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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HOMESIDE LENDING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
FLORIDA 59-2725415
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
</TABLE>
7301 BAYMEADOWS WAY
JACKSONVILLE, FLORIDA 32256
(904) 281-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ROBERT J. JACOBS
EXECUTIVE VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
7301 BAYMEADOWS WAY
JACKSONVILLE, FLORIDA 32256
(904) 281-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
<TABLE>
<S> <C>
MARY ELLEN O'MARA JONATHAN B. MILLER
HUTCHINS, WHEELER & DITTMAR BROWN & WOOD LLP
A PROFESSIONAL CORPORATION ONE WORLD TRADE CENTER
101 FEDERAL STREET NEW YORK, NEW YORK 10048
BOSTON, MASSACHUSETTS 02110 (212) 839-5300
(617) 951-6600
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
in light of market and other conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C>
Debt Securities............................................. $1,000,000,000 $278,000
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</TABLE>
(1) Such amount shall be increased if any Debt Securities are issued at an
original issue discount, by an amount such that the net proceeds to be
received by the Registrant shall be equal to the above amount to be
registered. Any offering of securities denominated other than in U.S.
dollars will be treated as the equivalent in United States dollars based
upon the official exchange rate applicable to the purchase of such
securities from the Registrant. Pursuant to Rule 429 under the Securities
Act of 1933, the Prospectus included in the Registration Statement is a
combined prospectus and also relates to the remaining unsold Debt Securities
having an aggregate offering price of $408,000,000 previously registered by
the Registrant under Registration Statement No. 333-45603 which was filed
and declared effective on March 11, 1998 and under Registration Statement
No. 333-78629, which was filed and became effective on May 17, 1999. This
Registration Statement, which is a new registration statement, also
constitutes Post-Effective Amendment No. 1 to registration statement No.
333-45603 and registration statement No. 333-78629, and such Post-Effective
Amendment No. 1 shall hereafter become effective concurrently with the
effectiveness of this Registration Statement and in accordance with Section
8(c) of the Securities Act of 1933. This Registration Statement and the
registration statements amended hereby are collectively referred to herein
as the "Registration Statement."
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 30, 1999
PROSPECTUS
$1,408,000,000
HOMESIDE LENDING, INC.
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
----------------------
THE NOTES:
- - We will offer notes from time to time and specify the terms and conditions of
each issue of notes in a pricing supplement.
- - The notes will be senior unsecured debt securities of HomeSide.
- - The notes will have stated maturities of nine months or more from the date
they are originally issued.
- - We will pay amounts due on the notes in U.S. dollars or any other
consideration described in the pricing supplement.
- - The notes will have minimum denominations of $1,000.
- - The notes may bear interest at fixed or floating rates or may not bear any
interest. If the notes bear interest at a floating rate, the floating rate may
be based on one or more indices or formulas plus or minus a fixed amount or
multiplied by a factor.
- - We will state whether the notes can be redeemed or repaid before their
maturity and whether they are subject to mandatory redemption, redemption at
the option of HomeSide or repayment at the option of the holder of the notes.
INVESTING IN THE NOTES INVOLVES RISKS.
SEE "RISK FACTORS" ON PAGE 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus or any pricing supplement is truthful or complete. Any representation
to the contrary is a criminal offense.
<TABLE>
<CAPTION>
PROCEEDS,
PUBLIC OFFERING AGENT'S DISCOUNTS BEFORE EXPENSES,
PRICE AND COMMISSIONS TO HOMESIDE
--------------- ----------------- ----------------
<S> <C> <C> <C>
Per note............. 100% .125% - .750% 99.875% - 99.250%
Total................ $1,408,000,000 $1,760,000 - $10,560,000 $1,406,240,000 - $1,397,440,000
</TABLE>
We may sell notes to the agents referred to below as principal for resale
at varying or fixed offering prices or through the agents as agent using their
reasonable efforts on our behalf. We may also sell notes without the assistance
of the agents, whether acting as principal or as agent.
Our executive offices are located at 7301 Baymeadows Way, Jacksonville,
Florida 32256, telephone number (904) 281-3000.
MERRILL LYNCH & CO.
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
J.P. MORGAN & CO.
SALOMON SMITH BARNEY
WARBURG DILLON READ LLC
THE DATE OF THIS PROSPECTUS IS , 1999.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE> 3
TABLE OF CONTENTS
Risk Factors................................................ 3
HomeSide.................................................... 8
Ratio of Earnings to Fixed Charges.......................... 10
Use of Proceeds............................................. 10
Description of the Notes.................................... 11
United States Federal Income Taxation....................... 34
Plan of Distribution........................................ 41
Where You Can Find More Information......................... 42
Incorporation of Information We File With the SEC........... 43
Validity of the Notes....................................... 43
Experts..................................................... 43
References in this prospectus to "HomeSide", "we", "us" and "our" are to
HomeSide Lending, Inc. References in this prospectus to the "National" are to
National Australia Bank Limited, our ultimate parent entity.
References in this prospectus to the "agents" are to Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Banc of America Securities LLC, Chase Securities
Inc., J.P. Morgan Securities Inc., Salomon Smith Barney Inc. and Warburg Dillon
Read LLC, collectively.
You should rely only on the information contained or incorporated by
reference in this prospectus and any pricing supplement. Neither we nor the
agents have authorized any other person to provide you with different or
additional information. If anyone provides you with different or additional
information, you should not rely on it. Neither we nor the agents are making an
offer to sell these securities in any jurisdiction where the offer or sale is
not permitted. You should assume that the information contained or incorporated
by reference in this prospectus and any pricing supplement is accurate only as
of the date on the front cover of the pricing supplement.
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RISK FACTORS
Your investment in the notes involves risks. In consultation with your own
financial and legal advisers, you should carefully consider, among other
matters, the following discussion of risks before deciding whether an investment
in the notes is suitable for you. The notes are not an appropriate investment
for you if you are unsophisticated with respect to the significant components of
the risks described below.
NOTES INDEXED TO INTEREST RATE, CURRENCY OR OTHER INDICES OR FORMULAS HAVE
INHERENT RISKS
If you invest in notes indexed to one or more interest rate, currency or
other indices or formulas, there will be significant risks not associated with a
conventional fixed rate or floating rate debt security. These risks include
fluctuation of the indices or formulas and the possibility that you will receive
a lower, or no, amount of principal, premium or interest and at different times
than you expected. We have no control over a number of matters, including
economic, financial and political events, that are important in determining the
existence, magnitude and longevity of these risks and their results. In
addition, if an index or formula used to determine any amounts payable in
respect of the notes contains a multiplier or leverage factor, the effect of any
change in that index or formula will be magnified. In recent years, values of
certain indices and formulas have been volatile and volatility in those and
other indices and formulas may be expected in the future. However, past
experience is not necessarily indicative of what may occur in the future.
REDEMPTION MAY ADVERSELY AFFECT YOUR RETURN ON THE NOTES
If your notes are redeemable at our option or are subject to mandatory
redemption, we may, in the case of optional redemption, or must, in the case of
mandatory redemption, redeem your notes at times when prevailing interest rates
may be relatively low. Accordingly, you generally will not be able to reinvest
the redemption proceeds in a comparable security at an effective interest rate
as high as that of the notes.
THERE MAY BE AN UNCERTAIN TRADING MARKET FOR YOUR NOTES; MANY FACTORS AFFECT THE
TRADING VALUE OF YOUR NOTES
We cannot assure you that a trading market for your notes will ever develop
or be maintained. Many factors independent of our creditworthiness may affect
the trading market of your notes. These factors include:
- the complexity and volatility of the index or formula applicable to the
notes,
- the method of calculating the principal, premium and interest in respect
of the notes,
- the time remaining to the maturity of the notes,
- the outstanding amount of the notes,
- the redemption features of the notes,
- the amount of other securities linked to the index or formula applicable
to the notes, and
- the level, direction and volatility of market interest rates generally.
In addition, because some notes were designed for specific investment
objectives or strategies, these notes will have a more limited trading market
and may experience more price volatility. There may be a limited number of
buyers for these notes. This may affect the price you receive for these notes or
your ability to sell these notes at all. You should not purchase notes unless
you understand, and know that you can bear, the related investment risks.
OUR CREDIT RATINGS MAY NOT REFLECT ALL RISKS OF AN INVESTMENT IN THE NOTES
Our credit ratings are an assessment of our ability to pay our obligations.
Consequently, real or anticipated changes in our credit ratings will generally
affect the market value of your notes. Our credit ratings, however, may not
reflect the potential impact of risks related to structure, market or other
factors discussed above on the value of your notes.
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SUBSTANTIAL LEVERAGE MAY HAVE NEGATIVE CONSEQUENCES
We require substantial financing for our business operations. Our financing
is currently provided under a credit arrangement with the National, our
commercial paper program, currently limited to $1.5 billion outstanding at any
time, an amended and restated credit agreement which we originally entered into
on January 31, 1997, as well as through the sale from time to time of the notes.
