.6 2,089.9 1,627.5 1,329.4 -------- -------- --------- --------- --------- Securitization income.............................. 1,081.9 995.3 1,393.5 1,548.9 1,638.4 Insurance revenues................................. 413.5 405.4 534.6 492.8 454.2 Investment income.................................. 127.2 128.0 168.8 161.2 173.1 Fee income......................................... 591.4 421.2 595.5 599.7 592.4 Other income....................................... 195.3 180.0 223.8 243.7 355.7 Gain on sale of Beneficial Canada.................. -- -- -- 189.4 -- -------- -------- --------- --------- --------- Total other revenues............................. 2,409.3 2,129.9 2,916.2 3,235.7 3,213.8 -------- -------- --------- --------- --------- Salaries and fringe benefits....................... 1,109.9 887.4 1,194.6 1,127.5 1,085.3 Occupancy and equipment expense.................... 229.5 200.0 270.9 316.1 333.6 Other marketing expenses........................... 366.6 264.0 370.0 403.2 449.6 Other servicing and administrative expenses........ 466.9 433.4 547.9 654.9 857.9 Amortization of acquired intangibles and goodwill......................................... 121.1 107.8 143.9 170.6 158.4 Policyholders' benefits............................ 198.3 199.0 258.1 238.2 255.9 Merger and integration related costs............... -- -- -- 1,000.0 -- -------- -------- --------- --------- --------- Total costs and expenses......................... 2,492.3 2,091.6 2,785.4 3,910.5 3,140.7 -------- -------- --------- --------- --------- Income before income taxes......................... 1,841.7 1,562.9 2,220.7 952.7 1,402.5 Income taxes....................................... 633.7 515.3 734.3 428.6 462.2 -------- -------- --------- --------- --------- Net income....................................... $1,208.0 1,047.6 $ 1,486.4 $ 524.1(2) $ 940.3 ======== ======== ========= ========= =========
AS OF DECEMBER 31, SEPTEMBER 30, ----------------------------------- 2000 1999 1998 1997 -------------- --------- --------- --------- (UNAUDITED) PERIOD END BALANCE SHEET DATA: Total assets: Owned........................................... $73,728.6 $60,749.4 $52,892.7 $46,817.0 Managed(1)...................................... 92,596.1 80,188.3 72,594.6 71,295.5 Deposits.......................................... 8,530.7 4,980.0 2,105.0 2,344.2 Total other debt.................................. 53,369.9 45,665.1 40,356.5 34,402.3 Company obligated mandatorily redeemable preferred securities of subsidiary trusts................. 675.0 375.0 375.0 175.0 Preferred stock................................... 164.4 164.4 164.4 264.5 Common shareholders' equity....................... 7,550.4 6,450.9 6,221.4 6,174.0
- ------------------ (1) Managed assets include assets on our balance sheet and assets that we service for investors as part of our asset securitization program. (2) Excluding merger and integration related costs of $751.0 million after-tax and the $118.5 million after-tax gain on sale of Beneficial's Canadian operations, operating net income was $1,156.6 million. 10 12 CAPITALIZATION OF HOUSEHOLD The following table sets forth the consolidated capitalization of Household International at September 30, 2000 and as adjusted to reflect a proposed application of the estimated net proceeds from the sale of the Trust Preferred Securities to reduce our short-term borrowings. See "Use of Proceeds." The table should be read in conjunction with Household International's consolidated financial statements and notes thereto included in the documents incorporated by reference herein. See "Incorporation of Information We File with the SEC."
------------------------ ACTUAL PRO FORMA --------- ----------- (UNAUDITED) ----------- (DOLLARS IN MILLIONS) Deposits............................................. $ 8,530.7 $ 8,530.7 Commercial paper, bank and other borrowings.......... 10,882.6 10,682.6 Senior and senior subordinated debt (with original maturities over one year).......................... 42,487.3 42,487.3 --------- --------- Total debt........................................... 61,900.6 61,700.6 Company obligated mandatorily redeemable preferred securities of subsidiary trusts(1)................. 675.0 875.0 Preferred stock...................................... 164.4 164.4 Common shareholders' equity.......................... 7,550.4 7,550.4 --------- --------- Total capitalization................................. $70,290.4 $70,290.4 ========= =========
- ------------------------- (1) The sole assets of the trusts are Junior Subordinated Deferrable Interest Notes issued by Household International in June 2000, March 1998, June 1996 and June 1995, bearing interest at 10.00, 7.25, 8.70 and 8.25 percent, respectively, with principal balances of $309.3, $206.2, $103.1 and $77.3 million, respectively, and due June 30, 2030, December 31, 2037, June 30, 2036 and June 30, 2025, respectively. (2) Pro forma assets of the trusts includes the $ million principal amount of Notes issued by Household International in connection with the issuance of the Trust Preferred Securities offered hereby. DESCRIPTION OF TRUST PREFERRED SECURITIES The Trust Preferred Securities will be issued pursuant to the terms of the Declaration. The Declaration will be qualified as an indenture under the Trust Indenture Act. The property trustee will act as the indenture trustee for purposes of compliance with the provisions of the Trust Indenture Act. The terms of the Trust Preferred Securities will include those stated in the Declaration and those made part of the Declaration by the Trust Indenture Act. The following summary of the principal terms and provisions of the Trust Preferred Securities does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Declaration, a copy of which is filed as an exhibit to the registration statement, of which this prospectus is a part, the Delaware Trust Act and the Trust Indenture Act. The Declaration authorizes the Regular Trustees, on behalf of the Trust, to issue the Trust Preferred Securities, which represent preferred undivided beneficial interests in the assets of the Trust, and the common interests, which represent common undivided beneficial interests in the assets of the Trust. All of the common interests will be owned by Household International. The common interests rank pari passu, and payments will be made to them on a pro rata basis with the Trust Preferred Securities, except that upon the occurrence of a Declaration Event of Default, the rights of the holders of the common interests to receive payment of periodic distributions and payments upon liquidation, redemption and otherwise will be subordinated to the rights of the holders of the Trust Preferred Securities. The Declaration does not permit the issuance by the Trust of any securities other than the Trust Preferred Securities and the common interests or the incurrence of any indebtedness by the Trust. Pursuant to the Declaration, the property trustee will own and hold the Notes for the benefit of the holders of the Trust Securities. The payment of distributions out of money held by the Trust, 11 13 and payments upon redemption of the Trust Preferred Securities or liquidation of the Trust, are guaranteed by Household International on a subordinated basis as and to the extent described under "Description of the Preferred Securities Guarantee." The Preferred Guarantee Trustee will hold the Preferred Securities Guarantee for the benefit of the holders of the Trust Preferred Securities. The Preferred Securities Guarantee does not cover payment of distributions on the Trust Preferred Securities when the Trust does not have sufficient available funds in the Property Account to make such distributions. In such event, the remedy of a holder of Trust Preferred Securities is to (i) vote to appoint a Special Regular Trustee, (ii) to direct the property trustee to enforce its rights under the Notes or (iii) if the failure of the Trust to pay distributions is attributable to the failure of Household International to pay interest or principal on the Notes, institute a proceeding directly against Household International for enforcement of payment to such holder of the principal or interest on the Notes having a principal amount equal to the aggregate liquidation amount of the Trust Preferred Securities of such holder on or after the respective due date specified in the Notes. See "Description of the Trust Preferred Securities -- Voting Rights." DISTRIBUTIONS Distributions on the Trust Preferred Securities will be fixed at a rate per annum of % of the stated liquidation amount of $25 per Trust Preferred Security. Distributions in arrears for more than one quarter will bear interest thereon at the rate per annum of % thereof. The term "distributions" as used herein includes any such interest payable unless otherwise stated. The amount of distributions payable for any period will be computed (i) for any full 90-day quarterly distribution period, on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full 90-day quarterly distribution period on the basis of a 30-day month, and for periods of less than a month, the actual number of days elapsed per 30-day month. Distributions on the Trust Preferred Securities will be cumulative, will accrue from , 2001 and will be payable quarterly in arrears on , , and of each year to the holders of record on the applicable record date, commencing , 2001 when, as and if available for payment by the property trustee, except as otherwise described below. The distribution on , 2001 will include the period from , 2001 to , 2001. Household International has the right under the Indenture to defer payments of interest on the Notes by extending the interest payment period from time to time on the Notes (each, an "Extension Period"). If Household elects to defer such payments, this would defer quarterly distributions on the Trust Preferred Securities (though such distributions would continue to accrue interest since interest would continue to accrue on the Notes) during any such extended interest payment period. In the event that Household International exercises this right, then (a) Household International shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock (other than (i) repurchases, redemptions or other acquisitions of shares of capital stock of Household International in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, (ii) as a result of an exchange or conversion of any class or series of Household International's capital stock for any other class or series of Household International's capital stock, or (iii) the purchase of fractional interests in shares of Household International's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged), and (b) Household International shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees) issued by Household International which rank pari passu with or junior to the Notes. The foregoing, however, will not apply to any stock dividends paid by Household International where the dividend stock is the same stock as that on which the dividend is being paid. Prior to the termination of any such Extension Period, Household International may further extend the interest payment period, provided that such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters and provided further that no Extension Period may extend beyond the maturity of the Notes. Upon the termination of any Extension Period and the payment of all amounts then due, Household International may select a new Extension Period as if no Extension Period had previously been declared, subject to the 12 14 above requirements. See "Description of the Notes -- Interest" and "-- Option to Extend Interest Payment Period." If distributions are deferred, the deferred distributions and accrued interest thereon shall be paid to holders of record of the Trust Preferred Securities, if funds are available therefor, as they appear on the books and records of the Trust on the record date next following the termination of such Extension Period. Distributions on the Trust Preferred Securities must be paid on the dates payable to the extent that the Trust has funds available for the payment of such distributions in the Property Account. The Trust's funds available for distribution to the holders of the Trust Preferred Securities will be limited to payments received under the Notes. See "Description of the Notes." The payment of distributions out of moneys held by the Trust is guaranteed by Household International to the extent set forth under "Description of the Preferred Securities Guarantee." Distributions on the Trust Preferred Securities will be payable to the holders thereof as they appear on the books and records of the Trust on the relevant record dates, which, as long as the Trust Preferred Securities remain in book-entry only form, will be one business day prior to the relevant payment dates. Such distributions will be paid through the property trustee, who will hold amounts received in respect of the Notes in the Property Account for the benefit of the holders of the Trust Securities. Subject to any applicable laws and regulations and the provisions of the Declaration, each such payment will be made as described under "-- Book-Entry Only Issuance -- The Depository Trust Company" below. In the event the Trust Preferred Securities shall not continue to remain in book-entry only form, the Regular Trustees shall have the right to select record dates which shall be more than one business day, but less than 30 business days prior to the relevant payment dates. In the event that any date on which distributions are to be made on the Trust Preferred Securities is not a business day, then payment of the distributions payable on such date will be made on the next succeeding day which is a business day (and without any interest or other payment in respect of any such delay) except that, if such business day is in the next succeeding calendar year, such payment shall be made on the immediately preceding business day, in each case with the same force and effect as if made on such date. A "business day" shall mean any day other than Saturday, Sunday or any day on which banking institutions in Chicago, Illinois, New York, New York, or the State of Delaware are authorized or required by law to close. MANDATORY REDEMPTION The Notes will mature on , 2031, and may be redeemed at any time, in whole or in part, on or after , 2006 or at any time, in whole or in part, in certain circumstances upon the occurrence of a tax event. See "-- Special Event Redemption or Distribution" below. Upon the repayment of the Notes, whether at maturity or upon redemption, the proceeds from such repayment or payment shall simultaneously be applied to redeem Trust Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Notes so repaid or redeemed at $25 per Trust Preferred Security plus accrued and unpaid distributions thereon to the redemption date; provided that holders of Trust Securities shall be given not less than 30 nor more than 60 days notice of such redemption. See "Description of the Notes." In the event that fewer than all of the outstanding Trust Preferred Securities are to be redeemed, the Trust Preferred Securities will be redeemed as described under "-- Book-Entry Only Issuance -- The Depository Trust Company" below. SPECIAL EVENT REDEMPTION OR DISTRIBUTION "Tax event" means that the Regular Trustees shall have received an opinion from independent tax counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of such laws or regulations, there is more than an insubstantial risk that (i) the Trust would be subject to United States federal income tax with respect to income accrued or received on the Notes, (ii) interest payable to the Trust on the Notes would not be deductible, in whole or in part, by Household International for United States federal income tax purposes or (iii) the Trust would be subject to 13 15 more than a de minimis amount of other taxes, duties or other governmental charges, which change or amendment becomes effective on or after the date of this prospectus. A "change in U.S. investment company law" means that the Regular Trustees shall have received an opinion from independent counsel to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the Investment Company Act of 1940, as amended (the "1940 Act"), which change becomes effective on or after the date of this prospectus. If, at any time, a tax event or a change in U.S. investment company law (each, as defined above, a "Special Event") shall occur and be continuing, the Trust shall, except in the circumstances described below, be dissolved with the result that Notes with an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accrued and unpaid distributions on, all securities issued by the Trust would be distributed to the holders of the such securities, in liquidation of such holders' interests in the Trust on a pro rata basis, within 90 days following the occurrence of such Special Event; provided, however, that in the case of the occurrence of a Special Event, as a condition of such dissolution and distribution, the Regular Trustees shall have received an opinion from independent tax counsel experienced in such matters, which opinion may rely on published revenue rulings of the Internal Revenue Service, to the effect that the holders of all securities issued by the Trust will not recognize any gain or loss for United States federal income tax purposes as a result of such dissolution and distribution of Notes; and, provided, further, that, if at the time there is available to the Trust the opportunity to eliminate, within such 90 day period, the Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure, which has no adverse effect on the Trust, Household International or the holders of all securities issued by the Trust, the Trust will pursue such measure in lieu of dissolution. Furthermore, if in the case of the occurrence of a tax event, (i) Household International has received an opinion from independent tax counsel experienced in such matters that, as a result of the tax event, there is more than an insubstantial risk that Household International would be precluded from deducting the interest on the Notes for United States federal income tax purposes even after the Notes were distributed to the holders of all securities issued by the Trust in liquidation of such holders' interests in the Trust as described above or (ii) the Regular Trustees shall have been informed by such counsel that the legal opinion required to be delivered with respect to the recognition of gain or loss as described above cannot be delivered, Household International shall have the right, upon not less than 30 nor more than 60 days notice, to redeem the Notes in whole or in part for cash within 90 days following the occurrence of such tax event, and, following such redemption, such securities with an aggregate liquidation amount equal to the aggregate principal amount of the Notes so redeemed shall be redeemed by the Trust at the redemption price on a pro rata basis; provided, however, that, if at the time there is available to Household International or the Trust the opportunity to eliminate, within such 90 day period, the tax event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure which has no adverse effect on the Trust, the holders of securities issued by the Trust or Household International, the Trust will pursue such measure in lieu of redemption. If Notes are distributed to the holders of the Trust Preferred Securities, Household International will use its best efforts to have the Notes listed on the New York Stock Exchange or on such other exchange as the Trust Preferred Securities are then listed. After the date for any distribution of Notes upon dissolution of the Trust, (i) the Trust Preferred Securities and Preferred Securities Guarantee will no longer be deemed to be outstanding, (ii) the depositary or its nominee, as the record holder of the Trust Preferred Securities, will receive a registered global certificate or certificates representing the Notes to be delivered upon such distribution and (iii) any certificates representing the Trust Preferred Securities and the Preferred Securities Guarantee not held by the depositary or its nominee will be deemed to represent Notes having an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid 14 16 interest equal to accrued and unpaid distribution on, such Trust Preferred Securities, until such certificates are presented to Household International or its agent for transfer or reissuance. There can be no assurance as to the market prices for the Trust Preferred Securities or the Notes that may be distributed in exchange for the Trust Preferred Securities if a dissolution and liquidation of the Trust were to occur. Accordingly, the Trust Preferred Securities that an investor may purchase, or the Notes that the investor may receive on dissolution and liquidation of the Trust, may trade at a discount to the price that the investor paid to purchase the Trust Preferred Securities offered hereby. REDEMPTION PROCEDURES The Trust may not redeem fewer than all of the outstanding Trust Preferred Securities unless all accrued and unpaid distributions have been paid on all Trust Preferred Securities for all quarterly distribution periods terminating on or prior to the date of redemption. If the Trust gives a notice of redemption in respect of the Trust Preferred Securities (which notice will be irrevocable), then, by 12:00 noon, New York City time, on the redemption date, provided that Household International has paid to the property trustee a sufficient amount of cash in connection with the related redemption or maturity of the Notes, the property trustee will irrevocably deposit with the depositary funds sufficient to pay the applicable redemption price and will give the depositary irrevocable instructions and authority to pay the redemption price to the holders of the Trust Preferred Securities. See "-- Book-Entry Only Issuance -- The Depository Trust Company." If notice of redemption shall have been given and funds deposited as required, then immediately prior to the close of business on the date of such deposit, distributions will cease to accrue and all rights of holders of such Trust Preferred Securities so called for redemption will cease, except the right of the holders of such Trust Preferred Securities to receive the redemption price, but without interest on such redemption price. In the event that any date fixed for redemption of the Trust Preferred Securities is not a business day, then payment of the redemption price payable on such date will be made on the next succeeding day which is a business day (and without any interest or other payment in respect of any such delay), except that, if such business day falls in the next calendar year, such payment will be made on the immediately preceding business day. In the event that payment of the redemption price in respect of the Trust Preferred Securities is improperly withheld or refused and not paid either by the Trust or by Household International pursuant to the Preferred Securities Guarantee, distributions on such Trust Preferred Securities will continue to accrue from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the redemption price. In the event that fewer than all of the outstanding Trust Preferred Securities are to be redeemed, the Trust Preferred Securities will be redeemed as described under "-- Book-Entry Only Issuance -- The Depository Trust Company" below. Subject to the foregoing and to applicable law (including, without limitation, United States federal securities laws), Household International or its affiliates may, at any time and from time to time, purchase outstanding Trust Preferred Securities by tender, in the open market or by private agreement. LIQUIDATION DISTRIBUTION UPON DISSOLUTION In the event of any voluntary or involuntary liquidation, dissolution, winding-up or termination of the Trust, the holders of the Trust Preferred Securities at that time will be entitled to receive out of the assets of the Trust, after satisfaction of liabilities to creditors, distributions in an amount equal to the aggregate of the stated liquidation amount of $25 per Trust Preferred Security plus accrued and unpaid distributions thereon to the date of payment, unless, in connection with such liquidation, dissolution, winding-up or termination, Notes in an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accrued and unpaid distributions on, the Trust Preferred Securities have been distributed on a pro rata basis to the holders of Trust Preferred Securities. 15 17 If, upon any such dissolution, the liquidation distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate liquidation distribution, then the amounts payable directly by the Trust on the Trust Preferred Securities shall be paid on a pro rata basis. The holders of the common interests will be entitled to receive distributions upon any such dissolution pro rata with the holders of the Trust Preferred Securities, except that if a Declaration Event of Default has occurred and is continuing, the Trust Preferred Securities shall have a preference over the common interests with respect to such distributions. Pursuant to the Declaration, the Trust shall terminate (i) on , 2031, the expiration of the term of the Trust, (ii) upon the bankruptcy of Household International, (iii) upon the filing of a certificate of dissolution or its equivalent with respect to Household International (except for permitted mergers, consolidations or reorganizations of Household International), the filing of a certificate of cancellation with respect to the Trust, or the revocation of the charter of Household International and the expiration of 90 days after the date of revocation without a reinstatement thereof, (iv) upon the distribution of the Notes following the occurrence of a Special Event, (v) upon the redemption of all of the securities issued by the Trust or (vi) upon the entry of a decree of a judicial dissolution of Household International or the Trust. DECLARATION EVENTS OF DEFAULT An event of default under the Indenture constitutes an event of default under the Declaration with respect to the Trust Preferred Securities (a "Declaration Event of Default"), provided that pursuant to the Declaration, the holder of the common interests will be deemed to have waived any Declaration Event of Default with respect to the common interests until all Declaration Events of Default with respect to the Trust Preferred Securities have been cured, waived or otherwise eliminated. Until such Declaration Events of Default with respect to the Trust Preferred Securities have been so cured, waived or otherwise eliminated, the property trustee will be deemed to be acting solely on behalf of the holders of the Trust Preferred Securities and only the holders of the Trust Preferred Securities will have the right to direct the property trustee with respect to certain matters under the Declaration, and therefore the Indenture. In the event that any Declaration Event of Default with respect to the Trust Preferred Securities is waived by the holders of the Trust Preferred Securities as provided in the Declaration, the holders of common interests pursuant to the Declaration have agreed that such waiver also constitutes a waiver of such Declaration Event of Default with respect to the common interests for all purposes under the Declaration without any further act, vote or consent of the holders of common interests. See " -- Voting Rights." If the property trustee fails to enforce its rights under the Notes, any holder of Trust Preferred Securities may directly institute a legal proceeding against Household International to enforce the property trustee's rights under the Notes, without first instituting any legal proceeding against the property trustee or any other person or entity. Notwithstanding the foregoing, if a Declaration Event of Default has occurred and is continuing and such event is attributable to the failure of Household International to pay interest or principal on the Notes on the date such interest or principal is otherwise payable (or in the case of redemption, the redemption date), then a holder of Trust Preferred Securities may directly institute a proceeding for enforcement of payment to such holder of the principal of or interest on the Notes having a principal amount equal to the aggregate liquidation amount of the Trust Preferred Securities of such holder on or after the respective due date specified in the Notes. In connection with such action, Household International will be subrogated to the rights of such holder of Trust Preferred Securities under the Declaration to the extent of any payment made by Household International to such holder of Trust Preferred Securities in such action. The holders of Trust Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Notes. Upon the occurrence of a Declaration Event of Default, the property trustee, as the sole holder of the Notes, will have the right under the Indenture to declare the principal of and interest on the Notes to be immediately due and payable. 