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As filed with the Securities and Exchange Commission on March 1, 1999
Registration No. 333-72453
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No.1
to
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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Household Finance Corporation
(Exact name of registrant as specified in its charter)
Delaware 36-1239445
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
2700 Sanders Road
Prospect Heights, Illinois 60070
(847) 564-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Patrick D. Schwartz, Esq.
Associate General Counsel and Assistant Secretary
Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
(847) 564-6301
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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With a copy to:
(Underwriter's/Agent's Counsel)
Scott N. Gierke, Esq.
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
(312) 984-7521
Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a) may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to buy these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 1, 1999
Household Finance Corporation
$6,050,000,000
Debt Securities
and
Warrants to Purchase Debt Securities
-----------
Household Finance Corporation may sell at one or more times up to
$6,050,000,000 of its debt securities and warrants to purchase debt securities.
We will provide specific terms of the securities which we may offer at any time
in supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
-----------
The date of this Prospectus is , 1999.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission ("SEC") utilizing a "shelf" registration
process. Under this process, we may sell any combination of the securities
described in this prospectus in one or more offerings up to a total dollar
amount of $6,050,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we offer to sell
securities, we will provide a supplement to this prospectus that will contain
specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement
together with the additional information described under the heading WHERE YOU
CAN FIND MORE INFORMATION. In this prospectus, the "Company" and "HFC" refer to
Household Finance Corporation.
WHERE YOU CAN FIND MORE INFORMATION
Household Finance Corporation files annual, quarterly and special reports
and other information with the SEC. You may read and copy any document filed by
HFC at the SEC's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. SEC filings are also available to
the public on the SEC's Internet web site at http:\\www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we file with the SEC later
will automatically update and supersede this information. We incorporate by
reference the HFC documents listed below and any future filings made by HFC
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, until we sell all of the securities.
. Annual Report on Form 10-K for the year ended December 31, 1997;
. Quarterly Reports on Forms 10-Q for the quarters ended March 31, June 30
and September 30, 1998;
. Current Reports on Forms 8-K dated February 12, April 7, June 2, June 30,
September 1 and November 16, 1998 and January 29 and February 5, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at: Household Finance Corporation, Office of the Secretary,
Prospect Heights, Illinois 60070, Telephone (847) 564-5000.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different or additional information.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed under the caption "Household Finance
Corporation" and elsewhere in this prospectus or in the information
incorporated by reference herein may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such information may involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or achievements of HFC
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
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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 (847) 564-5000). HFC is a
subsidiary of Household International, Inc. ("Household International").
HFC and its subsidiaries offer a diversified range of financial services.
The principal product of our consumer financial services business is the making
of cash loans, including home equity loans secured by first and second
mortgages, sales finance loans and other unsecured loans directly to consumers
in the United States. Loans are made through branch lending offices under the
brands "HFC" and "Beneficial", and through direct mail and telemarketing. We
also acquire portfolios of open-end and closed-end, secured and unsecured
loans.
We offer both MasterCard* and VISA* credit cards to residents throughout the
United States. We also purchase and service revolving charge card accounts
originated by merchants. These accounts result from consumer purchases of goods
and services from the originating merchant. We also directly originate closed-
end sales contracts.
A subsidiary of HFC also makes loans to non-prime borrowers for the purchase
of new and used vehicles. The loans are secured by the vehicles, which are
generally sold through franchised dealers.
Where applicable laws permit, we offer credit life and credit accident,
health and disability insurance to our customers. Such insurance is generally
written directly by, or reinsured with, one of our insurance affiliates.
On June 30, 1998, Household International completed the merger of Beneficial
Corporation ("Beneficial") with a subsidiary of Household International. Upon
completion of the Merger, substantially all of Beneficial's net assets were
contributed by Household International to HFC. The merger was accounted for as
a "pooling of interests" under generally accepted accounting principles and
accordingly, financial information of HFC incorporated by reference herein
includes the combined results of HFC and Beneficial.
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>
Year Ended December 31,
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1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
HFC and subsidiaries--calculated on income
from continuing operations............................ 1.32 1.61 1.57 1.41 1.51
</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 December 31, 1998
ratio has been negatively impacted by one-time merger and integration related
costs associated with the merger of Household International and Beneficial.
Excluding the merger and integration related costs, the December 31, 1998 ratio
would have been 1.81.
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* MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA USA, Inc., respectively.
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DESCRIPTION OF DEBT SECURITIES
HFC may offer, from time to time, one or more series of unsecured senior
notes ("Debt Securities") and warrants ("Warrants") to purchase Debt Securities
(the Debt Securities and Warrants being hereafter collectively called the
"Securities"). The Securities offered pursuant to this prospectus may have an
aggregate offering price up to U.S. $6,050,000,000, or the equivalent thereof
if any of the Securities are denominated in a foreign currency or a foreign
currency unit.
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any supplement to this
prospectus ("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. Unless
otherwise indicated in the applicable Prospectus Supplement, the Debt
Securities of each series will be issued 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 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
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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
Unless otherwise indicated in the Prospectus Supplement with respect to any
series of Offered Debt Securities, upon issuance, all 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 ("DTC" or the "Depositary") and registered in the name of Cede &
Co. (the Depositary's partnership nominee). Unless and until exchanged in whole
or in part for Offered Debt Securities in definitive form, no Global Security
may be transferred except as a whole by the Depositary to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
If so indicated in the Prospectus Supplement with respect to any series of
Offered Debt Securities, investors may elect to hold interests in Global
Securities through either the Depositary (in the United States) or Cedel Bank,
societe anonyme ("Cedel Bank"), or Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System ("Euroclear"), if they are
participants in such systems, or indirectly through organizations which are
participants in such systems. Cedel Bank and Euroclear will hold interests on
behalf of their participants through customers' securities accounts in Cedel
Bank's and Euroclear's names on the books of their respective depositaries,
which in turn will hold such interests in customers' securities accounts in the
depositaries' names on the books of the Depositary. Unless otherwise indicated
in the applicable Prospectus Supplement, Citibank, N.A. will act as depositary
for Cedel Bank and The Chase Manhattan Bank will act as depositary for
Euroclear (in such capacities, the "U.S. Depositaries").
So long as the Depositary, or its nominee, is a registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be considered
the sole owner or holder of Offered Debt Securities represented by such Global
Security for all purposes under the Indenture. Except as provided below, the
actual owners of Offered Debt Securities represented by a Global Security (the
"Beneficial Owner") will not be entitled to have the Offered Debt Securities
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of the Offered Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the applicable Indenture, including for purposes of receiving any reports
delivered by the Company or the applicable Trustee pursuant to such Indenture.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of the Depositary and, if such person is not a
participant of the Depositary (a "Participant"), on the procedures of the
Participant through which such person owns its interest, to exercise any rights
of a holder under the applicable Indenture. The Company understands that under
existing industry practices, in the event that the Company requests any action
of holders or that an owner of a beneficial interest which a holder is entitled
to give or take under an Indenture, the Depositary would authorize the
Participants holding the relevant beneficial interests to give or take such
action, and such Participants would authorize Beneficial Owners owning through
such
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Participants to give or take such action or would otherwise act upon the
instructions of Beneficial Owners. Conveyance of notices and other
communications by the Depositary to Participants, by Participants to Indirect
Participants, as defined below, and by Participants and Indirect Participants
to Beneficial Owners will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to time.
If (x) 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, (y) the Company executes and delivers to a Trustee a Company Order to the
effect that Global Securities shall be exchangeable or (z) an Event of Default
(as defined herein) has occurred and is continuing with respect to Offered Debt
Securities, the Global Securities will be exchangeable for Offered Debt
Securities in definitive form of like tenor and of an equal aggregate principal
amount, in denominations of $1,000 and integral multiples thereof. Such
definitive Offered Debt Securities shall be registered in such name or names as
the Depositary shall instruct the applicable Trustee. It is expected that such
instructions may be based upon directions received by the Depositary from
Participants with respect to ownership of beneficial interests in such Global
Securities.
The following is based on information furnished by DTC:
DTC will act as securities depositary for Offered Debt Securities. Offered
Debt Securities will be issued as fully registered notes registered in the name
of Cede & Co. (DTC's partnership nominee). One or more fully registered Global
Securities will be issued for the Offered Debt Securities in the aggregate
principal amount of such issue, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities that its Participants deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants of DTC ("Direct Participants") include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its Direct Participants and by The
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to DTC's system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Securities and
Exchange Commission.
Purchases of Offered Debt Securities under DTC's system must be made by or
through Direct Participants, which will receive a credit for Offered Debt
Securities on DTC's records. The ownership interest of each Beneficial Owner is
in turn to be recorded on the records of Direct Participants and Indirect
Participants. Beneficial Owners will not receive written confirmation from DTC
of their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct Participants or Indirect
Participants through which such Beneficial Owner entered into the transaction.
Transfers of ownership interests in Offered Debt Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Offered Debt Securities, except as provided above.
To facilitate subsequent transfers, all Offered Debt Securities deposited
with DTC are registered in the name of DTC's partnership nominee, Cede & Co.
The deposit of Offered Debt Securities with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of Offered Debt Securities. DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Notes are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
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Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC, nor Cede & Co. will consent or vote with respect to Offered
Debt Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
Company as soon as possible after the applicable record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts Offered Debt Securities are credited on the applicable record
date (identified in a listing attached to the Omnibus Proxy).
Principal and/or interest payments on Offered Debt Securities will be made
in immediately available funds to DTC. DTC's practice is to credit Direct
Participants' accounts on the applicable payment date in accordance with their
respective holdings shown on the Depositary's records unless DTC has reason to
believe that it will not receive payment on such date. Payments by Participants
to Beneficial Owners will be governed by standing instructions and customary
practices, as is 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 Participant and not of DTC, any Trustee or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and/or interest to DTC is the responsibility of the
Company or the applicable Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct
Participants and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to Offered Debt Securities at any time by giving reasonable notice to
the Company or the applicable Trustee. Under such circumstances, in the event
that a successor securities depositary is not obtained, Offered Debt Security
certificates are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
Offered Debt Security certificates will be printed and delivered.
Cedel Bank advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedel Bank holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedel Bank provides
to Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel Bank interfaces with domestic
markets in several countries. As a professional depositary, Cedel Bank is
subject to regulation by the Luxembourg Monetary Institute. Cedel Participants
are recognized financial institutions around the world, including underwriters,
securities brokers and dealers, trust companies, clearing corporations and
certain other organizations and may include the Underwriters. Indirect access
to Cedel Bank is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Cedel Participant either directly or indirectly.
Distributions with respect to Offered Debt Securities held beneficially
through Cedel Bank will be credited to cash accounts of Cedel Participants in
accordance with its rules and procedures, to the extent received by the U.S.
Depositary for Cedel Bank.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in
several
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countries. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euro-clear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator, not the Cooperative. The Cooperative
establishes policy for Euroclear on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to Euroclear is also available to other firms
that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities
and cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Offered Debt Securities held beneficially
through Euroclear will be credited to the cash accounts of Euroclear
Participants in accordance with the Terms and Conditions, to the extent
received by the U.S. Depositary for Euroclear.
Global Clearance and Settlement Procedures
Initial settlement for Offered Debt Securities will be made in immediately
available funds. Secondary market trading between DTC Participants will occur
in the ordinary way in accordance with the Depositary's rules and will be
settled in immediately available funds using the Depositary's Same-Day Funds
Settlement System. If and to the extent the Prospectus Supplement with respect
to any series of Debt Securities indicates that investors may elect to hold
interests in Offered Debt Securities through Cedel Bank or Euroclear, secondary
market trading between Cedel Participants and/or Euroclear Participants will
occur in the ordinary way in accordance with the applicable rules and operating
procedures of Cedel Bank and Euroclear and will be settled using the procedures
applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depositary on the one hand, and directly or indirectly through
Cedel or Euroclear Participants, on the other, will be effected in the
Depositary in accordance with the Depositary rules on behalf of the relevant
European international clearing system by its U.S. Depositary; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
U.S. Depositary to take action to effect final settlement on its behalf by
delivering or receiving Offered Debt Securities in the Depositary, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to the Depositary. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositary.
Because of time-zone differences, credits of Offered Debt Securities
received in Cedel Bank or Euroclear as a result of a transaction with a DTC
Participant will be made during subsequent securities settlement
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processing and will be credited the business day following the Depositary
settlement date. Such credits or any transactions in Offered Debt Securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such business day. Cash received in Cedel Bank or
Euroclear as a result of sales of Offered Debt Securities by or through a Cedel
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the Depositary settlement date but will be available in the
relevant Cedel Bank or Euroclear cash account only as of the business day
following settlement in the Depositary.
Although the Depositary, Cedel Bank and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of Offered Debt
Securities among participants of the Depositary, Cedel Bank and Euroclear, they
are under no obligation to perform or continue to perform such procedures and
such procedures may be discontinued at any time.
