<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration No. 33-64175
PROSPECTUS SUPPLEMENT
(To Prospectus dated December 21, 1995)
$200,000,000
HOUSEHOLD FINANCE CORPORATION
6 7/8% NOTES DUE MARCH 1, 2007
----------------
Interest Payable March 1 and September 1
----------------
The Notes may not be redeemed prior to maturity and do not provide for any
sinking fund. The Notes will be represented by a global security registered in
the name of a nominee of The Depository Trust Company, as depositary.
Beneficial interests in the Notes will be shown on, and transfers thereof will
be effected only through, records maintained by The Depository Trust Company
and its participants. Except as described herein, Notes in definitive form
will not be issued.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to Public(1) Discount(2) Company(1)(3)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note......................... 99.457% .600% 98.857%
- -------------------------------------------------------------------------------------------
Total............................ $198,914,000 $1,200,000 $197,714,000
- -------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1)Plus accrued interest, if any, from February 27, 1997 to date of delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(3)Before deducting expenses payable by the Company estimated at $200,000.
----------------
The Notes offered by this Prospectus Supplement are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of the Notes
will be made on or about February 27, 1997 through the facilities of The
Depository Trust Company against payment therefor in immediately available
funds.
----------------
LEHMAN BROTHERS
CHASE SECURITIES, INC.
J.P. MORGAN & CO.
SMITH BARNEY INC.
February 24, 1997
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF NOTES
The following description of the terms of the 6 7/8% Notes due March 1, 2007
(the "Notes") offered hereby (referred to in the Prospectus as the "Offered
Debt Securities" and "Senior Debt Securities") supplements, insofar as such
description relates to the Notes, the description of the Debt Securities set
forth in the Prospectus, to which description reference is hereby made.
GENERAL
The Notes will be issued in fully registered form only in denominations of
$1,000 and integral multiples thereof. The Notes will mature on March 1, 2007.
Interest on the Notes at the rate of 6 7/8% per annum will be payable
semiannually on March 1 and September 1, beginning September 1, 1997, to the
persons in whose names the Notes are registered at the close of business on the
fifteenth day of the preceding month, except that interest payable at maturity
shall be paid to the same persons to whom principal of the Notes is payable.
The Notes are not redeemable at the option of the Company prior to maturity.
The Notes will not be entitled to any sinking fund.
The Notes will be issued under an Indenture dated as of October 1, 1992,
between the Company and First Trust of Illinois, National Association, as
Trustee.
BOOK-ENTRY SYSTEM
The Notes will be represented by one or more global securities (the "Global
Security"). The Global Security will be deposited with, or on behalf of, The
Depository Trust Company (the "Depositary") and registered in the name of a
nominee of the Depositary. See "Description of Debt Securities--Book-Entry
System" in the Prospectus.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest on the Global Security
will be made by the Company in immediately available funds.
USE OF PROCEEDS
The Company will apply the net proceeds from the sale of the Notes to its
general funds to be used in its financial services business, including the
funding of investments in, or extensions of credit to, the Company's
subsidiaries. Pending such applications, the proceeds will be used initially to
reduce outstanding commercial paper of the Company. The proceeds of such
commercial paper are used in connection with the Company's financial services
business.
S-2
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for HFC and subsidiaries for the
periods indicated below was as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- ------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
HFC and subsidiaries--calculated on in-
come from continuing operations........ 1.56 1.44 1.50 1.54 1.61 1.49 1.20
</TABLE>
For purposes of calculating the ratio, earnings consist of income from
continuing operations to which has been added income taxes and fixed charges.
Fixed charges consist of interest on all indebtedness (less income earned on
the temporary investment of excess funds) and one-third rentals (approximate
portion representing interest).
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the Underwriters named below, and
each of the Underwriters has severally agreed to purchase, the principal amount
of the Notes set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
<S> <C>
Lehman Brothers Inc. ....................................... $ 50,000,000
Chase Securities, Inc. ..................................... 50,000,000
J.P. Morgan Securities Inc. ................................ 50,000,000
Smith Barney Inc. .......................................... 50,000,000
------------
Total................................................... $200,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions. The Underwriters are obligated to purchase
all of the Notes if any of the Notes are purchased.
The Underwriters have advised the Company that they propose to offer the
Notes initially to the public at the offering price set forth on the cover page
of this Prospectus Supplement and to certain dealers at such price less a
concession not in excess of .400% of the principal amount of the Notes; that
the Underwriters may allow, and such dealers may reallow, to other dealers, a
concession not in excess of .200% of the principal amount of the Notes; and
that after the initial public offering, such public offering price and such
concessions and reallowance may from time to time be varied by the
Underwriters.
The Notes are a new issue of securities with no established trading market.
The Notes will not be listed on any securities exchange. The Company has been
advised by the Underwriters that they presently intend to make a market in the
Notes, but the Underwriters are not obligated to do so and may discontinue such
market-making at any time without notice. No assurance can be given, however,
as to whether a trading market in the Notes will develop or as to the liquidity
of any trading market for the Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, the Underwriters or
their affiliates have engaged or may in the future engage in investment banking
and/or commercial banking transactions with the Company and its affiliates.
S-3
<PAGE>
LEGAL OPINIONS
The legality of the Notes will be passed upon by John W. Blenke, Vice
President-Corporate Law and Assistant Secretary for Household International,
Inc., the parent of the Company. As of the date of this Prospectus Supplement,
Mr. Blenke is a full-time employee and an officer of Household International
and owns, and holds options to purchase, shares of Common Stock of Household
International. Certain legal matters in connection with the Notes will be
passed upon for the Underwriters by McDermott, Will & Emery, Chicago, Illinois.