16 18 VOTING RIGHTS Except as provided below, under the Delaware Trust Act, the Trust Indenture Act and "Description of the Preferred Securities Guarantee -- Amendments and Assignment" and as otherwise required by law and the Declaration, the holders of the Trust Preferred Securities will have no voting rights. If (i) the Trust fails to pay distributions in full on the Trust Preferred Securities for six consecutive quarterly distribution periods, or (ii) a Declaration Event of Default occurs and is continuing then the holders of the Trust Preferred Securities, acting as a single class, will be entitled by the majority vote of such holders to appoint a Special Regular Trustee. For purposes of determining whether the Trust has failed to pay distributions in full for six consecutive quarterly distribution periods, distributions shall be deemed to remain in arrears, notwithstanding any payments in respect thereof, until full cumulative distributions have been or contemporaneously are paid with respect to all quarterly distribution periods terminating on or prior to the date of payment of such cumulative distributions. Any holder of Trust Preferred Securities (other than Household International or any of its affiliates) shall be entitled to nominate any person to be appointed as Special Regular Trustee. Not later than 30 days after such right to appoint a Special Regular Trustee arises, the Regular Trustees shall convene a meeting of the holders of Trust Preferred Securities for the purpose of appointing a Special Regular Trustee. If the Regular Trustees fail to convene such meeting within such 30-day period, the holders of not less than 10% of the aggregate stated liquidation amount of the outstanding Trust Preferred Securities will be entitled to convene such meeting. The provisions of the Declaration relating to the convening and conduct of the meetings of the holders will apply with respect to any such meeting. Any Special Regular Trustee so appointed shall cease to be a Special Regular Trustee if the event pursuant to which the Special Regular Trustee was appointed and all other events which could cause such appointment cease to be continuing. Notwithstanding the appointment of any Special Regular Trustee, Household International shall retain all rights under the Indenture, including the right to extend or defer interest payments as provided under "Description of the Notes -- Option to Extend Interest Payment Period." If such an extension or deferment occurs, there will be no Indenture event of default, and therefore no Declaration Event of Default, for failure to make any scheduled interest payment during that period. The holders of a majority in aggregate liquidation amount of the Trust Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the property trustee, or to direct the exercise of any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the property trustee, as the holder of the Notes, to (i) direct the time, method or place of conducting any proceeding for any remedy available to the Debt Trustee or exercise any trust or power conferred on the Debt Trustee with respect to the Notes, (ii) waive any past Indenture event of default which is waivable under the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all Notes shall be due and payable, or (iv) consent to any amendment, modification or termination of the Indenture or the Notes where such consent shall be required; provided that where a consent or action under the Indenture would require the consent or action of the holders of more than a majority in principal amount of the Notes (a "Super-Majority") affected thereby, only the holders of at least such Super-Majority in aggregate liquidation amount of the Trust Preferred Securities may direct the property trustee to give such consent or take such action. If the property trustee fails to enforce its rights under the Notes, a holder of Trust Preferred Securities may institute a legal proceeding directly against Household International to enforce the property trustee's rights under the Notes without first instituting any legal proceeding against the Property Trustee or any other person or entity. The property trustee shall notify all holders of the Trust Preferred Securities of any notice of default received from the Debt Trustee with respect to the Notes. Such notice shall state that such Indenture event of default also constitutes a Declaration Event of Default. Except with respect to directing the time, method and place of conducting a proceeding for a remedy, the property trustee shall not take any action described in clauses (i), (ii), (iii) or (iv) above unless the property trustee has obtained an opinion of independent tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes. In the event the consent of the property trustee, as the holder of the Notes, is required under the Indenture with respect to any amendment, modification or termination of the Indenture, the property trustee shall request the direction of the holders of the securities issued by the Trust with respect to such amendment, 17 19 modification or termination and shall vote with respect to such amendment, modification or termination as directed by a majority in liquidation amount of the such securities voting together as a single class, provided that where a consent under the Indenture would require the consent of a Super-Majority, the property trustee may only give such consent at the direction of the holders of at least the proportion in liquidation amount of all securities issued by the Trust which the relevant Super-Majority represents of the aggregate principal amount of the Notes outstanding. The property trustee shall not take any such action in accordance with the directions of the holders of all securities issued by the Trust unless the property trustee has obtained an opinion of independent tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes. A waiver of an Indenture event of default by the property trustee at the direction of the holders of the Trust Preferred Securities will constitute a waiver of the corresponding Declaration Event of Default. Any required approval or direction of holders of Trust Preferred Securities may be given at a separate meeting of holders of Trust Preferred Securities convened for such purpose, at a meeting of all of the holders of securities issued by the Trust or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which holders of Trust Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of Trust Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the holders of Trust Preferred Securities will be required for the Trust to redeem and cancel Trust Preferred Securities or distribute Notes in accordance with the Declaration. Notwithstanding that holders of Trust Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Trust Preferred Securities at such time that are owned by Household International or any entity directly or indirectly controlling or controlled by, or under direct or indirect common control with Household International, shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding. The procedures by which holders of Trust Preferred Securities may exercise their voting rights are described below. See "-- Book-Entry Only Issuance -- The Depository Trust Company." Except in the limited circumstances described above in connection with the appointment of a Special Regular Trustee, holders of the Trust Preferred Securities will have no rights to appoint or remove the Household International trustees, who may be appointed, removed or replaced solely by Household International, as the direct or indirect holder of all the common interests. MODIFICATION OF THE DECLARATION The Declaration may be amended or modified if approved and executed by a majority of the Regular Trustees, provided that if any proposed amendment provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would materially adversely affect the powers, preferences or special rights of the holders of securities issued by the Trust, whether by way of amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or termination of the Trust other than pursuant to the terms of the Declaration, then the holders of all the securities issued by the Trust voting together as a single class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of at least 66 2/3% in liquidation amount of the Trust Preferred Securities affected thereby, provided that (a) any modification of the right of holders of Trust Preferred Securities to appoint a Special Regular Trustee or (b) a reduction of the principal amount or the distribution rate, or a change in the payment dates or maturity dates of the Trust Preferred Securities, shall not be permitted without the consent of each holder of Trust Preferred Securities. In the event any amendment or proposal referred to in clause (i) above would materially adversely affect only the Trust Preferred Securities or the common interests, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of 66 2/3% in liquidation amount of such class of Trust Securities. 18 20 Notwithstanding the foregoing, no amendment or modification may be made to the Declaration if such amendment or modification would (i) cause the Trust to be classified for purposes of United States federal income taxation as other than a grantor trust, (ii) reduce or otherwise adversely affect the powers of the property trustee or (iii) cause the Trust to be deemed to be an "investment company" which is required to be registered under the 1940 Act. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other body, except as described below. The Trust may, with the consent of a majority of the Regular Trustees and without the consent of the holders of the securities issued by the Trust, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any State; provided, that (i) such successor entity either (x) expressly assumes all of the obligations of the Trust with respect to the securities issued by the Trust or (y) substitutes for the Trust Preferred Securities other securities having substantially the same terms as the Trust Preferred Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Trust Preferred Securities in priority with respect to distributions and payments upon liquidation, redemption and otherwise, (ii) Household International expressly appoints a trustee of such successor entity possessing the same powers and duties as the property trustee as the holder of the Notes, (iii) the Trust Preferred Securities or any Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or other organization on which the Trust Preferred Securities are then listed, (iv) such merger, consolidation, amalgamation or replacement does not cause the Trust Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization, (v) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the holders of the Trust Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity), (vi) such successor entity has a purpose identical to that of the Trust, (vii) prior to such merger, consolidation, amalgamation or replacement, Household International has received an opinion from independent counsel experienced in such matters to the effect that (A) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the holders of the Trust Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity), and (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor such successor entity will be required to register as an investment company under the 1940 Act and (viii) Household International guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Preferred Securities Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of holders of 100% in liquidation amount of the Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or the successor entity to be classified for United States federal income tax purposes as other than a grantor trust. In addition, so long as any Trust Preferred Securities are outstanding and are not held entirely by Household International, the Trust may not voluntarily liquidate, dissolve, wind-up or terminate except as described above under "-- Special Event Redemption or Distribution." BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY The Depository Trust Company ("DTC") will act as securities depositary for the Trust Preferred Securities. The Trust Preferred Securities will be issued only as fully registered securities registered in the name of Cede & Co. (DTC's nominee). One or more fully registered global Trust Preferred Securities certificates will be issued, representing in the aggregate the total number of Trust Preferred Securities, and will be deposited with DTC. 19 21 The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a global Trust Preferred Security. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants deposit with DTC. DTC also facilitates the settlement among participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its direct participants and by the New York Stock Exchange, the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the Commission. Purchases of Trust Preferred Securities within the DTC system must be made by or through direct participants, which will receive a credit for the Trust Preferred Securities on DTC's records. The ownership interest of each actual purchaser of Trust Preferred Securities is in turn to be recorded on the participants' records. Beneficial owners will not receive written confirmation from DTC of their purchases, but beneficial owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the participants through which the beneficial owners purchased Trust Preferred Securities. Transfers of ownership interests in the Trust Preferred Securities are to be accomplished by entries made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in Trust Preferred Securities, except in the event that use of the book-entry system for the Trust Preferred Securities is discontinued. To facilitate subsequent transfers, all the Trust Preferred Securities deposited by participants with DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of Trust Preferred Securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the Trust Preferred Securities. DTC's records reflect only the identity of the direct participants to whose accounts such Trust Preferred Securities are credited, which may or may not be the beneficial owners. The participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to direct participants, by direct participants to participants, and by participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the Trust Preferred Securities are being redeemed, DTC will use a lottery to select certain of the Trust Preferred Securities to be redeemed in accordance with its procedures. Although voting with respect to the Trust Preferred Securities is limited, in those cases where a vote is required, neither DTC nor Cede & Co. will itself consent or vote with respect to Trust Preferred Securities. Under its usual procedures, DTC would mail an omnibus proxy to the Trust as soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those direct participants to whose accounts the Trust Preferred Securities are credited on the record date (identified in listing attached to the omnibus proxy). Household International and the Trust believe the arrangements among DTC, participants, and beneficial owners will enable the beneficial owners to exercise rights equivalent in substance to the rights that can be directly exercised by a holder of a beneficial interest in the Trust. Distribution payments on the Trust Preferred Securities will be made to DTC. DTC's practice is to credit direct participants' accounts on the relevant payment date in accordance with their respective holdings shown 20 22 on DTC's records unless DTC has reason to believe that it will not receive payments on such payment date. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as in the case with securities held for the account of customers in bearer form or registered in "street name," and will be the responsibility of such participant and not of DTC, the Trust, any trustee or Household International, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of distributions to DTC is the responsibility of the Trust, disbursement of such payments to direct participants is the responsibility of DTC, and disbursement of such payments to the beneficial owners is the responsibility of participants. Except as provided herein, a beneficial owner in a global Trust Preferred Security will not be entitled to receive physical delivery of Trust Preferred Securities. Accordingly, each beneficial owner must rely on the procedures of DTC to exercise any rights under the Trust Preferred Securities. DTC may discontinue providing its services as securities depositary with respect to the Trust Preferred Securities at any time by giving reasonable notice to the Trust. Under such circumstances, in the event that a successor securities depositary is not obtained, Trust Preferred Securities certificates are required to be printed and delivered. Additionally, the Regular Trustees (with consent of Household International) may decide to discontinue use of the system of book-entry transfers through DTC (or a successor depositary) with respect to the Trust Preferred Securities. In that event, certificates for the Trust Preferred Securities will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system have been obtained from sources that Household International and the Trust believe to be reliable, but Household International and the Trust take no responsibility for the accuracy thereof. INFORMATION CONCERNING THE PROPERTY TRUSTEE The property trustee, prior to the occurrence of a default with respect to the Trust Securities or interest, undertakes to perform only such duties as are specifically set forth in the Declaration and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provisions, the property trustee is under no obligation to exercise any of the powers vested in it by the Declaration at the request of any holder of Trust Preferred Securities, unless offered indemnity satisfactory to it by such holder against the costs, expenses and liabilities which might be incurred thereby. The holders of Trust Preferred Securities will not be required to offer such indemnity in the event such holders, by exercising their voting rights, direct the property trustee to take any action following a Declaration Event of Default. The property trustee also serves as trustee under the Preferred Securities Guarantee. Household International, and certain of its affiliates, maintain a banking relationship with the property trustee. The property trustee, or affiliates thereof, serves as trustee under other indentures pursuant to which securities of Household International, or an affiliate, are outstanding. REGISTRAR, TRANSFER AGENT AND PAYING AGENT In the event that the Trust Preferred Securities do not remain in book-entry only form, the property trustee will act as paying agent and may designate an additional or substitute paying agent at any time. Registration of transfers of Trust Preferred Securities will be effected without charge by or on behalf of the Trust, but upon payment (with the giving of such indemnity as the Trust or Household International may require) in respect of any tax or other government charges which may be imposed in relation to it, the Trust will not be required to register or cause to be registered the transfer of Trust Preferred Securities after such Trust Preferred Securities have been called for redemption. GOVERNING LAW The Declaration and the Trust Preferred Securities will be governed by, and construed in accordance with, the internal laws of the State of Delaware. 21 23 MISCELLANEOUS The Regular Trustees are authorized and directed to operate the Trust in such a way so that the Trust will not be deemed to be an "investment company" required to be registered under the 1940 Act or characterized for United States federal income tax purposes as other than a grantor trust. Household International is authorized and directed to conduct its affairs so that the Notes will be treated as indebtedness of Household International for United States federal income tax purposes. In this connection, the Regular Trustees and Household International are authorized to take any action, not inconsistent with applicable law, the Declaration or the amended and restated certificate of incorporation of Household International, that each of the Regular Trustees and Household International determines in their discretion to be necessary or desirable for such purposes, as long as such action does not materially and adversely affect the interests of the holders of the Trust Preferred Securities. DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE Set forth below is a summary of information concerning the Preferred Securities Guarantee that will be executed and delivered by Household International for the benefit of the holders from time to time of Trust Preferred Securities. The Preferred Securities Guarantee will be qualified as an indenture under the Trust Indenture Act. The Bank of New York will act as indenture trustee under the Preferred Securities Guarantee (the "Preferred Guarantee Trustee") including for purposes of the Trust Indenture Act. The terms of the Preferred Securities Guarantee will be those set forth therein and those made part thereof by the Trust Indenture Act. The summary does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to the Preferred Securities Guarantee, which is filed as an exhibit to the registration statement of which this prospectus forms a part, and the Trust Indenture Act. The Preferred Securities Guarantee will be held by the Preferred Guarantee Trustee for the benefit of holders of the Trust Preferred Securities. GENERAL Pursuant to the Preferred Securities Guarantee, Household International will irrevocably agree, to the extent set forth therein, to pay in full to the holders of the Trust Preferred Securities, the guarantee payments (without duplication of amounts theretofore paid by the Trust), to the extent not paid by the Trust, regardless of any defense, right of set-off or counterclaim that the Trust may have or assert. The guarantee payments with respect to the Trust Preferred Securities, to the extent not paid or made by the Trust, will be: (i) any accrued and unpaid distributions on the Trust Preferred Securities where Household International has made a payment of principal, premium or interest on the Notes held by the property trustee, (ii) the redemption price, including all accrued and unpaid distributions to the date of the redemption, to the extent the Trust has funds available therefor with respect to the Trust Preferred Securities called for redemption by the Trust and (iii) upon a liquidation of the Trust (other than in connection with the distribution of Notes to the holders of Trust Securities or the redemption of all of the Trust Preferred Securities), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid distributions on the Trust Preferred Securities to the date of payment, to the extent the Trust has funds available therefor, and (b) the amount of assets of the Trust remaining available for distribution to holders of Trust Preferred Securities in liquidation of the Trust. Household International's obligation to make a guarantee payment may be satisfied by direct payment of the required amounts by Household International to the holders of Trust Preferred Securities or by causing the Trust to pay such amounts to such holders. If Household International does not make interest payments on the Notes held by the property trustee, the Trust will not make distributions on the Trust Preferred Securities. The Preferred Securities Guarantee will guarantee, on a subordinated basis, the guarantee payments with respect to the Trust Preferred Securities from the time of issuance of the Trust Preferred Securities, but will not apply to the payment of distributions and other payments on the Trust Preferred Securities when the property trustee does not have sufficient funds in the Property Account to make such distributions or other payments. The Preferred Securities Guarantee, when taken together with Household International's obligations under the Notes, the Indenture and the 22 24 Declaration, including its obligations to pay costs, expenses, debts and liabilities of the Trust (other than with respect to the Trust Securities), will provide a full and unconditional guarantee on a subordinated basis by Household International of amounts due on the Trust Preferred Securities. CERTAIN COVENANTS OF HOUSEHOLD INTERNATIONAL In the Preferred Securities Guarantee, Household International will covenant that, so long as the Trust Preferred Securities remain outstanding, if there shall have occurred and is continuing any event that would constitute an event of default under the Preferred Securities Guarantee or the Declaration, then (a) Household International will not declare or pay any dividends on, or purchase, acquire or make a distribution or liquidation payment with respect to, any of its capital stock (other than (i) repurchases, redemptions or other acquisitions of shares of capital stock of Household International in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, (ii) as a result of an exchange or conversion of any class or series of Household International's capital stock for any other class or series of Household International's capital stock, or (iii) the purchase of fractional interests in shares of Household International's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged), and (b) Household International shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees) issued by Household International which rank pari passu with or junior to such Notes. The foregoing, however, will not apply to any stock dividends paid by Household International where the dividend stock is the same stock as that on which the dividend is being paid. AMENDMENTS AND ASSIGNMENT Except with respect to any changes that do not materially adversely affect the rights of holders of Trust Preferred Securities (in which case no consent will be required), the Preferred Securities Guarantee may be amended only with the prior approval of the holders of not less than 66 2/3% in aggregate liquidation amount of the outstanding Trust Preferred Securities. The manner of obtaining any such approval of holders of the Trust Preferred Securities is set forth under "Description of the Trust Preferred Securities -- Voting Rights." All guarantees and agreements contained in the Preferred Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of Household International and shall inure to the benefit of the holders of the Trust Preferred Securities then outstanding. TERMINATION OF THE PREFERRED SECURITIES GUARANTEE The Preferred Securities Guarantee will terminate and be of no further force and effect as to the Trust Preferred Securities upon full payment of the redemption price of all Trust Preferred Securities, upon distribution of the Notes to the holders of Trust Preferred Securities, or upon full payment of the amounts payable upon liquidation of the Trust. See "Description of the Notes -- Events of Default" for a description of the events of default and enforcement rights of the holders of Notes. The Preferred Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of Trust Preferred Securities must repay to the Trust or Household International, or their respective successors, any sums paid to them under the Trust Preferred Securities or the Preferred Securities Guarantee. EVENTS OF DEFAULT An event of default under a Preferred Securities Guarantee will occur upon the failure of Household International to perform any of its payment or other obligations thereunder. The holders of a majority in liquidation amount of the Trust Preferred Securities relating to such Preferred Securities Guarantee have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Preferred Guarantee Trustee in respect of the Preferred Securities Guarantee or to direct the exercise of any trust or power conferred upon the Preferred Guarantee Trustee under such Preferred Securities Guarantee. If the Preferred Guarantee Trustee fails to enforce the Preferred 23 25 Securities Guarantee, any holder of Trust Preferred Securities may institute a legal proceeding directly against Household International to enforce such holder's rights under such Preferred Securities Guarantee, without first instituting a legal proceeding against the Trust, the Preferred Guarantee Trustee or any other person or entity. Notwithstanding the foregoing, if a Declaration Event of Default has occurred and is continuing and such event is attributable to the failure of Household International to pay interest or principal on the Notes on the date such interest or principal is otherwise payable (or in the case of redemption, the redemption date), then a holder of Trust Preferred Securities may directly institute a proceeding for enforcement of payment to such holder of the principal of or interest on the Notes having a principal amount equal to the aggregate liquidation amount of the Trust Preferred Securities of such holder on or after the respective due date specified in the Notes. In connection with such action, Household International will be subrogated to the rights of such holder of Trust Preferred Securities under the Declaration to the extent of any payment made by Household International to such holder of Trust Preferred Securities in such action. The holders of Trust Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Notes. STATUS OF THE PREFERRED SECURITIES GUARANTEE Household International's obligations under the Preferred Securities Guarantee to make the guarantee payments will constitute an unsecured obligation of Household International and will rank (i) subordinate and junior in right of payment to all other liabilities of Household International, including the Notes, except those made pari passu or subordinate by their terms, and (ii) pari passu with the most senior preferred stock now or hereafter issued by Household International and with any guarantee now or hereafter entered into by Household International in respect of any preferred security of any affiliate of Household International. The terms of the Trust Preferred Securities provide that each holder of Trust Preferred Securities by acceptance thereof agrees to the subordination provisions and other terms of the Preferred Securities Guarantee. In addition, because Household International is a holding company, its obligations under the Preferred Securities Guarantee are effectively subordinated to all existing and future liabilities of its subsidiaries. The Preferred Securities Guarantee will constitute a guarantee of payment and not of collection (that is, the guaranteed party may institute a legal proceeding directly against the guarantor to enforce its rights under the guarantee without first instituting a legal proceeding against any other person or entity). The Preferred Securities Guarantee will be deposited with the property trustee to be held for the benefit of the holders of the Trust Preferred Securities. Except as otherwise noted herein, the property trustee has the right to enforce the Preferred Securities Guarantee on behalf of the holders of the Trust Preferred Securities. The Preferred Securities Guarantee will not be discharged except by payment of the guarantee payments in full (without duplication of amounts theretofore paid by the Trust). INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE The Preferred Guarantee Trustee, prior to the occurrence of a default with respect to a Preferred Securities Guarantee, undertakes to perform only such duties as are specifically set forth in such Preferred Securities Guarantee and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provisions, the Preferred Guarantee Trustee is under no obligation to exercise any of the powers vested in it by the Preferred Securities Guarantee at the request of any holder of Trust Preferred Securities, unless offered reasonable indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred thereby. The Preferred Guarantee Trustee also serves as property trustee. Household International, and certain of its affiliates, maintain a banking relationship with the Preferred Guarantee Trustee. The Preferred Guarantee Trustee, or affiliates thereof, serves as trustee under other indentures pursuant to which securities of Household International, or an affiliate, are outstanding. 24 26 GOVERNING LAW The Preferred Securities Guarantee will be governed by and construed in accordance with the laws of the State of Illinois. DESCRIPTION OF THE NOTES Set forth below is a description of the terms of the Notes. The following description does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Indenture (the "Base Indenture"), dated as of May 15, 1995, between Household International and Bank One, National Association (formerly known as The First National Bank of Chicago) as trustee (the "Debt Trustee"), as supplemented by a Fifth Supplemental Indenture, dated as of , 2001 (the Base Indenture, as so supplemented, is hereinafter referred to as the "Indenture"), the forms of which are filed as exhibits to the registration statement of which this prospectus forms a part. The terms of the Notes will include those stated in the Indenture and those made a part of the Indenture by reference to the Trust Indenture Act. Certain capitalized terms used herein are defined in the Indenture. Under certain circumstances involving the dissolution of the Trust following the occurrence of a Special Event, Notes may be distributed to the holders of Trust securities in liquidation of the Trust. See "Description of the Trust Preferred Securities -- Special Event Redemption or Distribution." If the Notes are distributed to the holders of the Trust Preferred Securities, Household International will use its best efforts to have the Notes listed on the New York Stock Exchange or on such other exchange as the Trust Preferred Securities are then listed. GENERAL The Notes will be issued as unsecured junior subordinated debt securities under the Indenture. The Notes will be limited in aggregate principal amount to approximately $ , such amount being the sum of the aggregate stated liquidation amount of the Trust Preferred Securities and the capital contributed by Household International in exchange for the common interests (the "Payment"). The Notes are not subject to a sinking fund provision. The Notes will mature on , 2031 (such date, as it may be advanced as hereinafter described, the "Stated Maturity"). If a tax event occurs, then Household International will have the right prior to the termination of the Trust, to advance the Stated Maturity of the Notes to the minimum extent required in order to allow for the payments of interest in respect of the Notes to continue to be tax deductible, but in no event shall the resulting maturity of the Notes be less than 15 years from the date of original issuance thereof. The Stated Maturity shall be advanced only if, in the opinion of counsel to Household International experienced in such matters, (a) after advancing the Stated Maturity, interest paid on the Notes will be deductible for United States federal income tax purposes and (b) advancing the Stated Maturity will not result in a taxable event to holders of the Trust Preferred Securities. If Household International elects to advance the Stated Maturity of the Notes, it will give notice to the Debt Trustee, and the Debt Trustee will give notice of such change to the holders of the Notes not less than 30 and not more than 60 days prior to the effectiveness thereof. If Notes are distributed to holders of the Trust Preferred Securities in liquidation of such holders' interests in the Trust, such Notes will initially be issued as a Global Security. As described herein, under certain limited circumstances, Notes may be issued in certificated form in exchange for a Global Security. See "-- Book-Entry and Settlement." In the event Notes are issued in certificated form, the Notes will be in denominations of $25 and integral multiples thereof and may be transferred or exchanged at the offices described below. Payments on Notes issued as Global Securities will be made to the depositary for the Notes. In the event Notes are issued in certificated form, principal and interest will be payable, the transfer of the Notes will be registrable and Notes will be exchangeable for Notes of other denominations of a like aggregate principal amount at the corporate trust office of the Debt Trustee in Chicago, Illinois or its current principal 25 27 office; provided, that payment of interest may be made at the option of Household International by check mailed to the address of the persons entitled thereto. The Indenture does not contain provisions that afford holders of Notes protection in the event of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction involving Household International. SUBORDINATION The Indenture provides that the Notes are subordinated and junior in right of payment to all senior indebtedness of Household International. No payment of principal of (including redemption payments, if any), premium, if any, or interest on, the Notes may be made if (a) any senior indebtedness is not paid when due and any applicable grace period with respect to such default has ended with such default not being cured or waived or ceasing to exist, or (b) the maturity of any senior indebtedness has been accelerated because of a default. Upon any distribution of assets of Household International to creditors upon any dissolution, winding-up, liquidation or reorganization, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all principal of, premium, if