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 U.S. Bank Trust National Association, The Bank of New York, The
First National Bank of Chicago, Harris Trust and Savings Bank, FMB Bank, 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 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
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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 an
Indenture dated as of March 15, 1990, between HFC and Harris Trust and Savings
Bank, as Trustee (the "Indenture 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 Chicago, Illinois; 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
December 31, 1998, the aggregate amount of the outstanding senior indebtedness
of HFC was approximately $27.2 billion, including the impact of the Beneficial
merger. 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
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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 Indenture 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. (Indenture 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. (Indenture for
Senior Subordinated Debt Securities--Section 3.08)
Concerning the Trustee
Harris Trust and Savings Bank is trustee under other indentures of HFC under
which certain of HFC's outstanding senior subordinated debt securities have
been issued and under which HFC senior debt securities may be issued. HFC
maintains banking relationships with Harris Trust and Savings Bank. Harris
Trust and Savings Bank, 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
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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--Section 6.03, Indenture 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--Section 11.02, Indenture 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 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--Section 11.01, Indenture 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
Provision--Section 10.02, Indenture 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
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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--Sections 3.05
and 7.01, Indenture for Senior Subordinated Debt Securities--Sections 3.05 and
7.01)
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--Section 7.02, Indenture 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--Section 7.13, Indenture 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--Section 8.02, Indenture for Senior Subordinated Debt Securities--
Section 8.02)
Holders of Debt Securities may not enforce an Indenture except as provided
therein. (Standard Provisions--Section 7.07, Indenture 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--Section
7.12, Indenture 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--Section 8.03(e), Indenture 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
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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.
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.
CERTAIN UNITED STATES TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of an Offered Debt Security will generally be subject to
the withholding of United States federal income tax at rates up to 31% unless
one of the following steps is taken to obtain an exemption from or reduction of
the tax:
Exemption for Non-United States persons (current IRS Form W-8 or new IRS
Form W-8BEN). A beneficial owner of an Offered Debt Security that is a non-
United States person (other than certain persons that
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are related to the Company through stock ownership as described in clauses (x)
(a) and (b) of Paragraph (i) under "United States Taxation of Non-United States
Persons--Income and Estate Tax") can obtain an exemption from the withholding
of tax by providing a properly completed IRS Form W-8 (Certificate of Foreign
Status) or IRS Form W-8BEN (Certificate of Foreign Status of Beneficial Owner
for United States Tax Withholding). Special rules may apply in the case of
foreign partnerships.
Exemption for Non-United States persons with effectively connected income
(current IRS Form 4224 or new IRS Form W-8ECI). A beneficial owner of an
Offered Debt Security that is a non-United States person, including a non-
United States corporation or bank with a United States branch, that conducts a
trade or business in the United States with which interest income on an Offered
Debt Security is effectively connected, can obtain an exemption from the
withholding of tax by providing a properly completed IRS Form 4224 (Exemption
from Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States or IRS Form W-8ECI (Certificate of
Foreign Person's Claim for Exemption From Withholding on Income Effectively
Connected With the Conduct of a Trade or Business in the United States).
Exemption or reduced rate for Non-United States persons entitled to the
benefits of a treaty (current IRS Form 1001 or new IRS Form W-8BEN). A
beneficial owner of an Offered Debt Security that is a non-United States person
entitled to the benefits of an income tax treaty to which the United States is
a party can obtain an exemption from or reduction of the withholding of tax
(depending on the terms of the treaty) by providing a properly completed IRS
Form 1001 (Ownership, Exemption or Reduced Rate Certificate) or IRS Form W-8BEN
(Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding).
Exemption for United States persons (IRS Form W-9). A beneficial owner of an
Offered Debt Security that is a United States person can obtain a complete
exemption from the withholding of tax by providing a properly completed IRS
Form W-9 (Request for Taxpayer Identification Number and Certification).
United States federal income tax reporting procedure. A beneficial owner of
an Offered Debt Security, or, in situations currently addressed by IRS Forms
1001 and 4224, the beneficial owner or its agent, is required to submit the
appropriate IRS Form under applicable procedures to the person through which
the owner directly holds the Offered Debt Security. For example, if the
beneficial owner is listed directly on the books of Euroclear or Cedel Bank as
the holder of the Offered Debt Security, the IRS Form must be provided to
Euroclear or Cedel Bank, as the case may be. Each other person through which an
Offered Debt Security is held must submit, on behalf of the beneficial owner,
the IRS Form (or in certain cases a copy thereof) under applicable procedures
to the person through which it holds the Offered Debt Security, until the IRS
Form is received by the United States person who would otherwise be required to
withhold United States federal income tax from interest on the Offered Debt
Security. For example, in the case of an Offered Debt Security held through
Euroclear or Cedel Bank, the IRS Form (or a copy thereof) must be received by
the U.S. Depositary of such clearing agency. Applicable procedures include
additional certification requirements, described in clause (x) (d) (B) of
paragraph (i) under "United States Taxation of Non-United States Persons--
Income and Estate Tax", if a beneficial owner of the Offered Debt Security
provides an IRS Form W-8 to a securities clearing organization, bank or other
financial institution that holds the Offered Debt Security on its behalf.
Regulations recently issued by the IRS, which are generally proposed to
become effective for payments made after December 31, 1999, make certain
modifications to the certification procedures applicable to non-United States
persons, including replacing the current forms listed above with the new IRS
Form W-8 series listed above and providing special rules for foreign
partnerships. Withholding agents are authorized to use the new forms prior to
December 31, 1999. Prospective investors should consult their tax advisors
regarding the certification requirements for non-United States persons.
Each holder of an Offered Debt Security should be aware that if it does not
properly provide the required IRS Form, or if the IRS Form (or, if permissible,
a copy of such form) is not properly transmitted to and received by the United
States person otherwise required to withhold United States federal income tax,
interest
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on the Offered Debt Security may be subject to withholding and the holder
(including the beneficial owner) will not be entitled to any additional amounts
from the Company as provided for in connection with any series of Offered Debt
Securities and as described in the applicable Prospectus Supplement with
respect to such withholding. Such withholding, however, may in certain
circumstances be allowed as a refund or as a credit against such holder's
United States federal income tax. The foregoing does not deal with all aspects
of federal income tax withholding that may be relevant to non-United States
holders of the notes. Investors are advised to consult their own tax advisors
for specific advice concerning the ownership and disposition of Offered Debt
Securities.
UNITED STATES TAXATION OF NON-UNITED STATES PERSONS
The following summary describes the principal United States federal income
and estate tax consequences applicable to beneficial owners of the Offered Debt
Securities who are non-United States persons. The following discussion may not
be applicable to a particular series of Offered Debt Securities depending on
the terms and conditions established for such Offered Debt Securities in the
Prospectus Supplement. Any special United States federal income and estate tax
consequences to non-United States persons (and, if necessary, to United States
persons) not described herein will be described in the Prospectus Supplement.
Income and Estate Tax
In the opinion of Sidley & Austin, special tax counsel to the Company, under
United States federal tax law as of the date of this Prospectus, and subject to
the discussion of backup withholding below:
(i) payments of principal and interest on an Offered Debt Security that
is beneficially owned by a non-United States person will not be subject to
the withholding of United States federal income tax; provided, that in the
case of interest, (x) (a) the beneficial owner does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (b) the beneficial owner
is not a controlled foreign corporation that is related to the Company
through stock ownership, (c) the beneficial owner of the Offered Debt
Security is not a bank receiving interest on an Offered Debt Security as
described in Section 881 (c) (3) (A) of the Code and (d) either (A) the
beneficial owner of the Offered Debt Security certifies to the person
otherwise required to withhold United States federal income tax from such
interest, under penalties of perjury, that it is not a United States person
and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the Offered Debt Security certifies to the person
otherwise required to withhold United States federal income tax from such
interest, under penalties of perjury, that such statement has been received
from the beneficial owner by it or by a financial institution between it
and the beneficial owner and furnishes the payor with a copy thereof; (y)
the beneficial owner is entitled to the benefits of an income tax treaty
under which the interest is exempt from the withholding of United States
federal income tax and the beneficial owner of the Offered Debt Security or
such owner's agent provides an IRS Form 1001 or IRS Form W-8BEN claiming
the exemption; or (z) the beneficial owner conducts a trade or business in
the United States to which the interest is effectively connected and the
beneficial owner of the Offered Debt Security or such owner's agent
provides an IRS Form 4224 or IRS Form W-8ECI; provided that in each such
case, the relevant certification or IRS Form is delivered pursuant to
applicable procedures and is properly transmitted to the person otherwise
required to withhold United States federal income tax, and none of the
persons receiving the relevant certification or IRS Form has actual
knowledge that the certification or any statement on the IRS Form is false;
(ii) a non-United States person will not be subject to United States
federal income tax on any gain realized on the sale, exchange or redemption
of an Offered Debt Security unless the gain is effectively connected with
the beneficial owner's trade or business in the United States or, in the
case of an individual, the holder is present in the United States for 183
days or more in the taxable year in which the sale, exchange or redemption
occurs and certain other conditions are met; and
16
<PAGE>
(iii) an Offered Debt Security owned by an individual who at the time of
death is not a citizen or resident of the United States will not be subject
to United States federal estate tax as a result of such individual's death
if the individual does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of the Company
entitled to vote and the income on the Offered Debt Security would not have
been effectively connected with a U.S. trade or business of the individual.
Interest on an Offered Debt Security that is effectively connected with the
conduct of a trade or business in the United States by a holder of an Offered
Debt Security who is a non-United States person, although exempt from the
withholding of United States income tax, may be subject to United States income
tax as if such interest was earned by a United States person.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to payments of
principal and interest made on an Offered Debt Security and the proceeds of the
sale of an Offered Debt Security within the United States to non-corporate
holders of the Offered Debt Securities, and "backup withholding" at a rate of
31% will apply to such payments if the holder fails to provide an accurate
taxpayer identification number in the manner required or to report all interest
and dividends required to be shown on its federal income tax returns.
Information reporting on IRS Form 1099 and backup withholding will not apply
to payments made by the Company or a paying agent to a non-United States person
on an Offered Debt Security if, in the case of interest, the IRS Form described
in clause (y) or (z) in paragraph (i) under "Income and Estate Tax" has been
provided under applicable procedures, or, in the case of interest or principal,
the certification described in clause (x) (d) in paragraph (i) under "Income
and Estate Tax" and a certification that the beneficial owner satisfies certain
other conditions have been supplied under applicable procedures, provided that
the payor does not have actual knowledge that the certifications are incorrect.
Payments of the proceeds from the sale of an Offered Debt Security made to
or through a foreign office of a broker will not be subject to information
reporting or backup withholding, except that if the broker is a United States
person, a controlled foreign corporation for United States tax purposes or a
foreign person 50% or more of whose gross income is effectively connected with
a United States trade or business for a specified three-year period (or,
effective for payments made after December 31, 1999, a United States branch of
a foreign bank or foreign insurance company or a foreign partnership controlled
by United States persons or engaged in a United States trade or business),
information reporting may apply to such payments. Payments of the proceeds from
the sale of an Offered Debt Security to or through the United States office of
a broker are subject to information reporting and backup withholding unless the
holder or beneficial owner certifies that it is a non-United States person and
that it satisfies certain other conditions or otherwise establishes an
exemption from information reporting and backup withholding.
Regulations recently issued by the IRS, which are currently proposed to
become effective for payments made after December 31, 1999, make certain
modifications to the certification procedures applicable to non-United States
persons. Prospective investors should consult their tax advisors regarding the
certification requirements for non-United States persons.
Backup withholding is not a separate tax, but is allowed as a refund or
credit against the holder's United States federal income tax, provided the
necessary information is furnished to the Internal Revenue Service.
Interest on an Offered Debt Security that is beneficially owned by a non-
United States person will be reported annually on IRS Form 1042-S, which must
be filed with the Internal Revenue Service and furnished to such beneficial
owner.
17
<PAGE>
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 will set 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 will describe 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 will be named in the
Prospectus Supplement relating to such offering, and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be 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.
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
18
<PAGE>
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 HFC 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), PTCE 95-60 (an exemption for certain transactions
involving life insurance general accounts), PTCE 96-23 (an exemption for
certain transactions determined by in-house investment managers), 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.
LEGAL OPINIONS
The legality of the Offered Securities will be passed upon for HFC by John
W. Blenke, Vice President--Corporate Law for Household International, Inc., the
parent of HFC. Sidley & Austin, Chicago, Illinois has acted as special tax
counsel to HFC in connection with tax matters related to the issuance of Debt
Securities. Certain legal matters will be passed upon for underwriters and
agents by McDermott, Will & Emery, Chicago, Illinois. 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.
EXPERTS
The financial statements and schedules of HFC and its subsidiaries
incorporated by reference in this Prospectus, to the extent and for the periods
indicated in its reports, have been audited by Arthur Andersen LLP, independent
public accountants, and are incorporated by reference herein in reliance upon
the authority of said firm as experts in giving said reports.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. Exhibits.
<TABLE>
<C> <S>
1 Form of Underwriting Agreement for Debt Securities and Warrants to
Purchase Debt Securities. (Incorporated by reference from Exhibit 1 to
HFC's Registration Statement on Form S-3 (No. 333-60543)).
4.1 Standard Multiple-Series Indenture Provisions for Senior Debt
Securities dated as of June 1, 1992. (Incorporated herein by reference
from Exhibit 4(b) to HFC's Registration Statement on Form S-3 (No. 33-
48854)).
4.2 Indenture for Senior Subordinated Debt Securities, dated as of March
15, 1990, between HFC and Harris Trust and Savings Bank, as Trustee.
(Incorporated herein by reference from Exhibit 4(e) to HFC's
Registration Statement on Form S-3 (No. 33-38955)).
4.3 Indenture for Senior Debt Securities between HFC and U.S. Bank Trust
National Association (formerly known as First Trust of Illinois,
National Association, successor in interest to Bank of America
Illinois, formerly known as Continental Bank, National Association),
as Trustee, dated as of October 1, 1992. (Incorporated herein by
reference from Exhibit 4(d) to HFC's Registration Statement on Form S-
3 (No. 33-55043)).