EXPERTS
The financial statements and schedules of the Company and its subsidiaries
incorporated by reference in this Prospectus Supplement, to the extent and for
the periods indicated in its reports, have been audited by Arthur Andersen LLP,
independent public accountants, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
S-4
<PAGE>
HOUSEHOLD FINANCE CORPORATION
DEBT SECURITIES
AND
WARRANTS TO PURCHASE DEBT SECURITIES
Household Finance Corporation ("HFC" or the "Company") from time to time may
offer one or more series of its debt securities ("Debt Securities") and
warrants ("Warrants") to purchase Debt Securities (the Debt Securities and
Warrants being hereinafter collectively called "Securities") having an
aggregate initial offering price of up to $3,000,000,000, or the equivalent
thereof if any of the Securities are denominated in a foreign currency or a
foreign currency unit. The Debt Securities will be offered as separate series
in amounts, at prices and on terms to be determined at the time of sale and to
be set forth in supplements to this Prospectus. The Debt Securities and
Warrants may be sold for U.S. dollars, foreign currencies or foreign currency
units, and the principal of and any interest on the Debt Securities may be
payable in U.S. dollars, foreign currencies or foreign currency units. The
specific designation and classification as senior or senior subordinated debt
securities of HFC, aggregate principal amount, the currency or currency unit
for which the Securities may be purchased, the currency or currency unit in
which the principal and any interest is payable, the rate (or method of
calculation) and time of payment of any interest, authorized denominations,
maturity, offering price, any redemption terms or other specific terms of the
Securities in respect of which this Prospectus is being delivered are set forth
in one or more supplements to this Prospectus ("Prospectus Supplement"). With
regard to the Warrants, if any, in respect of which this Prospectus is being
delivered, the Prospectus Supplement sets forth a description of the Debt
Securities for which each Warrant is exercisable and the offering price, if
any, exercise price, duration, detachability and other terms of the Warrants.
HFC may sell Securities through underwriting syndicates led by one or more
managing underwriters or through one or more underwriting firms acting alone,
to or through dealers, acting as principals for their own account or as agents,
and also may sell Securities directly to other purchasers. See "Plan of
Distribution". The names of any underwriters or agents involved in the sale of
the Securities in respect to which this Prospectus is being delivered and their
compensation are set forth in the Prospectus Supplement.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECU-
RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REP-
RESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THE DATE OF THIS PROSPECTUS IS DECEMBER 21, 1995.
<PAGE>
AVAILABLE INFORMATION
HFC is subject to the informational requirements of the Securities Exchange
Act of 1934 and in accordance therewith files reports and other information
with the Securities and Exchange Commission (the "Commission"). Such reports
and other information can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices at the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can also
be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition,
certain debt securities of HFC are listed on the New York Stock Exchange, and
reports and other material concerning HFC can be inspected at the offices of
such Exchange at 20 Broad Street, New York, New York 10005. Although HFC is not
required to send an annual report to its security holders, HFC will, upon
request, send to any security holder a copy of its latest Annual Report on Form
10-K, as filed with the Commission, which contains financial information that
has been examined and reported upon, with an opinion expressed, by independent
certified public accountants.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission (File No. 1-75)
pursuant to the Securities Exchange Act of 1934 and are incorporated herein by
reference and made a part of this Prospectus:
(a) HFC's Annual Report on Form 10-K for the fiscal year ended December
31, 1994;
(b) HFC's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1995, June 30, 1995 and September 30, 1995; and
(c) HFC's Current Reports on Form 8-K dated February 21, 1995, August 9,
1995 and October 1, 1995.
All documents filed by HFC with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
date of this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated herein by reference and made a
part of this Prospectus from the respective dates of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
HFC WILL PROVIDE WITHOUT CHARGE TO EACH PERSON (INCLUDING ANY BENEFICIAL
OWNER) TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF
ANY SUCH PERSON, A COPY OF ANY OR ALL DOCUMENTS INCORPORATED HEREIN BY
REFERENCE (OTHER THAN EXHIBITS TO SUCH DOCUMENTS). REQUESTS SHOULD BE DIRECTED
TO:
HOUSEHOLD FINANCE CORPORATION
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
ATTENTION:OFFICE OF THE SECRETARY
TELEPHONE: 708-564-5000
2
<PAGE>
HOUSEHOLD FINANCE CORPORATION
HFC was incorporated in Delaware in 1925, as successor to an enterprise which
traces its origin through the same ownership to an office established in 1878.
The address of its principal executive office is 2700 Sanders Road, Prospect
Heights, Illinois 60070 (telephone 708-564-5000). HFC is a subsidiary of
Household International, Inc. ("Household International" or the "parent
company").
HFC and its subsidiaries offer a diversified range of financial services. The
principal product of HFC's consumer financial services business is the making
of cash loans, including home equity loans secured by first and second
mortgages and unsecured credit advances (including revolving and closed-end
personal loans) to middle-income consumers in the United States. Loans are made
through branch lending offices and through direct marketing efforts. HFC also
seeks to acquire portfolios of open-end and closed-end, secured and unsecured
loans.
HFC, through banking subsidiaries, offers both VISA* and MasterCard* credit
cards to residents throughout the United States.
Household Retail Services is the revolving credit card merchant participation
business of HFC. This business provides sales financing for consumer goods and
purchases and originates and services merchants' private label revolving charge
accounts.
In conjunction with its consumer finance operations and where applicable laws
permit, HFC makes available to customers credit life, credit accident and
health, and household contents insurance.
HFC, through its subsidiary, Household Commercial Financial Services, Inc.,
also is engaged
in commercial finance, involving leveraged leases, privately-placed, limited-
term preferred stocks and selected commercial financing of equipment or
property.
