<PAGE>
Filed Pursuant to Rule 424(b)(5)
File No. 333-33240
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 7, 2000.
$2,000,000,000
Household Finance Corporation
6 1/2% Notes due January 24, 2006
------------
We will pay interest on the Notes on each January 24 and July 24. The first
interest payment will be made on July 24, 2001. We may not redeem the Notes
prior to their maturity on January 24, 2006, unless certain events occur
involving United States taxation. There is no sinking fund for the Notes.
We have applied to list the Notes on the Luxembourg Stock Exchange in
accordance with the rules of the Luxembourg Stock Exchange.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Company (1)
-------------- ------------- --------------
<S> <C> <C> <C>
Per Note............................ 99.781% .35% 99.431%
Total............................... $1,995,620,000 $7,000,000 $1,988,620,000
</TABLE>
(1)Plus accrued interest, if any, from January 24, 2001.
Delivery of the Notes, in book-entry form only, will be made through The
Depository Trust Company on or about January 24, 2001. The Notes have been
approved for clearance through the Clearstream, Luxembourg (formerly
Cedelbank) and Euroclear systems.
Neither the Securities and Exchange Commission nor any state securities
commission nor the Luxembourg Stock Exchange has approved or disapproved of
these Notes or determined if this prospectus supplement or the prospectus to
which it relates is truthful or complete. Any representation to the contrary
is a criminal offense.
Joint Bookrunners
Banc of America Securities LLC
Credit Suisse First Boston
JP Morgan
Banc One Capital Markets, Inc.
Barclays Capital
Deutsche Banc Alex. Brown
Merrill Lynch & Co.
Morgan Stanley Dean Witter
UBS Warburg LLC
The date of this prospectus supplement is January 17, 2001.
<PAGE>
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
---- ----
Prospectus Supplement Prospectus
<S> <C> <C> <C>
Use of Proceeds...................... S-4 About This Prospectus............... 2
Ratio of Earnings to Fixed Charges... S-4 Where You Can Find More
Capitalization of HFC................ S-4 Information........................ 2
Selected Financial Information of Special Note Regarding Forward-
HFC................................. S-5 Looking Statements................. 2
Description of Notes................. S-7 Household Finance Corporation....... 3
Underwriting......................... S-11 Use of Proceeds..................... 3
Notice to Canadian Residents......... S-13 Ratio of Earnings to Fixed Charges.. 4
Legal Opinions....................... S-14 Description of Debt Securities...... 5
Experts.............................. S-14 Description of Warrants............. 15
General Information.................. S-15 Certain United States Tax
Documentation Requirements......... 16
United States Taxation of Non-United
States Persons..................... 17
Plan of Distribution................ 19
ERISA Matters....................... 20
Legal Opinions...................... 20
Experts............................. 20
</TABLE>
------------
You should rely only on the information contained or incorporated by
reference in this Prospectus Supplement and the accompanying Prospectus. The
Company has not authorized anyone to provide you with information different
from that contained in this Prospectus Supplement and the accompanying
Prospectus. This Prospectus Supplement and the accompanying Prospectus may only
be used where it is legal to sell these securities. The information contained
in this Prospectus Supplement and the accompanying Prospectus is accurate only
as of the date of this Prospectus Supplement and the date of the accompanying
Prospectus, regardless of the time of delivery of this Prospectus Supplement or
any sales of the Notes.
In this Prospectus Supplement and the accompanying Prospectus, the
"Company," "HFC" and "we" refer to Household Finance Corporation.
The Notes are offered globally for sale in those jurisdictions in the United
States, Canada, Europe, Asia and elsewhere where it is lawful to make such
offers. See "Underwriting."
This Prospectus Supplement and the accompanying Prospectus include
particulars given in compliance with the rules governing the listing of
securities on the Luxembourg Stock Exchange for the purpose of giving
information with regard to the Company. The Company accepts responsibility for
the information contained in this Prospectus Supplement and the accompanying
Prospectus and confirms, having made all reasonable
inquiries, that to the best of its knowledge and belief there are no other
facts the omission of which would make any statement herein or in the
Prospectus misleading in any material respect.
The distribution of this Prospectus Supplement and Prospectus and the
offering of the Notes in certain jurisdictions may be restricted by law.
Persons into whose possession this Prospectus Supplement and the Prospectus
come should inform themselves about and observe any such restrictions. This
Prospectus Supplement and the Prospectus do not constitute, and may not be used
in connection with, an offer or solicitation by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to
whom it is unlawful to make such offer or solicitation. See "Underwriting."
S-2
<PAGE>
References herein to "$" and "dollars" are to the currency of the United
States.
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 Supplement and the accompanying 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, until this
offering is completed.
. Annual Report on Form 10-K for the year ended December 31, 1999;
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000; and
. Current Report on Form 8-K dated February 10, 2000.
HFC will provide without charge to each person (including any beneficial
owner), on the written or oral request of any such person, a copy of any or all
of these filings (other than exhibits to such documents). Requests should be
directed to: Household Finance Corporation, 2700 Sanders Road, Prospect
Heights, Illinois 60070, Attention: Office of the Secretary, Telephone: 847-
564-5000. In addition, such documents are also available free of charge at the
office of Banque Internationale a Luxembourg societe anonyme, 69, route
d' Esch, L-2953 Luxembourg.
S-3
<PAGE>
USE OF PROCEEDS
HFC will apply the net proceeds (estimated to be approximately
$1,987,620,000) from the sale of the Notes to its general funds to be used in
its financial services business, including the funding of investments in, or
extensions of credit to, 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 the nine months ended September
30, 2000 and September 30, 1999 was 1.60 and 1.68, respectively. See "Ratio of
Earnings to Fixed Charges" in the accompanying Prospectus for additional
information.
CAPITALIZATION OF HFC
The following table sets forth the unaudited consolidated capitalization of
HFC at September 30, 2000. The table should be read in conjunction with HFC's
consolidated financial statements and notes thereto included in the documents
incorporated by reference herein. See "Where You Can Find More Information" in
the accompanying Prospectus. All amounts are stated in millions of U.S.
dollars. Since September 30, 2000 there has been no material change in the
consolidated capitalization of HFC.