any, and interest due or to become due on, all senior indebtedness must be paid in full before the holders of Notes are entitled to receive or retain any payment. The rights of the holders of the Notes will be subrogated to the rights of the holders of senior indebtedness to receive payments or distributions applicable to such senior indebtedness until all amounts owing on the Notes are paid in full. The term "senior indebtedness" means, with respect to Household International, (i) any payment in respect of (a) indebtedness of such obligor for money borrowed (including any financial derivative, hedging or futures contract or similar instrument) and (b) indebtedness evidenced by securities, debentures, bonds, notes or other similar instruments issued by Household International which, by their terms, are senior or senior subordinated debt securities including, without limitation, all obligations under its indentures with various trustees; (ii) all capital lease obligations; (iii) all obligations issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations of Household International under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations for the reimbursement on any letter of credit, banker's acceptance, security purchase facility or similar credit transaction; (v) all obligations of the type referred to in clauses (i) through (iv) above of other persons the payment of which Household International is responsible or liable as obligor, guarantor or otherwise; and (vi) all obligations of the type referred to in clauses (i) through (v) above of other persons secured by any lien on any property or asset of Household International (whether or not such obligation is assumed by Household International), except for (1) any such indebtedness that is by its terms subordinated to or pari passu with the Notes and (2) any unsecured indebtedness between or among Household International or its affiliates including all other debt securities and guarantees in respect of these debt securities, issued to (a) any other trust or a trustee of such trust and (b) any other partnership or other entity affiliated with Household International that is a financing vehicle of Household International or its subsidiaries in connection with the issuance by such financing vehicle of securities similar to the Trust Preferred Securities or other securities that rank pari passu with, or junior to, the Trust Preferred Securities. Such senior indebtedness shall continue to be senior indebtedness and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term of such senior indebtedness. The Indenture does not limit the aggregate amount of senior indebtedness which may be issued by Household International. As of December 31, 2000, senior indebtedness of Household International aggregated approximately $3.9 billion. In addition, because Household International is a holding company, its obligations under the Notes will be effectively subordinated to all existing and future liabilities of its subsidiaries. At December 31, 2000, such subsidiaries had total liabilities of approximately $66.6 billion. CERTAIN COVENANTS If (i) there shall have occurred any event that would constitute an event of default under the Indenture, (ii) Household International shall be in default with respect to its payment of any obligations under the 26 28 Preferred Securities Guarantee, or (iii) Household International shall have given notice of its election to extend or defer interest payments on the Notes as provided in the Indenture and such period, or any extension thereof, shall be continuing, then (a) Household International shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock, other than (x) repurchases, redemptions or other acquisitions of shares of capital stock of Household International in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, (y) as a result of an exchange or conversion of any class or series of Household International's capital stock for any other class or series of Household International's capital stock, or (z) the purchase of fractional interests in shares of Household International's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, and (b) Household International shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees) issued by Household International which rank pari passu with or junior to the Notes. For so long as the Trust Securities remain outstanding, Household International will covenant (i) to directly or indirectly maintain 100% ownership of the common interests of the Trust; provided, however, that any permitted successor of Household International under the Indenture may succeed to Household International's ownership of such common interests, and (ii) to use its reasonable efforts to cause the Trust (a) to remain a statutory business trust, except in connection with the distribution of Notes to the holders of Trust Securities in liquidation of the Trust, the redemption of all of the Trust Securities of the Trust, or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, and (b) to otherwise continue to be classified as a grantor trust for United States federal income tax purposes. OPTIONAL REDEMPTION Household International shall have the right to redeem the Notes at any time, in whole or in part, on or after , , or at any time, in whole or in part, in certain circumstances upon the occurrence of a tax event as described under "Description of the Trust Preferred Securities -- Special Event Redemption or Distribution," upon not less than 30 nor more than 60 days' notice. The redemption price shall be equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest, including Additional Interest, if any, to the redemption date. If a partial redemption of the Trust Preferred Securities resulting from a partial redemption of the Notes would result in the delisting of the Trust Preferred Securities, Household International may only redeem the Notes in whole. POSSIBLE TAX LEGISLATION There can be no assurance that legislation affecting Household International's ability to deduct interest paid on the Notes or the characterization of the Notes for United States federal income tax purposes will not be enacted in the future or that any such legislation would not be effective retroactively. If tax law changes are enacted and apply retroactively to the Notes, such changes could give rise to a tax event, which would, in certain circumstances, require the dissolution of the Trust or permit Household International to redeem the Notes. See "Risk Factors -- Redemption of the Trust Preferred Securities or Notes May Affect Your Return," "Description of Trust Preferred Securities -- Special Event Redemption or Distribution," and "Certain United States Federal Income Consequences -- Possible Tax Legislation." INTEREST Each Note shall bear interest at the rate of % per annum from the original date of issuance, payable quarterly in arrears on , , and of each year (each, an "Interest Payment Date"), commencing , 2001, to the person in whose name such Note is registered, subject to certain exceptions, at the close of business on the business day next preceding such Interest Payment Date. In the event the Notes shall not continue to remain in book-entry only form, Household International shall have the right to select such record dates which shall be not less than fifteen days prior to each Interest Payment Date. 27 29 The amount of interest payable for any period will be computed (i) for any full 90-day quarterly interest payment period, on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full 90-day quarterly interest payment period for which interest payments are computed, on the basis of a 30-day month, and for periods of less than a month, the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the Notes is not a business day, then payment of the interest payable on such date will be made on the next succeeding day which is a business day (and without any interest or other payment in respect of any such delay), except that, if such business day is in the next succeeding calendar year, such payment shall be made on the immediately preceding business day, in each case with the same force and effect as if made on such date. OPTION TO EXTEND INTEREST PAYMENT PERIOD Household International shall have the right at any time, and from time to time, during the term of the Notes to defer payments of interest by extending the interest payment period for a period not exceeding 20 consecutive quarters, provided, that no extension period may extend beyond the maturity of the Notes, at the end of which extension period, Household International shall pay all interest then accrued and unpaid (including any Additional Interest) (together with interest thereon at the rate specified for the Notes to the extent permitted by applicable law); provided further that, during any such extension period, (a) Household International shall not declare or pay any dividend or make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock (other than (i) repurchases, redemptions or other acquisitions of shares of capital stock of Household International in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, (ii) as a result of an exchange or conversion of any class or series of Household International's capital stock for any other class or series of Household International's capital stock, or (iii) the purchase of fractional interests in shares of Household International's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged), and (b) Household International shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees) issued by Household International which rank pari passu with or junior to the Notes. The foregoing, however, will not apply to any stock dividends paid by Household International where the dividend stock is the same stock as that on which the dividend is being paid. Prior to the termination of any such extension period, Household International may further defer payments of interest by extending the interest payment period, provided that such extension period together with all such previous and further extensions thereof may not exceed 20 consecutive quarterly periods and no extension period may extend beyond the maturity of the Notes. Upon the termination of any extension period and the payment of all amounts then due, Household International may select a new extension period, as if no extension period had previously been declared, subject to the above requirements. No interest during an extension period, except at the end thereof, shall be due and payable. Household International has no present intention of exercising its rights to defer payments of interest by extending the interest payment period on the Notes. If the property trustee shall be the sole holder of the Notes, Household International shall give the Regular Trustees and the property trustee notice of its selection of such extension period one business day prior to the earlier of (i) the date distributions on the Trust Preferred Securities are payable or (ii) the date the Regular Trustees are required to give notice to the New York Stock Exchange or the applicable self-regulatory organization or to holders of the Trust Preferred Securities of the record date or the date such distribution is payable, but in any event not less than one Business Day prior to such record date. The Regular Trustees shall give notice of Household International's selection of such extension period to the holders of the Trust Preferred Securities. If the property trustee shall not be the sole holder of the Notes, Household International shall give the holders of the Notes notice of its selection of such extension period ten business days prior to the earlier of (i) the next Interest Payment Date or (ii) the date Household International is required to give notice to the New York Stock Exchange or the applicable self-regulatory organization or to holders of the Notes of the record or payment date of such related interest payment. 28 30 ADDITIONAL INTEREST If at any time the Trust shall be required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, Household International will pay as additional interest ("Additional Interest") such additional amounts as shall be required so that the net amounts received and retained by the Trust after paying such taxes, duties, assessments or other governmental charges will be not less than the amounts the Trust would have received had no such taxes, duties, assessments or other governmental changes been imposed. INDENTURE EVENTS OF DEFAULT If any Indenture event of default shall occur and be continuing, the property trustee, as the holder of the Notes, will have the right to declare the principal of and the interest on the Notes (including Additional Interest, if any) and any other amounts payable under the Indenture to be forthwith due and payable and to enforce its other rights as a creditor with respect to the Notes. The Indenture provides that any one or more of the following described events, which has occurred and is continuing, constitutes an "event of default" with respect to the Notes: (a) failure for 60 days to pay interest on the Notes, including any Additional Interest in respect thereof, when due; provided, however, that a valid extension of the interest payment period by Household International shall not constitute a default in the payment of interest for this purpose; or (b) failure to pay principal or premium, if any, on the Notes when due whether at maturity or upon earlier redemption; (c) failure to observe or perform any other covenant (other than those specifically relating to another series of Notes) contained in the Indenture for 90 days after written notice to Household International from the Debt Trustee or the holders of at least 25% in principal amount of the outstanding Notes; or (d) certain events of bankruptcy, insolvency, or reorganization of Household International; or (e) the voluntary or involuntary dissolution, winding-up or termination of the Trust, except in connection with the distribution of Notes to the holders of Trust Preferred Securities in liquidation of the Trust and in connection with certain mergers, consolidations or amalgamation permitted by the Declaration. The holders of a majority in aggregate outstanding principal amount of the Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Debt Trustee. The Debt Trustee or the holders of not less than 25% in aggregate outstanding principal amount of the Notes may declare the principal due and payable immediately on default, but the holders of a majority in aggregate outstanding principal amount may annul such declaration and waive the default if the default has been cured and a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration and any applicable premium has been deposited with the Debt Trustee. The holders of a majority in aggregate outstanding principal amount of the Notes affected thereby may, on behalf of the holders of all the Notes, waive any past default, except (i) a default in the payment of principal, premium, if any, or interest (unless such default been cured and a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration and any applicable premium has been deposited with the Debt Trustee) or (ii) a default in the covenant of Household International not to declare or pay dividends on, or redeem, purchase or acquire any of its capital stock during an extension period. An Indenture event of default also constitutes a Declaration Event of Default. The holders of Trust Preferred Securities in certain circumstances have the right to direct the Property Trustee to exercise its rights as the holder of the Notes. See "Description of the Trust Preferred Securities -- Declaration Events of Default" and "-- Voting Rights." 29 31 Notwithstanding the foregoing, if a Declaration Event of Default has occurred and is continuing and such event is attributable to the failure of Household International to pay interest or principal on the Notes on the date such interest or principal is otherwise payable, Household International acknowledges that, in such event, a holder of Trust Preferred Securities may institute a direct action for payment on or after the respective due date specified in the Notes. Household International may not amend the Indenture to remove the foregoing right to bring a direct action without the prior written consent of all of the holders of Trust Preferred Securities of the Trust. Notwithstanding any payment made to such holder of Trust Preferred Securities by Household International in connection with such a direct action, Household International shall remain obligated to pay the principal of or interest on the Notes held by the Trust or property trustee, and Household International shall be subrogated to the rights of the holder of such Trust Preferred Securities with respect to payments on the Trust Preferred Securities to the extent of any payments made by Household International to such holder in any such direct action. The holders of Trust Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Notes. BOOK-ENTRY AND SETTLEMENT If distributed to holders of Trust Preferred Securities in connection with the voluntary or involuntary dissolution, winding-up or liquidation of the Trust as a result of the occurrence of a Special Event, the Notes will be issued in the form of one or more global certificates (each, a "Global Security") registered in the name of the depositary or its nominee. Except under the limited circumstances described below, Notes represented by the Global Security will not be exchangeable for, and will not otherwise be issuable as, Notes in definitive form. The Global Securities described above may not be transferred except by the depositary to a nominee of the depositary or by a nominee of the depositary to the depositary or another nominee of the depositary or to a successor depositary or its nominee. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to transfer beneficial interests in such a Global Security. Except as provided below, owners of beneficial interests in such a Global Security will not be entitled to receive physical delivery of Notes in definitive form and will not be considered the holders (as defined in the Indenture) thereof for any purpose under the Indenture, and no Global Security representing Notes shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the depositary or its nominee or to a successor depositary or its nominee. Accordingly, each beneficial owner must rely on the procedures of the depositary and, if such person is not a participant, on the procedures of the participant through which such person owns its interest, to exercise any rights of a holder under the Indenture. If Notes are distributed to holders of Trust Preferred Securities in liquidation of such holders' interests in the Trust, DTC will act as securities depositary for the Notes. For a description of DTC and the specific terms of the depository arrangements, see "Description of the Trust Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust Company." The description therein of DTC's book-entry system and DTC's practices as they relate to purchases, transfers, notices and payments with respect to the Trust Preferred Securities apply in all material respects to any debt obligations represented by one or more Global Securities held by DTC. Household International may appoint a successor to DTC or any successor depositary in the event DTC or such successor depositary is unable or unwilling to continue as depositary. None of Household International, the Trust, the Debt Trustee, any paying agent and any other agent of Household International or the Debt Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Security for such Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. A Global Security shall be exchangeable for Notes registered in the names of persons other than the depositary or its nominee only if (i) the depositary notifies Household International that it is unwilling or unable to continue as a depositary for such Global Security and no successor depositary shall have been appointed, or if at any time the depositary ceases to be a clearing agency registered under the Exchange Act at a time when the depositary is required to be so registered to act as such depositary and no successor depositary 30 32 shall have been appointed, (ii) Household International in its sole discretion determines that such Global Security shall be so exchangeable or (iii) there shall have occurred an event of default with respect to the Notes. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Notes registered in such names as the depositary shall direct. It is expected that such instructions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in such Global Security. In the event the Notes are not represented by one or more Global Securities, certificates evidencing Notes may be presented for registration of transfer (with the form of transfer endorsed thereon duly executed) or exchange, at the office of the Note Registrar or at the office of any transfer agent designated by Household International for such purpose with respect to the Notes, without service charge and upon payment of any taxes and other governmental charges as described in the Indenture. Such transfer or exchange will be effected upon the Note Registrar or such transfer agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. Household International has appointed the Debt Trustee as Note Registrar with respect to the Notes. Household International may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent acts, except that Household International will be required to maintain a transfer agent at the place of payment. Household International may at any time designate additional transfer agents with respect to the Notes. In the event of any redemption in part, Household International shall not be required to (i) issue, register the transfer of or exchange Notes during a period beginning at the opening of business 15 days before any selection for redemption of Notes and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all holders of the Notes and (ii) register the transfer of or exchange any Notes so selected for redemption, in whole or in part, except the unredeemed portion of any Notes being redeemed in part. PAYMENT AND PAYING AGENTS Payment of principal of and premium (if any) on the Notes will be made only against surrender to the paying agent of the Notes. Principal of and any premium and interest, if any, on Notes will be payable, subject to any applicable laws and regulations, at the office of such paying agent or paying agents as Household International may designate from time to time, except that at the option of Household International payment of any interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the Note Register with respect to the Notes. Payment of interest on Notes on any Interest Payment Date will be made to the person in whose name the Notes (or predecessor security) is registered at the close of business on the Regular Record Date for such interest payment. The Indenture Trustee will act as paying agent with respect to the Notes. Household International may at any time designate additional paying agents or rescind the designation of any paying agents or approve a change in the office through which any paying agent acts, except that Household International will be required to maintain a paying agent at the place of payment. All moneys paid by Household International to a paying agent for the payment of the principal of or premium or interest, if any, on the Notes which remain unclaimed at the end of two years after such principal, premium, if any, or interest shall have become due and payable will be repaid to Household International and the holder of such Notes will thereafter look only to Household International for payment thereof. MODIFICATION OF THE INDENTURE The Indenture contains provisions permitting Household International and the Debt Trustee, with the consent of the holders of not less than a majority in principal amount of the Notes, to modify the Indenture or any supplemental indenture affecting that series or the rights of the holders of the Notes; provided, that no such modification may, without the consent of the holder of each outstanding Note affected thereby, (i) extend the fixed maturity of the Notes, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the holder of Notes so affected or (ii) reduce the percentage of Notes, the holders of which are 31 33 required to consent to any such supplemental indenture, without the consent of the holders of each Note then outstanding and affected thereby. In addition, Household International and the Debt Trustee may execute, without the consent of holders of the Notes, any supplemental indenture for certain other usual purposes including the creation of any new series of Notes. CONSOLIDATION, MERGER AND SALE The Indenture provides that Household International will not consolidate with or merge into any other corporation or convey, transfer or lease its assets substantially as an entirety unless (a) the successor is a corporation organized in the United States and expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest on all Notes issued thereunder and the performance of every other covenant of the Indenture on the part of Household International and (b) immediately thereafter no event of default and no event which, after notice or lapse of time, or both, would become an event of default, shall have happened and be continuing. Upon any such consolidation, merger, conveyance or transfer, the successor corporation shall succeed to and be substituted for Household International under the Indenture and thereafter the predecessor corporation shall be relieved of all obligations and covenants under the Indenture and the Notes. DEFEASANCE AND DISCHARGE Under the terms of the Indenture, Household International will be discharged from any and all obligations in respect of the Notes (except in each case for certain obligations to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold moneys for payment in trust) if Household International deposits with the Debt Trustee, in trust, moneys or government obligations, in an amount sufficient to pay all the principal of, and interest on, the Notes on the dates such payments are due in accordance with the terms of the Notes. For federal income tax purposes, any such defeasance of the Notes will be treated as a taxable exchange of the Notes for an issue of obligations of the trust or a direct interest in the cash or government securities held in the trust. In that case, holders of the Trust Preferred Securities would recognize gain or loss as if the trust obligations or the cash or government obligations deposited, as the case may be, had actually been received by them in exchange for their Trust Preferred Securities. Such holders thereafter would be required to include in income a share of the income, gain or loss of the trust. The amount so required to be included in income could be a different amount than would be includable in the absence of defeasance. Holders of the Trust Preferred Securities should consult their own tax advisors as to the specific consequences of defeasance. GOVERNING LAW The Indenture and the Notes will be governed by, and construed in accordance with, the internal laws of the State of Illinois. INFORMATION CONCERNING THE DEBT TRUSTEE The Debt Trustee, prior to default, undertakes to perform only such duties as are specifically set forth in the Indenture and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provision, the Debt Trustee is under no obligation to exercise any of the powers vested in it by the Indenture at the request of any holder of Notes, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities which might be incurred thereby. The Debt Trustee is not required to expand or risk its own funds or otherwise incur personal financial liability in the performance of its duties if the Debt Trustee reasonably believes that repayment or adequate indemnity is not reasonably assured to it. 32 34 Household International and certain of its affiliates maintain a deposit account and a banking relationship with the Debt Trustee. The Debt Trustee serves as trustee under other indentures pursuant to which debt securities of an affiliate of Household International are outstanding. MISCELLANEOUS Household International will have the right at all times to assign any of its rights or obligations under the Indenture to a direct or indirect wholly-owned subsidiary of Household International; provided, that, in the event of any such assignment, Household International will remain liable for all of their respective obligations. Subject to the foregoing, the Indenture will be binding upon and inure to the benefit of the parties thereto and their respective successors and assigns. The Indenture provides that it may not otherwise be assigned by the parties thereto. The Indenture will also provide that Household International will pay all fees and expenses related to (i) the offering of the Trust Securities and the Notes, (ii) the organization, maintenance and dissolution of the Trust, (iii) the retention of the Household International trustees and (iv) the enforcement by the property trustee of the rights of holders of Trust Preferred Securities. EFFECT OF OBLIGATIONS UNDER THE NOTES AND THE PREFERRED SECURITIES GUARANTEE As set forth in the Declaration, the sole purpose of the Trust is to issue Trust Preferred Securities and the common interests and invest the proceeds thereof in the Notes. As long as payments of interest and other payments are made when due on the Notes, such payments will be sufficient to cover distributions and payments due on the Trust Securities primarily because (i) the aggregate principal amount of Notes will be equal to the sum of the aggregate stated liquidation amount of the Trust Securities; (ii) the interest rate and interest and other payment dates on the Notes will match the distribution rate and distribution and other payment dates for the Trust Preferred Securities; (iii) Household International shall pay for all costs and expenses of the Trust; and (iv) the Declaration provides that the Household International trustees shall not cause or permit the Trust to, among other things, engage in any activity that is not consistent with the purposes of the Trust. Payments of distributions (to the extent funds therefor are available) and other payments due on the Trust Preferred Securities (to the extent funds therefor are available) are guaranteed by Household International as and to the extent set forth under "Description of the Preferred Securities Guarantee." If Household International does not make interest payments on the Notes purchased by the Trust, it is expected that the Trust will not have sufficient funds to pay distributions on the Trust Preferred Securities. The Preferred Securities Guarantee is a guarantee on a subordinated basis from the time of its issuance, but does not apply to any payment of distributions unless and until the Trust has sufficient funds for the payment of such distributions. If Household International fails to make interest or other payments on the Notes when due (taking into account any extension period), the Declaration provides a mechanism whereby the holders of the Trust Preferred Securities, using the procedures described in "Description of the Trust Preferred Securities -- Voting Rights," may (i) appoint a Special Regular Trustee and (ii) direct the property trustee to enforce its rights under the Notes, including proceeding directly against Household International to enforce the Notes. If the property trustee fails to enforce its rights under the Notes, a holder of Trust Preferred Securities may institute a legal proceeding directly against Household International to enforce the property trustee's rights under the Notes without first instituting any legal proceeding against the property trustee or any other person or entity. Notwithstanding the foregoing, if a Declaration Event of Default has occurred and is continuing and such event is attributable to the failure of Household International to pay interest or principal on the Notes on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), then a holder of Trust Preferred Securities may institute an action for payment on or after the respective due date specified in the Notes. In connection with such action, Household International will be subrogated to the 33 35 rights of such holder of Trust Preferred Securities under the Declaration to the extent of any payment made by Household International to such holder of Trust Preferred Securities in such action. Household International, under the Preferred Securities Guarantee, acknowledges that the Preferred Guarantee Trustee shall enforce the Preferred Securities Guarantee on behalf of the holders of the Trust Preferred Securities. If Household International fails to make payments under the Preferred Securities Guarantee, the Preferred Securities Guarantee provides a mechanism whereby the holders of the Trust Preferred Securities may direct the Preferred Guarantee Trustee to enforce its rights thereunder. If the Preferred Guarantee Trustee fails to enforce the Preferred Securities Guarantee, any holder of Trust Preferred Securities may institute a legal proceeding directly against Household International to enforce the Preferred Guarantee Trustee's rights under