USE OF PROCEEDS
Unless otherwise indicated in the Prospectus Supplement, HFC will apply the
net proceeds from the sale of the Securities to its general funds to be used in
its financial services business, including the funding of investments in, or
extensions of credit to, affiliates of HFC. Pending such applications, the net
proceeds will be used initially to reduce outstanding commercial paper of HFC.
The proceeds of such commercial paper are used in connection with HFC's
financial services business.
- --------
* VISA and MasterCard are registered trademarks of VISA USA, Inc. and
MasterCard International Incorporated, respectively.
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for HFC and subsidiaries for the
periods indicated below was as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- ------------------------
1995 1994 1994 1993 1992 1991 1990
------ ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
HFC and subsidiaries--calculated on
income from continuing operations...... 1.44 1.58 1.54 1.61 1.49 1.20 1.32
</TABLE>
For purposes of calculating the ratio, earnings consist of income from
continuing operations to which has been added income taxes and fixed charges of
subsidiaries. Fixed charges consist of interest on all indebtedness and one-
third rentals (approximate portion representing interest).
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Debt Securities offered by any
Prospectus Supplement (the "Offered Debt Securities") and the extent to which
such general terms and provisions may apply to the Offered Debt Securities will
be described in the Prospectus Supplement relating to such Offered Debt
Securities.
GENERAL
Offered Debt Securities will constitute either senior or senior subordinated
unsecured debt of HFC and will be issued under one of the indentures specified
elsewhere herein (the "Indentures"). The Indentures, or forms thereof, and the
Standard Provisions (as defined herein) have been filed as exhibits to HFC's
Registration Statement which registers the Securities with the Commission. The
following summaries do not purport to be complete and, where particular
provisions of an Indenture or the Standard Provisions are referred to, such
provisions, including definitions of certain terms, are incorporated by
reference as part of such summaries, which are qualified in their entirety by
such reference.
The Indentures provide that Debt Securities may be issued thereunder from
time to time in one or more series and do not limit the aggregate principal
amount of the Debt Securities except as may be otherwise provided with respect
to any particular series of Offered Debt Securities.
Unless otherwise indicated in the Prospectus Supplement with respect to any
particular series of Offered Debt Securities, the Debt Securities will be
issued in registered form without coupons, will be exchangeable for authorized
denominations, and will be transferable at any time or from time to time. No
charge will be made to the holder for any such exchange or registration of
transfer except for any tax or governmental charge incident thereto. The Debt
Securities of any series may be issued in whole or in part in the form of one
or more global securities that will be deposited with, or on behalf of, a
depositary. See "Book-Entry System" below.
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms and other
information to the extent applicable with respect to the Offered Debt
Securities: (1) the title of the Offered Debt Securities and whether such
Offered Debt Securities will be senior or senior subordinated debt of HFC; (2)
any limit on the aggregate principal amount of the Offered Debt Securities; (3)
the price (expressed as a percentage
4
<PAGE>
of the aggregate principal amount thereof) HFC will be paid for the Offered
Debt Securities and the initial offering price, if any, at which the Offered
Debt Securities will be offered to the public; (4) the currency, currencies or
currency units for which the Offered Debt Securities may be purchased and the
currency, currencies or currency units in which the principal of and any
interest on such Offered Debt Securities may be payable; (5) the date or dates
on which the Offered Debt Securities will mature; (6) the rate or rates (which
may be fixed or variable) per annum at which the Offered Debt Securities will
bear interest, if any; (7) the date from which such interest, if any, on the
Offered Debt Securities will accrue, the dates on which such interest, if any,
will be payable, the date on which payment of such interest, if any, will
commence, and the Regular Record Dates for such Interest Payment Dates, if any;
(8) the dates, if any, on which and the price or prices at which the Offered
Debt Securities will, pursuant to any mandatory sinking fund provisions, or
may, pursuant to any optional sinking fund or to any purchase fund provisions,
be redeemed by HFC, and the other detailed terms and provisions of such sinking
and/or purchase funds; (9) the date, if any, after which and the price or
prices at which the Offered Debt Securities may, pursuant to any optional
redemption provisions, be redeemed at the option of HFC or of the holder
thereof and the other detailed terms and provisions of such optional
redemption; (10) the denominations in which the Offered Debt Securities are
authorized to be issued; (11) the securities exchange, if any, on which the
Debt Securities will be listed; and (12) additional provisions, if any, with
respect to the Offered Debt Securities.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of or any interest on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Debt Securities and such currencies or currency
units will be set forth in a Prospectus Supplement relating thereto.
Debt Securities may be issued as Original Issue Discount Securities to be
offered and sold at a discount below their stated principal amount. "Original
Issue Discount Securities" means any Debt Securities that provide for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the maturity thereof upon the occurrence of an Event of
Default and the continuation thereof. As used in the following summary of
certain terms of the Debt Securities, the term "principal amount" means, in the
case of any Original Issue Discount Security, the amount that would then be due
and payable upon acceleration of the maturity thereof, as specified in such
Debt Security.
BOOK-ENTRY SYSTEM
If so indicated in the Prospectus Supplement with respect to any series of
Offered Debt Securities, such Offered Debt Securities will be represented by
one or more global securities (the "Global Security"). The Global Security will
be deposited with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in the name of a nominee of the Depositary. Except
under circumstances described below, such Offered Debt Securities will not be
issuable in definitive form.