<TABLE>
<CAPTION>
September 30,
2000
-------------
(Unaudited)
<S> <C>
Commercial paper, bank and other borrowings...................... $ 8,707.3
Senior and senior subordinated debt (with original maturities
over one year) (1).............................................. 38,047.7
---------
Total debt....................................................... 46,755.0
---------
Common shareholder's equity:
Common stock, $1.00 par value, 1,000 shares authorized, issued
and outstanding, and additional paid-in capital (2)........... 3,504.2
Retained earnings.............................................. 3,492.5
Accumulated other comprehensive income......................... (12.6)
---------
Total common shareholder's equity............................ 6,984.1
---------
Total capitalization....................................... $53,739.1
=========
</TABLE>
--------
(1) This table does not reflect the issuance of the Notes offered hereby.
(2) All of HFC's authorized common stock is owned by Household International,
Inc.
S-4
<PAGE>
SELECTED FINANCIAL INFORMATION OF HFC
The financial information which is set forth below as of and for the two
years ended December 31, 1999 has been derived from the consolidated financial
statements and notes thereto of HFC and its subsidiaries as set forth in HFC's
Annual Report on Form 10-K for the year ended December 31, 1999, which have
been audited by Arthur Andersen LLP, independent certified public accountants.
HFC's Form 10-K is incorporated herein by reference. The financial information
which is set forth below as of September 30, 2000 and for the nine months ended
September 30, 2000 and 1999 are unaudited and should be read in conjunction
with HFC's Quarterly Report on Form 10-Q for the quarter ended September 30,
2000, which is incorporated by reference herein. Operating results for the nine
months ended September 30, 2000 should not be considered indicative of the
results for any future quarters or the year ending December 31, 2000. All
consolidated financial information of HFC and its subsidiaries presented below
is qualified in its entirety by the detailed information and financial
statements included in the documents referred to under "Where You Can Find More
Information" in the accompanying Prospectus. All amounts are stated in millions
of U.S. dollars.
Consolidated Statements of Income
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
----------------- -----------------
2000 1999 1999 1998
-------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Finance income............................. $4,621.2 $3,766.1 $5,139.8 $4,581.4
Other interest income...................... 38.5 52.9 67.3 36.5
Interest expense........................... 2,043.3 1,582.1 2,152.7 1,995.5
-------- -------- -------- --------
Net interest margin........................ 2,616.4 2,236.9 3,054.4 2,622.4
Provision for credit losses on owned
receivables............................... 1,133.3 1,030.7 1,407.4 1,253.1
-------- -------- -------- --------
Net interest margin after provision for
credit losses............................. 1,483.1 1,206.2 1,647.0 1,369.3
-------- -------- -------- --------
Securitization income...................... 611.6 559.8 794.9 1,058.5
Insurance revenues......................... 287.9 269.1 357.7 352.9
Investment income.......................... 115.4 117.3 154.4 146.7
Fee income................................. 255.2 299.5 414.1 498.7
Other income............................... 104.3 127.0 164.9 239.2
Gain on sale of Beneficial Canada.......... -- -- -- 189.4
-------- -------- -------- --------
Total other revenues....................... 1,374.4 1,372.7 1,886.0 2,485.4
-------- -------- -------- --------
Salaries and fringe benefits............... 844.1 704.7 964.9 921.7
Other operating expenses................... 480.7 504.8 629.4 889.9
Amortization of acquired intangibles and
goodwill.................................. 111.6 107.4 143.3 168.8
Policyholders' benefits.................... 172.6 168.3 224.7 207.6
Merger and integration related costs....... -- -- -- 1,000.0
-------- -------- -------- --------
Total costs and expenses................... 1,609.0 1,485.2 1,962.3 3,188.0
-------- -------- -------- --------
Income before income taxes................. 1,248.5 1,093.7 1,570.7 666.7
Income taxes............................... 434.3 383.8 550.8 361.8
-------- -------- -------- --------
Net income(1).............................. $ 814.2 $ 709.9 $1,019.9 $ 304.9
======== ======== ======== ========
</TABLE>
--------
(1) Operating net income, which excludes merger and integration related costs
of $751.0 million after-tax and the gain on the sale of Beneficial Canada
of $118.5 million after-tax, was $937.4 million for the year ended December
31, 1998.
S-5
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
September 30, -------------------
2000 1999 1998
------------- --------- ---------
(Unaudited)
<S> <C> <C> <C>
Assets
Cash......................................... $ 132.3 $ 1,487.2 $ 428.4
Investment securities........................ 3,745.7 2,257.2 2,944.4
Receivables, net............................. 47,386.9 38,187.6 34,283.2
Advances to parent company and affiliates.... 784.2 691.8 494.0
Acquired intangibles and goodwill, net....... 1,461.4 1,572.9 1,682.7
Properties and equipment, net................ 363.4 360.3 376.9
Real estate owned............................ 331.9 266.6 235.1
Other assets................................. 1,958.3 1,991.6 1,918.3
--------- --------- ---------
Total assets............................... $56,164.1 $46,815.2 $42,363.0
========= ========= =========
Liabilities and Shareholder's Equity
Commercial paper, bank and other borrowings.. $ 8,707.3 $ 8,780.2 $ 7,143.1
Senior and senior subordinated debt (with
original maturities over one year).......... 38,047.7 30,383.6 27,186.1
--------- --------- ---------
Total debt................................. 46,755.0 39,163.8 34,329.2
Insurance policy and claim reserves.......... 1,070.8 1,077.2 1,076.2
Other liabilities............................ 1,354.2 643.0 1,147.2
--------- --------- ---------
Total liabilities.......................... 49,180.0 40,884.0 36,552.6
Common shareholder's equity.................. 6,984.1 5,931.2 5,810.4
--------- --------- ---------
Total liabilities and shareholder's equity. $56,164.1 $46,815.2 $42,363.0
========= ========= =========
</TABLE>
S-6
<PAGE>
DESCRIPTION OF NOTES
General
The following description of the terms of the 6 1/2% Notes due January 24,
2006 (the "Notes") offered hereby (referred to in the Prospectus as the
"Offered Debt Securities") supplements, insofar as such description relates to
the Notes, the description of the Debt Securities set forth in the Prospectus,
to which description reference is hereby made. The Notes are part of the Debt
Securities registered by the Company with the Securities and Exchange
Commission to be issued on terms to be determined at the time of sale. The
Notes constitute senior unsecured debt of the Company and will rank on a parity
with all other senior unsecured debt of the Company and prior to all
subordinated debt. The Notes are to be issued as a series of Senior Debt
Securities under an Indenture dated as of April 1, 1995 (the "Indenture"),
between the Company and Bank One, National Association, as Trustee, which is
more fully described in the accompanying Prospectus under "Description of Debt
Securities--Senior Debt Securities."