the Preferred Securities Guarantee, without first instituting a legal proceeding against the Trust, the Preferred Guarantee Trustee or any other person or entity. The Preferred Securities Guarantee, when taken together with Household International's obligations under the Notes, the Indenture and the Declaration, including its obligations under the Indenture to pay costs, expenses, debts and liabilities of the Trust (other than with respect to the Trust Securities), will provide a full and unconditional guarantee of amounts due on the Trust Preferred Securities. See "Description of the Preferred Securities Guarantee -- General." CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following is a summary of certain of the principal United States federal income tax consequences of the purchase, ownership and disposition of the Trust Preferred Securities to a beneficial owner that is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any state thereof or the District of Columbia or an estate or trust treated as a United States person under Section 7701(a)(30) of the Code (a "Holder"). Except as set forth below, this summary does not address the United States federal income tax consequences to persons other than Holders. This summary is based on the United States federal income tax laws, regulations and rulings and decisions now in effect, all of which are subject to change, possibly on a retroactive basis. This summary does not address the tax consequences applicable to investors that may be subject to special tax rules such as banks, thrifts, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies, tax-exempt investors or persons that will hold the Trust Preferred Securities as a position in a "straddle," as part of a "synthetic security" or "hedge," as part of a "conversion transaction" or other integrated investment or as other than a capital asset. This summary also does not address the tax consequences to persons that have a functional currency other than the U.S. dollar or the tax consequences to shareholders, partners or beneficiaries of a Holder. Further, it does not include any description of any alternative minimum tax consequences or the tax laws of any state or local government or of any foreign government that may be applicable to a Holder. CLASSIFICATION OF HOUSEHOLD CAPITAL TRUST VI Sidley & Austin, special counsel to Household International and the Trust, is of the opinion that, under current law and assuming full compliance with the terms of the Indenture and the Declaration (and certain other documents), Household Capital Trust VI will be classified as a "grantor trust" for federal income tax purposes and will not be classified as an association taxable as a corporation or a publicly traded partnership. Each Holder will be treated as owning an undivided beneficial interest in the Notes. Accordingly, each Holder will be required to include in its gross income interest (or accrued original issue discount ("OID"), if any) with respect to its allocable share of Notes. Investors should be aware that the opinion of Sidley & Austin does not address any other issue and is not binding on the Internal Revenue Service (the "Service") or the courts. INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT Unless the Notes are issued with OID, stated interest on the Notes will be taxable to a Holder as ordinary income at the time such interest is paid (if the Holder uses the cash method of accounting for tax purposes) or 34 36 accrued (if the Holder uses the accrual method of accounting for tax purposes). Under regulations of the U.S. Treasury Department, the Notes will not be considered issued with OID if they contain terms that make the likelihood of Household International exercising its right to defer interest (as described under "Description of the Notes -- Option to Extend Interest Payment Period") a "remote" contingency at the time the Notes are issued. Household International believes that such likelihood is remote, because exercise of its right to defer interest would prevent Household International from declaring dividends on its capital stock. Accordingly, Household International intends to take the position that the Notes will not be issued with OID. However, the definition of the term "remote" in the regulations has not yet been addressed in any rulings or other interpretations by the Service, and it is possible that the Service would assert that the Notes were issued with OID. If, notwithstanding Household International's current belief, it did exercise its right to defer interest payments, the Notes would be treated as if they were retired and then reissued with OID at such time. In such case, the amount of OID would generally be equal to the interest payable thereafter. If the Notes were treated as having been issued or reissued with OID (either because Household International exercises its right to defer interest payments or because the likelihood of exercise of such right is not considered a remote contingency at the time of issuance), Holders would include that interest in income on an accrual basis, regardless of their method of tax accounting. The amount of OID that accrued in any period would approximately equal the amount of interest that accrued on the Notes in that period at the stated interest rate. If interest payments were received later than the taxable year in which the interest accrued, OID treatment would have the effect of accelerating the reporting of income for Holders who otherwise use a cash method of tax reporting. Corporate Holders of Trust Preferred Securities will not be entitled to a dividends-received deduction with respect to any interest earned with respect to the Trust Preferred Securities. PREMIUM AND MARKET DISCOUNT To the extent a Holder acquires its Trust Preferred Securities at a price that is greater or less than the principal payable at maturity (or, if the Notes are treated as having been issued or reissued with OID, the adjusted issue price of such Holder's share of Notes (which generally should approximate par plus any OID accrued with respect to unpaid interest)), the Holder will be deemed to have acquired its interest in the Trust Preferred Securities with premium or with market discount, as the case may be. A Holder acquiring Trust Preferred Securities at a premium may elect to reduce the amount of interest payments (and will reduce the amount of OID, if any) required to be included in income to reflect amortization of the premium over the remaining term. A Holder acquiring Trust Preferred Securities at a market discount will include the amount of such discount in income in accordance with the market discount rules described below. A Holder acquiring Trust Preferred Securities at a market discount generally will be required to recognize ordinary income to the extent of accrued market discount upon the retirement of the underlying Notes or, to the extent of any gain, upon the disposition of the Trust Preferred Securities. Such market discount will accrue ratably, or, at the election of the Holder, under a constant yield method over the remaining term of the Notes. A Holder will also be required to defer the deduction of a portion of the interest paid or accrued on indebtedness incurred to purchase or carry Trust Preferred Securities acquired with market discount. In lieu of the foregoing, a Holder may elect to include market discount in income currently as it accrues on all market discount instruments acquired by such Holder in the taxable year of the election and thereafter, in which case the interest deferral rule will not apply. RECEIPT OF NOTES UPON LIQUIDATION OF THE TRUST Under certain circumstances, as described under the caption "Description of Trust Preferred Securities -- Special Event Redemption or Distribution," Notes may be distributed to Holders in exchange for the Trust Preferred Securities and in liquidation of the Trust. Under current law, such a distribution would be treated as a non-taxable event to each Holder, and each Holder would receive an aggregate tax basis in the Notes equal to such Holder's aggregate tax basis in its Trust Preferred Securities. A Holder's holding period in 35 37 the Notes so received in liquidation of the Trust would include the period for which the Trust Preferred Securities were held by such Holder. SALE OF TRUST PREFERRED SECURITIES AND REDEMPTION OF NOTES A Holder that sells Trust Preferred Securities, or whose Trust Preferred Securities or Notes (distributed to Holders upon liquidation of the Trust) are redeemed, will recognize gain or loss equal to the difference between its adjusted tax basis in the Trust Preferred Securities or Notes and the amount realized on the sale or redemption. A Holder's adjusted tax basis in the Trust Preferred Securities or Notes generally will be its initial purchase price increased by OID, if any, previously includible in such Holder's gross income to the date of disposition (and the accrual of market discount, if any) and decreased by payments (other than payments of interest not reflected in OID) received on the Trust Preferred Securities and/or Notes and by any premium that the Holder has taken into account. Subject to the market discount rules described above, any such gain or loss generally will be capital gain or loss. The Trust Preferred Securities may trade at prices that do not accurately reflect the value of accrued but unpaid interest with respect to the underlying Notes. A Holder that uses the accrual method of accounting for tax purposes (and a cash method Holder if the Notes are deemed to have been issued with OID) and that disposes of Trust Preferred Securities between record dates for payments of distributions thereon will be required to include accrued but unpaid interest on the Notes through the date of disposition in income as ordinary income, and to add such amount to such Holder's adjusted tax basis in the pro rata share of the underlying Notes deemed disposed of. To the extent that the selling price is less than the Holder's adjusted tax basis (so determined) a Holder will recognize a capital loss. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. POSSIBLE TAX LEGISLATION There can be no assurance that legislation affecting Household International's ability to deduct interest paid on the Notes or the characterization of the Notes for United States federal income tax purposes will not be enacted in the future or that any such legislation would not be effective retroactively. If tax law changes are enacted and apply retroactively to the Notes, such changes could give rise to a Tax Event, which would, in certain circumstances, require the dissolution of the Trust or permit Household International to redeem the Notes. See "Risk Factors -- Possible Tax Event," "Risk Factors -- Redemption of the Trust Preferred Securities or Notes May Affect Your Return," "Description of Trust Preferred Securities -- Special Event Redemption or Distribution," and "Description of the Notes -- Possible Tax Legislation." FOREIGN INVESTORS Subject to the discussion of backup withholding below, interest (including OID) with respect to the Trust Preferred Securities paid to a nonresident alien individual, foreign corporation, foreign partnership or foreign estate or trust (collectively, "United States Alien Holder") will be exempt from U.S. withholding tax, provided that the United States Alien Holder complies with applicable certification requirements (and does not actually or constructively own ten percent or more of the total combined voting power of all classes of stock of Household International and is not a controlled foreign corporation related to Household International or its affiliates). New regulations governing withholding became effective on January 1, 2001 (the "Withholding Regulations"). In general, the Withholding Regulations provide certification requirements designed to simplify compliance by those responsible for withholding on payments to United States Alien Holders. Among other provisions, the Withholding Regulations provide, in the case of an entity classified as a foreign partnership under United States tax principles, that the partners, rather than the partnership, generally will be required to provide the required certification to qualify for an exemption from withholding. 36 38 INFORMATION REPORTING TO HOLDERS Subject to the qualifications discussed below, income on the Trust Preferred Securities will be reported to Holders on Form 1099, which forms should be mailed to Holders of Trust Preferred Securities by January 31 following each calendar year. The Trust will be obligated to report annually to Cede & Co., as Holder of record of the Trust Preferred Securities, the interest (and OID, if any) with respect to the Trust Preferred Securities that accrued during that year. The Trust currently intends to report such information on Form 1099 prior to January 31 following each calendar year even though the Trust is not legally required to report to record Holders until April 15 following each calendar year. The Underwriters have indicated to the Trust that, to the extent that they hold Trust Preferred Securities as nominees for beneficial Holders, they currently expect to report to such beneficial Holders on Forms 1099 by January 31 following each calendar year. Under current law, record holders of Trust Preferred Securities who hold as nominees for beneficial Holders will not have any obligation to report information regarding the beneficial Holders to the Trust. The Trust, moreover, will not have any obligation to report to beneficial Holders who are not also record holders. Thus, beneficial Holders of Trust Preferred Securities who hold their Trust Preferred Securities through the Underwriters will receive Forms 1099 reflecting the income on their Trust Preferred Securities from such nominee holders rather than the Trust. BACKUP WITHHOLDING Payments made on, and proceeds from the sale of, the Trust Preferred Securities may be subject to a "backup" withholding tax of 31% unless the Holder or the United States Alien Holder complies with certain identification or certification requirements. Any withheld amounts will be allowed as a credit against the holder's United States federal income tax, if any, provided the required information is provided to the Service. THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS. CERTAIN ERISA CONSIDERATIONS Before authorizing an investment in the Trust Preferred Securities, fiduciaries of pension, profit sharing or other employee benefit plans subject to ERISA ("Plans") should consider, among other matters, (a) ERISA's fiduciary standards (including its prudence and diversification requirements), (b) whether such fiduciaries have authority to make such investment in the Trust Preferred Securities under the applicable Plan investment policies and governing instruments, and (c) rules under ERISA and the Code that prohibit Plan fiduciaries from causing a Plan to engage in a "prohibited transaction." Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well as individual retirement accounts and Keogh plans subject to Section 4975 of the Code (also "Plans"), from, among other things, engaging in certain transactions involving "plan assets" with persons who are "parties in interest" under ERISA or "disqualified persons" under the Code (collectively, "Parties in Interest") with respect to such Plan. A violation of these "prohibited transaction" rules may result in an excise tax or other liabilities under ERISA and/or Section 4975 of the Code for such persons, unless exemptive relief is available under an applicable statutory or administrative exemption. Such administrative exemptions include the following prohibited transaction class exemptions ("PTCE"): PTCE 96-23 (for certain transactions determined by in-house asset managers), PTCE 91-38 (for certain transactions involving bank collective investment funds), PTCE 95-60 (for certain transaction involving insurance company general accounts), PTCE 90-1 (for certain 37 39 transactions involving insurance company pooled separate accounts), and PTCE 84-14 (for certain transactions determined by independent qualified asset managers). The Department of Labor has issued a regulation (29 C.F.R. section 2510.3-101) (the "Plan Assets Regulation") concerning the definition of what constitutes the assets of a Plan. The Plan Assets Regulation provides that, as a general rule, the underlying assets and properties of corporations, partnerships, trusts and certain other entities in which a Plan makes an "equity" investment will be deemed, for purposes of ERISA, to be assets of the investing Plan unless certain exceptions apply. Pursuant to an exception contained in the Plan Assets Regulations, the assets of the Trust would not be deemed to be "plan assets" of investing Plans if the equity interests acquired by employee benefit plans are "publicly-offered securities" -- that is, they are (1) widely held (i.e., owned by more than 100 investors independent of the issuer and of each other), (2) freely transferable and (3) sold as part of an offering pursuant to an effective registration statement under the Securities Act and then timely registered under Section 12(b) or 12(g) of the Exchange Act. It is expected that the Trust Preferred Securities will meet the criteria of "publicly-offered securities" above. The Underwriters expect that the Trust Preferred Securities will be held by at least 100 independent investors at the conclusion of the offering; there are no restrictions imposed on the transfer of the Trust Preferred Securities and the Trust Preferred Securities will be sold as part of an offering pursuant to an effective registration statement under the Securities Act, and then will be timely registered under the Exchange Act. Although it is expected that the assets of the Trust should not be deemed to be "plan assets" of an investing Plan, if Household International or the Trust is a Party in Interest with respect to the Plan, in the absence of an applicable exemption, the Plan's purchase of the Trust Preferred Securities from the Trust would likely constitute a prohibited transaction under Section 406(a)(1)(A) or ERISA and Section 4975(c)(1)(A) of the Code. In addition, in the absence of an applicable exemption, certain other transactions coincident to the Trust Preferred Securities may involve a prohibited transaction, such as a distribution of the Notes from the Trust to a Plan investor. Any plans or other entities whose assets include Plan assets subject to ERISA or Section 4975 of the Code proposing to acquire Trust Preferred Securities should consult with their own counsel to confirm that such investment will not result in a prohibited transaction that is not subject to an exemption and will satisfy any other applicable requirements of ERISA and the Code. Each purchaser using assets of a Plan to acquire Trust Preferred Securities will be deemed to have represented that its purchase and holding of such Trust Preferred Securities will not result in a non-exempt prohibited transaction under ERISA or the Code or will be covered by the exemptive relief provided by PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable exemption. Governmental Plans and certain church plans are not subject to ERISA, and are also not subject to the prohibited transaction provisions of Section 4975 of the Code. However, state laws or regulations governing the investment and management of the assets of such plans may contain fiduciary and prohibited transaction provisions similar to those under ERISA and the Code discussed above. Accordingly, fiduciaries of governmental and church plans, in consultation with their advisers, should consider the impact of their respective state laws on investments in the Trust Preferred Securities and the considerations discussed above to the extent applicable. 38 40 UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement, the Trust has agreed to sell to each of the Underwriters named below (the "Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, A.G. Edwards & Sons, Inc., Prudential Securities Incorporated and UBS Warburg LLC are acting as representatives (the "Representatives"), and the Underwriters have severally agreed to purchase from the Trust, the respective number of Trust Preferred Securities set forth opposite their names below. In the Underwriting Agreement, the several Underwriters have agreed, subject to the terms and conditions set forth therein (including, without limitation, the approval of certain legal matters by counsel to the Underwriters), to purchase all the Trust Preferred Securities offered hereby if any of the Trust Preferred Securities are purchased. In the event of default by an Underwriter, the Underwriting Agreement provides that, in certain circumstances, the purchase commitments of the nondefaulting Underwriters may be increased or the Underwriting Agreement may be terminated.
NUMBER OF TRUST PREFERRED UNDERWRITER SECURITIES - ----------- --------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated A.G. Edwards & Sons, Inc. Prudential Securities Incorporated UBS Warburg LLC --------- Total............................................. 8,000,000 =========
The Representatives have advised us that they propose initially to offer the Trust Preferred Securities to the public at the public offering price set forth on the cover page of this prospectus and to certain dealers at such price less a concession not in excess of $ per Trust Preferred Security. The Underwriters may allow, and such dealers may reallow, a discount not in excess of $ per Trust Preferred Security to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed by the Representatives. In view of the fact that the proceeds from the sale of the Trust Preferred Securities will be used to purchase the Notes issued by Household, the Underwriting Agreement provides that Household will pay to the Underwriters as compensation for their arranging the investment therein of such proceeds an amount of $ per Trust Preferred Security (or $ in the aggregate); provided that such compensation will be $ per Trust Preferred Security sold to certain institutions. Therefore, to the extent of such sales, the aggregate amount of compensation will be less than that specified in the preceding sentence. Household estimates that the total expenses of the offering, excluding the underwriting commission, will be $ . 39 41 Household and the Trust have agreed that, during a period of 30 days from the date of the Underwriting Agreement they will not offer, sell, contract to sell or otherwise dispose of any preferred securities in any trust similar to the Trust, any other beneficial interests in the assets of the Trust or any trust similar to the Trust, or any preferred securities or any other securities of the Trust or Household, as the case may be, that are substantially similar to the Trust Preferred Securities, including any guarantee of such securities, or any securities convertible into or exchangeable for or representing the right to receive securities, preferred securities or any such substantially similar securities of either the Trust, any trust similar to the Trust or Household that are subordinated to Household's senior indebtedness in a manner substantially similar to the subordination of the Notes, without the prior written consent of the Underwriters, except for the Trust Preferred Securities offered in connection with this offering. The Trust Preferred Securities are a new issue of securities with no established trading market. The Trust Preferred Securities are expected to be approved for listing on the New York Stock Exchange subject to official notice of issuance. Trading of the Trust Preferred Securities on the New York Stock Exchange is expected to commence within a 30-day period after the initial delivery of the Trust Preferred Securities. The Underwriters have advised Household and the Trust that they intend to make a market in the Trust Preferred Securities prior to commencement of trading on the New York Stock Exchange, but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the Trust Preferred Securities. In order to meet one of the requirements for listing the Trust Preferred Securities on the New York Stock Exchange, the Underwriters will undertake to sell lots of 100 or more Trust Preferred Securities to a minimum of 400 beneficial holders. Household and the Trust have agreed to indemnify the several Underwriters against, or contribute to payments that the Underwriters may be required to make in respect of, certain liabilities, including liabilities under the Securities Act of 1933, as amended. In order to facilitate the offering of the Trust Preferred Securities, the Underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Trust Preferred Securities. Specifically, the Underwriters may overallot in connection with the offering, creating a short position in the Trust Preferred Securities for their own account. In addition, to cover overallotments or to stabilize the price of the Trust Preferred Securities, the Underwriters may bid for, and purchase, the Trust Preferred Securities in the open market. Finally, the underwriting syndicate may reclaim selling concessions allowed to an Underwriter or a dealer for distributing the Trust Preferred Securities in the offering, if the syndicate repurchases previously distributed Trust Preferred Securities in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the Trust Preferred Securities above independent market levels. The Underwriters are not required to engage in these activities, and may end any of these activities at any time. It is expected that delivery of the Trust Preferred Securities will be made against payment therefor on or about the date specified in the last paragraph of the cover page of this prospectus, which will be the fifth business day following the date of pricing of the Trust Preferred Securities. Under Rule 15c6-1 under the Securities Exchange Act of 1934, as amended, purchases or sales of securities in the secondary market generally are required to settle within three business days ("T+3"), unless the parties to any such transactions expressly agree otherwise. Accordingly, prospective purchasers of the Trust Preferred Securities who wish to trade such securities will be required, by virtue of the fact that the Trust Preferred Securities initially will settle within five business days ("T+5"), to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Prospective purchasers of the Trust Preferred Securities who wish to trade prior to the settlement date should consult their own legal advisors. Certain of the Underwriters or their affiliates have provided from time to time, and expect to provide in the future, investment or commercial banking services to Household and its affiliates, for which such Underwriters or their affiliates have received or will receive customary fees and commissions. 40 42 WHERE YOU CAN FIND MORE INFORMATION We file reports, proxy statements and other information with the SEC. Our SEC filings are also available over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file by visiting the SEC's public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. You may also inspect our SEC reports and other information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. We have filed a registration statement on Form S-3 with the SEC covering the Trust Preferred Securities, the Notes and the guarantee. For further information on Household International and the Trust Preferred Securities, the Notes and the guarantee, you should refer to our registration statement and its exhibits. This prospectus summarizes material provisions of contracts and other documents that are included with that registration statement. Because this prospectus may not contain all the information that you may find important, you should review the full text of these contracts and documents. INCORPORATION OF INFORMATION WE FILE WITH THE SEC The SEC allows us to incorporate by reference the information we file with them, which means: - incorporated documents are considered part of the prospectus; - we can disclose important information to you by referring you to those documents; and - information that we file with the SEC will automatically update and supersede this incorporated information. We incorporate by reference the documents listed below which were filed with the SEC under the Exchange Act: - annual report on Form 10-K for the year ended December 31, 1999; - quarterly report on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2000; and - current reports on Form 8-K dated January 19, 2000, April 20, 2000, July 19, 2000, October 18, 2000, November 8, 2000 and January 17, 2001. We also incorporate by reference each of the following documents that we will file with the SEC after the date of this prospectus until this offering is completed or after the date of this initial registration statement and before the effectiveness of the registration statement: - reports filed under Sections 13(a) and (c) of the Exchange Act; - definitive proxy or information statements filed under Section 14 of the Exchange Act in connection with any subsequent stockholders' meeting; and - any reports filed under Section 15(d) of the Exchange Act. 41 43 You may request a copy of any filings referred to above (excluding exhibits), at no cost, by contacting us at the following address: Ms. Darcie Oakes Office of the Corporate Secretary Household International, Inc. 2700 Sanders Road Prospect Heights, Illinois 847-564-7580 email: djoakes@household.com LEGAL MATTERS Certain matters of Delaware law relating to the validity of the Trust Preferred Securities will be passed upon on behalf of the Trust and Household International by Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to the Trust and Household International. The validity of the Notes, the Preferred Securities Guarantee and certain matters relating thereto will be passed upon on behalf of Household International by John W. Blenke, Vice President -- Corporate Law and Assistant Secretary of Household International. Certain legal matters will be passed upon for the Underwriters by McDermott, Will & Emery, Chicago, Illinois. Certain United States federal income taxation matters will be passed upon for Household International and the Trust by Sidley & Austin, Chicago, Illinois. EXPERTS The financial statements and schedules of Household International and its subsidiaries, incorporated by reference in this prospectus, to the extent and for the periods indicated in its reports, have been audited by Arthur Andersen LLP, independent public accountants, and are incorporated by reference herein in reliance upon the authority of said firm as experts in giving said reports. 42 44 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8,000,000 TRUST PREFERRED SECURITIES HOUSEHOLD CAPITAL TRUST VI % TRUST PREFERRED SECURITIES (LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY) FULLY AND UNCONDITIONALLY GUARANTEED BY HOUSEHOLD INTERNATIONAL, INC. -------------------- PROSPECTUS -------------------- MERRILL LYNCH & CO. A.G. EDWARDS & SONS, INC. PRUDENTIAL SECURITIES UBS WARBURG LLC , 2001 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 45 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 16. EXHIBITS. 1* Form of Underwriting Agreement for Trust Preferred Securities. 4.1 Indenture between Household International, Inc. and Bank One, National Association (successor to The First National Bank of Chicago), as Trustee, dated as of May 15, 1995 (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-3 (Nos. 333-03337 and 333-03337-01). 4.2 Form of Supplemental Indenture between Household International, Inc. and Bank One, National Association, as Trustee. 4.3 Declaration of Trust of Household Capital Trust VI. 4.4 Form of Amended and Restated Declaration of Trust. 4.5 Form of Trust Preferred Security (included in Exhibit 4.4 above). 4.6 Form of Notes (included in Exhibit 4.2 above). 4.7 Form of Guarantee with respect to Trust Preferred Securities. 4.8 Certificate of Trust. 5.1* Opinion and Consent of Mr. John W. Blenke, Vice President -- Corporate Law and Assistant Secretary of Household International, Inc. 5.2* Opinion and Consent of Richards, Layton & Finger, P.A. 8* Tax opinion of Sidley & Austin. 12 Statement on the Computation of Ratio of Earnings to Fixed Charges incorporated herein by reference to Exhibit 12 of Household International's Form 10-K (File No. 1-8198) for the year ended December 31, 1999 and Form 10-Q (File No. 1-8198) for the quarter ended September 30, 2000. 23.1* Consent of Arthur Andersen LLP, Certified Public Accountants. 23.2* Consent of Mr. John W. Blenke, Vice President -- Corporate Law and Assistant Secretary of Household International, Inc. is contained in his opinion (Exhibit 5.1). 23.3* Consent of Sidley & Austin is contained in their opinion (Exhibit 8). 23.4* Consent of Richards, Layton & Finger, P.A. is contained in their opinion (Exhibit 5.2). 24.1 Powers of Attorney with respect to Household International officers and directors 24.2 Powers of Attorney with respect to Household Capital Trust VI trustees (included in Exhibit 4.3 hereto). 25.1* Statement of eligibility and qualification of Bank One, National Association. 25.2* Statement of eligibility and qualification of The Bank of New York, as Preferred Guaranty Trustee. 25.3* Statement of eligibility and qualification of The Bank of New York, as Property Trustee.