4.4 Indenture for Senior Debt Securities, dated as of November 1, 1994,
between HFC and The Bank of New York, successor in interest to
NationsBank of Tennessee, as Trustee. (Incorporated by reference from
Exhibit 4(e) to HFC's Registration Statement on Form S-3 (No. 33-
64175)).
4.5 Indenture for Senior Debt Securities, dated as of April 1, 1995,
between HFC and The First National Bank of Chicago, as Trustee.
(Incorporated by reference from Exhibit 4(f) to HFC's Registration
Statement on Form S-3 (No. 33-64175)).
4.6 Indenture for Senior Debt Securities, dated as of October 15, 1998,
between HFC and Harris Trust and Savings Bank, as Trustee.
4.7 Indenture for Senior Debt Securities, dated as of September 15, 1998,
between HFC and FMB Bank (formerly known as The First National Bank of
Maryland), as Trustee.
4.8 Form of Indenture with respect to Senior Debt Securities.
(Incorporated by reference from Exhibit 4.8 to HFC's Registration
Statement on Form S-3 (No. 333-60543)).
4.9 Forms of Warrant Agreement, including forms of Warrant Certificate.
(Incorporated by reference from Exhibit 4.9 to HFC's Registration
Statement on Form S-3 (No. 333-60543)).
5 Opinion and Consent of Mr. J. W. Blenke, Vice President--Corporate Law
and Assistant Secretary of Household International, Inc.
8 Opinion and consent of Sidley & Austin as to tax matters.
12 Statement on the Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Arthur Andersen LLP, Certified Public Accountants.
23.2 Consent of Mr. J. W. Blenke, Vice President-Corporate Law and
Assistant Secretary of Household International, Inc., is contained in
his opinion (Exhibit 5).
23.3 Consent of Sidley & Austin is contained in their opinion (Exhibit 8).
24 Power of Attorney (filed previously).
25.1 Statement of eligibility and qualification of The First National Bank
of Chicago.
25.2 Statement of eligibility and qualification of Harris Trust and Savings
Bank.
25.3 Statement of eligibility and qualification of U.S. Bank Trust National
Association.
25.4 Statement of eligibility and qualification of The Bank of New York.
25.5 Statement of eligibility and qualification of FMB Bank.
</TABLE>
- --------
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Prospect Heights, and
State of Illinois, on the 1st day of March, 1999.
Household Finance Corporation
*
By: _________________________________
G.D. Gilmer
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-3 has been signed below by the
following persons in the capacities indicated on the 1st day of March, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* President and Chief Executive Officer,
___________________________________________ Director
(G.D. Gilmer)
* Vice President--Chief Financial Officer,
___________________________________________ Chief Accounting Officer, Director
(D.A. Schoenholz)
* Director
___________________________________________
(W.F. Aldinger)
* Director
___________________________________________
(J. A. Vozar)
</TABLE>
<TABLE>
<S> <C>
*By: /s/ Patrick D. Schwartz
___________________________________________
(Patrick D. Schwartz)
Attorney-in-fact
</TABLE>
The Registrant reasonably believes that the security rating to be assigned
to the Securities registered hereunder will make the Securities "investment
grade securities" pursuant to Transaction Requirement B.2 of Form S-3.
II-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Document Description
------- --------------------
<C> <S> <C>
1 Form of Underwriting Agreement for Debt Securities and
Warrants to Purchase Debt Securities (Incorporated by
reference from Exhibit 1 to HFC's Registration Statement on
Form S-3 (No. 333-60543)).....................................
4.1 Standard Multiple-Series Indenture Provisions for Senior Debt
Securities dated as of June 1, 1992. (Incorporated herein by
reference from Exhibit 4(b) to HFC's Registration Statement on
Form S-3 (No. 33-48854))......................................
4.2 Indenture for Senior Subordinated Debt Securities, dated as of
March 15, 1990, between HFC and Harris Trust and Savings Bank,
as Trustee. (Incorporated herein by reference from Exhibit
4(e) to HFC's Registration Statement on Form S-3 (No. 33-
38955)).......................................................
4.3 Indenture for Senior Debt Securities between HFC and U.S. Bank
Trust National Association (formerly known as First Trust of
Illinois, National Association, successor in interest to Bank
of America Illinois, formerly known as Continental Bank,
National Association), as Trustee, dated as of October 1,
1992. (Incorporated herein by reference from Exhibit 4(d) to
HFC's Registration Statement on Form S-3 (No. 33-55043))......
4.4 Indenture for Senior Debt Securities, dated as of November 1,
1994, between HFC and The Bank of New York, successor in
interest to NationsBank of Tennessee, as Trustee.
(Incorporated by reference from Exhibit 4(e) to HFC's
Registration Statement on Form S-3 (No. 33-64175))............
4.5 Indenture for Senior Debt Securities, dated as of April 1,
1995, between HFC and The First National Bank of Chicago, as
Trustee. (Incorporated by reference from Exhibit 4(f) to HFC's
Registration Statement on Form S-3 (No. 33-64175))............
4.6 Indenture for Senior Debt Securities, dated as of October 15,
1998, between HFC and Harris Trust and Savings Bank, as
Trustee.......................................................
4.7 Indenture for Senior Debt Securities, dated as of September
15, 1998, between HFC and FMB Bank (formerly known as The
First National Bank of Maryland), as Trustee..................
4.8 Form of Indenture with respect to Senior Debt Securities
(Incorporated by reference from Exhibit 4.8 to HFC's
Registration Statement on Form S-3 (No. 333-60543))...........
4.9 Forms of Warrant Agreement, including forms of Warrant
Certificate (Incorporated by reference from Exhibit 4.9 to
HFC's Registration Statement on Form S-3 (No. 333-60543)).....
5 Opinion and Consent of Mr. J. W. Blenke, Vice President--
Corporate Law and Assistant Secretary of Household
International, Inc............................................
8 Opinion and consent of Sidley & Austin as to tax matters......
12 Statement on the Computation of Ratio of Earnings to Fixed
Charges.......................................................
23.1 Consent of Arthur Andersen LLP, Certified Public Accountants..
23.2 Consent of Mr. J. W. Blenke, Vice President-Corporate Law and
Assistant Secretary of Household International, Inc., is
contained in his opinion (Exhibit 5)..........................
23.3 Consent of Sidley & Austin is contained in their opinion
(Exhibit 8)...................................................
24 Power of Attorney (filed previously)..........................
25.1 Statement of eligibility and qualification of The First
National Bank of Chicago......................................
25.2 Statement of eligibility and qualification of Harris Trust and
Savings Bank..................................................
25.3 Statement of eligibility and qualification of U.S. Bank Trust
National Association..........................................
25.4 Statement of eligibility and qualification of The Bank of New
York..........................................................
25.5 Statement of eligibility and qualification of FMB Bank........
</TABLE>
II-3
<PAGE>
Exhibit 4.6
INDENTURE
FOR
SENIOR DEBT SECURITIES
dated as of October 15, 1998
This Indenture, dated as of the 15th day of October, 1998, between Household
Finance Corporation, a corporation duly organized and existing under the laws of
the state of Delaware (hereinafter called the "Company") and having its
principal office at 2700 Sanders Road, Prospect Heights, Illinois 60070, and
Harris Trust and Savings Bank (hereinafter called the "Trustee"), and having its
principal Corporate Trust Office at 111 West Monroe Street, Chicago, Illinois
60690.
WITNESSETH:
Whereas, the Company deems it necessary from time to time to borrow money for
its corporate purposes and to issue its debt securities therefor, and to that
end has duly authorized and directed the execution and delivery of this
Indenture to provide for one or more series of its unsecured debentures, notes,
or other evidence of indebtedness, issuable as provided herein; and
Whereas, all things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises and the purchase of Notes to be issued
hereunder by Holders thereof, it is mutually covenanted and agreed, for the
equal proportionate benefit of all Holders, as follows:
Article 1. Standard Provisions. All of the terms, conditions, covenants and
provisions contained in the Company's Standard Multiple-Series Indenture
Provisions for Senior Debt Securities dated as of June 1, 19992 (the
"Provisions"), a copy of which is attached hereto, are incorporated herein by
reference in their entirety and shall be deemed to be a part hereof to the same
extent as if such provisions had been set forth in full herein. All capitalized
terms which re used herein and not otherwise defined herein are defined in the
provisions and are used herein with the same meanings as in the Provisions. The
Provisions, together with this Indenture, are deemed to be the "Indenture".
<PAGE>
TESTIMONIUM
This Indenture may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this Indenture to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first written above.
Household Finance Corporation
By: /s/ John W. Blenke
--------------------
Title: Vice President
Attest:
/s/ Patrick D. Schwartz
- -----------------------
(Corporate Seal)
Harris Trust and Savings Bank
By: /s/ C. Potter
---------------------------
Title: Assistant Vice President
Attest:
/s/ C. K. Lebu
- --------------------
(Corporate Seal)
<PAGE>
Exhibit 4.7
INDENTURE
FOR
SENIOR DEBT SECURITIES
dated as of September 15, 1998
This Indenture, dated as of the 15th day of September, 1998, between Household
Finance Corporation, a corporation duly organized and existing under the laws of
the state of Delaware (hereinafter called the "Company"), and having its
principal office at 2700 Sanders Road, Prospect Heights, Illinois 60070, and The
First National Bank Of Maryland (hereinafter called the "Trustee"), and having
its principal Corporate Trust Office at 25 S. Charles Street, Baltimore,
Maryland 21201.
WITNESSETH:
Whereas, the Company deems it necessary from time to time to borrow money for
its corporate purposes and to issue its debt securities therefor, and to that
end has duly authorized and directed the execution and delivery of this
Indenture to provide for one or more series of its unsecured debentures, notes,
or other evidence of indebtedness, issuable as provided herein; and
Whereas, all things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises and the purchase of Notes to be issued
hereunder by Holders thereof, it is mutually covenanted and agreed, for the
equal proportionate benefit of all Holders, as follows:
Article 1. Standard Provisions. All of the terms, conditions, covenants and
provisions contained in the Company's Standard Multiple-Series Indenture
Provisions for Senior Debt Securities dated as of June 1, 1992 (the
"Provisions"), a copy of which is attached hereto, are incorporated herein by
reference in their entirety and shall be deemed to be a part hereof to the same
extent as if such provisions had been set forth in full herein. All capitalized
terms which re used herein and not otherwise defined herein are defined in the
provisions and are used herein with the same meanings as in the Provisions. The
Provisions, together with this Indenture, are deemed to be the "Indenture".
<PAGE>
TESTIMONIUM
This Indenture may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this Indenture to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first written above.
Household Finance Corporation
By: /s/ B. B. Moss, Jr.
----------------------
Title: Vice President and
Treasurer
Attest:
/s/Patrick D. Schwartz
- ---------------------------
Assistant Secretary
(Corporate Seal)
The First National Bank
of Maryland
By: /s/ Donald C. Hargadon
---------------------------
Title: Assistant Vice President
Attest:
/s/ Robert C. Brown
- -------------------
(Corporate Seal)
<PAGE>
March 1, 1999 Exhibit 5
---------
Household Finance Corporation
2700 Sanders Road
Prospect Heights, IL 60070
Re: Household Finance Corporation
Registration Statement on Form S-3
for $6 Billion of Debt Securities
and Warrants to Purchase Debt Securities
----------------------------------------
Gentlemen:
As Vice President-Corporate Law and Assistant Secretary of Household
International, Inc., the parent company of Household Finance Corporation
("HFC"), I am generally familiar with the proceedings in connection with HFC's
Registration Statement on Form S-3 (the "Registration Statement") in which
$6,000,000,000 aggregate principal amount of Debt Securities and Warrants to
Purchase Debt Securities of HFC are being registered. Each issuance of Debt
Securities constituting senior debt of HFC and will be issuable under one of
several Indentures, such Indentures being dated as of October 1, 1992 between
HFC and U.S. Bank Trust National Association, formerly known as First Trust of
Illinois, as Trustee, successor in interest to BankAmerica of Illinois, formerly
known as Continental Bank, (National Association), as Trustee (the "U.S. Bank
Indenture"), dated as of April 1, 1995 between HFC and The First National Bank
of Chicago, as Trustee (the "First Chicago Indenture"), dated as of November 1,
1994 between HFC and The Bank of New York, as Trustee, successor in interest to
NationsBank of Tennessee (the "Bank of New York Indenture"), dated as of
September 15, 1998 between HFC and The First National Bank of Maryland, as
Trustee (the "First Maryland Indenture"), and dated as of October 15, 1998
between HFC and Harris Trust and Savings Bank, as Trustee (the "Harris Senior
Indenture"). Debt Securities constituting senior subordinated debt of HFC will
be issuable under an Indenture dated as of March 15, 1990, between HFC and
Harris Trust and Savings Bank, as Trustee (the "Harris Subordinated Indenture").
The Warrants, if and where issued, will be issuable under a warrant agreement
between HFC and a national or state banking institution (the "Warrant
Agreement"). The
<PAGE>
foregoing Indentures, or forms thereof, and the forms of the Warrant Agreement
have been filed with the Securities and Exchange Commission (the "Commission")
as exhibits to the Registration Statement.
Based upon my review of the records and documents of HFC, I am of the opinion
that:
1. HFC is a corporation duly incorporated and validly existing under the laws
of the State of Delaware.