The Notes are not subject to redemption by the Company prior to maturity
unless certain events occur involving U.S. taxation. See "Description of
Notes--Redemption for Tax Reasons."
The Notes will be issued in denominations of $1,000 and integral multiples
thereof. The Notes will mature on January 24, 2006. At maturity, the amount due
and payable on the Notes will be equal to 100% of their principal amount
outstanding, together with interest accrued but unpaid thereon to such maturity
date.
Any Notes issued in definitive form will be issued only in fully registered
form, without coupons, in denominations of $1,000 and in integral multiples
thereof, in the amount of each holder's registered holdings. Any Notes so
issued will be registered in such names, and in such denominations, as the
Depositary shall request. Such Notes may be presented for registration of
transfer or exchange at the office of the Trustee in Chicago, Illinois and
principal thereof and interest thereon will be payable at such office of the
Trustee, provided that interest thereon may be paid by check mailed to the
registered holders of the definitive Notes. In the event definitive Notes are
issued, the holders thereof will be able to receive payments thereon and effect
transfers thereof at the offices of Banque Internationale a Luxembourg or its
successor as paying agent in Luxembourg with respect to the Notes.
The Company has appointed Banque Internationale a Luxembourg as a paying
agent and transfer agent in Luxembourg with respect to the Notes, and as long
as the Notes are listed on the Luxembourg Stock Exchange, the Company will
maintain a paying agent and transfer agent in Luxembourg and any change in the
Luxembourg paying agent and transfer agent will be published in Luxembourg. See
"Description of Notes--Notices."
Interest
Interest on the Notes will accrue from and including January 24, 2001 at the
rate of 6 1/2% per annum and will be payable semiannually on each January 24
and July 24, beginning July 24, 2001, to the persons in whose names the Notes
are registered at the close of business on the preceding January 9 or July 9,
respectively, except that interest payable at maturity shall be paid to the
same persons to whom principal of the Notes is payable. In the event any
principal of or interest on the Notes is due on a day other than a Business Day
(as defined below), the related payment of principal or interest will be made
on the next succeeding Business Day as if made on the date such payment was
due, and no interest will accrue on the amount so payable for the period from
and after the date such principal or interest is due, as the case may be.
"Business Day" with respect to any place of payment means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in such place of payment are authorized or obligated by law or executive order
to close. The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months.
S-7
<PAGE>
Depositary
Upon issuance, all Notes will be represented by one or more fully registered
global notes ("Global Notes"). Each such Global Note will be deposited with, or
on behalf of, The Depository Trust Company or any successor thereto ("DTC" or
the "Depositary"), as Depositary, and registered in the name of Cede & Co.
(DTC's partnership nominee). Investors may elect to hold interests in the
Global Notes through either the Depositary (in the United States) or
Clearstream Banking, societe anonyme ("Clearstream Luxembourg") (formerly
Cedelbank), 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. See "Description of Debt Securities--Book-Entry System" and "--
Global Clearance and Settlement Procedures" in the accompanying Prospectus.
Notices
Notices to holders of the Notes will be sent by mail to the registered
holders and will be published, whether the Notes are in global or definitive
form, and so long as the Notes are listed on the Luxembourg Stock Exchange, in
a daily newspaper of general circulation in Luxembourg. It is expected that
publication will be made in Luxembourg in the Luxemburger Wort. Any such notice
shall be deemed to have been given on the date of such publication or, if
published more than once, on the date of the first such publication. So long as
the Notes are listed on the Luxembourg Stock Exchange, any change in the
Luxembourg Paying Agent and Transfer Agent will be published in Luxembourg in
the manner set forth above.
Further Issues
The Company may from time to time, without notice to or the consent of the
registered holders of the Notes, create and issue further notes ranking pari
passu with the Notes in all respects (or in all respects except for the payment
of interest accruing prior to the issue date of such further Notes or except
for the first payment of interest following the issue date of such further
Notes) and so that such further Notes may be consolidated and form a single
series with the Notes and have the same terms as to status, redemption or
otherwise as the Notes.
Payment of Additional Amounts
The Company will, subject to the exceptions and limitations set forth below,
pay as additional interest on the Notes, such additional amounts ("Additional
Amounts") as are necessary in order that the net payment by the Company or a
paying agent of the principal of and interest on the Notes to a holder who is a
non-United States person (as defined below), after deduction for any present or
future tax, assessment or other governmental charge of the United States or a
political subdivision or taxing authority thereof or therein, imposed by
withholding with respect to the payment, will not be less than the amount
provided in the Notes to be then due and payable; provided, however, that the
foregoing obligation to pay Additional Amounts shall not apply:
(1) to any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, partner, member or shareholder of the holder if the holder is
an estate, trust, partnership, limited liability company or corporation, or
a person holding a power over an estate or trust administered by a
fiduciary holder, being considered as:
(a) being or having been present or engaged in a trade or business
in the United States or having had a permanent establishment in the
United States;
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States, a corporation that has
accumulated earnings to avoid United States federal income tax or a
private foundation or other tax exempt organization;
S-8
<PAGE>
(d) being or having been a "10-percent shareholder" of the Company
as defined in section 871(h)(3) of the United States Internal Revenue
Code or any successor provision;
(e) being a bank receiving payments on an extension of credit made
pursuant to a loan agreement entered into in the ordinary course of its
trade or business; or
(f) having made an election the effect of which is to make the
payment of principal of or interest on the Notes subject to United
States federal income tax;
(2) to any holder that is not the sole beneficial owner of the Note, or
a portion thereof, or that is a fiduciary, partnership or limited liability
company, but only to the extent that a beneficiary or settlor with respect
to the fiduciary, a beneficial owner or member of the partnership or
limited liability company would not have been entitled to the payment of an
additional amount had the beneficiary, settlor, beneficial owner or member
received directly its beneficial or distributive share of the payment;
(3) to any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of the failure of the holder or any other
person to comply with certification, identification or information
reporting requirements concerning the nationality, residence, identity or
connection with the United States of the holder or beneficial owner of such
Note, if compliance is required by statute, by regulation of the United
States Treasury Department or by an applicable income tax treaty to which
the United States is a party as a precondition to exemption from such tax,
assessment or other governmental charge;
(4) to any tax, assessment or other governmental charge that is imposed
otherwise than by withholding by the Company or a paying agent from the
payment;
(5) to any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of a change in law, regulation, or
administrative or judicial interpretation that becomes effective more than
15 days after the payment becomes due or is duly provided for, whichever
occurs later;
(6) to any estate, inheritance, gift, sales, excise, transfer, wealth or
personal property tax or similar tax, assessment or other governmental
charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest
on any Note, if such payment can be made without such withholding by any
other paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5), (6)
and (7).