- --------------- * Filed herewith -- all other exhibits previously filed. II-1 46 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Prospect Heights, and State of Illinois, on the 22nd day of January, 2001. HOUSEHOLD INTERNATIONAL, INC. By: /s/ WILLIAM F. ALDINGER ------------------------------------ William F. Aldinger Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed below by the following persons in the capacities indicated and on the 22nd day of January, 2001.
SIGNATURE TITLE --------- ----- * - --------------------------------------------------- Chairman, Chief Executive Officer, and Director (William F. Aldinger) (as Principal Executive Officer) * - --------------------------------------------------- (Robert J. Darnall) Director * - --------------------------------------------------- (Gary G. Dillon) Director * - --------------------------------------------------- (John A. Edwardson) Director * - --------------------------------------------------- (Mary J. Evans) Director * - --------------------------------------------------- (Dudley Fishburn) Director * - --------------------------------------------------- (Cyrus F. Freidheim, Jr.) Director * - --------------------------------------------------- (James H. Gilliam, Jr.) Director * - --------------------------------------------------- (Louis E. Levy) Director * - --------------------------------------------------- (George A. Lorch) Director
II-2 47
SIGNATURE TITLE --------- ----- * - --------------------------------------------------- (John D. Nichols) Director * - --------------------------------------------------- (James B. Pitblado) Director * - --------------------------------------------------- (S. Jay Stewart) Director * - --------------------------------------------------- (Louis W. Sullivan, M.D.) Director * Group Executive -- Chief Financial Officer - --------------------------------------------------- (as Principal Accounting and Financial (David A. Schoenholz) Officer) *By: /s/ JOHN W. BLENKE ---------------------------------------------- (John W. Blenke) Attorney-in-fact
II-3 48 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Household Capital Trust VI certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Prospect Heights, State of Illinois, on this 22nd day of January, 2001. HOUSEHOLD CAPITAL TRUST VI By: /s/ B.B. MOSS, JR. ------------------------------------ Name: Benjamin B. Moss, Jr. Title: Trustee By: /s/ DENNIS J. MICKEY ------------------------------------ Name: Dennis J. Mickey Title: Trustee By: /s/ EDGAR ANCONA ------------------------------------ Name: Edgar Ancona Title: Trustee The Registrant reasonably believes that the security rating to be assigned to the Securities registered hereunder will make the Securities "investment grade securities" pursuant to Transaction Requirements B-2 of Form S-3. II-4 49 EXHIBIT INDEX
EXHIBIT - ------- 1* Form of Underwriting Agreement for Trust Preferred Securities.................................................. 4.1 Indenture between Household International, Inc. and Bank One, National Association (successor to The First National Bank of Chicago, as Trustee, dated as of May 15, 1995 (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-3 (Nos. 333-03337 and 333-03337-01)............................................... 4.2 Form of Supplemental Indenture between Household International, Inc. and Bank One, National Association, as Trustee..................................................... 4.3 Declaration of Trust of Household Capital Trust VI.......... 4.4 Form of Amended and Restated Declaration of Trust........... 4.5 Form of Trust Preferred Security (included in Exhibit 4.4 above)...................................................... 4.6 Form of Notes (included in Exhibit 4.2 above)............... 4.7 Form of Guarantee with respect to Trust Preferred Securities.................................................. 4.8 Certificate of Trust........................................ 5.1* Opinion and Consent of Mr. John W. Blenke, Vice President -- Corporate Law and Assistant Secretary of Household International, Inc.......................................... 5.2* Opinion and Consent of Richards, Layton & Finger, P.A....... 8* Tax opinion of Sidley & Austin.............................. 12 Statement on the Computation of Ratio of Earnings to Fixed Charges incorporated herein by reference to Exhibit 12 of Household International's Form 10-K (File No. 1-8198) for the year ended December 31, 1999 and Form 10-Q (File No. 1-8198) for the quarter ended September 30, 2000............ 23.1* Consent of Arthur Andersen LLP, Certified Public Accountants................................................. 23.2* Consent of Mr. John W. Blenke, Vice President -- Corporate Law and Assistant Secretary of Household International, Inc. is contained in his opinion (Exhibit 5.1)................... 23.3* Consent of Sidley & Austin is contained in their opinion (Exhibit 8)................................................. 23.4* Consent of Richards, Layton & Finger, P.A. is contained in their opinion (Exhibit 5.2)................................. 24.1 Powers of Attorney with respect to Household International officers and directors (included on page II-5 hereof)....... 24.2 Powers of Attorney with respect to Household Capital Trust VI trustees (included in Exhibit 4.3 above)................. 25.1* Statement of eligibility and qualification of Bank One, National Association........................................ 25.2* Statement of eligibility and qualification of The Bank of New York, as Preferred Guaranty Trustee..................... 25.3* Statement of eligibility and qualification of The Bank of New York, as Property Trustee.
- --------------- * Filed herewith -- all other exhibits previously filed. II-5 EX-1 2 c59540a1ex1.txt FORM OF UNDERWRITING AGREEMENT 1 Exhibit 1 Household Capital Trust VI and Household International, Inc. Trust Preferred Securities UNDERWRITING AGREEMENT _________, 2001 Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated A. G. Edwards & Sons, Inc. Prudential Securities Incorporated UBS Warburg LLC As Representatives of the Underwriters c/o Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center-North Tower New York, NY 10281-1325 Ladies and Gentlemen: Household Capital Trust VI (the "Trust"), a statutory business trust organized under the Business Trust Act (the "Delaware Act") of the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections 3801 et seq.), proposes, upon the terms and conditions set forth herein, to issue and sell 8,000,000 __% Trust Preferred Securities with an aggregate liquidation amount equal to $200,000,000 (the "Preferred Securities") to the several Underwriters named in Schedule I hereto (the "Underwriters"). The Preferred Securities will be guaranteed by Household International, Inc., a Delaware corporation (the "Company"), with respect to distributions and payments upon liquidation, redemption and otherwise (the "Preferred Securities Guarantee") pursuant to the Preferred Securities Guarantee Agreement (the "Preferred Securities Guarantee Agreement"), dated as of _______, 2001, between the Company and The Bank of New York, as trustee (the "Guarantee Trustee"). The entire proceeds from the sale of the Preferred Securities will be combined with the entire proceeds from the sale by the Trust to the Company of its common securities (the "Common Securities"), as guaranteed by the Company, to the extent set forth in the Prospectus, with respect to distributions and payments upon liquidation and redemption (the "Common Securities Guarantee" and together with the Preferred Securities Guarantee, the "Guarantees") pursuant to the Common Securities Guarantee Agreement (the "Common Securities Guarantee Agreement" and, together with the Preferred Securities Guarantee Agreement, the "Guarantee Agreements"), dated as of ______, 2001, between the Company and the Guarantee Trustee, as 2 trustee, and will be used by the Trust to purchase the $_____________ of __% Junior Subordinated Deferrable Interest Notes due ________, ____ (the "Junior Subordinated Notes") issued by the Company. The Preferred Securities and the Common Securities will be issued pursuant to the amended and restated declaration of trust of the Trust, dated as of _______, 2001 (the "Declaration"), among the Company, as Sponsor, Edgar Ancona, Benjamin B. Moss, Jr. and Dennis J. Mickey (the "Regular Trustees"), The Bank of New York, a New York banking corporation, as property trustee (the "Property Trustee") and The Bank of New York (Delaware), as Delaware trustee (the "Delaware Trustee" and together with the Regular Trustees and the Property Trustee, the "Trustees"), and the holders from time to time of undivided beneficial interests in the assets of the Trust. The Junior Subordinated Notes will be issued pursuant to an indenture, dated as of May 15, 1995 (the "Base Indenture"), between the Company and Bank One, National Association (formerly known as The First National Bank of Chicago), as trustee (the "Debt Trustee"), and a supplement to the Base Indenture, dated as of _______, 2001 (the "Supplemental Indenture" and together with the Base Indenture and any other amendments or supplements thereto, the "Indenture"), between the Company and the Debt Trustee. The Trust and the Company (together, the "Offerors") wish to confirm as follows their agreement with you and the other several Underwriters on whose behalf you are acting as representatives (the "Representatives") in connection with the several purchases of the Preferred Securities by the Underwriters. 1. Registration Statement and Prospectus. The Offerors have filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (Nos. 333-53862 and 333-53862-01) and a related preliminary prospectus for the registration under the Securities Act of 1933 (the "1933 Act") of (i) the Preferred Securities, (ii) the Preferred Securities Guarantee, and (iii) the Junior Subordinated Notes to be issued and sold to the Trust by the Company, have filed such amendments thereto, if any, and such amended preliminary prospectuses as may have been required to the date hereof, and will file such additional amendments thereto and such amended prospectuses as may hereafter be required. Such registration statement (as amended) and the prospectus constituting a part thereof (including, in each case, all documents incorporated or deemed to be incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act and the information, if any, deemed to be part thereof pursuant to Rule 430A(b) of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations")), as from time to time amended or supplemented pursuant to the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"), or otherwise, are hereinafter referred to as the "Registration Statement" and the "Prospectus", respectively, except that, if any revised prospectus shall be provided to the Underwriters by the Offerors for use in connection with the offering of the Preferred Securities which differs from the Prospectus on file at the Commission at the time the Registration Statement becomes effective (whether or not such revised prospectus is required to be filed by the Offerors pursuant to Rule 424(b) of the 1933 Act Regulations), the term "Prospectus" shall refer to such revised prospectus from and after the time it is first provided to the Underwriters for such use. All references in this Agreement to financial statements and schedules and other information that is "contained," "included" or "stated" in the Registration Statement or the Prospectus (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information that are or 2 3 are deemed to be incorporated by reference in the Registration Statement or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement or the Prospectus shall be deemed to mean and include the filing of any document under the 1934 Act that is or is deemed to be incorporated by reference in the Registration Statement or the Prospectus, as the case may be. 2. Agreements to Sell and Purchase. The Trust hereby agrees, subject to all the terms and conditions set forth herein, to issue and sell to each Underwriter and, upon the basis of the representations, warranties and agreements of the Offerors herein contained and subject to all the terms and conditions set forth herein, each Underwriter agrees, severally and not jointly, to purchase from the Trust, at a purchase price of $25.00 per Preferred Security, plus accrued distributions, if any, from _______, 2001, to the Closing Time (as hereinafter defined), the number of Preferred Securities set forth opposite the name of such Underwriter in Schedule I hereto (or such number of Preferred Securities increased as set forth in Section 10 hereof). In consideration of such purchases at the Closing Time (as defined below), the Company shall pay to the Underwriters as compensation (in immediately available funds), at the Closing Time, $.____ per Preferred Security, provided, however, that such compensation shall be $.__ per Preferred Security sold to certain institutions. The Underwriters shall inform the Company in writing at the Closing Time of the number of Preferred Securities so sold. 3. Terms of Public Offering. The Offerors have been advised by you that the Underwriters propose to make a public offering of their respective portions of the Preferred Securities as soon as the Underwriters deem advisable after the Registration Statement has become effective, this Agreement has been executed and delivered, and the Declaration, the Preferred Securities Guarantee Agreement and the Indenture have been qualified under the Trust Indenture Act of 1939 (the "1939 Act"). 4. Delivery of the Preferred Securities and Payment Therefor. Delivery to the Underwriters of and payment for the Preferred Securities shall be made at the offices of Household International, Inc., Prospect Heights, Illinois, at 9:00 A.M., Central Time, on _______, 2001 (the "Closing Time"). The place of closing for the Preferred Securities and the Closing Time may be varied by agreement between you and the Company. The Preferred Securities shall be delivered to you for the accounts of the several Underwriters against payment of the purchase price therefor in immediately available funds and registered in the name of CEDE & Co., as nominee for the Depository Trust Company. The Preferred Securities to be delivered to the Underwriters shall be made available to you in New York City for inspection and packaging not later than 9:30 A.M., Eastern Time, on the business day next preceding the Closing Time. 5. Agreements of Offerors. The Offerors jointly and severally agree with the several Underwriters as follows: (a) The Offerors will notify the Representatives promptly, and confirm the notice in writing, (i) of the effectiveness of the Registration Statement and any amendment 3 4 thereto (including any post-effective amendment), (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose. The Offerors will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) The Offerors will give the Representatives notice of their intention to file or prepare (i) any amendment to the Registration Statement (including any post-effective amendment), (ii) any amendment or supplement to the Prospectus (including any revised prospectus which the Offerors propose for use by the Underwriters in connection with the offering of the Preferred Securities which differs from the prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), or (iii) any document that would as a result thereof be incorporated by reference in the Prospectus whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the Representatives with copies of any such amendment, supplement or other document within a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment, supplement or other document or use any such prospectus to which the Representatives or counsel for the Underwriters shall reasonably object. Subject to the foregoing, the Offerors will file the Prospectus pursuant to Rule 424(b) and Rule 430A under the Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement. (c) The Offerors will deliver to the Representatives signed copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) as the Representatives may reasonably request and will also deliver to the Representatives as many conformed copies of the Registration Statement as originally filed and of each amendment thereto (without exhibits) for each of the Underwriters. (d) The Offerors will furnish to each Underwriter, from time to time during the period when the Prospectus is required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request for the purposes contemplated by the 1933 Act or the respective applicable rules and regulations of the Commission thereunder. (e) If at any time when the Prospectus is required by the 1933 Act to be delivered in connection with sales of the Preferred Securities, any event shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriters or counsel to the Company and the Trust, to amend or supplement the Prospectus in order to make the 4 5 Prospectus not misleading in the light of the circumstances existing at the time it is to be delivered to a purchaser, or if it shall be necessary at any such time, to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Offerors will promptly prepare and file with the Commission, subject to paragraph (b) above, such amendment or supplement as may be necessary to correct such untrue statement or omission or to make the Registration Statement or the Prospectus comply with such requirements; and the Offerors will furnish to the Underwriters a reasonable number of copies of such amendment or supplement. (f) The Offerors will endeavor, in cooperation with the Underwriters, to qualify the Preferred Securities, the Preferred Securities Guarantee and the Junior Subordinated Notes for offering and sale under the applicable securities laws of such states and the other jurisdictions of the United States as the Representatives may designate; provided, however, that none of the Offerors shall be obligated to qualify as a foreign corporation in any jurisdiction in which it is not so qualified. (g) The Company will make generally available to its security holders as soon as practicable but not later than 45 days after the close of the period covered thereby, an earnings statement of the Company (in form complying with the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in said Rule 158) of the Registration Statement. (h) The Offerors will use best efforts to effect the listing of the Preferred Securities (including the Preferred Securities Guarantee with respect thereto) on the New York Stock Exchange; if the Preferred Securities are exchanged for Junior Subordinated Notes, the Company will use its best efforts to effect the listing of the Junior Subordinated Notes on the exchange on which the Preferred Securities were then listed. (i) During a period of 30 days from the date of this Agreement, neither the Trust nor the Company will, without the prior written consent of the Representatives, directly or indirectly, sell, offer to sell, contract to sell, grant any option for the sale of, or otherwise dispose of, any Preferred Securities, any security convertible into or exchangeable into or exercisable for Preferred Securities or the Junior Subordinated Notes or any debt securities substantially similar to the Junior Subordinated Notes or equity securities substantially similar to the Preferred Securities (except for the Junior Subordinated Notes and the Preferred Securities issued pursuant to this Agreement). 6. Representations and Warranties of the Offerors. The Offers jointly and severally represent and warrant to, and agree with, each Underwriter that: (a) At the time the Registration Statement became or becomes effective, the Registration Statement complied or will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rule and regulations of the Commission under the 1939 Act (the "1939 Act Regulations"), and 5 6 will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, at the date hereof (unless the term "Prospectus" refers to a prospectus that has been provided to the Underwriters by the Trust for use in connection with the offering of the Preferred Securities and that differs from the Prospectus on file at the Commission at the time the Registration Statement becomes effective, in which case, at the time it is first provided to the Underwriters for such use) and at Closing Time referred to in Section 2 hereof, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statement therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Offerors in writing by any Underwriter through the Representatives expressly for use in the Registration Statement or Prospectus. (b) The documents incorporated or deemed to be incorporated by reference in the Registration Statement or Prospectus, at the time they were or hereafter are filed with the Commission complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission under the 1934 Act (the "1934 Act Regulations"), and, when read together with the other information in the Prospectus, at the time the Registration Statement and any amendments thereto become effective and at the Closing Time, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) To the best of the Company's knowledge, Arthur Andersen LLP, the accountants who certified the financial statements and supporting schedules included in the Registration Statement, are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (d) The financial statements included in the Registration Statement and the Prospectus present fairly the financial position of the Company and its consolidated subsidiaries as at the dates indicated and the results of their operations for the periods specified; except as otherwise stated in the Registration Statement, said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis; and the supporting schedules included in the Registration Statement present fairly the information required to be stated therein. (e) Since the respective dates as of which information is given in the Registration Statement and the Prospectus (exclusive of any amendments or supplements after the date hereof), except as otherwise stated therein, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, financial position or business affairs of the Company and its subsidiaries, considered as one enterprise, or the Trust, whether or not arising in the ordinary course of business, and (B) there have been no 6 7 transactions entered into by the Trust or by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Trust or the Company and its subsidiaries, considered as one enterprise. (f) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus, to enter into and perform its obligations under this Agreement, the Declaration, the Indenture and each of the Guarantees and to purchase, own, and hold the Common Securities issued by the Trust; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which the character or location of its properties or the nature or the conduct of its business requires such qualification, except for any failures to be so qualified or in good standing which, taken as a whole, are not materially adverse to the Company and its subsidiaries considered as one enterprise. (g) Each subsidiary of the Company which is a significant subsidiary (a "Subsidiary") as defined in Rule 405 of the 1933 Act Regulations, has been duly organized or incorporated and is validly existing in good standing under the laws of the jurisdiction of its incorporation, association or organization, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign entity to transact business and is in good standing in each jurisdiction in which the character or location of its properties or the nature or the conduct of its business requires such qualification, except for any failures to be so qualified or in good standing which, taken as a whole, are not materially adverse to the Company and its subsidiaries considered as one enterprise; all of the issued and outstanding capital stock of each such Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable; and the capital stock of each such Subsidiary owned by the Company, directly or through subsidiaries, is owned free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (h) The authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectus (except for subsequent issuances, if any, pursuant to reservations, agreements, employee benefit plans or the exercise of convertible securities referred to in the Prospectus); and all of the issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable. (i) The Trust has been duly created and is validly existing and in good standing as a business trust under the Delaware Act with the power and authority to own property and to conduct its business as described in the Registration Statement and Prospectus and to enter into and perform its obligations under this Agreement, the Preferred Securities, the Common Securities and the Declaration; the Trust is duly qualified to transact business as a foreign company and is in good standing in any other jurisdiction in which such qualification is necessary, except to the extent that the failure to so qualify or be in 7 8 good standing would not have a material adverse effect on the Trust; the Trust is not a party to or otherwise bound by any agreement other than those described in the Prospectus; the Trust is and will be classified for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation; and the Trust is and will be treated as a consolidated subsidiary of the Company pursuant to generally accepted accounting principles. (j) The Common Securities have been duly authorized by the Declaration and, when issued and delivered by the Trust to the Company against payment therefor as described in the Registration Statement and Prospectus, will be validly issued and (subject to the terms of the Declaration) fully paid and non-assessable undivided beneficial interests in the assets of the Trust and will conform to all statements relating thereto contained in the Prospectus; the issuance of the Common Securities is not subject to preemptive or other similar rights: and at the Closing Time all of the issued and outstanding Common Securities of the Trust will be directly owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (k) This Agreement has been duly authorized, executed and delivered by each of the Offerors. (l) The Declaration has been duly authorized by the Company and, at the Closing Time, will have been duly executed and delivered by the Company and the Trustees, and assuming due authorization, execution and delivery of the Declaration by the Property Trustee, the Declaration will, at the Closing Time, be a valid and binding obligation of the Company and the Regular Trustees, enforceable against the Company and the Regular Trustees in accordance with its terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally or by general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity) (the "Bankruptcy Exceptions") and will conform to all statements relating thereto in the Prospectus; and at the Closing Time, the Declaration will have been duly qualified under the 1939 Act. (m) Each of the Guarantee Agreements has been duly authorized by the Company and, when validly executed and delivered by the Company, and, in the case of the Preferred Securities Guarantee Agreement, assuming due authorization, execution and delivery of the Preferred Securities Guarantee by the Guarantee Trustee, will constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions, and each of the Guarantees and the Guarantee Agreements will conform to all statements relating thereto contained in the Prospectus; and the Preferred Securities Guarantee Agreement, at the Closing Time, will have been duly qualified under the 1939 Act. (n) The Preferred Securities have been duly authorized by the Declaration and, when issued and delivered pursuant to this Agreement against payment of the 8 9 consideration set forth herein, will be validly issued and (subject to the terms of the Declaration) fully paid and non-assessable undivided beneficial interests in the Trust, will be entitled to the benefits of the Declaration and will conform to all statements relating thereto contained in the Prospectus; the issuance of the Preferred Securities is not subject to preemptive or other similar rights; and (subject to the terms of the Declaration) holders of Preferred Securities will be entitled to the same limitation of personal liability under Delaware law as extended to stockholders of private corporations for profit. (o) The Indenture has been duly authorized by the Company and, when validly executed and delivered by the Company, will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions; the Indenture will conform to all statements relating thereto contained in the Prospectus; and at the Closing Time, the Indenture will have been duly qualified under the 1939 Act. (p) The Junior Subordinated Notes have been duly authorized by the Company and, at the Closing Time, will have been duly executed by the Company and, when authenticated in the manner provided for in the Indenture and delivered against payment therefor as described in the Prospectus, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions, will be in the form contemplated by, and entitled to the benefits of, the Indenture and will conform to all statements relating thereto in the Prospectus. (q) The Company's obligations under the Guarantees are subordinate and junior in right of payment to all liabilities of the Company and are pari passu with the preferred stock issued by the Company. (r) The Junior Subordinated Notes are subordinated and junior in right of payment to all "senior indebtedness" (as defined in the Indenture) of the Company. (s) Each of the Regular Trustees of the Trust is an employee of the Company and has been duly authorized by the Company to execute and deliver the Declaration; the Declaration has been duly executed and delivered by the Regular Trustees and is a valid and binding obligation of each Regular Trustee, enforceable against such Regular Trustee in accordance with its terms except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions. (t) None of the Offerors is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). (u) The execution, delivery and performance of this Agreement, the Declaration, the Preferred Securities, the Common Securities, the Indenture, the Junior Subordinated Notes, the Guarantee Agreements and the Guarantees and the consummation of the transactions contemplated herein and therein and compliance by the Offerors with their 9 10 respective obligations hereunder and thereunder have been duly authorized by all necessary action (corporate or otherwise) on the part of the Offerors and do not and will not result in any violation of the charter or by-laws of the Company or any subsidiary, or the Declaration or Certificate of Trust and do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Trust, the Company or any Subsidiary under (A) any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Trust, the Company or any Subsidiary is a party or by which it may be bound or to which any of its properties may be subject (except for conflicts, breaches or defaults which would not, individually or in the aggregate, be materially adverse to the Trust or the Company and its subsidiaries considered as one enterprise, or materially adverse to the transactions contemplated by this Agreement), or (B) any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, or any regulatory body or administrative agency or other governmental body having jurisdiction over the Trust, the Company, or any Subsidiary or any of their respective properties. (v) Except as disclosed in the Prospectus, there is no action, suit or proceeding before or by any government, governmental instrumentality or court, domestic or foreign, now pending or, to the knowledge of the Trust or the Company, threatened, against or affecting the Trust, the Company or any of its subsidiaries that is required to be disclosed in the Prospectus, other than actions, suits or proceedings which are not reasonably expected, individually or in the aggregate, to have a material adverse effect on the condition, financial or otherwise, of the Trust or the Company and its subsidiaries considered as one enterprise, or on the earnings, financial position or business affairs of the Trust or the Company and its subsidiaries considered as one enterprise; and there are no contracts or documents of the Company, any of its subsidiaries or the Trust that are required to be filed as exhibits to the Registration Statement by the 1933 Act or by the 1933 Act Regulations that have not been so filed. (w) No authorization, approval, consent or order of any court or governmental authority or agency is necessary in connection with the issuance and sale of the Common Securities or the offering of the Preferred Securities, the Junior Subordinated Notes or the Guarantees hereunder, except such as may be required under the 1933 Act or the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations or state or foreign securities laws and the qualification of the Declaration, the Preferred Securities Guarantee Agreement and the Indenture under the 1939 Act. (x) The Company and the Subsidiaries and the Trust possess adequate certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies to conduct the business now operated by them, and neither the Company nor any of the Subsidiaries nor the Trust has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or 10 11 finding would materially and adversely affect the condition, financial or otherwise, or the earnings or business affairs of the Company and its subsidiaries considered as one enterprise or of the Trust. 