The Depositary has advised the Company and any underwriters, dealers or
agents named in the applicable Prospectus Supplement as follows: the Depositary
is a limited-purpose trust company organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. The Depositary was created to hold securities of its participants
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for
5
<PAGE>
physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations, some of which (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies, that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
Upon the issuance of the Global Security, the Depositary will credit on its
book-entry registration and transfer system the accounts of participants with
the respective principal amounts of the Offered Debt Securities represented by
the Global Security. Ownership of beneficial interests in the Global Security
will be limited to persons that have accounts with the Depositary or its
nominee ("participants") or persons that may hold interests through
participants. Ownership of beneficial interests in the Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary or its nominee (with respect to interests
of participants) and on the records of participants (with respect to interests
of persons other than participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in the Global Security.
So long as the Depositary or its nominee is the registered owner of the
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Offered Debt Securities represented
by the Global Security for all purposes under the Indenture. Except as provided
below, owners of beneficial interests in the Global Security will not be
entitled to have Offered Debt Securities represented by the Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Offered Debt Securities in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Principal and interest payments on Offered Debt Securities registered in the
name of the Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security.
None of the Company, the Trustee, any paying agent or the registrar for the
Offered Debt Securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
interests in the Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
The Company expects that the Depositary for the Offered Debt Securities or
its nominee, upon receipt of any payment of principal or interest, will credit
immediately participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the Global
Security as shown on the records of the Depositary or its nominee. The Company
also expects that payments by participants to owners of beneficial interests in
the Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name",
and will be the responsibility of such participants.
If the Depositary is at any time unwilling or unable to continue as
Depositary and a successor Depositary is not appointed by the Company within 90
days, the Company will issue Offered Debt Securities in definitive form in
exchange for the entire Global Security. In addition, the Company may at any
time and in its sole discretion determine not to have the Offered Debt
Securities represented by the Global Security and, in such event, will issue
Offered Debt Securities in definitive form in exchange for the entire Global
Security. In any such instance, an owner of a beneficial interest in the Global
Security will be entitled to physical delivery in definitive form of Offered
Debt Securities represented by the Global Security equal in principal amount to
such beneficial interest and to have such Offered Debt Securities registered in
its name. Offered Debt Securities so issued in definitive form will be issued
as registered Offered Debt Securities in denominations of $1,000 and integral
multiples thereof, unless otherwise specified by the Company.
6
<PAGE>
SAME-DAY SETTLEMENT AND PAYMENT
If so indicated in the Prospectus Supplement with respect to any series of
Offered Debt Securities, settlement for such Offered Debt Securities will be
made by the underwriters, dealers or agents in immediately available funds and
all payments of principal and interest thereon will be made by the Company in
immediately available funds. Secondary trading in long-term notes and
debentures of corporate issuers is generally settled in clearing-house or next-
day funds. In contrast Offered Debt Securities subject to settlement in
immediately available funds will trade in the Depositary's Same-Day Funds
Settlement System until maturity, and secondary market trading activity in the
Offered Debt Securities will therefore be required by the Depositary to settle
in immediately available funds. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on trading activity in the
Offered Debt Securities.
SENIOR DEBT SECURITIES
The trustees for the indentures under which Offered Debt Securities
constituting senior debt of HFC (the "Senior Debt Securities") will be issued
shall be either First Trust of Illinois, National Association (successor in
interest to Bank of America Illinois, formerly known as Continental Bank,
National Association), The Bank of New York (successor in interest to
NationsBank of Tennessee), State Street Bank and Trust Company (successor in
interest to The First National Bank of Boston), The First National Bank of
Chicago, or such other entity which may be specified in the Prospectus
Supplement (collectively, the "Senior Trustees"). Each particular series of
Senior Debt Securities will be issued under the Indenture specified in the
Prospectus Supplement between HFC and a Senior Trustee, which will incorporate
the terms and provisions of the Standard Multiple-Series Indenture Provisions
for Senior Debt Securities dated as of June 1, 1992 (the "Standard
Provisions"). The above noted indentures are collectively called the
"Indentures for Senior Debt Securities" herein. Senior Debt Securities will
rank on a parity with all unsecured debt of HFC, and prior to all subordinated
debt.
Principal of and interest, if any, on Senior Debt Securities will be payable
at the office or agency of HFC specified in the Prospectus Supplement,
depending on the Senior Trustee; provided, however, that payment of interest
may be made at the option of HFC by check or draft mailed to the person
entitled thereto.
Covenant Against Creation of Pledges or Liens
All Senior Debt Securities issued under the Indentures for Senior Debt
Securities will be unsecured. HFC covenants that, with the exceptions listed
below, it will not issue, assume or guarantee any indebtedness for borrowed
money secured by a mortgage, security interest, pledge or lien ("security
interest") of or upon any of its property, now owned or hereafter acquired,
unless the Senior Debt Securities then outstanding are, by supplemental
indenture, effectively secured by such security interest equally and ratably
with all other indebtedness secured thereby for so long as such other
indebtedness shall be so secured. The term "indebtedness for borrowed money"
does not include any guarantee, cash deposit or other recourse obligation in
connection with the sale, securitization or discount by HFC of finance or
accounts receivables, trade acceptances, or other paper arising in the ordinary
course of its business.