The Notes are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable thereto.
Except as specifically provided under this heading "Payment of Additional
Amounts" and under the heading "Description of Notes--Redemption for Tax
Reasons," the Company shall not be required to make any payment with respect to
any tax, assessment or other governmental charge imposed by any government or a
political subdivision or taxing authority thereof or therein.
As used herein under the headings "Payment of Additional Amounts" and
"Description of Notes--Redemption for Tax Reasons," and in the accompanying
Prospectus under the headings "Certain United States Tax Documentation
Requirements" and "United States Taxation of Non-United States Persons" the
term "United States" means the United States of America (including the States
and the District of Columbia). "United States person" means any individual who
is a citizen or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof (other than a partnership that is not
treated as a United States person under any applicable Treasury regulations),
any estate the income of which is subject to United States federal income
taxation regardless of its source, or any trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in the Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons prior to such date that
elect to continue to be treated as United States persons will also be a United
States person. "Non-United States person" means a person who is not a United
States person.
S-9
<PAGE>
Redemption for Tax Reasons
If, as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change
in, or amendments to, an official position regarding the application or
interpretation of such laws, regulations or rulings, which change or amendment
is announced or becomes effective on or after the date of this Prospectus
Supplement, the Company becomes or, based upon a written opinion of independent
counsel selected by the Company, will become obligated to pay Additional
Amounts as described herein under the heading "Description of Notes--Payment of
Additional Amounts," then the Company may, at its option redeem, as a whole,
but not in part, the Notes on not less than 30 nor more than 60 days prior
notice, at a redemption price equal to 100% of their principal amount, together
with interest accrued but unpaid thereon to the date fixed for redemption.
Certain United States Tax Documentation Requirements and United States Taxation
of Non-United States Persons
The new regulations referred to in the Prospectus under "Certain United
States Tax Documentation Requirements" and "United States Taxation of Non-
United States Persons" became effective on January 1, 2001. Accordingly, non-
United States persons will be required to use the new IRS forms referred to in
the Prospectus under "Certain United States Tax Documentation Requirements"
(i.e., IRS Form W-8BEN and IRS Form W-8ECI) in lieu of former IRS Form W-8, IRS
Form 4224 and IRS Form 1001. Any reference to the old forms under the preceding
sections of the Prospectus should be read as a reference to the new forms.
Proposed EU Directive on the Taxation of Savings Income
In November 2000, the European Council confirmed proposals to proceed with a
new EU Directive on the taxation of savings income, which is designed to secure
that at least a minimum effective rate of tax is paid on all interest and
similar savings income earned by residents of EU member states. The Directive
is intended to come into effect in 2003. The key features of the proposed
Directive are:
. Where a "paying agent" established in any EU member state makes payments of
interest, discount or premium to an individual resident in another member
state, the tax authorities of the paying agent's member state will be
required to supply details of the payment to the tax authorities of the
other member state. For these purposes, the term "paying agent" is widely
defined to include both the principal obligor under a debt obligation; a
paying agent in the normal sense of that term; and an agent who collects
interest, discounts or premiums on behalf of an individual beneficially
entitled thereto.
. During a transitional period of not more than seven years from the coming
into effect of the Directive, certain member states (expected to be confined
to Austria, Belgium and Luxembourg, and possibly Greece and Portugal) may,
instead of supplying information on savings income to the tax authorities of
other member states, operate a withholding tax. In such cases, "paying
agents" established in the relevant member states must withhold tax from any
interest, discount or premium paid to an individual resident in another
member state. The withholding tax will be levied at a rate of 15% during the
first three years of the transitional period, and at a rate of 20% during
the remaining four years.
. Eurobonds and other negotiable debt securities which are issued before March
1, 2001, or under a prospectus issued before that date, will be exempt from
the withholding tax provisions of the Directive even if interest, discounts
or premiums on such securities are paid through a "paying agent" established
in a member state which adopts the transitional withholding tax regime.
Securities issued after March 1, 2001, or under a prospectus issued after
that date, will be fully within the scope of the Directive when it comes
into force.
It is expected that the Directive, which can be adopted only by unanimous
agreement amongst the member states, will also be conditional on the adoption
of equivalent measures in third party countries with significant financial
centers (including the United States and Switzerland) and in dependent or
associated territories of certain of the EU member states.
S-10
<PAGE>
Pending agreement on the precise text of the Directive, it is not possible
to say what effect, if any, the adoption of the Directive would have on the
Notes or payments in respect thereof.
If the Directive is adopted in its current form, no Additional Amounts will
be payable by the Company in respect of any withholding tax required by the
Directive legislation to be deducted.
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated January 17, 2001, we have agreed to sell to the underwriters
named below the following respective principal amounts of the Notes:
<TABLE>
<CAPTION>
Principal
Underwriter Amount
----------- --------------
<S> <C>
Credit Suisse First Boston Corporation.................... $ 606,800,000
Banc of America Securities LLC............................ 606,600,000
Chase Securities Inc. .................................... 606,600,000
Banc One Capital Markets, Inc. ........................... 30,000,000
Barclays Capital Inc...................................... 30,000,000
Deutsche Bank Securities Inc. ............................ 30,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated........ 30,000,000
Morgan Stanley & Co. Incorporated......................... 30,000,000
UBS Warburg LLC........................................... 30,000,000
--------------
Total................................................. $2,000,000,000
==============
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all of the Notes, if any are purchased. The underwriting agreement
provides that, in the event of a default by an underwriter, in certain
circumstances the purchase commitments of non-defaulting underwriters may be
increased or the offering of the Notes may be terminated.