7. Indemnification and Contribution. (a) Each of the Trust and the Company jointly and severally agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Preferred Securities, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Preferred Securities to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities, unless such failure is the result of noncompliance by the Company with Section 6(a) hereof. (b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Trust, the Company, its directors, its officers who sign the Registration Statement, the trustees of the Trust and each person, if any, who controls the Company within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from the Trust and the Company to such Underwriter, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through you expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to 11 12 paragraph (a) or (b) of this Section 7, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Merrill Lynch, Pierce, Fenner & Smith Incorporated in the case of parties indemnified pursuant to paragraph (a) of this Section 7, and by the Company, in the case of parties indemnified pursuant to paragraph (b) of this Section 7. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) To the extent the indemnification provided for in paragraph (a) or (b) of this Section 7 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative 12 13 benefits received by the Trust and the Company on the one hand and the Underwriters on the other hand from the offering of the Preferred Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Trust and the Company on the one hand and of the Underwriters on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Trust and the Company on the one hand and the Underwriters on the other hand in connection with the offering of the Preferred Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Preferred Securities (before deducting expenses) received by the Trust and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate public offering price of the Preferred Securities. The relative fault of the Trust and the Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Trust and the Company or by the Underwriters and the parties, relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters' respective obligations to contribute pursuant to this Section 7 are several in proportion to the respective number of Preferred Securities they have purchased hereunder, and not joint. (e) The Trust, the Company and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) of this Section 7. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Preferred Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. (f) The indemnity and contribution provisions contained in this Section 7 and the representations, warranties and other statements of the Trust and the Company contained 13 14 in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or by or on behalf of the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Preferred Securities. 8. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Preferred Securities hereunder are subject to the following conditions: (a) The Registration Statement shall have become effective not later than 5:30 P.M. on the date hereof, or at such later time and date as may be approved in writing by the Representatives; and at Closing Time no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission. The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the 1933 Act Regulations and in accordance with Section 3(b) and prior to Closing Time the Offerors shall have provided evidence satisfactory to the Representatives of such timely filing. (b) At Closing Time the Representatives shall have received: (1) The favorable opinion, dated as of Closing Time, of John W. Blenke, Vice President-Corporate Law and Assistant Secretary of the Company, in form and substance satisfactory to counsel for the Underwriters, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware. (ii) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and to enter into and perform its obligations under this Agreement, except where the failure to have such power and authority would not be material to the Company and its subsidiaries considered as one enterprise. (iii) To the best of his knowledge and information, the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify or be in good standing would not be material to the Company and its subsidiaries considered as one enterprise. (iv) To the best of his knowledge and information, the Trust is duly qualified and in good standing as a foreign entity in any jurisdiction in which such qualification is necessary, except to the extent that the 14 15 failure to so qualify or be in good standing would not have a material adverse effect on the Trust; and the Trust is not a party to or otherwise bound by any agreement other than those described in the Prospectus. (v) Each Subsidiary has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and, to the best of his knowledge and information, is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which the character or location of its properties or the nature or conduct of its business requires such qualification, except where the failure to have such power and authority or to so qualify or be in good standing would not be material to the Company and its subsidiaries considered as one enterprise; all of the issued and outstanding capital stock of each Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, to the best of his knowledge and information, the capital stock of each such Subsidiary owned by the Company, directly or through subsidiaries, is owned free and clear of any perfected security interest, mortgage, pledge, lien, encumbrance, claim or equity. (vi) The Company has an authorized capitalization as set forth in the Prospectus and all outstanding shares of its common and preferred stock have been duly and validly authorized and issued and are fully paid and nonassessable. (vii) This Agreement has been duly authorized, executed and delivered by the Company. (viii) The Registration Statement is effective under the 1933 Act and, and to the best of his knowledge and information, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act or proceeding therefor initiated or threatened by the Commission. (ix) At the time the Registration Statement became effective and at the Closing Time, the Registration Statement (other than the financial statements and supporting schedules and other financial or statistical data included therein, as to which no opinion need be rendered) complied as to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations. (x) To the best of his knowledge and information, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration 15 16 Statement or to be filed as exhibits thereto other than those described or referred to therein or filed or incorporated by reference as exhibits thereto. (xi) No authorization, approval, consent or order of any court or governmental authority or agency is required in connection with the offering, issuance or sale of the Preferred Securities, the Preferred Securities Guarantee and the Junior Subordinated Notes to the Underwriters, except (a) such as may be required under the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations or state securities laws and (b) the qualification of the Declaration, the Preferred Securities Guarantee Agreement and the Indenture under the 1939 Act; and, to the best of his knowledge and information, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein and compliance by the Company and the Trust with their obligations hereunder and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Subsidiaries or the Trust pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any of the Subsidiaries or the Trust is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of the Subsidiaries or the Trust is subject (except for conflicts, breaches and defaults which would not, individually or in the aggregate, be materially adverse to the Company and its subsidiaries taken as a whole or the Trust or materially adverse to the transactions contemplated by this Agreement), nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company, or any applicable law, administrative regulation or administrative or court decree. (xii) Each document filed pursuant to the 1934 Act (other than the financial statements and supporting schedules and other financial or statistical data included therein, as to which no opinion need be rendered) and incorporated or deemed to be incorporated by reference in the Prospectus complied when so filed as to form in all material respects with the 1934 Act and the 1934 Act Regulations. (xiii) To the best of his knowledge and information and other than as disclosed in the Registration Statement, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which individually or in the aggregate is material, and, to the best of his knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. 16 17 (xiv) The Declaration has been duly qualified under the 1939 Act. (xv) Each of the Guarantee Agreements has been duly authorized, executed and delivered by the Company; the Preferred Securities Guarantee Agreement, assuming it is duly authorized, executed and delivered by the Guarantee Trustee, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by Bankruptcy Exceptions; and the Preferred Securities Guarantee Agreement has been duly qualified under the 1939 Act. (xvi) To the best of his knowledge, all of the issued and outstanding Common Securities of the Trust are directly owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equitable right. (xvii) The Indenture has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution, and delivery thereof by the Debt Trustee, is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions; the Indenture has been duly qualified under the 1939 Act; and the Indenture conforms to the description thereof in the Prospectus. (xviii) The Junior Subordinated Notes have been duly authorized and executed by the Company and, when authenticated by the Trustee in the manner provided in the Indenture and delivered against payment therefor, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except to the extent that enforcement thereof may be limited by the Bankruptcy Exceptions; and the Junior Subordinated Notes conform to the description thereof in the Prospectus. (xix) Neither the Company nor the Trust is an "investment company" or a company "controlled" by an "investment company" within the meaning of the 1940 Act. (xx) The Common Securities, the Preferred Securities and the Declaration conform in all material respects to all statements relating thereto contained in the Prospectus. (2) The favorable opinion of Richards, Layton & Finger, P.A., Special Delaware counsel to the Offerors, in form and substance satisfactory to counsel for the Underwriters, to the effect that: 17 18 (i) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Act; all filings required under the laws of the State of Delaware with respect to the formation and valid existence of the Trust as a business trust have been made; the Trust has all necessary power and authority to own property and to conduct its business as described in the Registration Statement and the Prospectus and to enter into and perform its obligations under this Agreement, the Preferred Securities and the Common Securities. (ii) The Declaration constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by the Bankruptcy Exceptions. (iii) The Common Securities have been duly authorized by the Declaration and are validly issued beneficial interests in the assets of the Trust, and the issuance of the Common Securities is not subject to preemptive or other similar rights. (iv) The Preferred Securities have been duly authorized by the Declaration and are validly issued and (subject to the terms of the Declaration), when delivered to and paid for by the Underwriters pursuant to this Agreement, will be validly issued, fully paid and non-assessable beneficial interests in the assets of the Trust; the holders of the Preferred Securities will (subject to the terms of the Declaration) be entitled to the same limitation of personal liability under Delaware law as is extended to stockholders of private corporations for profit; and the issuance of the Preferred Securities is not subject to preemptive or other similar rights. (v) This Agreement has been duly authorized, executed and delivered by the Trust. (vi) The execution, delivery and performance of this Agreement, the Declaration, the Preferred Securities and the Common Securities; the consummation of the transactions contemplated herein and therein; and the compliance by the Trust with its obligations hereunder and thereunder do not and will not result in any violation of the Declaration or Certificate of Trust, or any applicable law, rule or regulation of the State of Delaware. (3) The favorable opinion, dated as of Closing Time, of Emmet, Marvin & Martin, LLP, counsel for The Bank of New York, as Property Trustee under the Declaration, and Guarantee Trustee under the Preferred Securities Guarantee Agreement, in form and substance satisfactory to counsel for the Underwriters, to the effect that: 18 19 (i) The Bank of New York is a New York banking corporation with trust powers, duly organized, validly existing and in good standing under the laws of the State of New York with all necessary power and authority to execute and deliver, and to carry out and perform its obligations under the terms of the Declaration and the Preferred Securities Guarantee Agreement. (ii) The execution, delivery and performance by the Property Trustee of the Declaration and the execution, delivery and performance by the Guarantee Trustee of the Preferred Securities Guarantee Agreement have been duly authorized by all necessary corporate action on the part of the Property Trustee and the Guarantee Trustee, respectively. The Declaration and the Guarantee Agreements have been duly executed and delivered by the Property Trustee and the Guarantee Trustee, respectively, and constitute the legal, valid and binding obligations of the Property Trustee and the Guarantee Trustee, respectively, enforceable against the Property Trustee and the Guarantee Trustee, respectively, in accordance with their terms, except as enforcement thereof may be limited by the Bankruptcy Exceptions. (iii) The execution, delivery and performance of the Declaration and the Guarantee Agreements by the Property Trustee and the Guarantee Trustee, respectively, does not conflict with or constitute a breach of the Organization Certificate or Bylaws of the Property Trustee and the Guarantee Trustee, respectively. (iv) No consent, approval or authorization of, or registration with or notice to, any New York or federal banking authority is required for the execution, delivery or performance by the Property Trustee and the Guarantee Trustee of the Declaration and the Guarantee Agreements. (4) The favorable opinion, dated as of Closing Time, of McDermott, Will & Emery, counsel for the Underwriters, in form and substance satisfactory to the Underwriters with respect to the legal existence of the Company, the Preferred Securities, the Indenture, the Junior Subordinated Notes, the Preferred Securities Guarantee Agreement, this Agreement, the Registration Statement, the Prospectus and other related matters as the Representatives may require. In giving its opinion, McDermott Will & Emery may rely as to certain matters of Delaware law upon the opinion of, counsel for the Offerors, which shall be delivered in accordance with Section 8(b)(1) and (2) hereto. (5) The favorable opinion of Sidley & Austin, special tax counsel to the Company and the Trust, as to certain Federal tax matters set forth in the Prospectus under "Certain Federal Income Tax Consequences", in form and substance satisfactory to the Representatives. 19 20 (6) In giving their opinions required by subsections (b) (1) and (b)(4), respectively, of this Section, Mr. Blenke and McDermott, Will & Emery shall each additionally state that nothing has come to their attention that has caused them to believe that the Registration Statement (except for financial statements and schedules and other financial or statistical data included or incorporated by reference, therein, as to which counsel need make no statement), at the time it became effective or at the Closing Time, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus (except for financial statements and schedules and other financial or statistical data included or incorporated by reference therein, as to which counsel need make no statement), at the date thereof or at Closing Time, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (7) At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings or business affairs of the Trust or the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Representatives shall have received a certificate of a Vice President of the Company and of the chief financial or chief accounting officer of the Company and a certificate of a Trustee of the Trust, and dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 6 hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, (iii) the Trust and the Company have complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (8) At Closing Time, the Representatives shall have received from Arthur Andersen LLP, a letter dated such date, in form and substance satisfactory to the Representatives. (9) At Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Preferred Securities as herein contemplated and related proceedings, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Offerors, in connection with the issuance and sale of the Preferred Securities as herein 20 21 contemplated shall be satisfactory in form and substance to the Representatives and McDermott, Will & Emery, counsel for the Underwriters. (10) At Closing Time, there shall not have occurred any decrease in the ratings of any of the debt securities of the Company or of the Preferred Securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act). (11) At Closing Time, the Preferred Securities shall have been approved for listing on the New York Stock Exchange upon notice of issuance. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representatives by notice to the Offerors at any time at or prior to Closing Time, and such termination shall be without liability of any party to any other party except as provided in Section 9 hereof. 9. Expenses. The Company agrees to pay the following costs and expenses and all other costs and expenses incident to the performance by it and by the Trust of its and the Trust's respective and joint obligations hereunder: (i) the preparation, printing (or reproduction), and filing with the Commission of the Registration Statement (including financial statements and exhibits thereto), each preliminary prospectus, the Prospectus, each amendment or supplement to any of them, this Agreement, the Declaration, the Preferred Securities Guarantee, the Indenture and the Statement of Eligibility and Qualification of each of the Property Trustee, the Guarantee Trustee and the Debt Trustee; (ii) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Registration Statement, each preliminary prospectus, the Prospectus, the documents incorporated therein by reference, and all amendments or supplements to any of them, as may be reasonably requested for use in connection with the offering and sale of the Preferred Securities; (iii) the preparation, printing (or reproduction), execution and delivery of the Declaration, the Preferred Securities Guarantee and the Indenture and the preparation, printing, authentication, issuance and delivery of the Preferred Securities, including any stamp taxes in connection with the original issuance of the Preferred Securities; (iv) the printing (or reproduction) and delivery of this Agreement, the Blue Sky Memorandum and all other agreements or documents printed (or reproduced) and delivered in connection with the offering the Preferred Securities; (v) the registration of the Preferred Securities under the Exchange Act and the listing of the Securities on the New York Stock Exchange; (vi) the registration or qualification of the Preferred Securities for offer and sale under the securities or Blue Sky laws of the several states as provided in Section 5(g) hereof (including the reasonable fees, expenses and disbursements of counsel for the Underwriters relating to the preparation, printing (or reproduction), and delivery of the Blue Sky Memorandum and such registration and qualification); (vii) the filing fees and the fees and expenses of counsel for the Underwriters in connection with any filing required to be made with the National Association of Securities Dealers, Inc.; (viii) the fees and expenses of the Property Trustee, the Guarantee Trustee and the Debt Trustee; (ix) the fees and expenses associated with obtaining ratings for the Preferred Securities and the Junior Subordinated Notes from nationally recognized 21 22 statistical rating organizations; and (x) the fees and expenses of the Company's accountants and the fees and expenses of counsel (including local and special counsel) for the Offerors. 10. Effective Date of Agreement. This Agreement shall become effective: (i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at the time this Agreement is executed and delivered, it is necessary for the registration statement or a post-effective amendment thereto to be declared effective before the offering of the Preferred Securities may commence, when notification of the effectiveness of the registration statement or such post-effective amendment has been released by the Commission. Until such time as this Agreement shall have become effective, it may be terminated by the Company or the Trust, by notifying you, or by you, as Representatives of the several Underwriters, by notifying the Offerors. If any one or more of the Underwriters shall fail or refuse to purchase Preferred Securities which it or they are obligated to purchase hereunder, and the aggregate number of Preferred Securities which such defaulting Underwriter or Underwriters are obligated but fail or refuse to purchase is not more than one-tenth of the aggregate number of the Preferred Securities, each non-defaulting Underwriter shall be obligated, severally, in the proportion which the number of Preferred Securities set forth opposite its name in Schedule I hereto bears to the aggregate number of Preferred Securities set forth opposite the names of all non-defaulting Underwrites, to purchase the Preferred Securities which such defaulting Underwriter or Underwriters are obligated, but failed or refused, to purchase. If any Underwriter or Underwriters shall fail or refuse to purchase Preferred Securities and the aggregate number of Preferred Securities with respect to which such default occurs is more than one-tenth of the aggregate number of the Preferred Securities and arrangements satisfactory to you and the Offerors for the purchase of such Preferred Securities by one or more non-defaulting Underwriters or other party or parties approved by you and the Offerors are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Offerors. In any such case which does not result in termination of this Agreement, either you or the Offerors shall have the right to postpone the Closing Time, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and the Prospectus or any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any such default of any such Underwriter under this Agreement. The term "Underwriter" as used in this Agreement includes, for all purposes of this Agreement, any party not listed in Schedule I hereto who, with your approval and the approval of the Offerors, purchases Preferred Securities which a defaulting Underwriter is obligated, but fail or refuses, to purchase. Any notice under this Section 10 may be given by telegram, telecopy or telephone but shall be subsequently confirmed by letter. 11. Termination. This Agreement shall be subject to termination by notice given by you to the Offerors, if (a) after the execution and delivery of this Agreement and prior to the Closing Time (i) trading generally shall have been suspended or materially limited on or by, as the case may be, either of the New York Stock Exchange or the National Association of Securities Dealers, Inc., (ii) trading of any securities of the Company shall have been suspended on any 22 23 exchange, (iii) a general moratorium on commercial banking activities in New York shall have been declared by either Federal or New York State authorities or (iv) there shall have occurred any outbreak or escalation of hostilities or any calamity or crisis that, in your judgment, is material and adverse and (b) in the case of any of the events specified in clauses (a)(i) through (iv), such event, singly or together with any other such event, makes it, in your judgment, impracticable to market the Preferred Securities on the terms and in the manner contemplated in the Prospectus. 12. Miscellaneous. Except as otherwise provided in Sections 5, 10 and 11 hereof, notice given pursuant to any provision of this Agreement shall be in writing and shall be delivered (i) if to the Offerors, to the Company, or to the Trust, care of the Company, at the office of the Company at the address specified in the Prospectus, Attention: Secretary; or (ii) if to you, as Representatives of the several Underwriters, care of Merrill Lynch, Pierce, Fenner & Smith Incorporated. This Agreement has been and is made solely for the benefit of the several Underwriters, the Trust, the Company, the Company's directors and officers, the Trustees, and the other controlling persons referred to in Section 7 hereof and their respective successors and assigns, to the extent provided herein, and no other person shall acquire or have any right under or by virtue of this Agreement. Neither the term "successor" nor the term "successors and assigns" as used in this Agreement shall include a purchaser from any Underwriter of any of the Preferred Securities in his status as such purchaser. 13. Applicable Law; Counterparts. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York. This Agreement may be signed in various counterparts which together constitute one and the same instrument. If signed in counterparts, this Agreement shall not become effective unless at least one counterpart hereof shall have been executed and delivered on behalf of each party hereto. 23 24 Please confirm that the foregoing correctly sets forth the agreement among the Trust, the Company and the several Underwriters. Very truly yours, HOUSEHOLD CAPITAL TRUST VI By: ------------------------------------------ as Regular Trustee By: ------------------------------------------ as Regular Trustee By: ------------------------------------------ as Regular Trustee HOUSEHOLD INTERNATIONAL, INC. By: ------------------------------------------ Name: Title: Confirmed as of the date first above mentioned on behalf of themselves and the other several Underwriters named in Schedule I hereto. Merrill Lynch & Co. Merrill Lynch Pierce, Fenner & Smith Incorporated A. G. Edwards & Sons, Inc. Prudential Securities Incorporated UBS Warburg LLC As Representatives of the Underwriters By: Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated By: -------------------------------------- 24 25 SCHEDULE I HOUSEHOLD CAPITAL TRUST VI __% Preferred Securities Number of Underwriter Preferred Securities - ----------- -------------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated....................... A. G. Edwards & Sons, Inc. Prudential Securities Incorporated UBS Warburg LLC Total....................................... 