2. The First Trust Indenture, First Chicago Indenture, Bank of New York
Indenture, First Maryland Indenture, Harris Senior Indenture and Harris
Subordinated Indenture have been duly authorized, executed and delivered by
HFC, and constitute valid and legally binding instruments of HFC
enforceable in accordance with their terms, except as enforcement of the
provisions thereof may be limited by bankruptcy, insolvency, reorganization
or other laws relating to or affecting the enforcement of creditors' rights
or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3. The Warrant Agreement will, after being duly authorized, executed and
delivered by HFC, constitute a valid and legally binding instrument of HFC
enforceable in accordance with its terms, except as enforcement of the
provisions thereof may be limited by bankruptcy, insolvency, reorganization
or other laws relating to or affecting the enforcement of creditors' rights
or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4. When the issuance of the Debt Securities and the Warrants to Purchase Debt
Securities, as the case may be, has been duly authorized by appropriate
corporate action, and such Debt Securities and Warrants to Purchase Debt
Securities have been duly executed, authenticated, issued and delivered
against payment of the agreed consideration therefor in accordance with the
Indenture or the Warrant Agreement, and as described in the Registration
Statement, including the Prospectus and Prospectus Supplement, relating to
such Debt Securities and Warrants to Purchase Debt Securities, such Debt
Securities and Warrants to Purchase Debt Securities will be legally and
validly issued and will be the legal and binding obligations
<PAGE>
of HFC enforceable in accordance with their terms, except as enforcement of
the provisions thereof may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights or by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
I hereby consent to the use of my name and my opinion in the Prospectus and
Prospectus Supplement filed pursuant to Rule 424 of Regulation C of the
Securities Act of 1933, as amended (the "Act"), in connection with the
Registration Statement relating thereto initially filed with the Commission on
February 16, 1999, as amended by a filing on or about March 1, 1999, including
any references to my opinions set forth in the documents incorporated by
reference therein, and to the filing of this consent as an exhibit to the
Registration Statement. In giving such consent I do not admit that I am in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission thereunder.
Very truly yours,
/s/ John W. Blenke
<PAGE>
[LETTERHEAD OF SIDLEY & AUSTIN]
March 1, 1999
Household Finance Corporation
2700 Sanders Road
Prospect Heights, IL 60070
Dear Sirs:
Reference is made to the Registration Statement on Form S-3 (the
"Registration Statement") filed with the Securities and Exchange Commission by
Household Finance Corporation (the "Company") on March 1, 1999 and to the
prospectus (the "Prospectus") included in such Registration Statement relating
to the issuance of up to $6,050,000,000 of Debt Securities (the "Debt
Securities") and Warrants to purchase the Debt Securities (the "Warrants").
We are special tax counsel to the Company in connection with the
Prospectus. The statements in the Prospectus under the heading "Certain United
States Tax Documentation Requirements" and "United States Taxation of Non-United
States Persons," to the extent they constitute matters of federal tax law or
legal conclusions with respect thereto, have been prepared or reviewed by us
and, in our opinion, are correct in all material respects. In rendering this
opinion, we have relied without independent investigation on the description of
the Debt Securities set forth in the Prospectus. We hereby consent to the
reference to this firm in the Supplement under the headings "United States
Taxation of Non-United States Persons," and "Legal Opinions."
We assume no obligation to update or supplement this letter to reflect any
facts or circumstances which may hereafter come to our attention with respect to
the opinion expressed above, including any changes in applicable law which may
hereafter occur.
Very truly yours,
/s/ Sidley & Austin
<PAGE>
EXHIBIT 12
HOUSEHOLD FINANCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Income from continuing operations $ 304.9 $ 767.1 $ 650.0 $ 412.3 $ 434.1
Income taxes 361.8 391.9 358.1 295.3 252.0
--------- --------- --------- --------- ---------
Income before income taxes 666.7 1,159.0 1,008.1 707.6 686.1
Fixed charges:
Interest expense/1/ 2,009.3 1,863.0 1,727.9 1,675.9 1,330.2
Interest portion of rentals/2/ 48.1 46.8 45.2 37.1 24.9
--------- --------- --------- --------- ---------
Total fixed charges 2,057.4 1,909.8 1,773.1 1,713.0 1,355.1
Total earnings as defined 2,724.1 $ 3,068.8 $ 2,781.2 $ 2,420.6 $ 2,041.2
--------- --------- --------- --------- ---------
Ratio of earnings to fixed charges 1.32 1.61 1.57 1.41 1.51
--------- --------- --------- --------- ---------
Preferred stock dividends/3/ - $ 14.6 $ 19.4 $ 21.3 $ 19.6
--------- --------- --------- --------- ---------
Ratio of earnings to combined fixed
charges and preferred stock
dividends/4/ 1.32 1.59 1.55 1.40 1.48
--------- --------- --------- --------- ---------
Ratio of earnings to combined fixed
charges and preferred stock
dividends, excluding merger and
integration related costs 1.81 - - - -
--------- --------- --------- --------- ---------
</TABLE>
/1/ For financial statement purposes, these amounts are reduced for income
earned on temporary investment of excess funds, generally resulting from
over-subscriptions of commercial paper issuances.
/2/ Represents one-third of rentals, which approximates the portion representing
interest.
/3/ Preferred stock dividends are grossed up to their equivalents.
/4/ The 1998 ratios have been negatively impacted by the one-time merger and
integration related costs associated with our merger with Beneficial
Corporation. As a result, ratios excluding these costs have also been
presented for comparative purposes.
<PAGE>
[ARTHUR ANDERSEN LLP LETTERHEAD]
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Household Finance Corporation
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement on Form S-3 relating to the offering
of up to $6,000,000,000 of Debt Securities and Warrants to Purchase Debt
Securities, filed with the Securities and Exchange Commission on February 16,
1999, as amended by Amendment No. 1 thereto, to be filed on or about March 1,
1999, of our report dated June 30, 1998, included in Household Finance
Corporation's Form 8-K dated September 1, 1998, and to all references to our
Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 1, 1999
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
---------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
-----------------------------------
Household Finance Corporation
(Exact name of obligor as specified in its charter)
Delaware 36-1239445
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2700 Sanders Road
Prospect Heights, Ilinois 60070
(Address of principal executive offices) (Zip Code)
Debt Securities
(Title of Indenture Securities)
<PAGE>
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of Currency, Washington, D.C.; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System, Washington D.C..
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations With the Obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a part of this
Statement of Eligibility.
1. A copy of the articles of association of the trustee now in effect.*
2. A copy of the certificates of authority of the trustee to commence
business.*
3. A copy of the authorization of the trustee to exercise corporate
trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago and State of Illinois, on the 24th day of February,
1999.
The First National Bank of Chicago,
Trustee
By /s/ Steven M. Wagner
--------------------------------
Steven M. Wagner
First Vice President
* Exhibit 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 16 of the Form T-1 of The First National Bank of
Chicago, filed as Exhibit 25 to the Registration Statement on Form S-3 of U S
WEST Capital Funding, Inc., filed with the Securities and Exchange Commission on
May 6, 1998 (Registration No. 333-51907-01).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
February 24, 1999
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Household Finance
Corporation and The First National Bank of Chicago, as Trustee, the undersigned,
in accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, hereby consents that the reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
The First National Bank of Chicago
/s/ Steven M. Wagner
By: ______________________________________
Steven M. Wagner
First Vice President
4
<PAGE>
EXHIBIT 7
<TABLE>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for September 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
Dollar Amounts in thousands C400
RCFD BIL MIL THOU ----
---- ------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin(1).................................. 0081 4,898,646 1.a
b. Interest-bearing balances(2)........................................................... 0071 4,612,143 1.b
2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A)............................. 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)........................... 1773 9,817,318 2.b
3. Federal funds sold and securities purchased under agreements to resell.................... 1350 6,071,229 3.
4. Loans and lease financing receivables: RCFD
a. Loans and leases, net of unearned income (from Schedule ----
RC-C).................................................................................. 2122 26,327,215 4.a
b. LESS: Allowance for loan and lease losses.............................................. 3123 412,850 4.b
c. LESS: Allocated transfer risk reserve.................................................. 3128 0 4.c
RCFD
d. Loans and leases, net of unearned income, allowance, and ----
reserve (item 4.a minus 4.b and 4.c)................................................... 2125 25,914,365 4.d
5. Trading assets (from Schedule RD-D)....................................................... 3545 6,924,064 5.
6. Premises and fixed assets (including capitalized leases).................................. 2145 731,747 6.
7. Other real estate owned (from Schedule RC-M).............................................. 2150 6,424 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M).. 2130 153,385 8.
9. Customers' liability to this bank on acceptances outstanding.............................. 2155 352,324 9.
10. Intangible assets (from Schedule RC-M).................................................... 2143 295,823 10.
11. Other assets (from Schedule RC-F)......................................................... 2160 2,193,803 11.
12. Total assets (sum of items 1 through 11).................................................. 2170 61,971,271 12.
</TABLE>
- ------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
Schedule RC-Continued
<TABLE>
<CAPTION>
Dollar Amounts in
Thousands
---------
<S> <C> <C> <C>
LIABILITIES
13. Deposits: RCON
a. In domestic offices (sum of totals of columns A and C ----
from Schedule RC-E, part 1).............................................................. 2200 20,965,124 13.a
(1) Noninterest-bearing(1)............................................................... 6631 9,191,662 13.a1
(2) Interest-bearing..................................................................... 6636 11,773,462 13.a2
RCFN
b. In foreign offices, Edge and Agreement subsidiaries, and ----
IBFs (from Schedule RC-E, part II)....................................................... 2200 15,912,956 13.b
(1) Noninterest bearing.................................................................. 6631 475,182 13.b1
(2) Interest-bearing..................................................................... 6636 15,437,774 13.b2
RCFN
14. Federal funds purchased and securities sold under agreements ----
to repurchase: RCFD 2800 4,245,925 14
15. a. Demand notes issued to the U.S. Treasury................................................. RCON 2840 359,381 15.a
b. Trading Liabilities (from Schedule RC-D)................................................. RCFD 3548 5,614,049 15.b
RCFD
16. Other borrowed money: ----
a. With original maturity of one year or less............................................... 2332 4,603,402 16.a
b. With original maturity of more than one year............................................. A547 328,001 16.b
c. With original maturity of more than three years.......................................... A548 324,984 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding..................................... 2920 352,324 18.
19. Subordinated notes and debentures........................................................... 3200 2,400,000 19.
20. Other liabilities (from Schedule RC-G)...................................................... 2930 1,833,935 20.
21. Total liabilities (sum of items 13 through 20).............................................. 2948 56,940,081 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus............................................... 3838 0 23.
24. Common stock................................................................................ 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock).................................... 3839 3,192,857 25.
26. a. Undivided profits and capital reserves................................................... 3632 1,614,511 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities................... 8434 27,815 26.b
27. Cumulative foreign currency translation adjustments......................................... 3284 (4,851) 27.
28. Total equity capital (sum of items 23 through 27)........................................... 3210 5,031,190 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)....................................................... 3300 61,971,271 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
<TABLE>
<S> <C> <C> <C>
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external auditors as Number
of any date during 1996..........................................................................RCFD 6724.... [N/A] M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- -------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
<PAGE>
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) ______
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Carolyn Potter, Harris Trust and Savings Bank,
311 West Monroe Street, Chicago, Illinois, 60606
312-461-2531 phone 312-461-3525 facsimile
(Name, address and telephone number for agent for service)
HOUSEHOLD FINANCE CORPORATION
(Name of obligor)
Delaware 36-1239445
(State of Incorporation) (I.R.S. Employer Identification No.)
2700 Sanders Road
Prospect heights, Illinois 60070
(Address of principal executive offices)
Debt Securities
(Title of indenture securities)
<PAGE>
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164 West
Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System,Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee is now in effect
which includes the authority of the trustee to commence business and to
exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in effect
and includes the authority of the Trustee to commence business and to
exercise corporate trust powers was filed in connection with the
Registration Statement of Louisville Gas and Electric Company, File No.
2-44295, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of Commercial Federal Corporation, File
No. 333-20711, and is incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 25th day of February, 1999.
HARRIS TRUST AND SAVINGS BANK
/s/ C. Potter
By: ___________________________
C. Potter
Assistant Vice President
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that
reports of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
HARRIS TRUST AND SAVINGS BANK
/s/ C. Potter
By: ___________________________
C. Potter
Assistant Vice President
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of December 31, 1998, as published in accordance with
a call made by the State Banking Authority and by the Federal Reserve Bank of
the Seventh Reserve District.