The underwriters propose to offer the Notes initially at the public offering
price on the cover page of this prospectus supplement and to selling group
members at that price less a concession of .200% of the principal amount per
Note. The underwriters and selling group members may allow a discount of .125%
of such principal amount per Note on sales to other broker/dealers. After the
initial public offering, the public offering price and concession and discount
to broker/dealers may be changed by the underwriters.
Although application has been made to list the Notes on the Luxembourg Stock
Exchange, a listing may not be obtained. The Notes are a new issue of
securities with no established trading market. One or more of the underwriters
intends to make a secondary market for the Notes. However, they are not
obligated to do so and may discontinue making a secondary market for the Notes
at any time without notice. No assurance can be given as to the liquidity of
the trading market for the Notes.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act of 1933, or to contribute to payments which the underwriters may
be required to make in that respect.
We estimate that our out of pocket expenses for this offering will be
approximately $1,000,000.
Some of the underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including commercial and investment banking
services, for, the Company and its affiliates in the ordinary course of
business.
The Notes are offered for sale in those jurisdictions in the United States,
Canada, Europe, Asia and elsewhere where it is lawful to make such offers.
S-11
<PAGE>
Each of the underwriters has represented and agreed that it has not offered,
sold or delivered and will not offer, sell or deliver any of the Notes directly
or indirectly, or distribute this Prospectus Supplement or the Prospectus or
any other offering material relating to the Notes, in or from any jurisdiction
except under circumstances that will result in compliance with the applicable
laws and regulations thereof and that will not impose any obligations on the
Company except as set forth in the underwriting agreement.
In particular, each underwriter has represented and agreed that:
(i) it has not offered or sold and, prior to the expiry of the period of
six months from the issue date of the Notes, will not offer or sell any
Notes to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purpose of their businesses or
otherwise in circumstances which have not resulted and will not result in
an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995 (as amended);
(ii) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by it in
relation to any Notes in, from or otherwise involving the United Kingdom;
(iii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue
of the Notes to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996 (as amended) or is a person to whom such document may otherwise
lawfully be issued or passed on;
(iv) it will not offer or sell any Notes directly or indirectly in Japan
or to, or for the benefit of any Japanese person or to others, for re-
offering or re-sale directly or indirectly in Japan or to any Japanese
person except pursuant to an exemption from the registration requirements
of, and otherwise in compliance with, Securities and Exchange Law of Japan
and any other applicable laws and regulations of Japan. For purposes of
this paragraph, "Japanese person" shall mean any person resident in Japan,
including any corporation or other entity organized under the laws of
Japan;
(v) it is aware of the fact that no German selling prospectus
(Verkaufsprospekt) has been or will be published in respect of the sale of
the Notes and that it will comply with the Securities Selling Prospectus
Act (the "Act") of the Federal Republic of Germany (Wertpapier-
Verkaufsprospektgeset:). In particular, each Underwriter has undertaken not
to engage in public offering (offentliche Anbieten) in the Federal Republic
of Germany with respect to any Notes otherwise than in accordance with the
Act and any other act replacing or supplementing the Act and all other
applicable laws and regulations; and
(vi) the Notes are being issued and sold outside the Republic of France
and that, in connection with their initial distribution, it has not offered
or sold and will not offer or sell, directly or indirectly, any Notes to
the public in the Republic of France, and that it has not distributed and
will not distribute or cause to be distributed to the public in the
Republic of France the Prospectus Supplement, the Prospectus or any other
offering material relating to the Notes, and that such offers, sales and
distributions have been and shall be made in France only to (i) qualified
investors (investisseurs qualfies) and/or (ii) a restricted group of
investors (cercle restreint d'investisseurs), all as defined in Article 6
of ordonnance no. 67-833 dated 28th September, 1967 (as amended) and decret
no. 98-880 dated 1st October, 1998.
In connection with the offering the underwriters, may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
S-12
<PAGE>
. Syndicate covering transactions involve purchases of the Notes in the
open market after the distribution has been completed in order to cover
syndicate short positions.
. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the Notes originally sold by such syndicate
member are purchased in a stabilizing transaction or a syndicate covering
transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
Notes or preventing or retarding a decline in the market price of the Notes. As
a result, the price of the Notes may be higher than the price that might
otherwise exist in the open market. These transactions, if commenced, may be
discontinued at any time.
It is expected that delivery of the Notes will be made against payment
therefor on or about the date specified in the penultimate paragraph of the
cover page of this Prospectus, which is the fifth business day following the
date hereof. Under Rule 15c6-1 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934, trades in the secondary market generally
are required to settle in three business days, unless the parties to any such
trade expressly agree otherwise. Accordingly, purchasers who wish to trade
Notes on the date hereof or the next succeeding business day will be required,
by virtue of the fact that the Notes initially will settle in T+5, to specify
an alternate settlement cycle at the time of any such trade to prevent a failed
settlement and should consult their own advisor.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the Notes are effected. Accordingly, any resale of the Notes in
Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to
be made in accordance with the available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
resale of the Notes.
Representations of Purchasers
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Company and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent, (iii) if in
Quebec, such purchaser shall be deemed to have agreed that all documents
relating to such purchase be in English only, and (iv) such purchaser has
reviewed and acknowledges the terms above under "Resale Restrictions."
Rights of Action (Ontario Purchasers)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provision
of the U.S. federal securities laws.
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within
S-13
<PAGE>
Canada upon the issuer or such persons. All or a substantial portion of the
assets of the issuer and such persons may be located outside of Canada and, as
a result, it may not be possible to satisfy a judgment against the issuer or
such persons in Canada or to enforce a judgment obtained in Canadian courts
against the issuer or such persons outside of Canada.
Notice to British Columbia Residents
A purchaser of Notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes
acquired by such purchaser pursuant to this offering. Such report must be in
the form attached to British Columbia Securities Commission Blanket Order BOR
#95/17, a copy of which may be obtained from the Company. Only one such report
must be filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
Taxation and Eligibility for Investment
Canadian purchasers of the Notes should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the Notes in
their particular circumstances and with respect to the eligibility of the Notes
for investment by the purchaser under relevant Canadian legislation.