8,000,000 ========= 25 EX-5.1 3 c59540a1ex5-1.txt OPINION AND CONSENT OF MR. JOHN W. BLENKE 1 EXHIBIT 5.1 January 22, 2001 Household International, Inc. 2700 Sanders Road Prospect Heights, IL 60070 RE: Combined Registration Statement on Form S-3, relating to Junior Subordinated Debt Securities and Preferred Securities Guarantee of Household International, Inc. and the Preferred Securities of Household Capital Trust VI - Registration Nos. 333-53862 and 333-53862-01. Ladies and Gentlemen: As Vice President-Corporate Law and Assistant Secretary of Household International, Inc. ("Household"), I am generally familiar with the proceedings in connection with the Registration Statement on Form S-3 of Household and Household Capital Trust VI (the "Trust") filed with the Securities and Exchange Commission (the "Commission") on January 17, 2001 and amended by Amendment No. 1 to be filed with the Commission on or about January 22, 2001 (as amended, the "Registration Statement"), relating to the registration under the Securities Act of 1933, as amended (the "Securities Act"), of preferred beneficial interests of the Trust (the "Preferred Securities"), subordinated debt securities (the "Junior Subordinated Notes") and a preferred securities guarantee, (the "Preferred Securities Guarantee"), guaranteeing distributions on the Preferred Securities to the extent set forth in a Preferred Securities Guarantee Agreement, a form of which is filed as an exhibit to the Registration Statement (the "Guarantee Agreement"). The Junior Subordinated Notes, which constitute unsecured junior subordinated debt of Household, will be issuable under an Indenture dated as of May 15, 1995, between Household and Bank One, National Association (formerly the First National Bank of Chicago), as Trustee and a Fifth Supplemental Indenture to be dated as of January 22, 2001 (together, the "Indenture"). The Indenture, or forms as filed thereof, have been included as exhibits to the Registration Statement as filed with the Commission. 2 Household International, Inc. January 22, 2001 Page 2 Based upon my review of the records and documents of Household I am of the opinion that: 1. Household is a corporation duly incorporated and validly existing under the Laws of the State of Delaware. 2. Each of the Indenture and the Guarantee Agreement will, after being duly authorized, executed and delivered by Household, constitute, a valid and legally binding instrument of Household enforceable in accordance with its terms, except as enforcement of the provisions thereof may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity of at law). 3. When (i) the Registration Statement filed by Household with respect to the Junior Subordinated Notes and the Preferred Securities Guarantee shall have become effective under the Securities Act, (ii) the issuance of junior Subordinated Notes and the Preferred Securities Guarantee have been duly authorized by the appropriate corporate action, and (iii) such Junior Subordinated Notes and the Preferred Securities Guarantee have been duly executed, authenticated, issued and delivered against payment of the agreed consideration therefor in accordance with the appropriate Indenture or Guarantee Agreement as described in the Registration Statement, including the Prospectus relating to the offering of Preferred Securities, such Junior Subordinated Notes and the Preferred Securities Guarantee will be legally and validly issued and will be the legal and binding obligations of Household enforceable in accordance with their terms, except as enforcement of the provisions thereof may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). I herely 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 Propectus or Prospectus forming a part of the Registration Statement. 3 Household International, Inc. January 22, 2001 Page 3 In giving such consent I do not admit that I am in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, /s/ John W. Blenke John W. Blenke EX-5.2 4 c59540a1ex5-2.txt OPINION AND CONSENT OF RICHARDS, LAYTON & FINGER, 1 EXHIBIT 5.2 January 22, 2001 Household International, Inc. 2700 Sanders Road Prospect Heights, Illinois 60070 Re: Household Capital Trust VI Ladies and Gentlemen: We have acted as special Delaware counsel for Household International, Inc., a Delaware corporation (the "Company") and Household Capital Trust VI, a Delaware business trust (the "Trust") in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust, as filed with the office of the Secretary of State of the State of Delaware (the "Secretary of State") on January 17, 2001; (b) The Declaration of Trust of the Trust, dated as of January 17, 2001, among the Company and the trustees named therein; (c) The Registration Statement (the "Registration Statement") on Form S-3 (Nos. 333-53862 and 333-53862-01), including a preliminary prospectus with respect to the Trust (the "Prospectus"), relating to the Trust Preferred Securities of the Trust representing preferred undivided beneficial ownership interests in the assets of the Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), as filed by the Company and the Trust with the Securities and Exchange Commission on January 17, 2001; 2 Household International, Inc. January 22, 2001 Page 2 (d) A form of Amended and Restated Declaration of Trust for the Trust, to be entered into between the Company, the trustees of the Trust named therein, and the holders, from time to time, of the undivided beneficial interests in the assets of such Trust (including Exhibits A and B thereto) (the "Trust Agreement"), attached as an exhibit to the Registration Statement; and (e) A Certificate of Good Standing for the Trust, dated January 22, 2001, obtained from the Secretary of State. Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraphs (a) through (e) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (e) above) that is referred to in or incorporated by reference into the documents reviewed by us. We have assumed that there exists no provision in any document that we have not reviewed that is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Trust Agreement will constitute the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the creation, operation and termination of the applicable Trust, and that the Trust Agreement and the Certificate of Trust will be in full force and effect and will not be amended, (ii) except to the extent provided in paragraph 1 below, the due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Security Certificate for such Preferred Security and the payment for such Preferred Security, in accordance with the Trust Agreement and the Registration Statement, and (vii) that the Preferred Securities are authenticated, issued and sold to the Preferred Security Holders in accordance with the Trust Agreement and the Registration 3 Household International, Inc. January 22, 2001 Page 3 Statement. We have not participated in the preparation of the Registration Statement or the Prospectus and assume no responsibility for their contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Business Trust Act. 2. The Preferred Securities of the Trust will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable preferred undivided beneficial ownership interests in the assets of the Trust. 3. The Preferred Security Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred Security Holders may be obligated to make payments as set forth in the Trust Agreement. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. We hereby consent to the use of our name under the heading "Legal Matters" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ RICHARDS, LAYTON & SINGER, P.A. EAM EX-8 5 c59540a1ex8.txt TAX OPINION OF SIDLEY & AUSTIN 1 EXHIBIT 8 [SIDLEY & AUSTIN LETTERHEAD] January 22, 2001 Household Capital Trust VI Household International, Inc. 2700 Sanders Road Prospect Heights, IL 60070 Re: Household Capital Trust VI Trust Preferred Securities Ladies and Gentlemen: Reference is made to the Registration Statement on Form S-3, (Registration numbers 333-53862 and 333-53862-01) including all amendments thereto, filed with the Securities and Exchange Commission by Household International, Inc. ("HII") and Household Capital Trust VI (the "Trust") and the preliminary prospectus (the "Preliminary Prospectus") included in the Registration Statement. We have acted as special tax counsel to HII and the Trust in connection with the Preliminary Prospectus forming a part of the Registration Statement. In rendering the opinion expressed below, we have examined the Preliminary Prospectus and such other documents as we have deemed relevant and necessary, including, without limitation, the Declaration of Trust, the Form of Amended and Restated Declaration of Trust, the Indenture, and the Form of Supplemental Indenture attached as Exhibits to the Registration Statement. Such opinion is conditioned, among other things, upon the accuracy and completeness of the facts, information and representations contained in the Preliminary Prospectus as of the date hereof and the continuing accuracy and completeness thereof as of the date of the issuance of the Trust Preferred Securities (the "Trust Preferred Securities") described in the Registration Statement. We have assumed that such other documents will be enforceable and the Trust valid under applicable state law, that the transactions contemplated by the Preliminary Prospectus and such other documents will occur as provided therein, and that there will be no material change to the Preliminary Prospectus or any of such other documents between the date hereof and the date of the issuance of the Trust Preferred Securities. The statements contained in the Preliminary Prospectus under the heading "Certain United States Federal Income Tax Consequences" to the extent they constitute matters 2 Sidley & Austin Chicago Household Capital Trust VI Household International, Inc. January 22, 2001 Page 2 of federal income tax law or legal conclusions with respect thereto, have been prepared or reviewed by us and, in our opinion, are correct in all material respects. We hereby affirm to you the opinions attributed to us under such heading in the Preliminary Prospectus. This opinion letter is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this Firm under the caption "Certain United States Federal Income Tax Consequences" and "Legal Matters" in the Preliminary Prospectus included in the Registration Statement. This opinion is rendered as of the date hereof based on the law and facts in existence on the date hereof, and we do not undertake, and hereby disclaim, any obligation to advise you of any changes in law or fact, whether or not material, which may be brought to our attention at a later date. Very truly yours, /s/ SIDLEY & AUSTIN EX-23.1 6 c59540a1ex23-1.txt CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.1 [ARTHUR ANDERSEN LOGO] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Household International, Inc, Household Capital Trust VI As independent public accountants, we hereby consent to the incorporation by reference in this registration statement on Form S-3 (registration numbers 333-53862 and 333-53862-01) relating to the offering of up to 8,000,000 Preferred Securities of Household Capital Trust VI and Junior Subordinated Deferrable Interest Notes of Household International, Inc., filed with the Securities and Exchange Commission on or about January 17, 2001 of our report dated January 14, 2000, included in Household International, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1999, and to all references to our Firm included in this registration statement. /s/ ARTHUR ANDERSEN LLP Chicago, Illinois January 22, 2001 EX-25.1 7 c59540a1ex25-1.txt STATEMENT OF ELIGIBILITY AND QUALIFICATION 1 EXHIBIT 25.2 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) [ ] ---------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------- Household International, Inc. (Exact name of obligor as specified in its charter) Delaware 36-3121988 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 2700 Sanders Road Prospect Heights, Illinois 60070 (Address of principal executive offices) (Zip code) ---------- Guarantee of Trust Preferred Securities of Household Capital Trust VI (Title of the indenture securities) ================================================================================ 2 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.
- ----------------------------------------------------------------------------------------- Name Address - ----------------------------------------------------------------------------------------- Superintendent of Banks of the 2 Rector Street, New York, State of New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- 3 SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 19th day of January, 2001. THE BANK OF NEW YORK By: /s/ STEPHEN J. GIURLANDO ----------------------------------------- Name: STEPHEN J. GIURLANDO Title: VICE PRESIDENT EX-25.2 8 c59540a1ex25-2.txt STATEMENT OF ELIGIBILITY 1 EXHIBIT 25.1 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) ---------- BANK ONE, NATIONAL ASSOCIATION (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) 1 BANK ONE PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) BANK ONE, NATIONAL ASSOCIATION 1 BANK ONE PLAZA, SUITE IL1-0286 CHICAGO, ILLINOIS 60670-0286 ATTN: STEVEN M. WAGNER, GLOBAL CORPORATE TRUST SERVICES (312)407-1819 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ---------- HOUSEHOLD INTERNATIONAL, INC. (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) DELAWARE 36-3121988 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 2700 SANDERS ROAD PROSPECT HEIGHTS, ILLINOIS 60070 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) DEBT SECURITIES (TITLE OF INDENTURE SECURITIES) 2 ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect. 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee. 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. 3 Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bank One, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and the State of Illinois, on this 19th day of January, 2001. BANK ONE, NATIONAL ASSOCIATION, TRUSTEE By /s/ Steven M. Wagner -------------------------------- Steven M. Wagner First Vice President 4 EXHIBIT 1 ARTICLES OF ASSOCIATION OF BANK ONE, NATIONAL ASSOCIATION (Corrected To September 13, 1999) FIRST. The title of this Association, organized for the purpose of carrying on the business of banking under the laws of the United States, shall be "Bank One, National Association". SECOND. The main office of this Association shall be in Chicago, County of Cook, State of Illinois. The business of the Association shall be conducted at its main office and its branches. THIRD. The Board of Directors of this 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. Any vacancy in the Board of Directors may be filled by action of a majority of the remaining directors between meetings of shareholders. The Board of Directors, by the vote of a majority of the full Board, may, between meetings of shareholders, increase the membership of the Board within such maximum limit by not more than four members if the number of directors last elected by shareholders was 16 or more and by not more than two members if the number of directors last elected by shareholders was 15 or less. FOURTH. The regular annual meeting of the shareholders of this Association shall be held at its main banking house, or other convenient place duly authorized by the Board of Directors, on such day of each year as is specified therefor in the by-laws. FIFTH. The amount of authorized capital stock of this Association shall be Five Hundred Twenty-Five Million Eight Hundred Fifty-Eight Thousand Two Hundred Dollars ($525,858,200) divided into 26,292,910 shares of common stock of the par value per share of Twenty Dollars ($20); 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. In the event of any such increase in the capital stock of this Association by the sale of additional shares or the distribution of additional shares as a stock dividend, each shareholder of this Association (unless otherwise provided by the shareholders' vote or votes authorizing the increase) shall be entitled, in proportion to the number of shares of said capital stock owned by him before such increase, to proportionate rights in respect of such additional shares as follows: (1) to the extent that such shareholder's proportionate right in respect of such additional shares shall embrace one or more whole shares of such additional shares, to receive (a) in the case of a sale, a transferable warrant entitling the holder to subscribe, within the specified subscription period, for such one or more whole shares of such additional shares or (b) in the case of a stock dividend, a certificate evidencing such one or more whole shares of such additional shares; and (2) to the extent that such shareholder's proportionate right in respect of such additional shares shall embrace a fraction of a share, to receive (a) in the case of a sale, a fractional subscription warrant, conditioned that it shall be void unless, within the specified subscription period, it is combined with other such fractional subscription warrants in the aggregate entitling the holder thereof to subscribe for a whole share or whole shares of such additional shares and such subscription is completed by such holder of such combined fractional warrants or (b) in the case of a stock dividend, a fractional warrant which shall not represent or entitle the holder thereof to any of the privileges of a shareholder of this Association but may be combined with other such fractional warrants in the aggregate entitling the holder thereof to exchange them for a whole share or whole shares of such additional shares and conditioned that the holder exchanging such combined fractional warrants for such whole share or whole shares of such additional shares shall receive any dividends applicable to such whole share or whole shares declared after the date of such fractional warrants and payable in respect of such whole share or whole shares at the time of such exchange. 5 In the event of an increase in the capital stock of this Association in pursuance of a statutory consolidation to which this Association may be a party, the additional shares shall be issued in such a manner as the contract or plan of consolidation may provide, pursuant to and in contemplation of the statute under which said consolidation is effected. In the event of an increase in the capital stock of this Association in pursuance of a plan or contract (other than in the case of a statutory consolidation) for the acquisition by this Association of the assets, in whole or in part, and the good will of another banking institution or banker, the additional shares shall be subscribed for by or issued to any persons, firms, trustees or corporations, whether or not shareholders of this Association, as, in its discretion in the execution of such plan or contract, the Board of Directors may approve. 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 this Association, who shall be Chairman of the Board; but the Board of Directors may appoint a director, in lieu of the President, to be Chairman of the Board, who shall perform such duties as may be designated by the Board of Directors. The Board of Directors shall have the power to appoint one or more Vice Presidents; to appoint a Cashier and such other officers as may be required to transact the business of this Association; to fix the salaries to be paid to all officers of this Association; and to dismiss such officers, or any of them; but the Board of Directors may delegate to the Chairman of the Board the authority to exercise such powers of appointment, salary determination and dismissal. The Board of Directors shall have the power to define the duties of officers and employees of this Association, to require bonds from them, and to fix the penalty thereof; to regulate the manner in which directors shall be elected or appointed, and to appoint judges of election; in the event of an increase of the capital stock of this Association to regulate the manner in which such increase shall be made; to make all by-laws that it may be lawful for them to make for the general regulation of the business of this Association and the management of its affairs; and generally to do and perform all acts that it may be lawful for a Board of Directors to do and perform. The Board of Directors, without the approval of the shareholders, shall have the power to change the location of the main office of this Association, subject to such limitations as from time to time may be provided by law. SEVENTH. This Association shall have succession from the date of its organization certificate until such time as it be dissolved by the act of its shareholders in accordance with the provisions of the banking laws of the United States, or until its franchise becomes forfeited by reason of violation of law, or until terminated by either a general or a special act of Congress, or until its affairs be placed in the hands of a receiver and finally wound up by him. EIGHTH. The Board of Directors of this Association, the Chairman of the Board, or the President, may call a special meeting of the shareholders at any time: Provided, however, that, unless otherwise provided by the by-laws or the laws of the United States, or waived by the shareholders, notice of the time, place and purpose of the meeting shall be given to each shareholder of record of this Association entitled to act and vote at such meeting, by a notice in writing either mailed (prepaid first class postage) to such shareholder at his address as shown upon the books of this Association or delivered manually to such shareholder, not less than ten days prior to the date fixed for any such meeting. NINTH. (a) This Association shall indemnify and hold harmless each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he, or a person of whom he is the legal representative, is or was a director, officer or employee of this Association, or is or was serving at the request of this Association as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent permitted by the General Corporation Law of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits this Association to provide broader indemnification rights than said law permitted this Association to provide prior to such amendment) against all expenses (including attorneys' fees, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by him in connection therewith. This Association may, by action of the Board of Directors, provide indemnification to agents of this Association with a lesser or the same scope and effect as the foregoing indemnification of directors, officers and employees of this Association. 6 (b) Expenses incurred by a director, officer or employee in defending a civil or criminal action, suit or proceeding shall be paid by this Association in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director, officer or employee to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by this Association. Such expenses incurred by agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. (c) The indemnification provided by this Article does not authorize this Association to indemnify any director, officer or employee 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 against such director, officer or employee assessing civil money penalties or requiring affirmative action in the form of payments to this Association. (d) The indemnification and advancement of expenses provided by, or granted pursuant to, this Article Ninth shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any statute, by-law, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Notwithstanding the provisions of this Article, this Association may indemnify any person referred to in paragraph (a) of this Article to the fullest extent permitted under the statutes applicable to national banking associations and the rules, regulations and interpretations promulgated thereunder by the primary regulator of national banking associations, in each case now or hereafter in effect. (e) This Association shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of this Association, or is or was serving at the request of this Association as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not this Association would have the power to indemnify him against such liability under the provisions of this Article. This provision does not, however, authorize this Association to purchase insurance covering civil money penalties assessed against a director or employee of this Association pursuant to a formal order by an appropriate bank regulatory agency. (f) Neither the amendment nor repeal of this Article Ninth, nor the adoption of any provision of these Articles of Association inconsistent with this Article Ninth, shall eliminate or reduce the effect of this Article Ninth in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article Ninth, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. TENTH. These Articles of Association may, subject to the provisions of the banking laws of the United States, be amended at any regular or special meeting of the shareholders by the affirmative vote of the shareholders owning at least a majority of the stock of this Association. 7 EXHIBIT 2 CERTIFICATE OF AUTHORITY I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that: 1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering of all National Banking Associations. 2. "Bank One, National Association," Chicago, Illinois, (Charter No. 000008) is a National Banking Association formed under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department in the City of Washington and District of Columbia, this 6th day of October, 1999. /s/ John D. Hawke, Jr. Comptroller of the Currency [SEAL] 8 EXHIBIT 3 CERTIFICATE OF FIDUCIARY POWERS I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that: 1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering of all National Banking Associations. 2. "Bank One, National Association," Chicago, Illinois, (Charter No. 000008) was granted, under the hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of the Act of Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the authority so granted remains in full force and effect on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department in the City of Washington and District of Columbia, this 6th day of October, 1999. 9 EXHIBIT 4 BY-LAWS OF BANK ONE, NATIONAL ASSOCIATION AS AMENDED AND RESTATED SEPTEMBER 13, 1999 10 BY-LAWS OF BANK ONE, NATIONAL ASSOCIATION ARTICLE I CORPORATE GOVERNANCE To the extent not inconsistent with applicable Federal banking statutes or regulations, or safe and sound banking practices, the Bank shall follow the corporate governance procedures of the Delaware General Corporation Law, as amended. ARTICLE II SHAREHOLDERS SECTION 1. Annual Meeting. The regular annual meeting of shareholders of the Bank to elect directors and to transact whatever other business may properly come before the meeting shall be held in its main office on the third Tuesday in May if not a legal holiday under the Laws of Illinois, and if a legal holiday, then on the next business day following, at 11:30 A.M., or on such other date and time as shall be designated by the Board of Directors. If, for any cause, the annual election of directors should not be held on that date, the Board shall order the election to be held on some subsequent day, of which special notice shall be given. SECTION 2. Judges of Election. To the extent required by law, the Board of Directors shall, prior to the time of the election of directors, appoint three persons to be Judges of Election, who shall hold and conduct the same, and who shall, after the election has been held, certify under their hands to the Cashier of the Bank the result thereof and the names of the directors-elect. SECTION 3. Notice to Directors-Elect. The Cashier upon receiving the Certificate of the Judges of Election as aforesaid, shall cause the same to be recorded upon the minute book of the Bank, and shall notify the directors-elect of their election and of the time at which they are required to meet at the main office of the Bank for the purpose of organizing the new Board. If at the time fixed for the meeting of the directors-elect there should not be a quorum present, the members present may adjourn from time to time until a quorum is obtained. SECTION 4. Special Meetings. Special meetings of the shareholders may be called in accordance with Article EIGHTH of the Bank's Articles of Association. SECTION 5. Record Date. The Board of Directors may fix in advance a day not more than sixty (60) or less than ten (10) days prior to the date of holding any regular or special meeting of shareholders as the day as of which shareholders entitled to notice of and to vote at such meeting shall be determined. SECTION 6. Notice. The Bank shall mail notice of any meeting of shareholders at least 10 days prior to the meeting by first class mail, unless the Office of the Comptroller of the Currency determines that an emergency circumstance exists. If the Bank is a wholly-owned subsidiary of a company, the sole shareholder may waive notice of the shareholder's meeting. SECTION 7. Consent of Shareholders in Lieu of Annual or Special Meeting. Unless otherwise restricted by law or the Articles of Association, any action which may be taken at any annual or special shareholder meeting may be taken without a meeting, without prior notice and without a vote, if written consent setting forth the action so taken shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who did not give written consent. 