As of March 31, 1999, we had aggregate outstanding indebtedness of approximately
$4.2 billion, none of which was secured, consisting of $1.2 billion of notes
outstanding under the indenture, $1.8 billion outstanding under HomeSide's
credit arrangement with the National and $1.3 billion outstanding under
HomeSide's commercial paper program. Borrowings under the credit agreement are
secured by the capital stock of HomeSide, HomeSide's immediate parent company
and each of HomeSide's subsidiaries and become further secured by the assets of
HomeSide upon the occurrence of certain events. See "Description of the
Notes -- Terms of the Notes." We may also incur additional indebtedness in the
future, although we are limited by provisions contained in the instruments
governing our current indebtedness, other than the indenture relating to the
notes, which imposes no such limitations.
The degree to which we are leveraged could have important consequences to
you, including the following:
- our ability to grow will depend on our ability to obtain additional
financing in the future for originating loans, investment in servicing
rights, working capital, capital expenditures and general corporate
purposes, and that ability may be impaired;
- a substantial portion of our cash flow from operations must be dedicated
to the payment of the principal of and interest on our indebtedness,
thereby reducing the funds available to finance operations; and
- we may be more highly leveraged than some of our competitors, which may
place us at a competitive disadvantage and make us more vulnerable to
economic downturns.
FUNDING SOURCES MAY NOT BE AVAILABLE
In order to operate our business, we require substantial financing. If we
are not successful in negotiating renewals of our current borrowings or in
arranging new financing, we may have to curtail our origination activities
and/or sell significant portions of our servicing portfolio. This would have a
significant negative impact on our business and results of operations. Financial
market conditions and our value and performance at the time of any refinancing,
among other factors, may affect our ability to refinance our bank credit
facilities or the securities offered hereby. We cannot assure you that any
refinancing can be successfully completed.
CHANGES IN INTEREST RATES COULD ADVERSELY IMPACT HOMESIDE
Changes in interest rates can have a variety of effects on our business. In
particular, changes in interest rates can affect:
- the volume of loan originations and acquisitions,
- the interest rate spread on loans held for sale,
- the amount of gain or loss on the sale of loans, and
- the size and value of our servicing portfolio.
During periods of declining interest rates, mortgage banking companies
typically experience an increase in loan originations because of increased home
purchases and increased refinancing activity. During 1997 to 1998, a period of
generally declining interest rates, refinancing activity as a percentage of
total originations in the industry increased from 31% in 1997 to 50% in 1998. In
contrast, refinancing activity was only 32% of total originations in 1994, 25%
in 1995 and 29% in 1996 as the result of generally increasing interest rates.
Increases in interest rates may adversely affect refinancing activity, which
could have a negative impact on HomeSide's origination revenues.
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Our net warehouse interest income is the difference between the interest
income we earn on loans held for sale, which is generally based on long-term
interest rates, and the interest we pay on our borrowings, which is generally
based on short-term interest rates. If this spread narrows or becomes negative,
our results of operations could be negatively impacted.
In addition, mortgage interest rate declines and loan prepayment increases
may adversely affect the size and value of our servicing portfolio. In periods
of declining interest rates, the economic advantages to borrowers of refinancing
their mortgage loans become greater. Because borrowers do not always refinance
their mortgage loans with their existing lender, mortgage banking companies,
including HomeSide, typically experience a reduction in the size of their
servicing portfolio during periods of declining interest rates. Increases in the
rate of mortgage loan prepayments increase servicing costs and reduce the period
during which we receive servicing income from the loans. We capitalize the cost
of the acquisition of servicing rights from third parties and began in 1996 to
capitalize servicing rights on loans that we originate. The value of servicing
rights is based upon the net present value of future cash flows. If the rate of
prepayment of the related loans exceeds the rate assumed by us, the value of the
servicing portfolio will decrease and accelerated amortization of servicing
rights may become necessary. Interest rate changes can also adversely affect our
ability to sell servicing rights to a third party or reduce the proceeds from a
sale.
A FAILURE OF OUR RISK MANAGEMENT ACTIVITIES MAY ADVERSELY AFFECT OUR
PROFITABILITY
From the time the interest rate on a customer's loan application is
established to the time we sell the loan, changes in interest rates may result
in gain or loss on the sale of a mortgage loan. To manage interest rate risk, we
use a hedging strategy that is designed to minimize the negative effect of
changes in interest rates on loans that have closed and loans for which interest
rate commitments have been given that are expected to close. We then enter into
forward sale commitments and option contracts with the Federal National Mortgage
Association (Fannie Mae), Federal Home Loan Mortgage Corporation (FHLMC) and the
private investors to whom we sell loans. The results of our hedging program
depend on a variety of factors, including the relationship between mortgage
rates and Treasury securities, the hedge instruments used and other factors. If
our strategy is not successful, our profitability may be negatively affected.
For each year since 1990, we and our predecessor, BancBoston Mortgage
Corporation, have not experienced secondary market losses.
UNSUCCESSFUL HEDGING OF SERVICING RIGHTS PORTFOLIO MAY ADVERSELY AFFECT OUR
PROFITABILITY AND FINANCIAL CONDITION
As described above, in periods of declining interest rates, the rate of
mortgage loan prepayments tends to increase and the value of our servicing
portfolio will tend to decrease. To manage this interest rate risk, we use a
hedging strategy that is designed to counteract the negative effect of changes
in interest rates on the value of our servicing portfolio. The results of this
hedging program depend on a variety of factors, including the relationship
between mortgage rates and mortgage refinancings, the hedge instruments used and
other factors. If our strategy is not successful, our profitability and
financial condition may be negatively impacted.
LOAN DELINQUENCIES AND DEFAULTS ON LOANS MAY ADVERSELY AFFECT OUR PROFITABILITY
Economic downturns may have a negative impact on our profitability as the
frequency of loan defaults tends to increase. From the time that we fund the
loans we originate to the time we sell the loans, generally 10 to 40 days, we
are generally at risk for any loan defaults. Once we sell the loans we
originate, the risk of loss from loan defaults and foreclosure generally passes
to the purchaser or insurer of the loans. In connection with sales, we typically
make some representations and warranties to the purchasers and insurers of loans
and to the purchasers of servicing rights. These representations and warranties
generally relate to the origination and servicing of loans in substantial
conformance with state and federal laws and applicable investor guidelines. If a
loan defaults and there has been a breach of these representations and
warranties, we become liable for the unpaid principal and interest on the
defaulted mortgage loan. In those circumstances, we may be required to
repurchase the loan and bear the subsequent loss, if any. Historically, the
impact of loans we have repurchased as the result of breaches of representations
and warranties has not been material. However, the number and amount of loans
repurchased in the future could increase due to the high volume of loans which
we originate,
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acquire and sell. Accordingly, we believe that future charges to net income
relating to loan repurchases may be necessary as loan origination volume
increases.
We are also affected by loan delinquencies and defaults on loans that we
service. Under certain types of servicing contracts, particularly contracts to
service loans that have been pooled or securitized, the servicer must advance
all or part of the scheduled payments to the owner of the loan, even when loan
payments are delinquent. Also, to protect their liens on mortgaged properties,
owners of loans usually require the servicer to advance mortgage and hazard
insurance and tax payments on schedule even if sufficient escrow funds are not
available. The servicer will be reimbursed, subject to certain limitations with
respect to Federal Housing Administration (FHC) and Veterans Administration (VA)
loans, by the mortgage owner or from liquidation proceeds for payments advanced
that the servicer is unable to recover from the mortgagor, although the timing
of reimbursement is typically uncertain. In the interim, the servicer must
absorb the cost of funds advanced during the time the advance is outstanding. In
addition, the servicer must bear the increased costs of attempting to collect on
delinquent and defaulted loans. We also forego servicing income from the time a
loan becomes delinquent until foreclosure when the amounts may be recovered, if
any proceeds are available.
We periodically incur losses attributable to servicing FHA and VA loans for
investors. Losses include actual losses for final disposition of loans that have
been foreclosed or assigned to the FHA or VA and accrued interest on FHA or VA
loans for which payment has not been received. Our servicing losses on
investor-owned loans have historically primarily represented losses on VA loans.
Because the total principal amount of FHA loans is guaranteed, losses on FHA
loans are generally limited to expenses of collection. We have experienced
minimal losses from FHA loans. With respect to VA loans, the VA guarantees the
initial losses on a loan. The guaranteed amount generally ranges from 20% to 35%
of the original principal balance. Before each foreclosure sale, the VA
determines whether to bid by comparing the estimated net sale proceeds to the
outstanding principal balance and the servicer's accumulated reimbursable costs
and fees. If this amount is a loss and exceeds the guaranteed amount, the VA
typically issues a no-bid and pays the servicer the guaranteed amount. Whenever
a no-bid is issued, the servicer absorbs the loss, if any, in excess of the sum
of the guaranteed principal and amounts recovered at the foreclosure sale. Our
historical delinquency and foreclosure rate experience on VA loans has generally
been consistent with that of the industry. We cannot assure you that our
servicing losses on investor-owned loans will not be greater in the future.
