<PAGE> 1
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 21, 1995.
$500,000,000
HOUSEHOLD FINANCE CORPORATION
6 3/8% Notes Due August 1, 2010
Interest payable February 1 and August 1
------------------
Household Finance Corporation ("HFC" or the "Company") is offering $500,000,000
principal amount of its 6 3/8% Notes Due August 1, 2010 (the "Notes"). The Notes
will not be redeemed prior to maturity and will not be subject to any sinking
fund. See "Description of Notes." The Notes will be represented by one or more
global securities registered in the name of the nominee of The Depository Trust
Company (the "Depository"). Interests in the Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depository and its participants. Except as provided herein, the Notes in
definitive form will not be issued. Settlement for the Notes will be made in
immediately available funds. All payments of principal and interest will be made
by the Company in immediately available funds.
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
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS COMPANY(1)(2)
------------ ------------- -------------
<S> <C> <C> <C>
Per Note............................................. 98.976% .625% 98.351%
Total................................................ $494,880,000 $3,125,000 $491,755,000
</TABLE>
(1) Plus accrued interest, if any, from July 28, 1998.
(2) Before deduction of expenses payable by the Company estimated at $500,000.
The Notes are offered by the several Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Notes, in book-entry form, will be made through the facilities of the Depository
on or about July 28, 1998, against payment in immediately available funds.
CREDIT SUISSE FIRST BOSTON
CHASE SECURITIES INC.
J.P. MORGAN & CO.
WARBURG DILLON READ LLC
Prospectus Supplement dated July 23, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET,
INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING
TRANSACTIONS, AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING". SUCH ACTIVITIES, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
RECENT DEVELOPMENTS
On June 30, 1998, Household International, Inc., the parent of HFC
("Household International"), completed the merger of Beneficial Corporation
("Beneficial") with a subsidiary of Household International. In connection with
the merger, Household International contributed substantially all of the
consolidated assets of Beneficial to HFC. This transaction was accounted as a
"pooling-of-interests" by HFC. Additional information concerning the merger,
including historical financial statements of Beneficial, proforma financial
information and restated combined financial information is included in the
Company's Current Reports on Form 8-K dated June 2 and June 30, 1998, which are
incorporated by reference herein.
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.
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>
Three Months
Ended
March 31, Year Ended December 31,
--------------- --------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
HFC and subsidiaries -- calculated on
income from continuing operations... 2.01 1.65 1.61 1.57 1.41 1.51 1.54
</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 and one-third of rental
expense (approximate portion representing interest). The ratio has been restated
as a result of the merger of Household International and Beneficial. See "Recent
Developments".
DESCRIPTION OF THE NOTES
The following description of the terms of the 6 3/8% Notes Due August 1,
2010 (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.
S-2
<PAGE> 3
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 August 1, 2010.
Interest on the Notes at the rate of 6 3/8% per annum will be payable
semiannually on February 1 and August 1, beginning February 1, 1999, 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 U.S. Bank Trust National Association (formerly known as
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 "Depository") and registered in the name of a
nominee of the Depository. See "Description of Debt Securities -- Book-Entry
System" in the Prospectus.
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated July 23, 1998 (the "Underwriting Agreement"), the Underwriters
named below (the "Underwriters"), have severally but not jointly agreed to
purchase from the Company the following respective principal amounts of the
Notes:
<TABLE>
<CAPTION>
Principal
Underwriter Amount
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation...................... $125,000,000
Chase Securities Inc. ...................................... 125,000,000
J.P. Morgan Securities Inc. ................................ 125,000,000
Warburg Dillon Read LLC..................................... 125,000,000
------------
Total.................................................. $500,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all the Notes, if any are purchased.
The Underwriting Agreement provides that, in the event of a default by an
Underwriter, in certain circumstances the purchase commitments of non-defaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the public offering price
set forth on the cover page of this Prospectus Supplement and to certain dealers
at such price less a concession of .375% of the principal amount per Note, and
the Underwriters and such dealers may allow a discount of .25% of such principal
amount per Note on sales to certain other dealers. After the initial public
offering, the public offering price and concession and discount to dealers may
be changed by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Underwriters have advised the Company that they intend to act as market
makers for the Notes. However, the Underwriters are not obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of the trading market for the Notes.