LEGAL OPINIONS
The legality of the Notes will be passed upon for HFC by John W. Blenke,
Vice President--Corporate Law and Assistant Secretary for Household
International, Inc., the parent of HFC. Certain legal matters will be passed
upon for the underwriters by McDermott, Will & Emery, Chicago, Illinois. Mr.
Blenke is a full-time employee and an officer of Household International, Inc.
and owns, and holds options to purchase, shares of Common Stock of Household
International, Inc.
EXPERTS
The consolidated financial statements and schedules of HFC and its
subsidiaries incorporated by reference in this Prospectus Supplement, to the
extent and for the periods indicated in its reports, have been audited by
Arthur Andersen LLP, independent public accountants, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
giving said reports.
S-14
<PAGE>
GENERAL INFORMATION
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and the By-Laws of the Company and a legal notice relating to the
issuance of the Notes have been deposited prior to listing with Greffier en
Chef du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may
be obtained upon request. Copies of the above documents together with this
Prospectus Supplement, the accompanying Prospectus, the Indenture, the form of
Underwriting Agreement and the Company's current Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as all
such future reports, so long as any of the Notes are outstanding, will be made
available for inspection at the main office of Banque Internationale a
Luxembourg, in Luxembourg. Banque Internationale a Luxembourg will act as
intermediary between the Luxembourg Stock Exchange and the Company and the
holders of the Notes, as long as the Notes are represented by Global Notes. In
addition, copies of the above reports of the Company may be obtained free of
charge at such office.
Other than as disclosed or contemplated herein or in the documents
incorporated herein by reference, there has been no material adverse change in
the financial position of the Company since December 31, 1999.
The Company does not publish unconsolidated financial statements.
The independent accountants of the Company are Arthur Andersen LLP, Chicago,
Illinois.
Other than as disclosed or contemplated in the documents incorporated herein
by reference, neither the Company nor any of its subsidiaries is involved in
litigation, arbitration, or administrative proceedings relating to claims or
amounts that are material in the context of the issue of the Notes and the
Company is not aware of any such litigation, arbitration, or administrative
proceedings pending or threatened.
Resolutions relating to the issue and sale of the Notes were adopted by the
Board of Directors of the Company on January 17, 2001.
The Notes, the Indenture and the Underwriting Agreement are governed by, and
shall be construed in accordance with, the laws of the State of Illinois,
United States of America, applicable to agreements made and to be performed
wholly within such jurisdiction.
The Notes have been approved for clearance through the Clearstream
Luxembourg and Euroclear systems. The Notes have been assigned Euroclear and
Clearstream Luxembourg Common Code No. 012364997, International Security
Identification Number (ISIN) US441812JT28 and CUSIP No. 441812JT2.
S-15
<PAGE>
Household Finance Corporation
$11,261,000,000
Debt Securities
and
Warrants to Purchase Debt Securities
----------------
Household Finance Corporation may sell at one or more times up to
$11,261,000,000 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 April 7, 2000
<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 $11,261,000,000. 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, "us," "we," "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, 1999; and
. Current Report on Form 8-K dated February 10, 2000.
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.
2
<PAGE>
HOUSEHOLD FINANCE CORPORATION
HFC was incorporated in Delaware in 1925, as successor to an enterprise
which traces its origin through the same ownership to an office established in
1878. The address of its principal executive office is 2700 Sanders Road,
Prospect Heights, Illinois 60070 (telephone (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, telemarketing and the
internet. 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 primarily through strategic affinity relationships. 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. We also make tax refund anticipation
loans. These loans are marketed to consumers at H&R Block offices and offices
of other tax preparation services throughout the U.S.
Subsidiaries of HFC primarily service the loans made by HFC and its
subsidiaries, including loans made by the credit card operations.
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.
USE OF PROCEEDS
Unless otherwise indicated in the prospectus supplement, we will apply the
net proceeds from the sale of the securities to our general funds to be used in
our financial services business, including the funding of investments in, or
extensions of credit to, our affiliates. Pending such applications, the net
proceeds will be used initially to reduce our outstanding commercial paper. The
proceeds of such commercial paper are used in connection with our financial
services business.
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for HFC and subsidiaries for the
periods indicated below was as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges..................... 1.72 1.32 1.61 1.57 1.41
</TABLE>
For purposes of calculating the ratio, earnings consist of net income 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 Corporation. Excluding the
merger and integration related costs of $751 million after-tax, the December
31, 1998 ratio would have been 1.81.
--------
* MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA USA, Inc., respectively.
4
<PAGE>
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. $11,261,000,000, 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
5
<PAGE>
redemption provisions, be redeemed at the option of HFC or of the holder
thereof and the other detailed terms and provisions of such optional
redemption; (10) the denominations in which the Offered Debt Securities are
authorized to be issued; (11) the securities exchange, if any, on which the
Debt Securities will be listed; and (12) additional provisions, if any, with
respect to the Offered Debt Securities.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of or any interest on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Debt Securities and such currencies or currency
units will be set forth in a Prospectus Supplement relating thereto.
Debt Securities may be issued as Original Issue Discount Securities to be
offered and sold at a discount below their stated principal amount. "Original
Issue Discount Securities" means any Debt Securities that provide for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the maturity thereof upon the occurrence of an Event of
Default and the continuation thereof. As used in the following summary of
certain terms of the Debt Securities, the term "principal amount" means, in the
case of any Original Issue Discount Security, the amount that would then be due
and payable upon acceleration of the maturity thereof, as specified in such
Debt Security.
Book-Entry System
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 Clearstream
Banking, societe anonyme, formerly Cedelbank ("Clearstream Luxembourg"), 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.
Clearstream Luxembourg and Euroclear will hold interests on behalf of their
participants through customers' securities accounts in Clearstream Luxembourg'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 Clearstream Luxembourg 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
6
<PAGE>
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 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
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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.
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.