[HARRIS LOGO APPEARS HERE] HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on December 31, 1998, a state banking institution organized and
operating under the banking laws of this State and a member of the Federal
Reserve System. Published in accordance with a call made by the Commissioner of
Banks and Trust Companies of the State of Illinois and by the Federal Reserve
Bank of this District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency and coin..................... $ 1,435,233
Interest bearing balances............................................... $ 98,929
Securities:....................................................................
a. Held-to-maturity securities $ 0
b. Available-for-sale securities $ 5,295,498
Federal funds sold and securities purchased under agreements to resell $ 151,575
Loans and lease financing receivables:
Loans and leases, net of unearned income................................ $9,320,939
LESS: Allowance for loan and lease losses.............................. $ 108,280
----------------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b).................................................... $ 9,212,659
Assets held in trading accounts................................................ $ 252,881
Premises and fixed assets (including capitalized leases)....................... $ 271,540
Other real estate owned........................................................ $ 366
Investments in unconsolidated subsidiaries and associated companies............ $ 57
Customer's liability to this bank on acceptances outstanding................... $ 30,829
Intangible assets.............................................................. $ 257,627
Other assets................................................................... $ 1,093,599
-------------------------
TOTAL ASSETS $18,100,793
=========================
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
Deposits:
<S> <C> <C>
In domestic offices.......................................................... $10,270,499
Non-interest bearing.................................................... $3,410,568
Interest bearing........................................................ $6,859,931
In foreign offices, Edge and Agreement subsidiaries, and IBF's............... $935,609
Non-interest bearing.................................................... $69,215
Interest bearing........................................................ $866,394
Federal funds purchased and securities sold under agreements to repurchase in
domestic offices of the bank and of its Edge and Agreement subsidiaries, and
in IBF's:
Federal funds purchased & securities sold under agreements to repurchase....... $3,642,049
Trading Liabilities............................................................ 131,909
Other borrowed money:
a. With remaining maturity of one year or less................................ $1,107,125
b. With remaining maturity of more than one year.............................. $0
Bank's liability on acceptances executed and outstanding $30,829
Subordinated notes and debentures.............................................. $225,000
Other liabilities.............................................................. $424,376
----------------------
TOTAL LIABILITIES.............................................................. $16,767,396
======================
EQUITY CAPITAL
Common stock................................................................... $100,000
Surplus........................................................................ $608,116
a. Undivided profits and capital reserves..................................... $593,973
b. Net unrealized holding gains (losses) on available-for-sale securities..... $31,308
----------------------
TOTAL EQUITY CAPITAL........................................................... $1,333,397
======================
Total liabilities, limited-life preferred stock, and equity capital............ $18,100,793
======================
</TABLE>
I, Pamela Piarowski, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
PAMELA PIAROWSKI
1/27/99
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
RICHARD E. TERRY
Directors.
<PAGE>
EXHIBIT 25.3
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER
THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of
a Trustee Pursuant to Section 305(b)(2)___
_______________________________________________________
U.S. BANK TRUST NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
111 East Wacker Drive, Suite 3000 36-4046888
Chicago, Illinois 60601 I.R.S. Employer
(Address of principal executive offices) (Zip Code) Identification No.
Steven E. Charles
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Telephone (312) 228-9418
(Name, address and telephone number of agent for service)
Household Finance Corporation
(Exact name of obligor as specified in its charter)
Delaware 36-1239445
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2700 Sanders Road
Propsect Heights 60070
(Address of Principal Executive Offices) (Zip Code)
Debt Securities and Warrants to Purchase Debt Securities
(Title of the Indenture Securities)
================================================================================
<PAGE>
FORM T-1
--------
Item 1. GENERAL INFORMATION. Furnish the following information as to the
Trustee.
a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Washington, D.C.
b) Whether it is authorized to exercise corporate trust powers.
Yes
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
Trustee, describe each such affiliation.
None
Items 3-15 Not applicable because, to the best of Trustee's knowledge, the
Trustee is not a trustee under any other indenture under which any
other securities or certificates of interest or participation in
any other securities of the obligor are outstanding and there is
not, nor has there been, a default with respect to securities
issued under this indenture.
Item 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this
statement of eligibility and qualification.
1. A copy of the Articles of Association of the Trustee now in effect,
incorporated herein by reference to Exhibit 1 to Item 16 of Form
T-1, Registration No. 333-18235*
2. A copy of the certificate of authority of the Trustee to commence
business, incorporated herein by reference to Exhibit 2 to Item 16
of Form T-1, Registration No. 333-18235.*
3. A copy of the certificate of authority of the Trustee to exercise
corporate trust powers, incorporated herein by reference to Exhibit
3 to Item 16 of Form T-1, Registration No. 333-18235*
4. A copy of the existing bylaws of the Trustee, as now in effect,
incorporated herein by reference to Exhibit 4 to Item 16 of Form
T-1, Registration No. 333-18235*
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Trust
Indenture Act of 1939, incorporated herein by reference to Exhibit
6 of Form T-1, Registration No. 333-18235*
7. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority, filed herewith.
8. Not applicable.
9. Not applicable.
* See* at top of page 3
2
<PAGE>
* Exhibits thus designated are incorporated herein by reference to Exhibits
bearing identical numbers in Item 16 of the Form T-1 filed by the Trustee
with the Securities and Exchange Commission with the specific references
noted.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, U.S. BANK TRUST NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Chicago, State of Illinois on the 24th day
of February, 1999.
U.S. BANK TRUST NATIONAL ASSOCIATION
By: /s/ Steven E. Charles
-----------------------------------
Steven E. Charles
Vice President and Assistant Secretary
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
U.S. Bank Trust National Association Call Date: 12/31/1998 ST-BK: 17-1638 FFIEC 033
400 North Michigan Avenue Page RC- 1
Chicago, IL 60611 Vendor ID: D CERT: 34094 9
</TABLE>
Transit Number: 09600069
Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for December 31, 1998
All schedules are to reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC -- Balance sheet
<TABLE>
<CAPTION>
C200
Dollar Amount in Thousands
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions
(from Schedule RC-A): RCON
----
a. Noninterest-bearing balances and currency and coin (1)__ 0081.. 11,111 1.a
b. Interest-bearing balances (2)___________________________ 0071.. 48,890 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B,
column A)_______________________________________________ 1754.. 0 2.a
b. Available-for-sale securities (from Schedule RC-B,
column D)_______________________________________________ 1773.. 3,735 2.b
3. Federal funds sold and securities purchased under agreements
to resell___________________________________________________ 1350.. 0 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income RCON
----
(from Schedule RC-C)___________________ 2122.. 0 . . . . . . . . 4.a
b. LESS: Allowance for loan and lease
losses_________________________________ 3123.. 0 . . . . . . . . 4.b
c. LESS: Allocated transfer risk reserve__ 3128.. 0 . . . . . . . . 4.c
d. Loans and leases, net of unearned
income, allowance, and reserve (item
4.a minus 4.b and 4.c)__________________________________ 2125.. 0 4.d
5. Trading assets______________________________________________ 3545.. 0 5.
6. Premises and fixed assets (including capitalized leases)____ 2145.. 82 6.
7. Other real estate owned (from Schedule RC-M)________________ 2150.. 0 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)______________________________ 2130.. 0 8.
9. Customers' liability to this bank on acceptances outstanding 2155.. 0 9.
10. Intangible assets (from Schedule RC-M)_______________________ 2143.. 44,547 10.
11. Other assets (from Schedule RC-F)____________________________ 2160.. 2,739 11.
12. Total assets (sum of items 1 through 11)_____________________ 2170. 111,104 12.
- -------------
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
U.S. Bank Trust National Association Call Date: 12/31/1998 ST-BK: 17-1638 FFIEC 033
400 North Michigan Avenue Page RC-2
Chicago, IL 60611 Vendor ID: D CERT: 34094
</TABLE>
10
Transit Number: 09600069
Schedule RC-Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Liabilities
13. Deposits:
a. In domestic offices (sum of totals of RCON
----
columns A and C from Schedule RC-E)_________________________________________2200. . 0 13.a
RCON
----
(1) Noninterest-bearing (1)_______________________________6631. . 0 . . . . . . . 13.a.1
(2) Interest-bearing______________________________________6636. . 0 . . . . . . . 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs_______________ . . . . . . .
(1) Noninterest-bearing_____________________________________________________ . . . . . . .
(2) Interest-bearing________________________________________________________ . . . . . . .
14. Federal funds purchased and securities sold under agreements to repurchase_____2800. . 0 14.
15. a. Demand notes issued to the U.S. Treasury____________________________________2840. . 0 15.a
b. Trading liabilities_________________________________________________________3548. . 0 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less______________________________2332. . 0 16.a
b. With a remaining maturity of more than one year through three years________A547. . 0 16.b
c. With a remaining maturity of more than three years_________________________A548. . 0 16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding_______________________2920. . 0 18.
19. Subordinated notes and debentures (2)__________________________________________3200. . 0 19.
20. Other liabilities (from Schedule RC-G)_________________________________________2930. . 2,627 20.
21. Total liabilities (sum of items 13 through 20)_________________________________2948. . 2,627 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus__________________________________3838. . 0 23.
24. Common stock___________________________________________________________________3230. . 1,000 24.
25. Surplus (exclude all surplus related to preferred stock)_______________________3839. . 106,712 25.
26. a. Undividend profits and capital reserves_____________________________________3632. . 762 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities______8434. . 3 26.b
27. Cumulative foreign currency translation adjustments____________________________ . . . . .
28. Total equity capital (sum of items 23 through 27)______________________________3210. . 108,477 28.
29. Total liabilities and equity capital (sum of items 21 and 28)__________________3300. . 111,104 29.
</TABLE>
Memorandum
<TABLE>
<CAPTION>
<S> <C> <C> <C>
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes
the most comprehensive level of auditing work performed for the bank by independent
external auditors as of any date during 1997___________________________________6724. . N/A M.1
</TABLE>
1 = Independent audit of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company (but
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm (may be required by state charter-
ing authority)
4 = Directors' examination of the bank performed by other
external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external
auditors
6 = Compilation of the bank's financial statements by
external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- --------------
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
(2) Includes Limited Life preferred stock and related surplus.
<PAGE>
<TABLE>
<S> <C> <C> <C>
U.S. Bank Trust National Association Call Date: 12/31/1998 ST-BK: 17-1638 FFIEC 033
400 North Michigan Avenue
Chicago, IL 60611 Vendor ID: D Cert: 34094 Page RC- 3
</TABLE>
11
Transit Number: 09600069
Schedule RC-A -- Cash and Balances Due From Depository Institutions
Exclude assets held for trading. C205
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and coin: RCON
----
a. Cash items in process of collection and unposted debits___________________________0020. . 0 1.a
b. Currency and coin_________________________________________________________________0080. . 0 1.b
2. Balances due from depository institutions in the U.S.:
a. U.S. branches and agencies of foreign banks_______________________________________0083. . 0 2.a
b. Other commercial banks in the U.S. and other depository institutions in the U.S.__0085. . 60,001 2.b
3. Balances due from banks in foreign countries and foreign central banks:
a. Foreign branches of other U.S. banks______________________________________________0073. . 0 3.a
b. Other banks in foreign countries and foreign central banks________________________0074. . 0 3.b
4. Balances due from Federal Reserve Banks______________________________________________0090. . 0 4.
5. Total (sum of items 1 through 4) (must equal Schedule RC, sum of items 1.a and 1.b)__0010. . 60,001 5.
Memorandum Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
1. Noninterest-bearing balances due from commercial banks in the U.S. RCON
----
(included in items 2.a and 2.b above)________________________________________________0050. . 11,111 M.1
</TABLE>
<PAGE>
EXHIBIT 25.4
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
HOUSEHOLD FINANCE CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 36-1239445
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2700 Sanders Road
Prospect Heights, Illinois 60070
(Address of principal executive offices) (Zip code)
______________________
Debt Securities and Warrants to Purchase Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Name Address
- ----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed
with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1
filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-
1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 24th day of February, 1999.
THE BANK OF NEW YORK
By: /s/VAN K.BROWN
-------------------------------------
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
<PAGE>
IN WITNESS WHEREOF, THE BANK OF NEW YORK has caused this certificate to be
executed in its corporate name by an officer thereunto duly authorized.
Dated: February 24, 1999
THE BANK OF NEW YORK
/s/ Van K. Brown
By:________________________________
Name: Van K. Brown
Title: Assistant Vice President
<PAGE>
EXHIBIT 7
---------
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
ASSETS Dollar Amounts
in Thousands
Cash and balances due from depository
institutions:
<S> <C>
Noninterest-bearing balances and currency and
coin........................................... $ 3,951,273
Interest-bearing balances....................... 4,134,162
Securities:
Held-to-maturity securities..................... 932,468
Available-for-sale securities................... 4,279,246
Federal funds sold and Securities purchased
under agreements to resell...................... 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income..................37,861,802
LESS: Allowance for loan and
lease losses...............619,791
LESS: Allocated transfer risk
reserve......................3,572
Loans and leases, net of unearned income,
allowance, and reserve......................... 37,238,439
Trading Assets................................... 1,551,556
Premises and fixed assets (including capitalized
leases)......................................... 684,181
Other real estate owned.......................... 10,404
Investments in unconsolidated subsidiaries and
associated companies............................ 196,032
Customers' liability to this bank on acceptances
outstanding..................................... 895,160
Intangible assets................................ 1,127,375
Other assets..................................... 1,915,742
-----------
Total assets..................................... $60,077,664
===========
LIABILITIES
Deposits:
In domestic offices............................. $27,020,578
Noninterest-bearing.....11,271,304
Interest-bearing........15,749,274
In foreign offices, Edge and
Agreement subsidiaries, and IBFs............... 17,197,743
Noninterest-bearing........103,007
Interest-bearing........17,094,736
Federal funds purchased and Securities sold
under agreements to repurchase.................. 1,761,170
Demand notes issued to the U.S.Treasury.......... 125,423
Trading liabilities.............................. 1,625,632
Other borrowed money:
With remaining maturity of one year or less..... 1,903,700
With remaining maturity of more than one year
through three years............................ 0
With remaining maturity of more than three years 31,639
Bank's liability on acceptances executed and
outstanding..................................... 900,390
Subordinated notes and debentures................ 1,308,000
Other liabilities................................ 2,708,852
-----------
Total liabilities................................ 54,583,127
-----------
EQUITY CAPITAL
Common stock..................................... 1,135,284
Surplus.......................................... 764,443
Undivided profits and capital reserves........... 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities................... 82,367
Cumulative foreign currency translation
adjustments..................................... (29,725)
-----------
Total equity capital............................. 5,494,537
-----------
Total liabilities and equity capital............. $60,077,664
===========
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni )
Gerald L. Hassell ) Directors
Alan R. Griffith )
<PAGE>
Registration No. 333-72453
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
____________________
FMB BANK
(Exact name of trustee as specified in its charter)
Maryland 52-0312840
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
25 South Charles Street
Baltimore, Maryland 21201
(Address of principal (Zip code)
executive offices)
Gregory K. Thoreson, General Counsel
FMB Bank
25 South Charles Street
Baltimore, Maryland 21201
(410) 244-3800
(Name, address and telephone number of agent
for service of process)
HOUSEHOLD FINANCE CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE 36-1239445
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
2700 SANDERS ROAD
PROSPECT HEIGHTS, ILLINOIS 60070
(Address of principal (Zip code)
executive offices)
Debt Securities
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of Richmond, Richmond, Virginia 23261.