S-3
<PAGE> 4
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, as
amended, or to contribute to payments which the Underwriters may be required to
make in respect thereof.
The Notes are offered for sale in those jurisdictions in the United States
and Canada where it is lawful to make such offers.
Certain of the Underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including commercial and investment banking
services, for Household International, the Company and its subsidiaries in the
ordinary course of business.
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids. Over-allotment involves
syndicate sales in excess of the offering size, which creates a syndicate short
position. Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve purchases of the Notes in the open
market after the distribution has been completed in order to cover syndicate
short positions. Penalty bids permit the Underwriters to reclaim a selling
concession from a syndicate member when the Notes originally sold by such
syndicate member are purchased in a syndicate covering transaction to cover
syndicate short positions. Such stabilizing transactions, syndicate covering
transactions and penalty bids may cause the price of the Notes to be higher than
it would otherwise be in the absence of such transactions. Neither the Company
nor the Underwriters make any representation that the Underwriters will engage
in such transactions or that such transactions, once commenced, will not be
discontinued without notice.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Company and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus or offering memorandum qualified under such securities laws, (ii)
where required by law, that such purchaser is purchasing as principal and not as
agent, (iii) if in Quebec, such purchaser shall be deemed to have agreed that
all documents relating to such purchase be in English only, and (iv) such
purchaser has reviewed the text above under "Resale Restrictions."
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
S-4
<PAGE> 5
ENFORCEMENT OF LEGAL RIGHTS
All of the Company's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
Company or such persons. All or a substantial portion of the assets of the
Company and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the Company or such persons in
Canada or to enforce a judgment obtained in Canadian courts against the Company
or such persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes acquired
by such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #95/17, a
copy of which may be obtained from the Company. Only one such report must be
filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of Notes should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the Notes in
their particular circumstances and with respect to the eligibility of the Notes
for investment by the purchaser under relevant Canadian legislation.
LEGAL OPINIONS
The legality of the Notes will be passed upon for HFC 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.
The financial statements of Beneficial incorporated in this Prospectus
Supplement by reference from HFC's Current Reports on Form 8-K as filed on June
2 and June 30, 1998 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports, which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
S-5
<PAGE> 6
HOUSEHOLD FINANCE CORPORATION
DEBT SECURITIES
AND
WARRANTS TO PURCHASE DEBT SECURITIES
Household Finance ("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 SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------
THE DATE OF THIS PROSPECTUS IS DECEMBER 21, 1995.
<PAGE> 7
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> 8
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.
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).
- ---------------
* VISA and MasterCard are registered trademarks of VISA USA, Inc. and MasterCard
International Incorporated, respectively.
3
<PAGE> 9
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 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
4
<PAGE> 10
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 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
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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.
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.
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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 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 (b) 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 (b)
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.
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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, 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)
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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)
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
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corporation to the Company and to provide for the assumption of all the
obligations of the Company under the Debt Securities and the Indenture by such
corporation; (iii) to provide for uncertificated Debt Securities in addition to
certificated Debt Securities; (iv) to make any change that does not adversely
affect the rights of holders of Debt Securities issued thereunder; (v) to
provide for a new series of Debt Securities; or (vi) to add to rights of holders
of Debt Securities or add additional Events of Default. (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 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)
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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.
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.
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<PAGE> 17
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, 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.
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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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<PAGE> 19
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS 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 SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Recent Developments............... S-2
Use of Proceeds................... S-2
Ratio of Earnings to Fixed
Charges......................... S-2
Description of Notes.............. S-2
Underwriting...................... S-3
Notice to Canadian Residents...... S-4
Legal Opinions.................... S-5
Experts........................... S-5
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......................... 3
Description of Debt Securities.... 4
Description of Warrants........... 11
Plan of Distribution.............. 12
ERISA Matters..................... 13
</TABLE>
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HOUSEHOLD FINANCE
CORPORATION
$500,000,000
6 3/8% Notes Due
August 1, 2010
PROSPECTUS SUPPLEMENT
CREDIT SUISSE FIRST BOSTON
CHASE SECURITIES INC.
J.P. MORGAN & CO.
WARBURG DILLON READ LLC
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