CONCENTRATION OF OUR BUSINESS IN SOME STATES MAY ADVERSELY AFFECT US IF THOSE
STATES EXPERIENCE ECONOMIC DOWNTURNS
Economic downturns in states in which we have a significant concentration
of business could have a negative impact on our results of operations. Loans in
Florida and California represented 12% and 13%, respectively, of our servicing
portfolio at March 31, 1999. We originate and purchase servicing rights for
mortgage loans nationwide and actively monitor the geographic distribution of
our servicing portfolio to maintain a mix that we deem appropriate and make
adjustments as we deem necessary. We cannot assure you that our monitoring of
and adjustments to geographic distribution will prevent any significant negative
impact on our business, results of operations and financial condition in the
future.
HIGHLY COMPETITIVE CONDITIONS IN OUR INDUSTRY MAY ADVERSELY AFFECT OUR REVENUES
The mortgage banking business is highly competitive. We compete with other
mortgage banking companies, commercial banks, savings associations, credit
unions and other financial institutions in every aspect of our business,
including funding and purchasing loans from mortgage brokers, purchasing loans
from correspondents and acquiring loan servicing rights and origination
capabilities. We compete with mortgage banking companies and other financial
institutions that have substantially greater financial resources, greater
operating efficiencies and longer operating histories than we do. Furthermore,
increasing consolidation in the mortgage industry is leading to an increased
market share for the largest mortgage companies. At the same time, Fannie Mae
and FHLMC are developing technologies and business practices that could reduce
their reliance on large mortgage companies for loan production and enable them
to access smaller producers for volume. If market pricing becomes more
competitive, we may be unable to achieve our planned level of originations or
consummate acquisitions of servicing rights at a satisfactory cost. Retail
mortgage banking
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companies have direct access to borrowers and generally are able to sell their
loans to the same entities that purchase our loans. We depend primarily on
mortgage brokers and correspondents for originating new loans. Competitors also
seek to establish relationships with mortgage brokers and correspondents, who
are not obligated by contract or otherwise to continue to do business with us.
REGULATION AND RELATED LEGAL MATTERS AFFECTING OUR BUSINESS MAY HAVE ADVERSE
CONSEQUENCES
Our mortgage banking business is subject to the rules and regulations of
the Federal Reserve Board, the Department of Housing and Urban Development
(HUD), FHA, VA, Fannie Mae, FHLMC, Government National Mortgage Association
(GNMA) and other regulatory agencies with respect to originating, processing,
underwriting, selling, securitizing and servicing mortgage loans. In addition,
other federal and state statutes and regulations affect these activities. These
rules and regulations, among other things, impose licensing obligations on us,
prohibit discrimination and establish underwriting guidelines which include
provisions for inspections and appraisals, require credit reports on prospective
borrowers and fix maximum loan amounts. Moreover, lenders such as ourselves are
required annually to submit audited financial statements to Fannie Mae, FHLMC,
GNMA and HUD and to comply with each regulatory entity's own financial
requirements. Our business is also subject to examination by Fannie Mae, FHLMC
and GNMA and state regulatory agencies at all times to assure compliance with
applicable regulations, policies and procedures.
There are various Federal and state laws that regulate mortgage origination
activities including, among others, the Equal Credit Opportunity Act, the
Federal Truth-in-Lending Act, the Real Estate Settlement Procedures Act, the
Fair Housing Act, and the regulations promulgated thereunder. These laws, among
other things, prohibit discrimination, prohibit unfair and deceptive trade
practices, and require the disclosure of basic information to mortgagors
concerning credit terms and settlement costs, limit fees and charges paid by
borrowers and lenders, and regulate terms and conditions of credit and the
procedures by which credit is offered and administered. Many of these regulatory
requirements are designed to protect the interests of consumers, while others
protect the owners or insurers of mortgage loans. Failure to comply with these
requirements can lead to loss of approved status, termination of servicing
contracts without compensation to the servicers, demands for indemnification or
loan repurchases, class action lawsuits and administrative enforcement actions.
These regulatory requirements may be changed and may become more restrictive,
making compliance more difficult or expensive or otherwise restricting our
ability to conduct our business as currently conducted.
Our net income reflects a reduction in interest expense on our borrowings
with depository institutions for custodial balances placed with such
institutions. Proposed revisions of applicable bank regulations could cause
these escrow accounts to be recharacterized as demand deposit accounts reducing
our net income. This would require reserves to be established with Federal
Reserve Banks, and would reduce the amount of the credit. If applied
retroactively to change our ability to receive credit for escrow balances, other
regulatory changes or interpretations would likewise adversely affect us.
In addition, certain states require that interest be paid to mortgagors on
funds deposited by them in escrow to cover mortgage-related payments such as
property taxes and insurance premiums. Federal legislation has in the past been
introduced that would revise current escrow regulations and establish a uniform
interest payment requirement in all states. There would be a negative impact on
our earnings if such federal legislation were enacted or if other states enact
legislation relating to payment of, or increases in the rate of, interest on
escrow balances, or if such legislation were retroactively applied to loans in
our servicing portfolio.
In recent years, the mortgage banking industry has been subject to class
action lawsuits which allege violations of federal and state laws and
regulations, including the propriety of collecting and paying various fees and
charges and the calculation of escrow amounts. Class action lawsuits may
continue to be filed against the mortgage banking industry generally. Defending
such lawsuits in the future may be expensive and any adverse judgments may make
it more expensive or difficult for us to conduct our business as currently
conducted.
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THE CONTINUED AVAILABILITY OF FEDERAL PROGRAMS AND ACTIVE SECONDARY MARKET ARE
UNCERTAIN
Our ability to sell mortgage loans and mortgage-backed securities is
largely dependent upon the continuation of programs of Fannie Mae, FHLMC, GNMA
and private investors. These entities facilitate the sale of mortgage loans and
mortgage-backed securities. Our continued eligibility to participate in these
programs is also a necessary element to the ability to sell mortgage loans.
Although we are not aware of any proposed discontinuation of, or significant
reduction in, the various programs of Fannie Mae, FHLMC, GNMA or private
investors, this could have a material adverse effect on our operations. We
expect that we will continue to remain eligible to participate in these
programs, but any significant impairment of our eligibility could also
materially and adversely affect our operations.
The sponsoring entity may change the requirements of loans accepted under
these programs. The profitability of participating in these programs may vary
depending on a number of factors, including the administrative costs to us of
originating and purchasing qualifying loans.
We cannot assure you that we will be successful in effecting the sale of
mortgage loans at the historic price or volume levels in the future. Any
significant change in the secondary market level of activity or underwriting
criteria of Fannie Mae, FHLMC or private investors could have a significant
negative impact on the gain or loss on sales of mortgage loans that we record
and therefore on our results of operations.
CONTROL IS CONCENTRATED IN NATIONAL AUSTRALIA BANK LIMITED
HomeSide had outstanding indebtedness of $1.8 billion pursuant to a credit
agreement with the National as of March 31, 1999. Also, HomeSide International,
Inc., the parent of HomeSide, is an indirect wholly-owned subsidiary of the
National. Accordingly, the National is able to control our direction and future
operations, including decisions regarding acquisitions and other business
opportunities, the declaration of dividends and the issuance of other securities
by us. Certain decisions concerning our operations or financial structure may
present conflicts of interest between the National and the holders of the
securities offered hereby.
HOMESIDE'S BUSINESS WOULD BE DISRUPTED IF ITS COMPUTER SYSTEMS AND THOSE OF ITS
SUPPLIERS AND VENDORS CANNOT WORK PROPERLY WITH YEAR 2000 DATA
We use and are dependent upon a significant number of computer software
programs and operating systems to conduct our business. These programs and
systems include those developed and maintained by us, as well as software and
systems purchased from outside vendors. We have initiated a review and
assessment of all hardware, software systems and processes to determine whether
it will function properly in the Year 2000. We have modified our mission
critical systems and successfully conducted internal testing on these systems to
ensure that they will function properly in the Year 2000. We presently believe
that costs associated with Year 2000 compliance efforts will not have a
significant impact on our ongoing results of operations, although we cannot
assure you about this. To the extent that we will be relying on our outside
software vendors, Year 2000 compliance matters will not be within our direct
control. In addition, we have relationships with vendors, customers and other
third parties that rely on computer software that may not be Year 2000
Compliant. We cannot assure you that Year 2000 compliance failures by third
parties will not have a significant negative impact on our results of
operations.
HOMESIDE
HomeSide is one of the largest full service residential mortgage banking
companies in the United States. On February 10, 1998, the National acquired all
outstanding shares of the common stock of HomeSide International, Inc., the
parent of HomeSide. HomeSide's predecessor was formed through the acquisition of
the mortgage banking operations of BankBoston, N.A. on March 16, 1996 and
subsequent purchase of the mortgage banking operations of Barnett Banks, Inc.
HomeSide's strategy emphasizes variable cost mortgage loan originations,
low cost mortgage servicing and effective risk management. Headquartered in
Jacksonville, Florida, HomeSide ranks as the 8th largest
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<PAGE> 10
mortgage loan originator and the 6th largest servicer in the United States at
March 31, 1999 based on data published by Inside Mortgage Finance.