Maryland Bank Commission, Baltimore, Maryland 21202
Federal Deposit Insurance Corporation, Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
(Because responses from the obligor and the underwriters have not yet been
received, Item 2 is at the date hereof based upon incomplete information
but is believed to be correct and may be considered to be complete unless
modified by an amendment to this Form T-1).
Item 16. List of Exhibits.
List below all exhibits filed as a part of this statement of eligibility.
Exhibit
- -------
1 A copy of the articles of incorporation of the trustee as now in
effect is incorporated herein by refererence to Exhibit 1 to Form T-1
(Exhibit 25 to the Registration Statement on Form S-3, Registration
No. 333-27305)
2 A copy of the certificate of authority of the trustee to commence
business is incorporated herein by reference to Exhibit T1-2 to Form
T-1 (Exhibit 26 to the Registration Statement on Form S-2,
Registration No. 2-98697)
3 A copy of the authorization of the trustee to exercise corporate
trust powers is incorporated herein by reference to Exhibit T1-3 of
Amendment No. 1 to Form T-1 (Exhibit 26 to the Registration Statement
on Form S-3, Registration No. 33-18373)
<PAGE>
4 A copy of the existing bylaws of the trustee is incorporated herein
by refererence to Exhibit 4 to Form T-1 (Exhibit 25 to the
Registration Statement on Form S-3, Registration No. 333-27305)
5 Not applicable
6 The consent of the trustee required by Section 321(b) of the Act
7 A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority
8 Not applicable
9 Not applicable
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, FMB Bank, a corporation organized and existing under the laws of the
United States of America, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of Baltimore and State of Maryland, on February 26, 1999
FMB BANK
By: /s/ Donald C. Hargadon
-----------------------
Donald C. Hargadon
Assistant Vice President
<PAGE>
Exhibit 6
---------
Consent of Trustee
------------------
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, in connection with the issuance by Household Finance Corporation, we
hereby consent that reports of examination by Federal, state, territorial or
district authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
FMB BANK
By: /s/ Donald C. Hargadon
-----------------------
Donald C. Hargadon
Assistant Vice President
<PAGE>
Exhibit 7
---------
Report of Condition Consolidating Domestic and Foreign Subsidiaries of FMB Bank,
Baltimore, Maryland at the close of business on December 31, 1998 published in
response to call made by Comptroller of the Currency, under Title 12, United
States Code, Section 161, Charter No. 04822, Comptroller of the Currency,
Richmond District.
<TABLE>
<CAPTION>
CONSOLIDATED REPORT OF CONDITION
(Dollars in Thousands)
<S> <C>
ASSETS
Cash and balances due from
depository institutions:
Noninterest-bearing balances
and currency and coin.................................... $ 1,199,940
Interest-bearing balances.................................. 6,943
Securities:
Held-to-maturity securities.................................. -0-
Available-for-sale securities................................ 4,602,042
Federal funds sold and securities purchased
under agreements to resell................................... 123,418
Loans and lease financing receivables:
Loans and leases, net of unearned income..................... 10,501,474
LESS: Allowance for loan and lease losses.................... 154,697
LESS: Allocated transfer risk reserve........................ 1,400
Loans and leases, net of unearned income,
allowance, and reserve..................................... 10,345,377
Trading assets................................................. 118,269
Premises and fixed assets (including
capitalized leases).......................................... 188,979
Other real estate owned........................................ 12,416
Investments in unconsolidated subsidiaries
and associated companies..................................... 58,643
Customers' liability to this bank
on acceptances outstanding................................... 12,253
Intangible assets.............................................. 91,109
Other assets................................................... 355,315
TOTAL ASSETS............................................... 17,114,704
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices....................................... $11,898,282
Noninterest-bearing.................................... 3,228,185
Interest-bearing....................................... 8,610,097
In foreign offices, Edge and Agreement
subsidiaries, and IBFs.................................. 517,687
Noninterest-bearing.................................... 0
Interest-bearing....................................... 517,687
Federal funds purchased and securities
sold under agreements to repurchase....................... 2,223,081
Demand notes issued to the U.S. Treasury.................... 56,020
Trading liabilities......................................... 71,866
Other borrowed money:
With a remaining maturity of one year or less............. -0-
With a remaining maturity of more than one year
through three years..................................... 200,000
With a remaining maturity of more than three
years................................................... 239
Bank's liability on acceptances
executed and outstanding.................................. 12,253
Subordinated notes and debentures........................... 219,000
Other liabilities........................................... 565,161
TOTAL LIABILITIES...................................... $15,763,589
-----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus............... -0-
Common Stock................................................ 18,448
Surplus..................................................... 765,562
Undivided profits and capital reserves...................... 543,808
Net unrealized holding gains (losses)
on available-for-sale securities.......................... 23,297
Cumulative foreign currency translation
adjustments............................................... -0-
TOTAL EQUITY CAPITAL................................... $ 1,351,115
TOTAL LIABILITIES AND EQUITY CAPITAL................... $17,114,704
===========
</TABLE>
<PAGE>
FNB BANK
ARTICLES OF AMENDMENT
FNB Bank, a Maryland state chartered commercial bank, having its principal
office in Baltimore, Maryland (the "Bank") hereby certifies that:
FIRST: Article II of the charter of the Bank is hereby amended to read in
its entirety as follows:
"ARTICLE II
The name of this bank (hereinafter called the 'Bank') shall be 'FMB Bank'."
SECOND: The amendment does not increase the authorized capital stock of
the Bank.
THIRD: The foregoing amendment to the charter of the Bank has been advised
by the Board of Directors and approved by the stockholders of the Bank.
IN WITNESS WHEREOF, FNB Bank has caused these Articles of Amendment to be
signed on its behalf by its President and Treasurer as of this 31st day of
December, 1998.
FNB BANK
/s/ Frank P. Bramble
--------------------
By: Frank P. Bramble, President
/s/ Jerome W. Evans
--------------------
By: Jerome W. Evans, Treasurer
THE UNDERSIGNED, President and Treasurer of FNB Bank, who executed the
foregoing Articles of Amendment on behalf of FNB Bank of which this certificate
is made a part, hereby acknowledge the foregoing Articles of Amendment to be the
corporate act of FNB Bank and hereby certify that the matters and facts set
forth herein with respect to the authorization and approval thereof by FNB Bank
are true in all material respects under the penalties of perjury.
/s/ Frank P. Bramble
--------------------
Frank P. Bramble, President
/s/ Jerome W. Evans
--------------------
Jerome W. Evans, Treasurer
<PAGE>
FNB BANK
ARTICLES OF INCORPORATION
ARTICLE I
THAT we, the undersigned incorporators, all being at least eighteen years
of age and citizens of the State of Maryland and of the United States, pursuant
to the authority granted by First Maryland Bancorp, a Maryland corporation and
the sole shareholder of The First National Bank of Maryland, a national banking
association, do hereby associate ourselves to convert such national banking
association to a commercial bank and by virtue of the laws of the State of
Maryland, as prescribed in Title 3 of the Financial Institutions Article of the
Annotated Code of Maryland, providing for the creation, regulation, and
supervision of state banks and trust companies. The name and address of each
such incorporator is as follows:
Jeremiah E. Casey 7900 Ruxwood Road
Ruxton, Maryland 21204
Frank P. Bramble 5724 St. Albans Way
Baltimore, Maryland 21212
Jerome W. Evans 12302 Cleghorn Road
Cockeysville, Maryland 21030
Brian L. King 3609 N. Furnace Road
Jarrettsville, Maryland 21084
Gregory K. Thoreson 10326 Kettledrum Court
Ellicott City, Maryland 21042
ARTICLE II
The name of this bank (hereinafter called the "Bank") shall be "FNB Bank".
ARTICLE III
The main office of the Bank shall be in the City of Baltimore, State of
Maryland. The general business of the Bank shall be conducted at its main office
and its branches.
ARTICLE IV
The Board of Directors of the Bank shall consist of not less than five nor
more than thirty persons, the exact number of directors within such minimum and
maximum limits to be fixed and determined in accordance with the By-Laws of the
Bank. The By-Laws may fix as a mandatory retirement date for directors the
annual meeting next following the reaching of the age of 70 years.
<PAGE>
The names and residence addresses of those persons who will serve as
directors until their successors are elected and qualified are:
Jeremiah E. Casey 7900 Ruxwood Road
Ruxton, Maryland 21204
Frank P. Bramble 5724 St. Albans Way
Baltimore, Maryland 21212
Jerome W. Evans 12302 Cleghorn Road
Cockeysville, Maryland 21030
Brian L. King 3609 N. Furnace Road
Jarrettsville, Maryland 21084
Gregory K. Thoreson 10326 Kettledrum Court
Ellicott City, Maryland 21042
ARTICLE V
The authorized amount of capital stock of the Bank shall be 2,250,000
shares of Common Stock of the par value of $10.00 each, but said capital stock
may be increased or decreased from time to time, in accordance with the
provisions of the laws of Maryland. The total par value of all shares is
$22,500,000.
No holder of shares of the capital stock of any class of the Bank shall
have any preemptive or preferential right of subscription to any shares of any
class of stock of the Bank, whether now or hereafter authorized, or to any
obligations convertible into stock of the Bank, issued, or sold, nor any right
of subscription to any thereof other than such, if any, as the Board of
Directors in its discretion may from time to time determine and at such price as
the Board of Directors may from time to time fix.
The Bank, at any time and from time to time, may authorize and issue debt
obligations, whether or not subordinated, without the approval of the
shareholders.
ARTICLE VI
The Board of Directors shall appoint one of its members President of the
Bank, who shall be Chairman of the Board, unless the Board appoints another
director to be the Chairman. The Board of Directors may also appoint another
director to be Vice Chairman of the Board. The Board of Directors shall have the
power to appoint one or more Vice Presidents and to appoint such other officers
and employees as may be necessary, convenient or appropriate to transact the
business of the Bank.
2
<PAGE>
The Board of Directors shall have the power to define the duties of the
officers and employees of the Bank; to fix the salaries to be paid to them; to
require bonds from them and to fix the penalty thereof; to regulate the manner
in which any increase of the capital of the Bank shall be made; to manage and
administer the business and affairs of the Bank; to make all By-Laws that it may
be lawful for them to make; and generally to do and perform all acts that it may
be legal for a Board of Directors to do and perform.
ARTICLE VII
The Board of Directors of the Bank, or any one or more shareholders owning,
in the aggregate, not less than twenty-five percent of the stock of the Bank,
may call a special meeting of shareholders at any time. Unless otherwise
provided by the laws of the Maryland, a notice of the time, place, and purpose
of every annual and special meeting of the shareholders shall be given by
first-class mail, postage prepaid, mailed at least ten days prior to the date of
such meeting to each shareholder of record at his address as shown upon the
books of the Bank.
ARTICLE VIII
The Bank shall indemnify its directors, officers and other institution
affiliated parties as provided in the By-Laws of the Bank as amended from time
to time.
ARTICLE IX
To the fullest extent permitted by Maryland law, as amended or interpreted,
no director or officer of the Bank shall be personally liable to the Bank or its
shareholders for money damages. No amendment of these Articles of Incorporation
or repeal of any of the provisions hereof shall limit or eliminate the benefits
provided to directors or officers under this Article IX with respect to any act
or omission which occurred prior to such amendment or repeal.
ARTICLE X
These Articles of Incorporation may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of the Bank, unless the vote of the holders of a greater
amount of stock is required by law, and in that case by the vote of the holders
of such greater amount.
ARTICLE XI
The conversion of the First National Bank of Maryland has been duly
authorized and approved by its sole stockholder in the manner required by
federal law. The sole stockholder, acting on the authority granted by and
through a majority of the members of its Board of Directors, has signed,
acknowledged and caused these Articles to be filed by the incorporators.
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ARTICLE XII
The Bank shall be a continuation of The First National Bank of Maryland, by
unbroken and uninterrupted succession. The Bank is, and shall be considered to
be, the same business and corporate entity as The First National Bank of
Maryland. The rights, franchises, and interests of The First National Bank of
Maryland in and to any property is and has become the property of the Bank,
subject to the liabilities of The First National Bank of Maryland that existed
at the effective date of these Articles of Incorporation. Such rights,
franchises, and interests include rights to all tangible and intangible assets,
franchises and interests in property of The First National Bank of Maryland,
existing at the time of the conversion, subject to all liabilities at such time
of conversion.
IN WITNESS WHEREOF, we have hereunto set our hands this 11th day of
December, 1998.
/s/ Jeremiah E. Casey
-----------------------
Jeremiah E. Casey
/s/ Frank P. Bramble
-----------------------
Frank P. Bramble
/s/ Jerome W. Evans
-----------------------
Jerome W. Evans
/s/ Brian L. King
-----------------------
Brian L. King
/s/ Gregory K. Thoreson
-----------------------
Gregory K. Thoreson
ACKNOWLEDGED AND CONSENTED to by First Maryland Bancorp through its duly
authorized officer this 11th day of December, 1998.