Clearstream Luxembourg advises that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream Luxembourg holds
securities for its participating organizations ("Clearstream Participants") and
facilitates the clearance and settlement of securities transactions between
Clearstream Participants through electronic book-entry changes in accounts of
Clearstream Participants, thereby eliminating the need for physical movement of
certificates. Clearstream Luxembourg provides to Clearstream Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Clearstream Luxembourg interfaces with domestic markets in several
countries. As a professional depositary, Clearstream Luxembourg is subject to
regulation by the Luxembourg Monetary Institute. Clearstream 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 Clearstream Luxembourg is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Clearstream Participant either directly or indirectly.
Distributions with respect to Offered Debt Securities held beneficially
through Clearstream Luxembourg will be credited to cash accounts of Clearstream
Participants in accordance with its rules and procedures, to the extent
received by the U.S. Depositary for Clearstream Luxembourg.
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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 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 Clearstream Luxembourg or
Euroclear, secondary market trading between Clearstream Participants and/or
Euroclear Participants will occur in the ordinary way in accordance with the
applicable rules and operating procedures of Clearstream Luxembourg 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
Clearstream 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
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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. Clearstream Participants and Euroclear
Participants may not deliver instructions directly to the Depositary.
Because of time-zone differences, credits of Offered Debt Securities
received in Clearstream Luxembourg or Euroclear as a result of a transaction
with a DTC Participant will be made during subsequent securities settlement
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
Clearstream Participants on such business day. Cash received in Clearstream
Luxembourg or Euroclear as a result of sales of Offered Debt Securities by or
through a Clearstream 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 Clearstream Luxembourg or Euroclear cash
account only as of the business day following settlement in the Depositary.
Although the Depositary, Clearstream Luxembourg and Euroclear have agreed to
the foregoing procedures in order to facilitate transfers of Offered Debt
Securities among participants of the Depositary, Clearstream Luxembourg 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,
Bank One, National Association, Allfirst 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
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corporation merges or consolidates with or into HFC or which security interests
exist at the time of the sale or transfer of all or substantially all of the
assets of such corporation to HFC; (d) security interests to secure any
indebtedness of HFC to a subsidiary; (e) security interests in property of HFC
in favor of the United States of America or any state or agency or
instrumentality thereof, or in favor of any other country or political
subdivision, to secure partial, progress, advance, or other payments pursuant
to any contract or statute or to secure any indebtedness incurred or guaranteed
for the purpose of financing all or any part of the purchase price or the cost
of construction of the property subject to such security interests; (f)
security interests on properties financed through tax-exempt municipal
obligations; provided that such security interests are limited to the property
so financed; (g) security interests existing on the date of execution of the
applicable Indenture; and (h) any extension, renewal, refunding, or replacement
(or successive extensions, renewals, refundings, or replacements), in whole or
in part, of any security interest referred to in the foregoing clauses (a)
through (g) inclusive; provided, however, that the principal amount of
indebtedness secured in such extension, renewal, refunding, or replacement does
not exceed the principal amount of indebtedness secured at the time by such
security interest; provided, further, that such extension, renewal, refunding,
or replacement of such security interest is limited to all or part of the
property subject to such security interest so extended, renewed, refunded, or
replaced.
Notwithstanding the foregoing, HFC may, without equally and ratably securing
the Senior Debt Securities, issue, assume, or guarantee indebtedness secured by
a security interest not excepted pursuant to clauses (a) through (h) above if
the aggregate amount of such indebtedness, together with all other indebtedness
of, or guaranteed by, HFC existing at such time and secured by security
interests not so excepted, does not at the time exceed 10% of HFC's
Consolidated Net Worth (as defined). In addition, an arrangement with any
person providing for the leasing by HFC of any property, which property has
been or is to be sold or transferred by HFC to such person with the intention
that such property be leased back to HFC, shall not be deemed to create any
indebtedness secured by a security interest if the obligation in respect to
such lease would not be included as a liability on a consolidated balance sheet
of HFC. The holders of not less than a majority in principal amount of the Debt
Securities at the time outstanding under an Indenture, on behalf of the holders
of all of the Debt Securities issued under such Indenture, may waive compliance
with the foregoing covenant. (Standard Provisions--Section 3.08)
Concerning the Trustees
HFC maintains a banking relationship with each of the Senior Trustees or
affiliates thereof and certain of the Senior Trustees are also trustees under
other indentures of HFC under which outstanding senior or subordinated
unsecured debt securities of HFC have been issued. The Senior Trustees or
affiliates thereof may also have other financial relations with HFC and other
corporations affiliated with HFC.
Senior Subordinated Debt Securities
Offered Debt Securities which will constitute senior subordinated unsecured
debt of HFC (the "Senior Subordinated Debt Securities") will be issued under 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
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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, 1999, the aggregate amount of the outstanding
senior indebtedness of HFC was approximately $30.4 billion. HFC is not directly
limited in its ability to issue additional senior indebtedness.
In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to HFC or to its creditors, as such, or to its
property, and in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of HFC, whether or not involving insolvency or
bankruptcy, then the holders of senior indebtedness shall be entitled to
receive payment in full of all principal and interest on all senior
indebtedness before the holders of the Senior Subordinated Debt Securities are
entitled to receive any payment on account of principal or interest upon the
Senior Subordinated Debt Securities, and to that end (but subject to the power
of a court of competent jurisdiction to make other equitable provision
reflecting the rights conferred in the Indentures for Senior Subordinated Debt
Securities upon the senior indebtedness and the holders thereof with respect to
the subordinated indebtedness represented by the Senior Subordinated Debt
Securities and the holders thereof by a lawful plan of reorganization under
applicable bankruptcy law) the holders of senior indebtedness shall be entitled
to receive for application in payment thereof any payment or distribution of
any kind or character, whether in cash or property or securities, which may be
payable or deliverable in any such proceedings in respect of the Senior
Subordinated Debt Securities, except securities which are subordinate and
junior in right of payment to the payment of all senior indebtedness then
outstanding.
In the event that any Senior Subordinated Debt Security is declared or
becomes due and payable before its expressed maturity because of the occurrence
of a default under the 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.