HomeSide's business strategy is to increase the volume of its loan
originations and the size of its servicing portfolio while continuing to improve
operating efficiencies. In originating mortgages, HomeSide focuses on variable
cost channels of production, including correspondent, broker, consumer direct,
affinity, and co-issue sources. HomeSide also pursues strategic relationships
with other production sources to acquire and service residential mortgage loans.
Management believes that these variable cost channels of production deliver
consistent origination opportunities for HomeSide without the fixed cost
investment associated with traditional retail mortgage branch networks. HomeSide
believes that its ongoing investment in technology will further enhance and
expand existing processing capabilities and improve its efficiency. Based on
independent surveys of direct cost per loan and loans serviced per employee,
management believes that HomeSide has been one of the industry's most efficient
mortgage servicers. HomeSide's average cost per employee approximates the
average cost per employee of its major competitors.
HOMESIDE PLANS TO BUILD ITS CORE OPERATIONS THROUGH:
- improved economies of scale in servicing costs,
- increased productivity using proprietary technology, and
- expanded and diversified variable cost origination channels.
In addition, HomeSide intends to pursue additional loan portfolio acquisitions
and strategic origination relationships similar to its existing agreement with
BankBoston, N.A., People's Bank and Banc One Mortgage Corporation.
HomeSide's business activities consist primarily of:
- MORTGAGE PRODUCTION: origination and purchase of residential single
family mortgage loans through multiple channels including correspondents,
strategic partners, mortgage brokers, coissue partners, direct consumer
telemarketing and affinity programs;
- SERVICING: administration, collection and remittance of monthly mortgage
principal and interest payments, collection and payment of property taxes
and insurance premiums and management of certain loan default activities;
- SECONDARY MARKETING: sale of residential single family mortgage loans as
pools underlying mortgage-backed securities guaranteed or issued by
governmental or quasi-governmental agencies or as whole loans or private
securities to investors; and
- RISK MANAGEMENT: management of a program designed primarily to protect
the economic performance of the servicing portfolio that could otherwise
be adversely affected by loan prepayments due to declines in interest
rates.
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<PAGE> 11
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
HomeSide, which for any period prior to February 11, 1998 refers to HomeSide
prior to its acquisition by the National and for any period after February 11,
1998, refers to HomeSide after its acquisition by the National. The ratio of
earnings to fixed charges is computed by dividing net fixed charges (interest
expense on all debt plus the interest portion of rent expense) into earnings
before income taxes and fixed charges.
<TABLE>
<CAPTION>
HOMESIDE
HOMESIDE PREDECESSOR COMPANY HOMESIDE PREDECESSOR COMPANY HOMESIDE
- ----------------------------------------- -------------------- -------------------- -----------------------------------------
FOR THE PERIOD FROM FOR THE PERIOD FROM FOR THE PERIOD FROM FOR THE PERIOD FROM FOR THE PERIOD FROM FOR THE SIX
MARCH 16, 1996 TO MARCH 1, 1997 TO FEBRUARY 11, 1998 TO SEPTEMBER 1, 1997 FEBRUARY 11, 1998 MONTHS ENDED
FEBRUARY 29, 1997 FEBRUARY 10, 1998 SEPTEMBER 30, 1998 TO FEBRUARY 10, 1998 TO MARCH 31, 1998 MARCH 31, 1999
- ------------------- ------------------- -------------------- -------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
2.36 2.65 2.26 2.49 2.01 2.02
</TABLE>
USE OF PROCEEDS
Unless otherwise stated in a pricing supplement, we intend to use the net
proceeds from the sale of the notes to repay outstanding indebtedness and for
working capital and general corporate purposes, including the purchase of
servicing rights.
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<PAGE> 12
DESCRIPTION OF THE NOTES
The notes will be issued under an indenture, dated as of May 15, 1997,
between HomeSide and The Bank of New York, as trustee, a copy of which is filed
as an exhibit to the registration statement of which this prospectus forms a
part. The terms of the notes include those stated in the indenture and those
made a part of the indenture by reference to the Trust Indenture Act of 1939, as
amended. The following summary of the material provisions of the notes and of
the indenture is not complete and is qualified in its entirety by reference to
the indenture and the notes.
The following description of notes will apply unless otherwise stated in a
pricing supplement.
TERMS OF THE NOTES
The notes will be unsecured general obligations of HomeSide and will rank
equally with all other unsecured and unsubordinated indebtedness of HomeSide.
However, the notes will be effectively subordinated to all present and future
secured indebtedness of HomeSide as to its assets which secure the indebtedness,
as well as to the claims of creditors of HomeSide's subsidiaries as to the
assets of those subsidiaries. Our financing is currently provided under a credit
arrangement with the National, our commercial paper program, currently limited
to $1.5 billion outstanding at any time, an amended and restated credit
agreement with a group of bank lenders which we originally entered into on
January 31, 1997, as well as through the sale from time to time of the notes. As
of March 31, 1999, we had aggregate outstanding indebtedness of approximately
$4.2 billion, none of which was secured, consisting of $1.2 billion of notes
outstanding under the indenture, $1.8 billion outstanding under HomeSide's
credit arrangement with the National and $1.3 billion outstanding under
HomeSide's commercial paper program. Borrowings under the credit agreement are
guaranteed by HomeSide International, Inc., HomeSide's indirect parent company.
In addition, HomeSide International has pledged to the bank lenders all of the
capital stock of HomeSide Holdings, Inc., HomeSide's direct parent company.
HomeSide Holdings has pledged all the capital stock of HomeSide and HomeSide has
pledged all the capital stock of its subsidiaries as security under the bank
credit agreement. Upon certain events, including HomeSide having ratings on its
unsecured long-term senior non-credit-enhanced debt of less than BBB by Standard
& Poor's Rating Services and less than Baa2 by Moody's Investor Services, Inc.,
the credit agreement also becomes secured by (i) all mortgage loans and
mortgage-backed securities submitted for inclusion in the borrowing base for the
warehouse credit facility portion of the credit agreement and all take-out
commitments and hedge contracts related thereto, (ii) all servicing rights and
hedge contracts and receivables related thereto, and (iii) any other assets
included in determining the borrowing bases under the credit agreement. The
credit agreement will again become unsecured (except for the stock pledges) upon
the occurrence of certain other events.
The indenture does not contain any provisions that would limit HomeSide
from incurring indebtedness or from reducing or eliminating its assets, or that
would protect the holders of notes in the event of a decline in HomeSide's
credit quality or a takeover, recapitalization or highly leveraged or similar
transaction, except for those described below under the heading "Consolidation,
Merger and Transfer of Assets". In addition, subject to the limitations
described under that heading, HomeSide may enter into certain transactions, such
as the sale of all or substantially all of its assets or a merger or
consolidation, that would increase the amount of HomeSide's indebtedness or
reduce or eliminate its assets. This may have an adverse effect on HomeSide's
ability to service its indebtedness, including the notes. The bank credit
agreement and the indenture of HomeSide International, Inc., HomeSide's parent
company, contain covenants that restrict HomeSide's ability to incur
indebtedness, but subject to certain conditions, including compliance with
certain financial tests specified therein, do not limit the ability of HomeSide
to issue notes.
The notes are currently limited to up to $2,568,000,000 aggregate initial
offering price, or the equivalent thereof in one or more foreign currencies
including the $1,160,000,000 of notes already issued and currently outstanding.
HomeSide may, without the consent of the holders of the notes, issue notes or
other securities under its indenture in addition to the notes offered by this
prospectus.
The notes will be offered on a continuing basis and will mature on a day
nine months or more from the date of issue, as specified in a pricing
supplement. Interest-bearing notes will bear interest at either fixed or
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<PAGE> 13
floating rates as specified in the pricing supplement. Notes may be issued at
significant discounts from their principal amount payable at stated maturity, or
on any date before the stated maturity date on which the principal or an
installment of principal of a note becomes due and payable, whether by the
declaration of acceleration, call for redemption at the option of HomeSide,
repayment at the option of the holder or otherwise (the stated maturity date or
such prior date, as the case may be, is referred to as the "Maturity" with
respect to the principal of such note repayable on such date). Some notes may
not bear interest.
Interest rates, interest rate formulas and other variable terms of the
notes may be changed by HomeSide from time to time, but no change will affect
any note already issued or as to which HomeSide has accepted an offer to
purchase.
Unless otherwise indicated in a note and in the applicable pricing
supplement, the notes will be denominated in United States dollars, and we will
make payments of the principal of, and any premium and interest on, the notes in
United States dollars. Each note will be issued in fully registered book-entry
form or certificated form, in denominations of $1,000 and integral multiples of
$1,000, unless otherwise specified in the applicable pricing supplement. Notes
in book-entry form may be transferred or exchanged only through a participating
member of The Depository Trust Company, also known as DTC, or any other
depository as is identified in a pricing supplement. See "-- Book-Entry Notes".