The foregoing covenant does not apply to (a) security interests to secure the
payment of the purchase price of property, shares of capital stock, or
indebtedness acquired by HFC or the cost of construction or improvement of such
property or the refinancing of all or any part of such secured indebtedness,
provided that such security interests do not apply to any other property,
shares of capital stock, or indebtedness of HFC; (b) security interests on
property, shares of capital stock, or indebtedness existing at the time of
acquisition by HFC; (c) security interests on property of a
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<PAGE>
corporation which security interests exist at the time such corporation merges
or consolidates with or into HFC or which security interests exist at the time
of the sale or transfer of all or substantially all of the assets of such
corporation to HFC; (d) security interests to secure any indebtedness of HFC to
a subsidiary; (e) security interests in property of HFC in favor of the United
States of America or any state or agency or instrumentality thereof, or in
favor of any other country or political subdivision, to secure partial,
progress, advance, or other payments pursuant to any contract or statute or to
secure any indebtedness incurred or guaranteed for the purpose of financing all
or any part of the purchase price or the cost of construction of the property
subject to such security interests; (f) security interests on properties
financed through tax-exempt municipal obligations; provided that such security
interests are limited to the property so financed; (g) security interests
existing on the date of execution of the applicable Indenture; and (h) any
extension, renewal, refunding, or replacement (or successive extensions,
renewals, refundings, or replacements), in whole or in part, of any security
interest referred to in the foregoing clauses (a) through (g) inclusive;
provided, however, that the principal amount of indebtedness secured in such
extension, renewal, refunding, or replacement does not exceed the principal
amount of indebtedness secured at the time by such security interest; provided,
further, that such extension, renewal, refunding, or replacement of such
security interest is limited to all or part of the property subject to such
security interest so extended, renewed, refunded, or replaced.
Notwithstanding the foregoing, HFC may, without equally and ratably securing
the Senior Debt Securities, issue, assume, or guarantee indebtedness secured by
a security interest not excepted pursuant to clauses (a) through (h) above if
the aggregate amount of such indebtedness, together with all other indebtedness
of, or guaranteed by, HFC existing at such time and secured by security
interests not so excepted, does not at the time exceed 10% of HFC's
Consolidated Net Worth (as defined). In addition, an arrangement with any
person providing for the leasing by HFC of any property, which property has
been or is to be sold or transferred by HFC to such person with the intention
that such property be leased back to HFC, shall not be deemed to create any
indebtedness secured by a security interest if the obligation in respect to
such lease would not be included as a liability on a consolidated balance sheet
of HFC. The holders of not less than a majority in principal amount of the Debt
Securities at the time outstanding under an Indenture, on behalf of the holders
of all of the Debt Securities issued under such Indenture, may waive compliance
with the foregoing covenant. (Standard Provisions--Section 3.08)
Concerning the Trustees
HFC maintains a banking relationship with each of the Senior Trustees or
affiliates thereof and certain of the Senior Trustees are also trustees under
other indentures of HFC under which outstanding senior or subordinated
unsecured debt securities of HFC have been issued. The Senior Trustees or
affiliates thereof may also have other financial relations with HFC and other
corporations affiliated with HFC.
SENIOR SUBORDINATED DEBT SECURITIES
Offered Debt Securities which will constitute senior subordinated unsecured
debt of HFC (the "Senior Subordinated Debt Securities") will be issued under
(i) an Indenture dated as of May 15, 1989, between HFC and BankAmerica National
Trust Company, successor to BankAmerica Trust Company of New York, as Trustee,
or (ii) an Indenture dated as of March 15, 1990, between HFC and Harris Trust
and Savings Bank, as Trustee (the "Indentures for Senior Subordinated Debt
Securities").
Unless a different place is specified in the Prospectus Supplement, principal
and interest, if any, on Senior Subordinated Debt Securities will be payable at
the office or agency of HFC in New York, New York, with respect to the
Indenture with BankAmerica National Trust Company; or in Chicago,
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<PAGE>
Illinois, with respect to the Indenture with Harris Trust and Savings Bank;
provided, however, that payment of interest may be made at the option of HFC by
check or draft mailed to the person entitled thereto.
Subordination
Senior Subordinated Debt Securities are subordinate and junior in right of
payment to all indebtedness for borrowed money of HFC, whenever outstanding,
which is not by its terms subordinate and junior to other indebtedness of HFC,
such indebtedness of HFC to which the Senior Subordinated Debt Securities are
subordinate and junior being hereinafter called "senior indebtedness." At
September 30, 1995, the aggregate amount of the outstanding senior indebtedness
of HFC was approximately $12.0 billion. HFC is not directly limited in its
ability to issue additional senior indebtedness.
In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to HFC or to its creditors, as such, or to its
property, and in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of HFC, whether or not involving insolvency or
bankruptcy, then the holders of senior indebtedness shall be entitled to
receive payment in full of all principal and interest on all senior
indebtedness before the holders of the Senior Subordinated Debt Securities are
entitled to receive any payment on account of principal or interest upon the
Senior Subordinated Debt Securities, and to that end (but subject to the power
of a court of competent jurisdiction to make other equitable provision
reflecting the rights conferred in the Indentures for Senior Subordinated Debt
Securities upon the senior indebtedness and the holders thereof with respect to
the subordinated indebtedness represented by the Senior Subordinated Debt
Securities and the holders thereof by a lawful plan of reorganization under
applicable bankruptcy law) the holders of senior indebtedness shall be entitled
to receive for application in payment thereof any payment or distribution of
any kind or character, whether in cash or property or securities, which may be
payable or deliverable in any such proceedings in respect of the Senior
Subordinated Debt Securities, except securities which are subordinate and
junior in right of payment to the payment of all senior indebtedness then
outstanding.
In the event that any Senior Subordinated Debt Security is declared or
becomes due and payable before its expressed maturity because of the occurrence
of a default under the Indentures for Senior Subordinated Debt Securities
(under circumstances when the provisions of the foregoing paragraph shall not
be applicable), the holders of the senior indebtedness outstanding at the time
such Senior Subordinated Debt Security so becomes due and payable because of
such occurrence of such default shall be entitled to receive payment in full of
all principal and interest on all senior indebtedness before the holders of the
Senior Subordinated Debt Securities are entitled to receive any payment on
account of the principal or interest upon the Senior Subordinated Debt
Securities.