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Satisfaction, Discharge, and Defeasance of the Indentures and Debt Securities
If there is deposited irrevocably with the Trustee as trust funds for the
benefit of the holders of Debt Securities of a particular series an amount, in
money or the equivalent in securities of the United States or securities the
principal of and interest on which is fully guaranteed by the United States,
sufficient to pay the principal, premium, if any, and interest, if any, on such
series of Debt Securities on the dates such payments are due in accordance with
the terms of such series of Debt Securities through their maturity, and if HFC
has paid or caused to be paid all other sums payable by it under the applicable
Indenture with respect to such series, then HFC will be deemed to have
satisfied and discharged the entire indebtedness represented by such series of
Debt Securities and all of the obligations of HFC under such Indenture with
respect to such series, except as otherwise provided in such Indenture. In the
event of any such defeasance, holders of such Debt Securities would be able to
look only to such trust funds for payment of principal, premium, if any, and
interest, if any, on their Debt Securities. (Standard Provisions--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
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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 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))
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DESCRIPTION OF WARRANTS
HFC may issue, together with any Debt Securities offered by any Prospectus
Supplement or separately, Warrants for the purchase of other Debt Securities.
The Warrants are to be issued under warrant agreements (each a "Warrant
Agreement") to be entered into between HFC and a bank or trust company, as
warrant agent ("Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of Warrants ("Offered Warrants"). A copy of
the forms of Warrant Agreement, including the form of warrant certificates
representing the Warrants ("Warrant Certificates"), reflecting the alternative
provisions to be included in the Warrant Agreements that will be entered into
with respect to particular offerings of Warrants, is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Warrant Agreement and the Warrant Certificates do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
the provisions of the Warrant Agreement and the Warrant certificates,
respectively, including the definitions therein of certain terms.
General
The Prospectus Supplement describes the terms of the Offered Warrants, the
Warrant Agreement relating to the Offered Warrants and the Warrant Certificates
representing the Offered Warrants, including the following: (1) the
designation, aggregate principal amount, and terms of the Debt Securities
purchasable upon exercise of the Offered Warrants; (2) the designation and
terms of any related Debt Securities with which the Offered Warrants are issued
and the number of Offered Warrants issued with each such Debt Security; (3) the
date, if any, on and after which the Offered Warrants and the related Offered
Debt Securities will be separately transferable; (4) the principal amount of
Debt Securities purchasable upon exercise of one Offered Warrant and the price
at which such principal amount of Debt Securities may be purchased upon such
exercise; (5) the date on which the right to exercise the Offered Warrants
shall commence and the date ("Expiration Date") on which such right shall
expire; (6) whether the Warrants represented by the Warrant Certificates will
be issued in registered or bearer form, and if registered, where they may be
transferred and registered; and (7) any other terms of the Offered Warrants.
Warrant Certificates will be exchangeable on the terms specified in the
Prospectus Supplement for new Warrant Certificates of different denominations,
and Warrants may be exercised at the corporate trust office of the Warrant
Agent or any other office indicated in the Prospectus Supplement. Prior to the
exercise of their Warrants, holders of Warrants will not have any of the rights
of Holders of the Debt Securities purchasable upon such exercise and will not
be entitled to payments of principal of, premium, if any, or interest, if any,
on the Debt Securities purchasable upon such exercise.
Exercise of Warrants
Each Offered Warrant will entitle the holder to purchase such principal
amount of Debt Securities at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the Prospectus Supplement
relating to the Offered Warrants by payment of such exercise price in full in
the manner specified in the Prospectus Supplement. Offered Warrants may be
exercised at any time up to the close of business on the Expiration Date set
forth in the Prospectus Supplement relating to the Offered Warrants. After the
close of business on the Expiration Date, unexercised Warrants will become
void.
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.
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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 are related to the
Company through stock ownership or that are banks receiving certain types of
interest as described in clauses (x) (a), (b) and (c) 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 Clearstream
Luxembourg as the holder of the Offered Debt Security, the IRS Form must be
provided to Euroclear or Clearstream Luxembourg, 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 Clearstream Luxembourg, 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.
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Regulations issued by the IRS, which are generally proposed to become
effective for payments made after December 31, 2000, 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 currently. 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 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 Debt Securities. 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
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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
(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, 2000, 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 issued by the IRS, which are currently proposed to become
effective for payments made after December 31, 2000, make certain modifications
to the certification procedures applicable to non-United States
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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.
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
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delayed delivery. The underwriters, dealers and such other persons will not
have any responsibility in respect of the validity or performance of such
contracts.
There can be no assurance that a secondary market will be created for the
Offered Securities or, if it is created, that it will continue.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with the ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of Offered Securities
on behalf of such Plan should determine whether such purchase is permitted
under the governing Plan documents and is prudent and appropriate for the Plan
in view of its overall investment policy and the composition and
diversification of its portfolio. Other provisions of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code") prohibit certain
transactions between a Plan and persons who have certain specified
relationships to the Plan ("parties in interest" within the meaning of ERISA or
"disqualified persons" within the meaning of Section 4975 of the Code). Thus, a
Plan fiduciary considering the purchase of Offered Securities should consider
whether such a purchase might constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code.
HFC may be considered a "party in interest" or a "disqualified person" with
respect to many Plans that are subject to ERISA. The purchase of Offered
Securities by a Plan that is subject to the fiduciary responsibility provisions
of ERISA or the prohibited transaction provisions of Section 4975 of the Code
(including individual retirement accounts and other plans described in Section
4975(c)(1) of the Code) and with respect to which 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.
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PRINCIPAL OFFICE OF THE COMPANY
2700 Sanders Road
Prospect Heights, Illinois 60070
TRUSTEE AND REGISTRAR
Bank One, National Association
Corporate Trust Office
1 Bank One Plaza
Mail Code IL 1-0126
Chicago, IL 60670-0126
LUXEMBOURG PAYING AGENT/TRANSFER AGENT
Banque Internationale a Luxembourg S.A.
69, route d'Esch
L-2953 Luxembourg
LISTING AGENT
Banque Internationale a Luxembourg S.A.
69, route d'Esch
L-2953 Luxembourg
LEGAL ADVISERS
To the Company To the Underwriters
as to United States Law as to United States Law
John W. Blenke, Esq. McDermott, Will & Emery
2700 Sanders Road 227 W. Monroe Street
Prospect Heights, Illinois 60070 Chicago, Illinois 60606
To the Company
as to United States Tax Law
Sidley & Austin
Bank One Plaza
Chicago, Illinois 60603
AUDITORS TO THE COMPANY
Arthur Andersen LLP
33 West Monroe Street
Chicago, Illinois 60603