Registration of transfer of notes in certificated form will be made at the
corporate trust office of the trustee. There will be no service charge for any
registration of transfer or exchange of notes, but HomeSide may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection with any transfer or exchange.
HomeSide will make payments of principal of, and any premium and interest
on, notes in book-entry form through the trustee to the depository or its
nominee. See "-- Book-Entry Notes". Unless otherwise specified in the applicable
pricing supplement, a beneficial owner of notes in book-entry form that are
denominated in a currency other than United States dollars (a "Specified
Currency") electing to receive payments of principal or any premium or interest
in that Specified Currency must notify the participant of DTC through which its
interest is held on or before the applicable regular record date, in the case of
a payment of interest, and on or before the sixteenth day, whether or not a
Business Day, as defined below, before its stated maturity, in the case of
principal or premium, of the beneficial owner's election to receive all or a
portion of any payment in a Specified Currency. The participant must notify the
depository of any election on or before the third Business Day after the regular
record date. The depository will notify the paying agent of the election on or
before the fifth Business Day after the regular record date. If complete
instructions are received by the participant and forwarded to the depository,
and forwarded by the depository to the paying agent, on or before the relevant
dates, the beneficial owner of the notes in book-entry form will receive
payments in the Specified Currency.
In the case of notes in certificated form, HomeSide will make payment of
principal or premium, if any, at the Maturity of each note in immediately
available funds upon presentation of the note and, in the case of any repayment
on an optional repayment date, upon submission of a duly completed election form
if and as required by the provisions described below, at the corporate trust
office of the trustee in the Borough of Manhattan, The City of New York, or at
any other place as HomeSide may designate. HomeSide will pay interest due at
Maturity to the person to whom payment of the principal of the note in
certificated form will be made. HomeSide will pay interest due on notes in
certificated form other than at Maturity at the corporate trust office of the
trustee or, at the option of HomeSide, by check mailed to the address of the
person entitled to receive payment as the address shall appear in the security
register. However, a holder of $10,000,000 or more, or if the Specified Currency
is other than United States dollars, the equivalent thereof in such Specified
Currency, in aggregate principal amount of notes in certificated form, whether
having identical or different terms and provisions, having the same interest
payment dates will, at the option of HomeSide, be entitled to receive interest
payments, other than at Maturity, by wire transfer of immediately available
funds if appropriate wire transfer instructions have been received in writing by
the trustee not less than 15 days before the interest payment date. Any wire
instructions received by the trustee shall remain in effect until revoked by the
holder.
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<PAGE> 14
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which commercial banks are authorized or
required by law, regulation or executive order to close in The City of New York;
provided, however, that, with respect to non-United States dollar-denominated
notes, the day is also not a day on which commercial banks are authorized or
required by law, regulation or executive order to close in the Principal
Financial Center, as defined below, of the country issuing the Specified
Currency or, if the Specified Currency is Euro, the day is also a day on which
the Trans-European Automated Real-time Gross Settlement Express Transfer
(TARGET) System is open; provided, further, that, with respect to notes as to
which LIBOR is an applicable Interest Rate Basis, the day is also a London
Business Day. "London Business Day" means a day on which commercial banks are
open for business, including dealings in the Designated LIBOR Currency, as
defined below, in London.
"Principal Financial Center" means, unless otherwise specified in the
applicable pricing supplement,
(1) the capital city of the country issuing the Specified Currency, except
that with respect to United States dollars, Australian dollars,
Canadian dollars, Deutsche marks, Dutch guilders, Italian lire, South
African rand and Swiss francs, the "Principal Financial Center" will be
The City of New York, Sydney and Melbourne, Toronto, Frankfurt,
Amsterdam, Milan, Johannesburg and Zurich, respectively, or
(2) the capital city of the country to which the Designated LIBOR Currency
relates, except that with respect to United States dollars, Australian
dollars, Canadian dollars, Deutsche marks, Dutch guilders, Italian
lire, Portuguese escudos, South African rand and Swiss francs, the
"Principal Financial Center" will be The City of New York, Sydney,
Toronto, Frankfurt, Amsterdam, Milan, Johannesburg and Zurich,
respectively.
TRANSACTION AMOUNT
Interest rates offered by HomeSide with respect to the notes may differ
depending upon, among other things, the aggregate principal amount of notes
purchased in any transaction. HomeSide may offer notes with similar variable
terms but different interest rates concurrently at any time. HomeSide may also
concurrently offer notes having different variable terms to different investors.
REDEMPTION AT THE OPTION OF HOMESIDE
The notes will not be subject to any sinking fund. HomeSide may redeem the
notes at its option before their stated maturity only if an initial redemption
date is specified in the notes and in the pricing supplement. If so indicated in
the pricing supplement, HomeSide may redeem the notes at its option on any date
on and after the initial redemption date specified in the pricing supplement. On
and after the initial redemption date, if any, HomeSide may redeem the related
note at any time in whole or from time to time in part at its option at the
redemption price referred to below together with interest on the principal of
the note payable to the redemption date, on notice given not more than 60 nor
less than 30 days before the redemption date. HomeSide will redeem the notes in
increments of $1,000, provided that any remaining principal amount will be an
authorized denomination of the note. The redemption price with respect to a note
will initially mean the initial redemption percentage of the principal amount of
the note to be redeemed specified in the pricing supplement and shall decline at
each anniversary of the initial redemption date by a percentage specified in the
pricing supplement, of the principal amount to be redeemed until the redemption
price is 100% of the principal amount.
REPAYMENT AT THE OPTION OF THE HOLDER
If so indicated in a pricing supplement, HomeSide will repay the notes in
whole or in part at the option of the holders of the notes on any optional
repayment date specified in the pricing supplement. If no optional repayment
date is indicated with respect to a note, it will not be repayable at the option
of the holder before its stated maturity. Any repayment in part will be in an
amount equal to $1,000 or integral multiples of $1,000, provided that any
remaining principal amount will be an authorized denomination of the note. The
repurchase price for any note so repurchased will be 100% of the principal
amount to be repaid, together with interest on
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<PAGE> 15
the principal of the note payable to the date of repayment. HomeSide's ability
to redeem the notes at the option of the holders at any time is subject to the
availability to HomeSide of funding sources at the time, including its existing
credit facilities and any refinancing or extension. Financial markets conditions
and HomeSide's value and performance at the time are among the factors that may
affect HomeSide's ability to refinance the notes or other credit facilities.
For any note to be repaid, the trustee must receive, at its office
maintained for that purpose in the Borough of Manhattan, The City of New York,
currently the corporate trust office of the trustee, not more than 60 nor less
than 30 days before the optional repayment date:
- in the case of a note in certificated form, the note and the form
entitled "Option to Elect Repayment" duly completed, or
- in the case of a note in book-entry form, instructions to that effect
from the beneficial owner of the notes to the depository and forwarded by
the depository.
Notices of elections from a holder to exercise the repayment option must be
received by the trustee by 5:00 p.m., New York City time, on the last day for
the giving of notice. Exercise of the repayment option by the holder of a note
will be irrevocable.
Only the depository may exercise the repayment option in respect of global
securities representing notes in book-entry form. Accordingly, beneficial owners
of global securities that desire to have all or any portion of the notes in
book-entry form represented by global securities repaid must instruct the
participant through which they own their interest to direct the depository to
exercise the repayment option on their behalf by forwarding the repayment
instructions to the trustee as discussed above. In order to ensure that the
instructions are received by the trustee on a particular day, the beneficial
owner must so instruct the participant through which it owns its interest before
that participant's deadline for accepting instructions for that day. Different
firms may have different deadlines for accepting instructions from their
customers. Accordingly, beneficial owners of notes in book-entry form should
consult the participants through which they own their interest for the
respective deadlines. All instructions given to participants from beneficial
owners of notes in book-entry form relating to the option to elect repayment
will be irrevocable. In addition, at the time instructions are given, each
beneficial owner will cause the participant through which it owns its interest
to transfer its interest in the global security or securities representing the
related notes in book-entry form, on the depository's records, to the trustee.
See "-- Book-Entry Notes".
If applicable, HomeSide will comply with the requirements of Section 14(e)
of the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder and any other securities laws or regulations in connection with any
repayment at the option of the holder.
HomeSide may at any time purchase notes at any price or prices in the open
market or otherwise. Notes so purchased by HomeSide may, at the discretion of
HomeSide, be held, resold or surrendered to the trustee for cancellation.
INTEREST
Each interest-bearing note will bear interest from the date of issue at the
rate per annum or, in the case of a floating rate note, pursuant to the interest
rate formula stated in the note and in the pricing supplement until the
principal of the note is paid or made available for payment. Interest will be
payable in arrears on each interest payment date specified in the pricing
supplement on which an installment of interest is due and payable and at
Maturity. The first payment of interest on any note originally issued between a
regular record date and the related interest payment date will be made on the
interest payment date immediately following the next succeeding regular record
date to the registered holder on the next succeeding regular record date. The
regular record date will be the fifteenth calendar day, whether or not a
Business Day, immediately preceding the related interest payment date.