FIRST MARYLAND BANCORP
By:/s/ Jeremiah E. Casey
---------------------
Jeremiah E. Casey,
Chairman of the Board
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STATE OF MARYLAND
CITY OF BALTIMORE, TO WIT:
I HEREBY CERTIFY that on this 11th day of December, 1998, before me, the
undersigned, a Notary Public in and or the state and city aforesaid, personally
appeared Jeremiah E. Casey, Frank P. Bramble, Jerome W. Evans, Brian L. King and
Gregory K. Thoreson, known to me, (or satisfactorily proven) to be the persons
whose names are subscribed to the foregoing instrument, and they each and
severally acknowledged the foregoing Articles of Incorporation to be their act
and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and Notarial Seal the day
and year last above written.
/s/ Debra A. Kollias
- --------------------
Notary Public
My Commission Expires 6-1-2000
--------
THE UNDERSIGNED, Chairman of the Board of First Maryland Bancorp, who
executed on behalf of First Maryland Bancorp the Articles of Incorporation of
which this certificate is made a part, hereby acknowledges in the name and on
behalf of First Maryland Bancorp the foregoing Articles of Incorporation to be
the corporate act of such corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof by
First Maryland Bancorp are true in all material respects under the penalties of
perjury.
/s/ Jeremiah E. Casey
---------------------
Jeremiah E. Casey
Chairman of the Board
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State of Maryland
DIVISION OF FINANCIAL REGULATION
[STATE LOGO]
Authority To Commence Business
Whereas, Articles of Incorporation of the FNB Bank, Baltimore City,
Maryland have been approved and duly filed in the office of the Commissioner of
Financial Regulation as of the 14th day of December, 1998 and,
Whereas, satisfactory evidence has been presented to the Commissioner that
all the provisions of the Statutes of Maryland have been complied with before
being authorized to commence business of a State banking institution:
Now, therefore, I, H. Robert Hergenroeder, Jr., Commissioner of Financial
Regulation in and for the State of Maryland, do hereby certify that the above-
named institution is authorized to commence business of a banking institution to
be effective December 31, 1998.
In testimony whereof, witness any signature and official seal this 18th day
of December, 1998.
/s/ H. Robert Hergenroeder, Jr.
--------------------------------
[SEAL] H. Robert Hergenroeder, Jr.
Commissioner of Financial Regulation
<PAGE>
FMB BANK
BY-LAWS
ARTICLE I.
SHAREHOLDERS
SECTION 1.01. Annual Meeting. The Bank shall hold an annual meeting of its
shareholders to elect directors and transact any other business within its
powers, either at 11:45 a.m. on the third Tuesday of March in each year if not a
legal holiday, or at such other time on such other day falling on or before the
60th day thereafter as shall be set by the Board of Directors. Except to the
extent of the Articles of Incorporation or applicable law provides otherwise,
any business may be considered at an annual meeting without the purpose of the
meeting having been specified in the notice. Failure to hold an annual meeting
does not invalidate the Bank's existence or affect any otherwise valid corporate
acts.
SECTION 1.02. Special Meeting. The Chairman of the Board, Chief Executive
Officer, a majority of the Board of Directors, or shareholders owning, in the
aggregate, not less than 25% of the stock of the Bank may call a special meeting
of shareholders at any time in the interval between annual meetings.
SECTION 1.03. Place of Meetings. Meetings of shareholders shall be held at
such place in the United States as may be designated from time to time by the
Board of Directors. In the absence of such designation, the meeting shall be
held at the main office of the Bank.
SECTION 1.04. Notice of Meetings; Waiver of Notice. Not less than ten nor
more than 90 days before each shareholders' meeting, the Secretary or an
Assistant Secretary shall give written notice of the meeting to each shareholder
entitled to vote at the meeting. The notice shall state the time and place of
the meeting and, if the meeting is a special meeting or notice of the purpose is
required by statute, the purpose of the meeting. Notice is given to a
shareholder when it is personally delivered to him or mailed to him at his
address as it appears on the records of the Bank. A meeting of shareholders
convened on the date for which it was called may be adjourned from time to time
without further notice to a date not more than 120 days after the original
record date.
SECTION 1.05. Nominations for Director. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any holder of
shares entitled to vote for the election of directors. Nominations not made in
accordance herewith may be disregarded by the chairman of the meeting.
SECTION 1.06. Quorum; Voting. Unless the Articles of Incorporation or
applicable law provides otherwise, at a meeting of shareholders the presence in
person or by proxy of shareholders entitled to cast a majority of all the votes
entitled to be cast at the meeting constitutes a quorum, and a majority of all
the votes cast at a meeting at which a quorum is
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present is sufficient to approve any matter which properly comes before the
meeting. In the absence of a quorum, the shareholders present in person or by
proxy, by majority vote and without notice other than by announcement, may
adjourn the meeting from time to time until a quorum shall attend. At any such
reconvenement of an adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally notified. In the event that at any meeting a quorum exists for the
transaction of some business but does not exist for the transaction of other
business, the business as to which a quorum is present may be transacted by the
shareholders present in person or by proxy who are entitled to vote thereon.
SECTION 1.07. General Right to Vote: Proxies. Unless the Articles of
Incorporation provides for a greater or lesser number of votes per share or
limit or deny voting rights, each outstanding share of stock, regardless of
class, is entitled to one vote on each matter submitted to a vote at a meeting
of shareholders. In all elections for directors, each share of stock may be
voted for as many individuals as there are directors to be elected and for whose
election the share is entitled to be voted with cumulative voting permitted. A
shareholder may vote the stock he owns of record either in person or by written
proxy signed by the shareholder or by his duly authorized attorney in fact.
Proxies shall be valid only for one meeting, to be specified therein, and any
adjournments of such meeting. Proxies shall be dated and shall be filed with the
records of the meeting.
SECTION 1.08. Conduct of Voting. At all meetings of shareholders, unless
the voting is conducted by judges, the proxies and ballots shall be received,
and all questions relating to the qualification of voters and the validity of
proxies and the acceptance or rejection of votes shall be decided, by the
chairman of the meeting.
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
SECTION 2.01. Function of Directors. The business and affairs of the Bank
shall be managed under the direction of its Board of Directors. All powers of
the Bank may be exercised by or under authority of the Board of Directors,
except as conferred on or reserved to the shareholders by the Articles of
Incorporation, applicable law or these By-Laws.
SECTION 2.02. Number of Directors. The Bank shall have at least five
directors and no more than 30 directors. A majority of the entire Board of
Directors, or the shareholders, may alter the number of directors within the
range permitted herein, but the action, if taken by the directors, may not
affect the tenure of office of any director.
SECTION 2.03. Qualification of Directors. No person shall qualify or
continue to serve as a director of the Bank unless he or she owns shares of
stock of the Bank or a company which has control, directly or indirectly, of at
least 80% of the capital stock of the Bank in such amount as may be required by
law. At least a majority of the directors of the Bank shall reside in Maryland.
No person shall be eligible to stand for election as a director after attaining
70 years of age.
2
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SECTION 2.04. Election and Tenure of Directors. At each annual meeting,
the shareholders shall elect directors to hold office until the next annual
meeting and until their successors are elected and qualify.
SECTION 2.05. Removal of Director. The shareholders may remove any
director, with or without cause, by the affirmative vote of a majority of all
the votes entitled to be cast for the election of directors.
SECTION 2.06. Vacancy on Board. A majority of the remaining directors,
whether sufficient to constitute a quorum, shall fill any vacancy on the Board
of Directors which results from any cause except an increase in the number of
directors, and a majority of the entire Board of Directors may fill a vacancy
which results from an increase in the number of directors. A director elected by
the Board of Directors to fill a vacancy serves until the next annual meeting of
shareholders and until his or her successor is elected and qualifies. A director
elected by the shareholders to fill a vacancy which results from the removal of
a director serves for the balance of the term of the removed director.
SECTION 2.07. Regular Meetings. After each meeting of shareholders at
which a Board of Directors shall have been elected, the Board of Directors so
elected shall meet as soon as practicable to take their oaths, organize and
transact other business; and in the event that no other time or place is
designated by the shareholders, the Board of Directors shall meet immediately
following the close of such shareholders' meeting at the main office of the
Bank. No notice of the first regular meeting shall be necessary if held as
herein above provided. Thereafter, regular meetings of the Board of Directors
shall be held, without notice, at the main office, on the schedule established
by the Board at the first regular meeting, or on such other schedule or at such
other place as the Board may from time to time designate.
SECTION 2.08. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board or the President or by a
majority of the Board of Directors by vote at a meeting, or in writing with or
without a meeting. A special meeting of the Board of Directors shall be held on
such date and at such time and place as may be designated from time to time by
the Board of Directors. In the absence of such designation the meeting shall be
held at the main office of the Bank.
SECTION 2.09. Notice of Special Meetings. The Secretary, an Assistant
Secretary, or the secretary to the Board shall give notice to each director of
each special meeting of the Board of Directors. The notice shall include the
time and place of the meeting. Notice is given to a director when it is
delivered personally, left at the director's residence or usual place of
business, or sent by telegraph, telephone or telefax at least 24 hours before
the time of the meeting or, in the alternative by mail to his address as it
shall appear on the records of the Bank, at least 72 hours before the time of
the meeting. The notice need not state the business to be transacted at or the
purposes of any special meeting of the Board of Directors. Any meeting of the
Board of Directors may adjourn from time to time to reconvene at the same or
some other place, and no notice need be given of any such adjourned meeting
other than by announcement.
3
<PAGE>
SECTION 2.10. Action by Directors. Unless the Articles of Incorporation,
applicable law or these By-Laws require a greater proportion, the action of a
majority of the directors present at a meeting at which a quorum is present is
action of the Board of Directors. A majority of the entire Board of Directors
shall constitute a quorum for the transaction of business. In the absence of a
quorum, the directors present by majority vote and without notice other than by
announcement may adjourn the meeting from time to time until a quorum shall
attend. At any such reconvenement of an adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted at the original meeting.
SECTION 2.11. Compensation. The Bank may provide compensation and
reimbursement of expenses for service on the Board of Directors or on committees
thereof, pursuant to a resolution of directors. A director who serves the Bank
in any other capacity also may receive compensation for such other services
subject to any applicable restrictions or limitations imposed by law or
otherwise on related party transactions.
SECTION 2.12. Meetings by Telephone or Other Communications Facilities.
Unless otherwise required by applicable law, the Board of Directors may meet by
telephone or other electronic communication means provided that each director
attending such meeting can hear the voice or a electronically generated
reproduction of the voice of each other director attending such meeting.
SECTION 2.13. Advisory Boards. The Chairman of the Board may establish one
or more Advisory Boards and appoint the members from time to time. No one shall
be appointed a member of an Advisory Board after attaining the age of 70 years.
Appointments to Advisory Boards shall be reported to the Board of Directors.
ARTICLE III
------------
COMMITTEES
----------
SECTION 3.01. Committees. The Board of Directors may appoint an Executive
Committee, an Audit Committee, a Management and Compensation Committee and such
other committees, composed of two or more directors and may delegate to these
committees any of the powers of the Board of Directors, except the power to
declare dividends or other distributions on stock, elect directors, issue stock,
recommend to the shareholders any action which requires shareholder approval,
and amend the By-Laws.
SECTION 3.02. Executive Committee. The Executive Committee shall be
composed of not less than six nor more than nine directors, as the Board of
Directors shall deem proper, of which the Chairman of the Board, the Chief
Executive Officer and, if so designated by the Chairman of the Board and the
Chief Executive Officer, the President shall be permanent members. The members
of the Executive Committee shall serve at the pleasure of the Board of
Directors, and any permanent member of the Committee shall have the power to
make temporary appointments to the Executive Committee of members of the Board
of Directors to act in the place and stead of members of the Executive Committee
who temporarily cannot attend its meetings. The Executive Committee shall have
and may exercise all of the powers of the Board
4
<PAGE>
of Directors during intervals between meetings thereof, except functions
reserved to the Board by Section 3.01 hereof.
Regular meetings of the Executive Committee shall be held, without notice,
at the main office of the Bank on the schedule established by the Board at the
first regular meeting following the annual meeting of shareholders, or on such
other schedule or at such other place as the Board may from time to time
designate. Special meetings of the Executive Committee may be held at any time
and place upon call of any permanent member of the Committee or any two other
members of the Committee, and upon such notice as the Committee may prescribe.
SECTION 3.03. Audit Committee. The Audit Committee shall be composed of at
least three directors, none of whom may be an officer of the Bank. The Audit
Committee shall at least once each 12 months meet to make suitable examinations
of the fiduciary and other trust activities of the Bank or cause suitable
examinations to be made by auditors responsible to the Board of Directors. The
examination shall ascertain whether the such activities have been administered
in accordance with applicable laws, rules and regulations and sound fiduciary
principles. The Audit Committee at least once during each calendar year and
within 15 months of the last such examination shall also make an examination
into the affairs of the Bank, or cause suitable examinations to be made by
auditors responsible to the Board of Directors, and report the result of such
examination in writing to the Board at the next regular meeting thereafter. Such
report shall state whether the Bank is in sound condition and whether adequate
internal controls and procedures are being maintained, and shall recommend to
the Board such changes in the manner of conducting the affairs of the Bank as
shall be deemed advisable.