11 SECTION 8. Minutes. The proceedings of shareholders at all regular and special meetings or by written consent in lieu of a meeting shall be recorded in the minute book, together with the Articles of Association of the Bank and the returns of the Judges of Election. The minutes of each meeting shall be signed by the Presiding Officer, and attested by the Cashier, or other officer of the Bank acting in place of the Cashier. ARTICLE III DIRECTORS SECTION 1. Authority. The Board of Directors shall have the power to manage and administer the business and affairs of the Bank. Except as expressly limited by law, all corporate powers of the Bank shall be vested in and may be exercised by the Board of Directors. SECTION 2. Number. The Board of Directors shall at all times consist of not less than five nor more than twenty-five individuals. The exact number within such minimum and maximum limits shall 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 meeting thereof; provided, however, that the Board of Directors may not increase the number of directors to a number which: (1) exceeds by more than two the number of directors last elected by shareholders where such number was fifteen or less; or (ii) exceeds by more than four the number of directors last elected by shareholders where such number was sixteen or more, but in no event shall the number of directors exceed twenty-five. SECTION 3. Term of Office. Each director shall hold office from the date of his election or appointment until the next annual shareholder meeting. Any director ceasing to be the owner of the amount of stock required by law or in any other manner becoming disqualified shall thereupon vacate his office as director. SECTION 4. Compensation. The Board of Directors may provide that a reasonable fee be paid to any of its members or to the members of any duly authorized committee for services rendered. No such payment shall preclude any director from serving the Bank in any other capacity and receiving compensation therefor. SECTION 5. Regular Meetings. Regular meetings of the Board of Directors shall be held on such dates, times and locations as determined by the Chairman of the Board and communicated in writing to the directors. SECTION 6. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board or the President. Such meetings shall be held at such times and at such places as shall be determined by the officer calling the meeting. Notice of any special meeting of directors shall be given to each director at the director's business or residence in writing by hand delivery, first-class or overnight mail or courier service, telegram or facsimile transmission, or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mail so addressed, with postage thereon prepaid, at least two (2) days before such meeting. If by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company or the notice is delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting. If by facsimile transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. Such notice need not state the purposes of the meeting. Any or all directors may waive notice of any meeting, either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when the director attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. SECTION 7. Quorum; Majority Vote. A quorum of directors shall be required to transact business at any regular or special meeting of the Board of Directors. A majority of the directors shall constitute a quorum. Each director shall be entitled to one vote. A vote by a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present shall be required to approve any matter or proposal at any such meeting. 12 SECTION 8. Vacancies. When any vacancy occurs in the Board of Directors, a majority of the remaining members of the Board, according to the laws of the United States, may appoint a director to fill such vacancy at any regular meeting of the Board of Directors, or at a special meeting called for that purpose at which a quorum is present, or if the directors remaining in office constitute fewer than a quorum of the Board of Directors, by the affirmative vote of a majority of all the directors remaining in office, or by shareholders at a special meeting called for that purpose. At any such shareholder meeting, each shareholder entitled to vote shall have the right to multiply the number of votes he or she is entitled to cast by the number of vacancies being filled and cast the product for a single candidate or distribute the product among two or more candidates. A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs. SECTION 9. Presiding Officer. The Chairman of the Board shall preside at all meetings of the Board of Directors at which he is present. In the absence of the Chairman of the Board, the President shall perform the duties of the Chairman of the Board and shall preside at the meetings of the Board of Directors. In the absence of the Chairman of the Board and the President, the Vice Chairman of the Board (or in the event there be more than one Vice Chairman of the Board, the Vice Chairmen of the Board in the order designated, or in the absence of any designation, then in the order of their election) shall perform their duties and shall preside at the meetings of the Board of Directors. SECTION 10. Minutes of Meeting. The Cashier shall act as secretary to the Board of Directors to take minutes at any regular or special meeting of the Board of Directors. If the Cashier is not present at any such meeting, the Chairman of the Board may designate a secretary pro tem to take minutes at the meeting. The Cashier or secretary pro tem shall record the actions and proceedings at each regular or special meeting of the Board of Directors as minutes of the meeting and shall maintain such minutes in a minute book of proceedings of such meetings of the Board of Directors. Minutes of each such meeting shall be signed by the presiding officer and secretary of each meeting. SECTION 11. Participation in Meetings by Telephone Unless otherwise restricted by law or the Articles of Association, members of the Board of Directors, or of any committee thereof, may participate in a meeting of the Board of Directors or committee by means of conference telephone or similar communications equipment which allows each person participating in the meeting to hear each other. Participation in such a meeting shall constitute presence in person at such meeting. SECTION 12. Consent of Directors in Lieu of Meeting. Unless otherwise restricted by law or the Articles of Association, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. SECTION 13. Committees. The Board of Directors may, by resolution passed by a majority of the entire Board, designate one or more committees, each committee to consist of two or more of the Directors of the Bank. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Bank, and may authorize the seal of the Bank to be affixed to all papers which may require it; provided, however, that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. As used in these By-Laws, "entire Board" means the total number of Directors the Bank would have if there were no vacancies. There shall be an Executive Committee composed and created as the Board of Directors may designate by resolution passed by a majority of the entire Board. During intervals between the regular meetings of the Board of Directors, the Executive Committee, to the extent permitted by law, the Articles of Association of the Bank and the 13 By-Laws, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Bank. Unless otherwise provided by the Board of Directors, a majority of the members of any committee appointed by the Board of Directors pursuant to this Section shall constitute a quorum at any meeting thereof and the act of a majority of the members present at a meeting at which a quorum is present shall be the act of such committee. Any such committee shall, subject to any rules prescribed by the Board of Directors, prescribe its own rules for calling, giving notice of and holding meetings and its method of procedure at such meetings and shall keep a written record of all action taken by it. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. SECTION 14. Honorary Directors. Any person who has at any time been Chairman of the Board, President or Vice Chairman of the Board of the Bank may, after retirement from the Board of Directors, be appointed by the Board of Directors as an Honorary Director on a year-to-year basis. In no case shall an Honorary Director serve as such for more than five years. Honorary Directors shall serve in an advisory capacity to the Board of Directors, shall have no vote and shall not be considered directors for the purpose of determining a quorum. Honorary Directors shall be reimbursed for their expenses in attending meetings of the Board of Directors and shall receive such fees, if any, for attendance at each meeting of the Board of Directors as may be fixed from time to time by the Board of Directors but shall not receive any other directors' fees or any other compensation for their services. ARTICLE IV OFFICERS SECTION 1. Officer Titles. The officers of the Bank shall include a Chairman of the Board and a President and may include one or more Vice Chairmen of the Board, Executive Vice Presidents, Senior Vice Presidents, First Vice Presidents, Vice Presidents and Assistant Vice Presidents, a General Auditor, a General Counsel, a Cashier, and such other officers as may be appropriate for the prompt and orderly transaction of the business of the Bank. Individuals appointed as Chairman of the Board, President and Vice Chairman of the Board must be members of the Board. The same person may hold any two or more offices. The Chairman of the Board or the President shall have such authority to establish officer titles as from time to time delegated by the Board of Directors and to delegate such authority further to other officers of the Bank. SECTION 2. Executive Management. The Chairman of the Board or the President, as determined by the Board of Directors, shall be the chief executive officer of the Bank. In case of the death or disability of the Chairman of the Board, his powers shall be exercised and his duties discharged by the President. In the event of the death or disability of the Chairman of the Board and the President, the Vice Chairman of the Board (or in the event there be more than one Vice Chairman of the Board, the Vice Chairmen of the Board in the order designated, or in the absence of any designation, then in the order of their election) shall exercise the powers and discharge the duties of the Chairman of the Board. SECTION 3. Election of Officers. The Board of Directors of the Bank shall have authority to appoint the officers of the Bank. The Chairman of the Board or the President shall have such authority to appoint officers as from time to time delegated by the Board of Directors, and to delegate such authority further to other officers of the Bank. SECTION 4. Authority and Responsibility. The authorities and responsibilities of all officers, in addition to those specifically prescribed herein, shall be those usually pertaining to their respective offices, or as may be designated by the Board of Directors or by the Chairman of the Board or by the President, or by any officer of the Bank designated by one of the foregoing. SECTION 5. Term of Office. Officers shall be appointed for an indefinite term, and their employment may be terminated or they may be removed from office at any time. The Board of Directors shall have authority to terminate or remove officers of the Bank. The Chairman of the Board or the President shall have such authority to terminate or remove officers as from time to time delegated by the Board of Directors, and to delegate such authority further to other officers of the Bank. 14 SECTION 6. Surety. All officers and employees of the Bank who shall be responsible for any moneys, funds or valuables of the Bank shall give bond, or be covered by a blanket bond, in such penal sum and with such security as shall be approved by the Board, conditioned for the faithful and honest discharge of their duties as such officers or employees and that they will faithfully apply and account for all such moneys, funds and valuables and deliver the same on proper demand to the order of the Board of the Bank, or to the person or persons authorized to receive the same. ARTICLE V SEAL SECTION 1. Description. The following is a description of the Seal adopted by the Board of the Bank: Female with left arm resting on shield, bale of goods and sheaf of grain at her side, ship and sea in the distance; the whole surrounded with the words, "BANK ONE, NATIONAL ASSOCIATION". SECTION 2. Attestation. Any instrument which is executed for and on behalf of the Bank by its duly authorized officers may, when necessary, be attested and sealed with the corporate seal by any officer of the Bank other than the officer who executes such instrument on behalf of the Bank. ARTICLE VI TRANSFERS OF REAL ESTATE Any Vice President or higher ranking officer shall have authority on behalf of and in the name of the Bank, to execute any document or instrument and to take action which may be necessary or appropriate to purchase, convey, lease, or otherwise affect any real estate or interest in real estate owned or to be owned by the Bank; provided, however, any document or instrument purchasing, conveying or leasing real estate used or to be used by the Bank as banking facilities must be executed by a Senior Vice President or higher ranking officer, or any other officer designated by any of the foregoing. Any Assistant Vice President or higher ranking officer shall have authority to execute and deliver on behalf of and in the name of the Bank, releases of mortgages or trust deeds. 15 ARTICLE VII STOCK AND STOCK CERTIFICATES SECTION 1. Increase of Stock. In the event of any increase in the capital stock of the Bank the preemptive rights of the shareholders in respect of any such increased stock shall be as set forth in Article FIFTH of the Articles of Association. Any warrants or certificates issuable to shareholders in connection with any increase of the capital stock of the Bank, shall be delivered to the respective shareholders entitled thereto, either by hand or by mail, first-class postage prepaid, addressed to their respective addresses as shown on the books of the Bank. If, in the event of a sale of additional shares, any subscription rights shall not have been exercised at the expiration of the specified subscription period, such unsubscribed new shares may be issued and sold at such price, not less than the par value thereof, to such persons and on such terms as the Board of Directors may determine. SECTION 2. Transfers of Stock. The stock of the Bank shall be assignable only upon the books of the Bank, subject to the restrictions of the Act, and a transfer book shall be kept in which all assignments and transfers of stock shall be made. Transfers of stock may be suspended preparatory to any election or payment of any dividends. SECTION 3. Certificates of Stock. Certificates of stock signed by any Vice President or higher ranking officer and the Cashier or any Assistant Cashier may be issued to shareholders, and the Certificates shall state upon the face thereof that the stock is transferable only upon the books of the Bank. If such Certificates are manually countersigned by two other officers of the Bank, the signatures of the officers designated in the preceding sentence may be facsimiles, engraved or printed. In case any officer who has signed or whose facsimile signature has been placed upon such Certificates shall have ceased to be such officer before such Certificates are issued, they may be issued by the Bank with the same effect as if such officer had not ceased to be such at the date of issue. In case of transfer of stock, new Certificates of stock shall not be issued until other Certificate or Certificates of stock of an equal amount shall first have been surrendered and cancelled. Any one of the following officers of the Bank: the Chairman of the Board, the President, or any Vice Chairman of the Board is each hereby authorized to cause new Certificates of stock of the Bank to be issued to replace Certificates reported to have been lost, stolen or destroyed, upon receipt of: (a) appropriate affidavit or affidavits setting forth whether the Certificates were lost, stolen or destroyed and the circumstances thereof, and (b) a bond or bonds (blanket or otherwise) or an agreement or agreements of indemnity, sufficient in the opinion of any of such officers to protect the interests of the Bank issuing such new Certificates. ARTICLE VIII BANKING HOURS The Bank shall be open for business during such days of the year and for such hours as the Board of Directors or any officer of the Bank designated by the Board of Directors may from time to time determine. 16 ARTICLE IX CONTRACTS, CERTIFICATES OF DEPOSIT AND NOTES SECTION 1. Execution of Contracts. Any officer of the bank and such other persons as may be authorized by the Board of Directors are severally and respectively authorized to execute documents and to take action in the Bank's name in connection with any and all transactions conducted in the ordinary course of business of the Bank. SECTION 2. Certificates of Deposit and Notes. Notwithstanding the foregoing, all certificates of deposits and notes evidencing obligations of the Bank shall be signed either manually or by facsimile signature by any officer of the Bank, and, if such signature is not a manual signature, shall be validated by the manual signature of another officer of the Bank whose signature does not already appear on said certificate of deposit or note or by the authorized officers of corporate fiduciaries or agents with whom the Board of Directors may from time to time by resolution authorize the officers of the Bank to contract for services in connection with the validation and delivery of certificates of deposit or notes issued by the Bank. ARTICLE X VOTING RIGHTS The vote of the Bank as stockholder in any corporation in which it may hold stock or upon any securities carrying voting rights which it shall have the right to vote in its individual capacity as a Bank, shall be cast at any stockholders' or shareholders' meeting by any Vice President or higher ranking officer, or the Cashier, in person, or by some person or persons authorized by written proxy signed by one of said officers. In all cases where shares of stock or other securities carrying voting rights and owned by the Bank shall be held in the name of a nominee of the Bank, any Vice President or higher ranking officer, or the Cashier, may authorize such nominee to vote such stock or other securities in person, either unconditionally or upon such terms, limitations, or conditions as such officer may direct, or any such officer may authorize such nominee to execute a proxy to vote such shares of stock or other securities carrying voting rights, either unconditionally or upon such terms, conditions and/or limitations as such officer shall approve. ARTICLE XI EXAMINATIONS It shall be the duty of the Auditor to examine, from time to time, the various operations of the Bank, verify its assets and liabilities, and perform such other procedures as are required to determine that the accounting records are accurate and to ascertain whether the Bank is in a sound and solvent condition. Major discrepancies and defalcations shall be reported to the Board promptly and other reports shall be made directly to the Board when deemed appropriate either by the Auditor or the Board. In the event of the death, resignation, absence or inability of the Auditor, the Board of Directors shall appoint a competent person who shall make such examinations and reports, pending the election of a successor to the Auditor or the return of the Auditor to his duties. 17 ARTICLE XII BONDS OF INDEMNITY Bonds of indemnity given to secure the issuance of duplicate or substitute notes, bonds, stock certificates, checks, debentures or other securities which may have been lost, destroyed or stolen or to secure the payment of any such lost, destroyed or stolen securities or to secure the payment by the Bank of funds deposited by any public authorities, shall be executed by any Assistant Vice President or higher ranking officer, and, if required, sealed with the corporate seal and attested by some other officer of the Bank. ARTICLE XIII AUTHORITY TO SELL STOCKS, BONDS, ETC. SECTION 1. U.S. Obligations. Any Assistant Vice President or higher ranking officer may at any time, in his discretion, sell, assign and transfer any and all United States bonds now standing, or which may hereafter stand, in the name of the Bank, and to appoint one or more attorneys for that purpose. SECTION 2. Other Obligations. Any Assistant Vice President or higher ranking officer may at any time, in his discretion, sell, assign and transfer any and all notes, bonds, certificates of indebtedness or obligations of any corporation, firm or individual, which said notes, bonds, certificates of indebtedness or obligations are now registered, or may hereafter be registered, in the name of, or for the benefit of, the Bank, or are payable or indorsed to the Bank. SECTION 3. Stock. Any Assistant Vice President or higher ranking officer may at any time in his discretion, sell, assign and transfer to any assignee or transferee, for and on behalf of the Bank and in its name, any and all shares of capital stock of any corporation or corporations held by the Bank. ARTICLE XIV FIDUCIARY ACTIVITIES 1. Authority to Sign as Registrar, Transfer Agent, etc. Any officer of the Bank shall have the right to sign, countersign, certify, register, authenticate and identify all bonds, notes, interim certificates, and depositary receipts, warrants, participation certificates, certificates of stock and similar instruments for or in respect of which the Bank may be acting as Trustee, Registrar, Transfer Agent or otherwise. 2. Authority to Vote Stock. The vote of the Bank as stockholder in any corporation or mutual fund in which it may hold capital stock in any fiduciary capacity, unless the governing instrument directs otherwise, may be voted by any officer of the Bank in person, electronically or by written proxy signed by one of said officers. 3. Authority to Sell, Assign and Transfer Stocks, etc. Any officer of the Bank may sell, assign and transfer to any assignee or transferee for the Bank and in its name, any and all shares of the capital stock or other securities and obligations of any individual or entity held by the Bank in any fiduciary capacity, and sign and deliver any instruments with respect to any such items. 4. Authority to Sign Checks and Other Instruments. Any officer of the Bank is authorized to sign for and on behalf of the Bank: checks against any account or accounts of any organizational unit of the Bank exercising fiduciary powers; petitions; schedules; accounts; reports; receipts for funds or securities deposited with the Bank as fiduciary and all instruments or documents that may be necessary or desirable in connection with the execution of any fiduciary powers of the Bank. 5. Delegation of Authority. Anything in this Article XIV to the contrary notwithstanding, the Chairman of the Board or President is authorized to designate in writing such persons as shall be authorized in the name of the 18 Bank to sign or countersign any or all of the documents and instruments enumerated in this Article XIV relating to transactions conducted in connection with the execution of any fiduciary powers of the Bank. ARTICLE XV AMENDMENT OF BY-LAWS These By-Laws may be changed or amended by the vote of a majority of the directors present at any regularly constituted meeting of the Board of Directors. ARTICLE XVI EMERGENCY OPERATION OF BANK In the event of an emergency declared by the President of the United States or the person performing his functions, due to threatened or actual enemy attack or disaster, the officers and employees of the Bank will continue to conduct the affairs of the Bank under such guidance from the directors as may be available, except as to matters which by statute require specific approval of the Board of Directors, and subject to conformance with any governmental directives during the emergency. ARTICLE XVII DELEGATION OF AUTHORITY Each of the Chairman of the Board, the President, any Vice Chairman of the Board and the Cashier of the Bank are severally and respectively authorized to designate in writing such persons who shall be authorized in the name and on behalf of the Bank to sign any document or instrument, including certificates of deposit and notes, and to take action which may be necessary or appropriate to the conduct of the Bank's business, in its individual capacity or any other capacity. Any such authorization to sign such document or instrument and to take any action may be general or limited as is determined in the discretion of the Chairman of the Board, the President, any Vice Chairman of the Board or the Cashier. 19 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT January 19, 2001 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an indenture between Household International, Inc. and Bank One, National Association, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, BANK ONE, NATIONAL ASSOCIATION By /s/ Steven M. Wagner ------------------------------------------- Steven M. Wagner First Vice President 20 EXHIBIT 7 Legal Title of Bank: Bank One, NA Call Date: 09/30/00 ST-BK: 17-1630 FFIEC 031 Address: 1 Bank One Plaza, Ste 0303 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR SEPTEMBER 30, 2000 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
DOLLAR AMOUNTS IN THOUSANDS C400 ---- RCFD BIL MIL THOU ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD ---- a. Noninterest-bearing balances and currency and coin(1) ...................0081 4,909,175 1.a b. Interest-bearing balances(2) ........................................... 0071 9,456,424 1.b 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A) ............. 1754 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D) ........... 1773 9,538,301 2.b 3. Federal funds sold and securities purchased under agreements to resell .... 1350 9,181,125 3. 4. Loans and lease financing receivables: RCFD ---- a. Loans and leases, net of unearned income (from Schedule RC-C) ...........2122 57,440,802 4.a b. LESS: Allowance for loan and lease losses .............................. 3123 984,209 4.b c. LESS: Allocated transfer risk reserve .................................. 3128 0 4.c RCFD ---- d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) ....................................2125 56,456,593 4.d 5. Trading assets (from Schedule RD-D) ....................................... 3545 3,648,812 5. 6. Premises and fixed assets (including capitalized leases) .................. 2145 587,051 6. 7. Other real estate owned (from Schedule RC-M) .............................. 2150 1,798 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ............................................ 2130 426,504 8. 9. Customers' liability to this bank on acceptances outstanding .............. 2155 458,892 9. 10. Intangible assets (from Schedule RC-M) .................................... 2143 207,832 10. 11. Other assets (from Schedule RC-F) ......................................... 2160 3,247,525 11. 12. Total assets (sum of items 1 through 11) .................................. 2170 98,120,032 12.
- ---------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 21 Legal Title of Bank: Bank One, NA Call Date: 09/30/00 ST-BK: 17-1630 FFIEC 031 Address: 1 Bank One Plaza, Ste 0303 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN THOUSANDS ----------------- LIABILITIES 13. Deposits: RCON a. In domestic offices (sum of totals of columns A and C ---- from Schedule RC-E, part 1) 2200 25,738,075 13.a (1) Noninterest-bearing(1) 6631 10,584,200 13.a1 (2) Interest-bearing 6636 15,153,875 13.a2 RCFN ---- b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II) 2200 31,520,969 13.b (1) Noninterest bearing 6631 465,521 13.b1 (2) Interest-bearing 6636 31,055,448 13.b2 RCFD ---- 14. Federal funds purchased and securities sold under agreements to repurchase: 2800 3,226,453 14 RCON ---- 15. a. Demand notes issued to the U.S. Treasury 2840 572,166 15.a RCFD ---- b. Trading Liabilities(from Schedule RC-D) 3548 3,356,051 15.b 16. Other borrowed money: RCFD ---- a. With original maturity of one year or less 2332 17,661,460 16.a b. With original maturity of more than one year A547 2,903,834 16.b c. With original maturity of more than three years A548 1,776,624 16.c 17. Not applicable 18. Bank's liability on acceptance executed and outstanding 2920 458,892 18. 19. Subordinated notes and debentures 3200 2,800,000 19. 20. Other liabilities (from Schedule RC-G) 2930 2,354,330 20. 21. Total liabilities (sum of items 13 through 20) 2948 92,368,854 21. 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus 3838 0 23. 24. Common stock 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock) 3839 3,660,673 25. 26. a. Undivided profits and capital reserves 3632 1,953,506 26.a b. Net unrealized holding gains (losses) on available-for-sale securities 8434 (63,547) 26.b c. ACCUMULATED NET GAINS (LOSSES) ON CASH FLOW HEDGES 4336 0 26.c 27. Cumulative foreign currency translation adjustments 3284 (312) 27. 28. Total equity capital (sum of items 23 through 27) 3210 5,751,178 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28) 3300 98,120,032 29.
22 Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the STATEMENT below that best describes the most comprehensive level of auditing work performed for the bank by independent external auditors as of any N/A Number date during 1996 ..........................................RCFD 6724 M.1. 1 = Independent audit of the bank conducted in accordance 2 = Independent audit of the bank's parent holding company 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - ---------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. EX-25.3 9 c59540a1ex25-3.txt STATEMENT OF ELIGIBILITY AND QUALIFICATION 1 EXHIBIT 25.3 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) [ ] ---------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------- Household International, Inc. (Exact name of obligor as specified in its charter) Delaware Applied for (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 2700 Sanders Road Prospect Heights, Illinois 60070 (Address of principal executive offices) (Zip code) ---------- Trust Preferred Securities (Title of the indenture securities) ================================================================================ 2 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.
- ----------------------------------------------------------------------------------------- Name Address - ----------------------------------------------------------------------------------------- Superintendent of Banks of the 2 Rector Street, New York, State of New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- 3 SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 19th day of January, 2001. THE BANK OF NEW YORK By: /s/ STEPHEN J. GIURLANDO ----------------------------------------- Name: STEPHEN J. GIURLANDO Title: VICE PRESIDENT -----END PRIVACY-ENHANCED MESSAGE-----