Without limiting the foregoing, no payment of principal, premium or interest
shall be made upon the Senior Subordinated Debt Securities during the
continuance of any default in the making of any required payment under any
sinking fund or analogous fund created for the benefit of any senior
indebtedness or any other default in the payment of principal of, or interest
on, any senior indebtedness then outstanding, whether by lapse of time, by
declaration, by call or notice of prepayment or otherwise. (Indentures for
Senior Subordinated Debt Securities--Section 12.01)
Liens
HFC will not create, assume, incur or suffer to exist any mortgage, pledge or
other lien on any of the property or assets of HFC whether now owned or
hereafter acquired for the purpose of securing any senior subordinated
indebtedness or junior subordinated indebtedness, as defined. (Indentures for
Senior Subordinated Debt Securities--Section 3.08)
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Concerning the Trustees
BankAmerica National Trust Company and Harris Trust and Savings Bank are
trustees under other indentures of HFC under which certain of HFC's outstanding
senior subordinated debt securities have been issued. HFC maintains banking
relationships with Harris Trust and Savings Bank and an affiliate of
BankAmerica National Trust Company. These trustees, or affiliates thereof, also
have other financial relations with HFC and other corporations affiliated with
HFC.
SATISFACTION, DISCHARGE, AND DEFEASANCE OF THE INDENTURES AND DEBT SECURITIES
If there is deposited irrevocably with the Trustee as trust funds for the
benefit of the holders of Debt Securities of a particular series an amount, in
money or the equivalent in securities of the United States or securities the
principal of and interest on which is fully guaranteed by the United States,
sufficient to pay the principal, premium, if any, and interest, if any, on such
series of Debt Securities on the dates such payments are due in accordance with
the terms of such series of Debt Securities through their maturity, and if HFC
has paid or caused to be paid all other sums payable by it under the applicable
Indenture with respect to such series, then HFC will be deemed to have
satisfied and discharged the entire indebtedness represented by such series of
Debt Securities and all of the obligations of HFC under such Indenture with
respect to such series, except as otherwise provided in such Indenture. In the
event of any such defeasance, holders of such Debt Securities would be able to
look only to such trust funds for payment of principal, premium, if any, and
interest, if any, on their Debt Securities. (Standard Provisions, Indentures
for Senior Subordinated Debt Securities--Section 6.03)
For federal income tax purposes, any such defeasance may be treated as a
taxable exchange of the related Debt Securities for an issue of obligations of
the trust or a direct interest in the cash and securities held in the trust. In
that case holders of such Debt Securities would recognize gain or loss as if
the trust obligations or the cash or securities deposited, as the case may be,
had actually been received by them in exchange for their Debt Securities. Such
holders thereafter would be required to include in income a share of the
income, gain or loss of the trust. The amount so required to be included in
income could be a different amount than would be includable in the absence of
defeasance. Prospective investors are urged to consult their own tax advisors
as to the specific consequences to them of defeasance.
MODIFICATION OF INDENTURES
Each Indenture provides that the holders of not less than a majority in
principal amount of each series of Debt Securities at the time outstanding
under such Indenture may enter into supplemental indentures for the purpose of
amending, in any manner, provisions of the Indenture or of any supplemental
indenture or modifying the rights of holders of such series of Debt Securities.
However, no such supplemental indenture, without the consent of the holder of
each outstanding Debt Security affected thereby, shall, among other things, (i)
change the maturity of the principal of, or any installment of interest on any
Debt Security, or reduce the principal amount thereof or the interest thereon
or any premium payable upon the redemption thereof, or (ii) reduce the
aforesaid percentage of the Debt Securities, the consent of the holders of
which is required for the execution of any such supplemental indenture or for
any waiver of compliance with any covenant or condition in such Indenture.
(Standard Provisions, Indentures for Senior Subordinated Debt Securities--
Section 11.02)
Each Indenture may be amended or supplemented without the consent of any
holder of Debt Securities under certain circumstances, including (i) to cure
any ambiguity, defect or inconsistency in the Indenture, any supplemental
indenture, or in the Debt Securities of any series; (ii) to evidence the
succession of another corporation to the Company and to provide for the
assumption of all the
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obligations of the Company under the Debt Securities and the Indenture by such
corporation; (iii) to provide for uncertificated Debt Securities in addition to
certificated Debt Securities; (iv) to make any change that does not adversely
affect the rights of holders of Debt Securities issued thereunder; (v) to
provide for a new series of Debt Securities; or (vi) to add to rights of
holders of Debt Securities or add additional Events of Default. (Standard
Provisions, Indentures for Senior Subordinated Debt Securities--Section 11.01)
SUCCESSOR ENTITY
The Company may not consolidate with or merge into, or transfer, sell or
lease its properties and assets as, or substantially as, an entirety to another
entity unless the successor entity is a corporation incorporated within the
United States and, after giving effect thereto, no default under the Indenture
shall have occurred and be continuing. Thereafter, except in the case of a
lease, all obligations of the Company under the Indenture terminate. (Standard
Provisions, Indentures for Senior Subordinated Debt Securities--Sections 10.01
and 10.02)
EVENTS OF DEFAULT
Each Indenture defines the following as Events of Default with respect to any
series of Debt Securities: default for 30 days in the payment of any interest
upon any Debt Security of such series issued under such Indenture; default in
the payment of any principal of or premium on any such Debt Security; default
for 30 days in the deposit of any sinking fund or similar payment for such
series of Debt Securities; default for 60 days after notice in the performance
of any other covenant in the Indenture; certain defaults for 30 days after
notice in the payment of principal or interest, or in the performance of other