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<PAGE> 16
Fixed Rate Notes
Each fixed rate note will bear interest from, and including, the date of
issue, at the rate per annum stated on the face of the note until the principal
amount of the note is paid or made available for payment. Interest payments on
fixed rate notes will equal the amount of interest accrued from and including
the immediately preceding interest payment date in respect of which interest has
been paid or from and including the date of issue, if no interest has been paid
with respect to the fixed rate notes, to, but excluding, the related interest
payment date or Maturity, as the case may be. Interest on fixed rate notes will
be computed on the basis of a 360-day year of twelve 30-day months.
Interest on fixed rate notes generally will be payable semiannually on June
30 and December 31 of each year and at Maturity. If any interest payment date or
the Maturity of a fixed rate note falls on a day that is not a Business Day, the
related payment of principal, premium, if any, or interest will be made on the
next succeeding Business Day as if made on the date the payment was due, and no
interest will accrue on the amount payable for the period from and after the
interest payment date or Maturity, as the case may be.
Floating Rate Notes
Interest on floating rate notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may be one or more
of:
- the CD Rate,
- the CMT Rate,
- the Commercial Paper Rate,
- the Eleventh District Cost of Funds Rate,
- the Federal Funds Rate,
- LIBOR,
- the Prime Rate,
- the Treasury Rate, or
- any other Interest Rate Basis or interest rate formula that is specified
in the pricing supplement.
A floating rate note may bear interest with respect to two or more Interest
Rate Bases.
TERMS. Each pricing supplement will specify the terms of the floating rate
note being delivered, including:
- whether the floating rate note is
- a "Regular Floating Rate Note",
- a "Floating Rate/Fixed Rate Note", or
- an "Inverse Floating Rate Note",
- the Fixed Rate Commencement Date, if applicable, or the Fixed Interest
Rate, if applicable,
- the Interest Rate Basis or Bases,
- the Initial Interest Rate,
- the Interest Reset Dates,
- the interest payment dates,
- the period to maturity of the instrument or obligation with respect to
which the Interest Rate Basis or Bases will be calculated (the "Index
Maturity"),
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<PAGE> 17
- the Maximum Interest Rate and Minimum Interest Rate, if any,
- the number of basis points to be added to or subtracted from the
related Interest Rate Basis or Bases (the "Spread"),
- the percentage of the related Interest Rate Basis or Bases by which
the Interest Rate Basis or Bases will be multiplied to determine the
applicable interest rate (the "Spread Multiplier"),
- if one or more of the specified Interest Rate Bases is LIBOR, the
Designated LIBOR Currency and the Designated LIBOR Page, and
- if one or more of the specified Interest Rate Bases is the CMT Rate,
the Designated CMT Telerate Page and Designated CMT Maturity Index.
The interest rate borne by the floating rate notes will be determined as
follows:
Regular Floating Rate Notes. Unless a floating rate note is designated as
a Floating Rate/Fixed Rate Note, an Inverse Floating Rate Note or as having an
Addendum attached or as having "Other Provisions" apply relating to a different
interest rate formula, it will be a "Regular Floating Rate Note" and, except as
described below or in a pricing supplement, will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases:
- plus or minus the Spread, if any, and/or
- multiplied by the Spread Multiplier, if any.
Commencing on the first Interest Reset Date, the rate at which interest on the
Regular Floating Rate Note will be payable will be reset as of each Interest
Reset Date; provided, however, that the interest rate in effect for the period
from the date of issue to the first Interest Reset Date will be the Initial
Interest Rate.
Floating Rate/Fixed Rate Notes. If a floating rate note is designated as a
"Floating Rate/Fixed Rate Note", then, except as described below or in a pricing
supplement, it will bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases:
- plus or minus the Spread, if any, and/or
- multiplied by the Spread Multiplier, if any.
Commencing on the first Interest Reset Date, the rate at which interest on
the Floating Rate/Fixed Rate Note will be payable will be reset as of each
Interest Reset Date; provided, however, that:
- the interest rate in effect for the period from the date of issue to the
first Interest Reset Date will be the Initial Interest Rate, and
- the interest rate in effect commencing on the date on which interest
begins to accrue on a fixed rate basis to Maturity will be the Fixed
Interest Rate, if the rate is specified in the pricing supplement, or if
no Fixed Interest Rate is specified, the interest rate in effect on the
Floating Rate/Fixed Rate Note on the day immediately preceding the date
on which interest begins to accrue on a fixed rate basis.
Inverse Floating Rate Notes. If a floating rate note is designated as an
"Inverse Floating Rate Note", except as described below, it will bear interest
equal to the Fixed Interest Rate specified in the related pricing supplement
minus the rate determined by reference to the applicable Interest Rate Basis or
Bases:
- plus or minus the Spread, if any, and/or
- multiplied by the Spread Multiplier, if any;
provided, however, that the interest rate on the Inverse Floating Rate Note will
not be less than zero percent. Commencing on the first Interest Reset Date, the
rate at which interest on the Inverse Floating Rate Note is payable will be
reset as of each Interest Reset Date; provided, however, that the interest rate
in effect for the period from the date of issue to the first Interest Reset Date
will be the Initial Interest Rate.
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<PAGE> 18
Each Interest Rate Basis shall be the rate determined in accordance with
the provisions below. Except as set forth above or in a pricing supplement, the
interest rate in effect on each day will be:
- if the day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date (as defined below) immediately preceding
such Interest Reset Date or
- if the day is not an Interest Reset Date, the interest rate determined as
of the Interest Determination Date immediately preceding the most recent
Interest Reset Date.
Interest Reset Dates. The pricing supplement will specify whether the
interest rate on the related floating rate note will reset daily, weekly,
monthly, quarterly, semi-annually, annually and the dates on which the interest
rate on the related floating rate note will be reset (each, an "Interest Reset
Date"). The Interest Reset Date will be, in the case of floating rate notes
which reset:
- daily -- each Business Day;
- weekly -- the Wednesday of each week, with the exception of weekly reset
Floating Rate Notes as to which the Treasury Rate is an applicable
Interest Rate Basis, which will reset the Tuesday of each week, except as
described below;
- monthly -- the third Wednesday of each month, with the exception of
monthly reset Floating Rate Notes as to which the Eleventh District Cost
of Funds Rate is an applicable Interest Rate Basis, which will reset on
the first calendar day of the month;
- quarterly -- the third Wednesday of March, June, September and December
of each year;
- semiannually -- the third Wednesday of the two months specified in the
pricing supplement; and
- annually -- the third Wednesday of the month specified in the pricing
supplement;
provided, however, that with respect to Floating Rate/Fixed Rate Notes, the rate
of interest will not reset after the date on which interest on a fixed rate
basis begins to accrue.
If any Interest Reset Date for any floating rate note would otherwise be a
day that is not a Business Day, the Interest Reset Date will be postponed to the
next succeeding day that is a Business Day, except that in the case of a
floating rate note as to which LIBOR is an applicable Interest Rate Basis, if
the Business Day falls in the next succeeding calendar month, then the Interest
Reset Date will be the immediately preceding Business Day.
Maximum and Minimum Interest Rates. A floating rate note may have either
or both of the following:
- a maximum numerical limitation, or ceiling, on the rate at which interest
may accrue during any interest period (a "Maximum Interest Rate"), and
- a minimum numerical limitation, or floor, on the rate at which interest
may accrue during any period (a "Minimum Interest Rate").
The indenture is, and any notes issued under the indenture will be,
governed by and construed in accordance with the laws of the State of New York.
In addition to any Maximum Interest Rate that may apply to any floating rate
note, the interest rate will in no event be higher than the maximum rate
permitted by New York law. Under present New York law, the maximum rate of
interest is 25% per annum on a simple interest basis. This limit may not apply
to securities in which $2,500,000 or more has been invested. While HomeSide
believes that New York law would be given effect by a state or federal court
sitting outside of New York, state laws frequently regulate the amount of
interest that may be charged to and paid by a borrower, including, in some
cases, corporate borrowers. It is suggested that prospective investors consult
their personal advisors with respect to the applicability of these laws.
HomeSide has agreed for the benefit of the beneficial owners of the notes, to
the extent permitted by law, not to claim voluntarily the benefits of any laws
concerning usurious rates of interest against a beneficial owner of the notes.
Interest Payments. Each pricing supplement will specify the dates on which
interest will be payable. Each floating rate note will bear interest from the
date of issue at the rates specified in the floating rate note
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until the principal of the note is paid or otherwise made available for payment.
Except as provided below or in the pricing supplement, the interest payment
dates with respect to floating rate notes will be, in the case of floating rate
notes which reset:
- daily, weekly or monthly -- the third Wednesday of each month or on the
third Wednesday of March, June, September and December of each year, as
specified in the pricing supplement;
- quarterly -- the third Wednesday of March, June, September and December
of each year;
- semiannually -- the third Wednesday of the two months of each year
specified in the pricing supplement;
- annually -- the third Wednesday of the month of each year specified in
the pricing supplement; and
- at Maturity.