SECTION 3.04. Management and Compensation Committee. The Management and
Compensation Committee shall be composed of at least three directors none of
whom may be an officer of the Bank. The Management and Compensation Committee
shall advise the Chief Executive Officer on major policy decisions, review and
recommend appropriate compensation for executive officers, be responsible for
nominating the individuals to serve on the Board of Directors and assume such
other duties as may be assigned by the Board of Directors from time to time.
SECTION 3.05. Committee Procedure. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of the
committee. In addition to temporary appointments permitted by Section 3.02, the
members of a committee present at any meeting, whether or not they constitute a
quorum, may appoint a director to act in the place of an absent member. The
minutes of meetings of each committee shall be submitted to the Board of
Directors at the next regular meeting of the Board.
SECTION 3.06. Emergency. In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Bank by its directors and officers as contemplated by the Articles of Bank
and the By-Laws, any two or more available members of the then incumbent
Executive Committee shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Bank in
5
<PAGE>
accordance with the provisions of Section 3.01. In the event of the
unavailability, at such time, of a minimum of two members of the then incumbent
Executive Committee, the available directors shall elect an Executive Committee
consisting of any two members of the Board of Directors, whether or not they be
officers of the Bank, which two members shall constitute the Executive Committee
for the full conduct and management of the affairs of the Bank in accordance
with the foregoing provisions of this Section. This Section shall be subject to
implementation by resolution of the Board of Directors passed from time to time
for that purpose, and any provisions of the By-Laws (other than this Section)
and any resolutions which are contrary to the provisions of this Section or to
the provisions of any such implementary resolutions shall be suspended until it
shall be determined by any interim Executive Committee acting under this Section
that it shall be to the advantage of the Bank to resume the conduct and
management of its affairs and business under all the other provisions of the
By-Laws.
ARTICLE IV.
-----------
OFFICERS
--------
SECTION 4.01. Executive and Other Officers. The Bank shall have a
President and one or more Executive Vice-Presidents who shall be the executive
officers of the Bank. It may have a Chairman of the Board and one or more Vice
Chairman of the Board. The Chairman of the Board and any Vice Chairman of the
Board shall be executive officers if they are designated as executive officers
by the Board of Directors of the Bank. The Board of Directors may designate who
will serve as the Chief Executive Officer, having general supervision of the
business and affairs of the Bank, or as chief operating officer, having general
supervision of the operations of the Bank; in the absence of designation, the
President shall serve as Chief Executive Officer and chief operating officer.
The Bank also shall have a Secretary and also may have such Vice-Presidents,
assistant officers, and subordinate officers as may be established by the Board
of Directors. A person may hold more then one office in the Bank but may not
serve concurrently as both President and Vice-President or as President and
Secretary of the Bank. The Chairman of the Board and the President shall be
directors;the other officers may be directors.
SECTION 4.02. Chairman of the Board. The Chairman of the Board, if one be
elected, shall preside at all meetings of the Board of Directors and of the
shareholders at which he or she shall be present; and, in general, the Chairman
of the Board shall perform all duties as are from time to time assigned to him
or her by the Board of Directors.
SECTION 4.03. Chairman of the Executive Committee. The Chairman of the
Executive Committee, if one be elected, shall preside at all meetings of the
Executive Committee at which he or she shall be present; and, in general, he or
she shall perform all duties as are from time to time assigned to him or her by
the Board of Directors.
SECTION 4.04. Chief Executive Officer. The Chief Executive Officer, in the
absence of the Chairman of the Board, shall preside at all meetings of the Board
of Directors and of the shareholders at which he or she shall be present; he or
she may on behalf of the Bank grant secured or unsecured loans, purchase or
discount bills, notes and trade paper, borrow money and pledge assets, purchase
or sell securities, accept trust appointments and delegate any such powers
6
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to other officers and employees; and, in general, he or she shall perform all
duties usually performed by a chief executive officer of a corporation and such
other duties as are from time to time assigned to him or her by the Board of
Directors or the chief executive officer of the Bank.
SECTION 4.05. President. The President, in the absence of the Chairman of
the Board and the Chief Executive Officer shall preside at all meetings of the
Board of Directors and the shareholders at which he or she shall be present. The
President, at the request of the Board of Directors or the Chairman of the Board
or in the Chief Executive Officer's absence or during his or her inability to
act shall perform the duties and exercise the functions of the Chief Executive
Officer, and when so acting shall have the powers of the Chief Executive
Officer.
SECTION 4.06. Vice-Presidents. The Vice-President or Vice-Presidents, at
the request of the Board of Directors, the chief executive officer or the Chief
Executive Officer or in the President's absence or during his or her inability
to act, shall perform the duties and exercise the functions of the President,
and when so acting shall have the powers of the President. If there are more
than one Vice-Presidents, the Board of Directors may determine which one or more
of the Vice-Presidents shall perform any of such duties or exercise any of such
functions, or if such determination is not made by the Board of Directors, the
chief executive officer or President may make such determination; otherwise any
of the Vice-Presidents may perform any of such duties or exercise any of such
functions. The Vice-President or Vice-Presidents shall have such other powers
and perform such other duties, and have such additional descriptive designations
in their titles (if any), as are from time to time assigned to them by the Board
of Directors, the chief executive officer, or the President.
SECTION 4.07. Secretary. The Secretary shall keep the minutes of the
meetings of the stockholders, of the Board of Directors, and of any committees,
in books provided for the purpose; he or she shall see that all notices are duly
given in accordance with the provisions of the By-Laws or as required by
applicable law; he or she shall be the custodian of the records of the Bank; he
or she may witness all documents on behalf of the Bank, the execution of which
is duly authorized, see that the corporate seal is affixed where such document
is required to be under its seal, and, when so affixed, may attest the same;
and, in general, he or she shall perform all duties incident to the office of a
secretary of a bank, and such other duties as are from time to time assigned to
him or her by the Board of Directors, chief executive officer, or the President.
SECTION 4.08. Assistant and Subordinate Officers. The assistant and
subordinate officers of the Bank are all officers below the office of
Vice-President or Secretary. The assistant or subordinate officers shall have
such duties as are from time to time assigned to them by the Board of Directors,
the chief executive officer, or the President, or the officer in charge of the
division, region, or department of the Bank to which the assistant or
subordinate officer is assigned.
SECTION 4.09. Election, Appointment, Tenure and Removal of Officers. The
Board of Directors shall elect the officers. The Board of Directors may from
time to time authorize any committee or officer to appoint assistant and
subordinate officers. The Chairman of the Board and the President serve for one
year. All other officers shall be elected or appointed to hold their offices,
respectively, during the pleasure of the Board. The Board of Directors (or, as
7
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to any assistant or subordinate officer, any committee or officer authorized by
the Board) may remove an officer at any time. The removal of an officer does
not prejudice any of his or her contract rights. The Board of Directors (or, as
to any assistant or subordinate officer, any committee or officer authorized by
the Board) may fill a vacancy which occurs in any office for the unexpired
portion of the term.
SECTION 4.10. Compensation. The Board of Directors shall have power to
fix the salaries and other compensation and remuneration, of whatever kind, of
all officers of the Bank. It may authorize any committee or officer of the Bank
to fix the salaries, compensation and remuneration.
ARTICLE V
---------
CAPITAL STOCK
-------------
SECTION 5.01. Certificates for Stock. Each shareholder is entitled to
certificates which represent and certify the shares of stock such shareholder
holds in the Bank. Each stock certificate shall include on its face the name and
location of the Bank, the name of the shareholder or other person to whom it is
issued, and the class of stock and number of shares it represents. It shall be
in such form, not inconsistent with law or with the Articles of Incorporation,
as shall be approved by the Board of Directors or any officer or officers
designated for such purpose by resolution of the Board of Directors. Each stock
certificate shall be signed by the Chairman of the Board, the President, or a
Vice-President, and countersigned by the Secretary or an Assistant Secretary.
Each certificate may be sealed with the actual seal of the Bank or a facsimile
of it or in any other form and the signatures may be either manual or facsimile
signatures. Each certificate shall recite on its face that the stock represented
thereby is transferable only upon the books of the Bank properly endorsed. A
certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued.
SECTION 5.02. Stock Ledger and Transfers. The Bank shall maintain a stock
ledger which contains the name and address of each shareholder and the number of
shares of stock of each class which the shareholder holds. Shares of stock shall
be transferable only on the books of the Bank, and a transfer book shall be kept
in which all transfers of stock shall be recorded. Every person becoming a
shareholder by such transfer shall, in proportion to his shares, succeed to all
rights of the prior holder of such shares.
SECTION 5.03. Record Date and Closing of Transfer Books. The Board may
prescribe a period prior to any shareholders' meeting, not exceeding 22 days,
during which no transfer of stock on the books of the Bank may be made.
Transfers of stock shall not be suspended preparatory to the declaration or
payment of dividends. Cash dividends shall be paid to the shareholders in whose
name the stock shall stand on the books of the Bank at the date of the
declaration of such cash dividend or at such later date as the Board may fix.
ARTICLE VI
----------
SUNDRY PROVISIONS
-----------------
8
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SECTION 6.01. Fiscal Year. The fiscal year of the Bank shall be the 12
calender months period ending December 31 in each year, unless otherwise
provided by the Board of Directors.
SECTION 6.02. Books and Records. The Bank shall keep correct and complete
books and records of its accounts and transactions and minutes of the
proceedings of its shareholders and Board of Directors and of any committee
thereof when exercising any of the powers of the Board of Directors. The books
and records of the Bank may be in written form or in any other form which can be
converted within a reasonable time into written form for visual inspection.
Minutes shall be recorded in written form but may be maintained in the form of a
reproduction.
SECTION 6.03. Corporate Seal. The Secretary shall provide a seal, bearing
the name of the Bank, which shall be in the charge of the Secretary. The Board
of Directors may authorize one or more duplicate seals and provide for the
custody thereof.
SECTION 6.04. Bonds. All officers and employees of the Bank shall be
bonded by responsible corporate sureties and in such sums as may be determined
by the Board of Directors.
SECTION 6.05. Voting Upon Shares in Other Corporations. Stock of other
corporations or Banks, registered in the name of the Bank, may be voted by the
Chairman of the Board, the President, a Vice-President, or a proxy appointed by
any of them. The Board of Directors, however, may by resolution appoint some
other person to vote such shares, in which case such person shall be entitled to
vote such shares upon the production of a certified copy of such resolution.
SECTION 6.06. Mail. Any notice or other document which is required by
these By-Laws to be given in writing shall be hand delivered, delivered by
overnight courier, delivered by telefax or other electronic communication means
or deposited in the United States mails, postage prepaid.
SECTION 6.07. Execution of Documents. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies and other instruments or
documents may be signed, executed, acknowledged, verified, delivered, or
accepted on behalf of the Bank by the Chairman of the Board, or the President,
or any Vice-President, or the Secretary. By resolution, the Board of Directors
may grant additional specific or general authority relating to any signing,
execution, acknowledgment, verification, delivery, or acceptance on behalf of
the Bank. A person who holds more than one office in the Bank may not act in
more than one capacity to execute, acknowledge, or verify an instrument required
by law to be executed, acknowledged, or verified by more than one officer.
SECTION 6.08. Banking Hours. The Board of Directors shall designate, or
delegate to an officer the authority to designate, the hours that each office of
the Bank shall be open for the transaction of business.
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SECTION 6.09. Inspection. A copy of the By-Laws, with all amendments
thereto, shall at all times be kept in a convenient place at the main office of
the Bank, and shall be open for inspection to all shareholders, during banking
hours.
SECTION 6.10. Amendments. Subject to the special provisions of Section
2.02, (a) any and all provisions of these By-Laws may be altered or repealed and
new by-laws may be adopted at any annual meeting of the shareholders, or at any
special meeting called for that purpose, and (b) the Board of Directors shall
have the power, at any meeting thereof, to make and adopt new by-laws, or to
amend, alter or repeal any of the By-Laws of the Bank.
SECTION 6.11. Indemnification of Directors and Officers.
(a) With respect to any administrative proceeding or civil action not
initiated by a federal banking agency, the Bank shall indemnify (i) its
directors to the fullest extent permitted by the laws of the State of Maryland
now or hereafter in force, including the advance of expenses under the
procedures provided by such laws; (ii) its officers to the same extent as its
directors; (iii) its officers who are not directors to such further extent as
shall be authorized by the affirmative vote of a majority of its Board of
Directors and be consistent with such laws; and (iv) its other employees and
agents to the extent as shall be authorized by the affirmative vote of a
majority of its Board of Directors and be consistent with such laws.
(b) With respect to any administrative proceeding or civil action initiated
by a federal banking agency against any director, officer or other institution
affiliated party of the Bank (as defined in 12 U.S.C. 1813(u) as amended from
time to time), the Bank shall make such indemnification payments to such person
as are (i) reasonable and consistent with the provisions of 12 U.S.C. 1828(k)
and the implementing regulations thereunder each as amended from time to time
and (ii) permitted by the laws of the State of Maryland now or hereafter in
force.
(c) The Bank may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, or agent of the Bank to the extent
as shall be authorized by the affirmative vote of a majority of its Board of
Directors and be consistent with the general laws of the State of Maryland now
or hereafter in force; however, the Bank shall not purchase or maintain
insurance on behalf of its directors, officers, employees or agents against
expenses, penalties, or other payments incurred in an administrative proceeding
or action instituted by an appropriate bank regulatory agency which proceeding
or action results in a final order assessing civil money penalties or requiring
affirmative action by a director, officer, employee or agent in the form of
payments to the Bank.