covenants, with respect to borrowed money under another indenture in which the
Trustee for such Debt Securities is trustee which results in the principal
amount of such indebtedness becoming due and payable prior to maturity, which
acceleration has not been rescinded or annulled; and certain events of
bankruptcy, insolvency or reorganization. HFC is required to file with each
Trustee annually a certificate as to the absence of certain defaults under the
Indenture. (Standard Provisions, Indentures for Senior Subordinated Debt
Securities--Sections 7.01 and 3.05)
If an Event of Default with respect to Debt Securities of any series at the
time outstanding occurs and is continuing, either the Trustee or the holders of
not less than 25% in principal amount of the outstanding Debt Securities of
such series by notice as provided in the Indenture may declare the principal
amount of all the Debt Securities of such series to be due and payable
immediately. At any time after a declaration of acceleration with respect to
Debt Securities of any series has been made, but before a judgment or decree
for payment of money has been obtained by the Trustee, the holders of not less
than a majority in principal amount of outstanding Debt Securities of such
series may, under certain circumstances, rescind or annul such declaration of
acceleration. (Standard Provisions, Indentures for Senior Subordinated Debt
Securities--Section 7.02)
The holders of not less than a majority in principal amount of the
outstanding Debt Securities of each series may, on behalf of all holders of
Debt Securities of such series, waive any past default under the Indenture and
its consequences with respect to Debt Securities of such series, except a
default (a) in the payment of principal of (or premium, if any) or interest, if
any, on any Debt Securities of such series, or (b) in respect of a covenant or
provision of the Indenture which cannot be modified or amended without the
consent of the holder of each outstanding Debt Security of such series
affected. (Standard Provisions, Indentures for Senior Subordinated Debt
Securities--Section 7.13)
Each Indenture provides that the Trustee thereunder may withhold notice to
holders of Debt Securities of any default, except in payment of the principal
of (or premium, if any) or interest, if
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<PAGE>
any, on any Debt Security issued under such Indenture or in the payment of any
sinking fund or similar payment, if it considers it in the interest of holders
of Debt Securities to do so. (Standard Provisions, Indentures for Senior
Subordinated Debt Securities--Section 8.02)
Holders of Debt Securities may not enforce an Indenture except as provided
therein. (Standard Provisions, Indentures for Senior Subordinated Debt
Securities--Section 7.07) Each Indenture provides that the holders of a
majority in principal amount of the outstanding debt securities issued under
such Indenture have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. (Standard Provisions, Indentures
for Senior Subordinated Debt Securities--Section 7.12) The Trustee will not be
required to comply with any request or direction of holders of Debt Securities
pursuant to the Indenture unless offered indemnity against costs and
liabilities which might be incurred by the Trustee as a result of such
compliance. (Standard Provisions, Indentures for Senior Subordinated Debt
Securities--Section 8.03(e))
DESCRIPTION OF WARRANTS
HFC may issue, together with any Debt Securities offered by any Prospectus
Supplement or separately, Warrants for the purchase of other Debt Securities.
The Warrants are to be issued under warrant agreements (each a "Warrant
Agreement") to be entered into between HFC and a bank or trust company, as
warrant agent ("Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of Warrants ("Offered Warrants"). A copy of
the forms of Warrant Agreement, including the form of warrant certificates
representing the Warrants ("Warrant Certificates"), reflecting the alternative
provisions to be included in the Warrant Agreements that will be entered into
with respect to particular offerings of Warrants, is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Warrant Agreement and the Warrant Certificates do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
the provisions of the Warrant Agreement and the Warrant certificates,
respectively, including the definitions therein of certain terms.
GENERAL
The Prospectus Supplement describes the terms of the Offered Warrants, the
Warrant Agreement relating to the Offered Warrants and the Warrant Certificates
representing the Offered Warrants, including the following: (1) the
designation, aggregate principal amount, and terms of the Debt Securities
purchasable upon exercise of the Offered Warrants; (2) the designation and
terms of any related Debt Securities with which the Offered Warrants are issued
and the number of Offered Warrants issued with each such Debt Security; (3) the
date, if any, on and after which the Offered Warrants and the related Offered
Debt Securities will be separately transferable; (4) the principal amount of
Debt Securities purchasable upon exercise of one Offered Warrant and the price
at which such principal amount of Debt Securities may be purchased upon such
exercise; (5) the date on which the right to exercise the Offered Warrants
shall commence and the date ("Expiration Date") on which such right shall
expire; (6) whether the Warrants represented by the Warrant Certificates will
be issued in registered or bearer form, and if registered, where they may be
transferred and registered; and (7) any other terms of the Offered Warrants.
Warrant Certificates will be exchangeable on the terms specified in the
Prospectus Supplement for new Warrant Certificates of different denominations,
and Warrants may be exercised at the corporate trust office of the Warrant
Agent or any other office indicated in the Prospectus Supplement. Prior to the
exercise of their Warrants, holders of Warrants will not have any of the rights
of Holders of the Debt Securities purchasable upon such exercise and will not
be entitled to payments of principal of, premium, if any, or interest, if any,
on the Debt Securities purchasable upon such exercise.
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<PAGE>
EXERCISE OF WARRANTS
Each Offered Warrant will entitle the holder to purchase such principal
amount of Debt Securities at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the Prospectus Supplement
relating to the Offered Warrants by payment of such exercise price in full in
the manner specified in the Prospectus Supplement. Offered Warrants may be
exercised at any time up to the close of business on the Expiration Date set
forth in the Prospectus Supplement relating to the Offered Warrants. After the
close of business on the Expiration Date, unexercised Warrants will become
void.