If any interest payment date for any floating rate note, other than an
interest payment date at Maturity, would otherwise be a day that is not a
Business Day, the interest payment date will be postponed to the next succeeding
day that is a Business Day, except that in the case of a floating rate note as
to which LIBOR is an applicable Interest Rate Basis, if the Business Day falls
in the next succeeding calendar month, the interest payment date will be the
immediately preceding Business Day. If the Maturity of a floating rate note
falls on a day that is not a Business Day, the payment of principal, premium, if
any, and interest will be made on the next succeeding Business Day, and no
interest on the payment will accrue for the period from and after the Maturity.
All percentages resulting from any calculation on floating rate notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upwards. For example,
9.876545%, or .09876545, would be rounded to 9.87655%, or .0987655. All dollar
amounts used in or resulting from any calculation on floating rate notes will be
rounded to the nearest cent with one-half cent being rounded upward.
Interest payments on floating rate notes will equal the amount of interest
accrued from and including the immediately preceding interest payment date in
respect of which interest has been paid or from and including the date of issue,
if no interest has been paid, to but excluding the related interest payment date
or Maturity.
With respect to each floating rate note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. The accrued
interest factor is computed by adding the interest factor calculated for each
day in the period for which accrued interest is being calculated.
- In the case of notes for which the Interest Rate Basis is the CD Rate,
the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Rate, LIBOR or the Prime Rate, the interest factor for each
day will be computed by dividing the interest rate applicable to each day
by 360.
- In the case of notes for which the Interest Rate Basis is the CMT Rate or
the Treasury Rate, the interest factor for each day will be computed by
dividing the interest rate applicable to each day by the actual number of
days in the year.
- The interest factor for notes for which the interest rate is calculated
with reference to two or more Interest Rate Bases will be calculated in
each period in the same manner as if only the applicable Interest Rate
Bases specified in the pricing supplement applied.
Interest Determination Dates. The interest rate applicable to each
interest reset period commencing on the Interest Reset Date with respect to that
interest reset period will be determined by the Calculation Agent and calculated
on or prior to the Calculation Date, as defined below, except with respect to
LIBOR and the Eleventh District Costs of Funds Rate, which will be calculated on
the Interest Determination Date.
- The Interest Determination Date with respect to the CD Rate, the CMT
Rate, the Commercial Paper Rate, Federal Funds Rate and the Prime Rate,
will be the second Business Day preceding each Interest Reset Date for
the related note.
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- The Interest Determination Date with respect to the Eleventh District
Cost of Funds Rate will be the last working day of the month immediately
preceding each Interest Reset Date on which the Federal Home Loan Bank of
San Francisco publishes the Index, as defined below.
- The Interest Determination Date with respect to LIBOR will be the second
London Business Day preceding each Interest Reset Date, unless the
Designated LIBOR Currency is in British pounds sterling, in which case
the Interest Determinate Date will be the Interest Reset Date.
- The Interest Determination Date with respect to the Treasury Rate will be
the day in the week in which the related Interest Reset Date falls on
which day Treasury Bills, as defined below, are normally auctioned.
Treasury Bills are normally sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is normally
held on the following Tuesday, except that the auction may be held on the
preceding Friday; provided, however, that if an auction is held on the
Friday of the week preceding the related Interest Reset Date, the related
Interest Determination Date will be the preceding Friday; and provided,
further, that if an auction falls on any Interest Reset Date, then the
related Interest Reset Date will instead be the first Business Day
following the auction.
- The Interest Determination Date pertaining to a floating rate note the
interest rate of which is determined with reference to two or more
Interest Rate Bases will be the latest Business Day which is at least two
Business Days before the Interest Reset Date for the floating rate note
on which each Interest Reset Basis is determinable. Each Interest Rate
Basis will be determined on the Interest Determination Date, and the
interest rate will take effect on the related Interest Reset Date.
Calculation Date. The Bank of New York is the calculation agent. Upon the
request of the holder of any floating rate note, the calculation agent will
provide the interest rate then in effect and, if determined, the interest rate
that will become effective as a result of a determination made for the next
Interest Reset Date with respect to that floating rate note. The calculation
date, if applicable, pertaining to any Interest Determination Date will be the
earlier of:
- the tenth calendar day after the Interest Determination Date, or, if the
tenth calendar day is not a Business Day, the next succeeding Business
Day or
- the Business Day preceding the Interest Payment Date or Maturity, as the
case may be.
The calculation agent will determine each Interest Rate Basis in accordance
with the following provisions, unless otherwise specified by a pricing
supplement.
CD RATE. CD Rate Notes will bear interest at the rates, calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any,
specified in the CD Rate Notes and in any pricing supplement.
"CD Rate" means:
(1) the rate on the Interest Determination Date for negotiable United
States dollar certificates of deposit having the Index Maturity
specified in the pricing supplement published in H.15(519) (as defined
below) under the heading "CDs (secondary market)", or
(2) if the rate referred to in clause (1) above is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the Interest Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity specified in the pricing
supplement as published in H.15 Daily Update (as defined below), or
other recognized electronic source used for the purpose of displaying
the applicable rate, under the caption "CDs (secondary market)" , or
(3) if the rate referred to in clause (2) is not so published by 3:00 P.M.,
New York City time, on the related calculation date, the rate on the
Interest Determination Date calculated by the calculation agent as the
arithmetic mean of the secondary market offered rates as of 10:00 A.M.,
New York City time, on the Interest Determination Date, of three
leading non-bank dealers in negotiable United States dollar
certificates of deposit in The City of New York, which may include the
agents or their affiliates, selected by the calculation agent for
negotiable United States dollar certificates of deposit of major United
States money center banks for negotiable certificates of deposit with a
remaining
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<PAGE> 21
maturity closest to the Index Maturity specified in the pricing
supplement in an amount that is representative for a single transaction
in that market at that time, provided, however
(4) if the dealers selected by the calculation agent are not quoting as
mentioned in clause (3) above, the CD Rate in effect on the Interest
Determination Date.
"H.15(519)" means the weekly statistical release designated as H.15(519),
or any successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/hl5/update, or any successor site or
publication.
CMT RATE. CMT Rate Notes will bear interest at the rates, calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any,
specified in the CMT Rate Notes and in any pricing supplement.
"CMT Rate" means:
(1) the rate displayed on the Designated CMT Telerate Page under the
caption ". . . Treasury Constant Maturities . . . Federal Reserve Board
Release H.15 . . . Mondays Approximately 3:45 P.M.", under the column
for the Designated CMT Maturity Index for:
(a) if the Designated CMT Telerate Page is 7051, the rate on the
Interest Determination Date, and
(b) if the Designated CMT Telerate Page is 7052, the weekly or the
monthly average, as specified in the pricing supplement, for the
week or the month, as applicable, ended immediately preceding the
week or the month, as applicable, in which the related Interest
Determination Date falls, or
(2) if the rate referred to in clause (1) is no longer displayed on the
relevant page or is not so displayed by 3:00 P.M., New York City time,
on the related calculation date, the treasury constant maturity rate
for the Designated CMT Maturity Index published in H.15(519), or
(3) if the rate referred to in clause (2) is no longer published or is not
published by 3:00 P.M., New York City time, on the related calculation
date, the treasury constant maturity rate for the Designated CMT
Maturity Index, or other United States Treasury rate for the Designated
CMT Maturity Index, for the Interest Determination Date with respect to
the Interest Reset Date as may then be published by either the Board of
Governors of the Federal Reserve System or the United States Department
of the Treasury that the calculation agent determines to be comparable
to the rate formerly displayed on the Designated CMT Telerate Page and
published in H.15(519), or
(4) if the rate referred to in clause (3) is not so published by 3:00 P.M.,
New York City time, on the calculation date, the rate on the Interest
Determination Date calculated by the calculation agent as a yield to
maturity, based on the arithmetic mean of the secondary market offered
rates as of approximately 3:30 P.M., New York City time, on the
Interest Determination Date reported, according to their written
records, by three leading primary United States government securities
dealers in The City of New York, which may include the agents or their
affiliates (each, a "Reference Dealer"), selected by the calculation
agent from five Reference Dealers selected by the calculation agent
after eliminating the highest quotation, or, in the event of equality,
one of the highest, and the lowest quotation or, in the event of
equality, one of the lowest, for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Designated CMT
Maturity Index and a remaining term to maturity of not less than the
Designated CMT Maturity Index minus one year, or
(5) if the calculation agent is unable to obtain three Treasury Note
quotations as referred to in clause (4), the rate on the Interest
Determination Date calculated by the calculation agent as a yield to
maturity based on the arithmetic mean of the secondary market offered
rates as of approximately 3:30 P.M., New York City time, on the
Interest Determination Date of three Reference Dealers in
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The City of New York selected by the calculation agent from five
Reference Dealers selected by the calculation agent after eliminating
the highest quotation or, in the event of equality, one of the highest,
and the lowest quotation or, in the event of equality, one of the
lowest, for Treasury Notes with an original maturity of the number of
years that is the next highest to the Designated CMT Maturity Index and
a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million, or
(6) if three or four and not five Reference Dealers are quoting as referred
to in clause (5) above, the rate will be calculated by the calculation
agent as the arithmetic mean of the offered rates obtained and neither
the highest nor the lowest of quotes will be eliminated, provided,
however
(7) if fewer than three Reference Dealers selected by the calculation agent
are quoting as mentioned in clause (6), the CMT Rate in effect on the
Interest Determination Date.