Upon receipt of payment of the exercise price and the Warrant Certificate
properly completed and duly executed at the corporate trust office of the
Warrant Agent or any other office indicated in the Prospectus Supplement, HFC
will, as soon as practicable, forward the Debt Securities purchasable upon such
exercise. If less than all of the Warrants represented by such Warrant
Certificate are exercised, a new Warrant Certificate will be issued for the
remaining amount of Warrants.
PLAN OF DISTRIBUTION
HFC may sell the Securities in any of three ways: (i) through underwriters or
dealers; (ii) directly to a limited number of purchasers or to a single
purchaser; or (iii) through agents. The Prospectus Supplement sets forth the
terms of the offering of the Offered Debt Securities and any Offered Warrants
(collectively, the "Offered Securities"), including the name or names of any
underwriters, dealers or agents, the purchase price of the Offered Securities
and the proceeds to HFC from such sale, any underwriting discounts and other
items constituting underwriters' compensation and any discounts and commissions
allowed or paid to dealers. Any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers may be changed from time
to time.
If the Offered Securities are sold through underwriters, the Prospectus
Supplement relating thereto describes the nature of the obligation of the
underwriters to take and pay for the Offered Securities. The Offered Securities
may be offered to the public either through underwriting syndicates represented
by one or more managing underwriters or directly by one or more underwriting
firms acting alone. The underwriter or underwriters with respect to a
particular underwritten offering of Offered Securities are named in the
Prospectus Supplement relating to such offering, and, if an underwriting
syndicate is used, the managing underwriter or underwriters are set forth on
the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Offered Securities will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all the Offered Securities if any
are purchased.
The Offered Securities may be sold directly by HFC or through agents
designated by HFC from time to time. Any agent involved in the offer or sale of
the Offered Securities in respect of which this Prospectus is delivered is
named, and any commissions payable by HFC to such agent are set forth, in the
Prospectus Supplement relating thereto.
Underwriters and agents who participate in the distribution of the Offered
Securities may be entitled under agreements which may be entered into with HFC
to indemnification by HFC against certain liabilities, including liabilities
under the Securities Act of 1933, or to contribution with respect to payments
which the underwriters or agents may be required to make in respect thereof.
If so indicated in the Prospectus Supplement, HFC will authorize
underwriters, dealers or other persons acting as HFC's agents to solicit offers
by certain institutions to purchase Offered Securities from HFC pursuant to
contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies,
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<PAGE>
pension funds, investment companies, educational and charitable institutions
and others, but in all cases such institutions must be approved by HFC. The
obligations of any purchaser under any such contract will not be subject to any
conditions except that (i) the purchase of the Offered Securities shall not at
the time of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject, and (ii) if the Offered Securities are also being
sold to underwriters, HFC shall have sold to such underwriters the Offered
Securities not sold for delayed delivery. The underwriters, dealers and such
other persons will not have any responsibility in respect of the validity or
performance of such contracts.
There can be no assurance that a secondary market will be created for the
Offered Securities or, if it is created, that it will continue.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with the ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of Offered Securities
on behalf of such Plan should determine whether such purchase is permitted
under the governing Plan documents and is prudent and appropriate for the Plan
in view of its overall investment policy and the composition and
diversification of its portfolio. Other provisions of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code") prohibit certain
transactions between a Plan and persons who have certain specified
relationships to the Plan ("parties in interest" within the meaning of ERISA or
"disqualified persons" within the meaning of Section 4975 of the Code). Thus, a
Plan fiduciary considering the purchase of Offered Securities should consider
whether such a purchase might constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code.
HFC may be considered a "party in interest" or a "disqualified person" with
respect to many Plans that are subject to ERISA. The purchase of Offered
Securities by a Plan that is subject to the fiduciary responsibility provisions
of ERISA or the prohibited transaction provisions of Section 4975 of the Code
(including individual retirement accounts and other plans described in Section
4975(c)(1) of the Code) and with respect to which the Company is a party in
interest or a disqualified person may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Offered
Securities are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment finds) or PTCE 90-1 (an exemption for
certain transactions involving insurance company pooled separate accounts). ANY
PENSION OR OTHER EMPLOYEE BENEFIT PLAN PROPOSING TO ACQUIRE ANY OFFERED
SECURITIES SHOULD CONSULT WITH ITS COUNSEL.
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No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus or
the accompanying Prospectus Supplement and, if given or made, such information
or representation must not be relied upon as having been authorized by the
Company or any agent or underwriter. This Prospectus and the accompanying
Prospectus Supplement do not constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
Neither the delivery of this Prospectus or any Prospectus Supplement nor any
sale made hereunder or thereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Prospectus Supplement
<S> <C>
Description of Notes....................................................... S-2
Use of Proceeds............................................................ S-2
Ratio of Earnings to Fixed Charges......................................... S-3
Underwriting............................................................... S-3
Legal Opinions............................................................. S-4
Experts.................................................................... S-4
Prospectus
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Household Finance Corporation.............................................. 3
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges......................................... 4
Description of Debt Securities............................................. 4
Description of Warrants.................................................... 12
Plan of Distribution....................................................... 13
ERISA Matters.............................................................. 14
</TABLE>
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$200,000,000
HOUSEHOLD
FINANCE
CORPORATION
6 7/8% NOTES
DUE MARCH 1, 2007
----------------
PROSPECTUS SUPPLEMENT
February 24, 1997
----------------
LEHMAN BROTHERS
CHASE SECURITIES, INC.
J.P. MORGAN & CO.
SMITH BARNEY INC.
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