If two Treasury Notes with an original maturity as described in clause (6)
have remaining terms to maturity equally close to the Designated CMT Maturity
Index, the calculation agent will obtain quotations for the Treasury Notes with
the shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on Bridge Telerate, Inc.
or any successor service on the page specified in the pricing supplement or any
other page as may replace the specified page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519), or, if no page
is specified in the pricing supplement, page 7052.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities, either 1, 2, 3, 5, 7, 10, 20 or 30 years,
specified in the pricing supplement with respect to which the CMT Rate will be
calculated or, if no maturity is specified in the pricing supplement, 2 years.
COMMERCIAL PAPER RATE. Commercial Paper Rate Notes will bear interest at
the rates, calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any, specified in the Commercial Paper Rate Notes
and in any pricing supplement.
"Commercial Paper Rate" means:
(1) the Money Market Yield (as defined below) on the Interest Determination
Date of the rate for commercial paper having the Index Maturity
specified in the pricing supplement published in H.15(519) under the
caption "Commercial Paper-Nonfinancial", or
(2) if the rate described in clause (1) is not so published by 3:00 P.M.,
New York City time, on the related calculation date, the rate on the
Interest Determination Date for commercial paper having the Index
Maturity specified in the pricing supplement published in H.15 Daily
Update, or other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "Commercial
Paper-Nonfinancial", or
(3) if the rates referred to in clauses (1) and (2) are not so published by
3:00 P.M., New York City time, on the related calculation date, the
rate on the Interest Determination Date calculated by the calculation
agent as the Money Market Yield of the arithmetic mean of the offered
rates at approximately 11:00 A.M., New York City time, on the Interest
Determination Date of three leading dealers of United States dollar
commercial paper in The City of New York, which may include the agents
and their affiliates, selected by the calculation agent for commercial
paper having the Index Maturity specified in the pricing supplement
placed for industrial issuers whose bond rating is "Aa", or the
equivalent, from a nationally recognized statistical rating
organization; provided however
(4) if the dealers selected by the calculation agent are not quoting as
mentioned in clause (3), the Commercial Paper Rate in effect on the
Interest Determination Date.
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"Money Market Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
Money Market Yield = D x 360 x 100
-------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
ELEVENTH DISTRICT COST OF FUNDS RATE. Eleventh District Cost of Funds Rate
Notes will bear interest at the rates, calculated with reference to the Eleventh
District Cost of Funds Rate and the Spread and/or Spread Multiplier, if any,
specified in the Eleventh District Cost of Funds Rate Notes and in any pricing
supplement.
"Eleventh District Cost of Funds Rate" means:
(1) the rate equal to the monthly weighted average cost of funds for the
calendar month immediately preceding the month in which the Interest
Determination Date falls as set forth under the caption "11th District"
on the display on Bridge Telerate, Inc. or any successor service on
page 7058 or any other page as may replace the specified page on that
service ("Telerate Page 7058") as of 11:00 A.M., San Francisco time, on
the Interest Determination Date, or
(2) if the rate referred to in clause (1) does not appear on Telerate Page
7058 on the related Interest Determination Date, the monthly weighted
average cost of funds paid by member institutions of the Eleventh
Federal Home Loan Bank District that was most recently announced (the
"Index") by the Federal Home Loan Bank of San Francisco as the cost of
funds for the calendar month immediately preceding the Interest
Determination Date, or
(3) if the Federal Home Loan Bank of San Francisco fails to announce the
Index on or before the Interest Determination Date for the calendar
month immediately preceding the Interest Determination Date, the
Eleventh District Cost of Funds Rate in effect on the Interest
Determination Date.
FEDERAL FUNDS RATE. Federal Funds Rate Notes will bear interest at the
rates, calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any, specified in the Federal Funds Rate Notes and in any
pricing supplement.
"Federal Funds Rate" means:
(1) the rate on the Interest Determination Date for United States dollar
federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)", as displayed on Bridge Telerate, Inc. or any
successor service on page 120 or any other page as may replace the
applicable page on that service ("Telerate Page 120"), or
(2) if the rate referred to in clause (1) does not appear on Telerate Page
120 or is not so published by 3:00 P.M., New York City time, on the
related calculation date, the rate on the Interest Determination Date
for United States dollar federal funds published in H.15 Daily Update,
or other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "Federal
Funds/Effective Rate", or
(3) if the rates referred to in clauses (1) and (2) are not so published by
3:00 P.M., New York City time, on the related calculation date, the
rate on the Interest Determination Date calculated by the calculation
agent as the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading
brokers of United States dollar federal funds transactions in The City
of New York, which may include the agents or their affiliates, selected
by the calculation agent before 9:00 A.M., New York City time, on the
Interest Determination Date, provided, however
(4) if the brokers selected by the calculation agent are not quoting as
mentioned in clause (3), the Federal Funds Rate in effect on the
Interest Determination Date.
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<PAGE> 24
LIBOR. LIBOR Notes will bear interest at the rates, calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified in
the LIBOR Notes and in any pricing supplement.
"LIBOR" means:
(1) if "LIBOR Telerate" is specified in the pricing supplement or if
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
pricing supplement as the method for calculating LIBOR, LIBOR will be
the rate for deposits in the Designated LIBOR Currency, as defined
below, having the Index Maturity specified in the pricing supplement,
commencing on the Interest Reset Date that appears on the Designated
LIBOR Page (as provided below) as of 11:00 A.M., London time, on the
Interest Determination Date, or
(2) if "LIBOR Reuters" is specified in the pricing supplement, LIBOR will
be the arithmetic mean of the offered rates for deposits in the
Designated LIBOR Currency having the Index Maturity specified in the
pricing supplement, commencing on the applicable Interest Reset Date
that appear on the Designated LIBOR Page as of 11:00 A.M., London time,
on the Interest Determination Date. If the Designated LIBOR Page by its
terms provides only for a single rate, then the single rate will be
used, or
(3) with respect to a LIBOR Interest Determination Date on which fewer than
two offered rates appear, or no rate appears, as the case may be, on
the designated LIBOR Page as specified in clauses (1) and (2),
respectively, the rate calculated by the calculation agent as the
arithmetic mean of at least two quotations obtained by the calculation
agent after requesting the principal London offices of each of four
major reference banks, which may include affiliates of the agents, in
the London interbank market to provide the calculation agent with its
offered quotation for deposits in the Designated LIBOR Currency for the
period of the Index Maturity specified in the pricing supplement,
commencing on the applicable Interest Reset Date, prime banks in the
London interbank market at approximately 11:00 A.M., London time, on
the Interest Determination Date and in a principal amount that is
representative for a single transaction in the applicable Designated
LIBOR Currency in that market at that time, or
(4) if fewer than two quotations referred to in clause (3) are so provided,
the rate on the Interest Determination Date calculated by the
calculation agent as the arithmetic mean of the rates quoted at
approximately 11:00 A.M., in the applicable Principal Financial
Center(s), on the Interest Determination Date by three major banks,
which may include affiliates of the agents, in the applicable Principal
Financial Center selected by the calculation agent for loans in the
LIBOR Currency to leading European banks, having the Index Maturity
specified designated in the pricing supplement and in a principal
amount that is representative for a single transaction in the
applicable Designated LIBOR Currency in that market at that time,
provided, however
(5) if the banks so selected by the calculation agent are not quoting as
mentioned in clause (4), the LIBOR in effect on the Interest
Determination Date.
"Designated LIBOR Currency" means the currency specified in the pricing
supplement as to which LIBOR will be calculated or, if no currency is specified
in the pricing supplement, United States dollars.
"Designated LIBOR Page" means either:
- if "LIBOR Telerate" is designated in the pricing supplement or neither
"LIBOR Reuters" nor "LIBOR Telerate" is specified in the pricing
supplement as the method for calculating LIBOR, the display on Bridge
Telerate, Inc. or any successor service on the page specified in the
pricing supplement or any page as may replace the specified page on that
service for the purpose of displaying the London interbank rates of major
banks for the Designated LIBOR Currency, or
- if "LIBOR Reuters" is specified in the pricing supplement, the display on
the Reuter Monitor Money Rates Service or any successor service on the
page specified in the pricing supplement or any other page as may replace
the specified page on that service for the purpose of displaying the
London interbank rates of major banks for the Designated LIBOR Currency.
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PRIME RATE. Prime Rate Notes will bear interest at the rates, calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any, specified in the Prime Rate Notes and any pricing supplement.
"Prime Rate" means:
(1) the rate on the Interest Determination Date as published in H.15(519)
under the heading "Bank Prime Loan", or
(2) if the rate referred to in clause (1) is not so published by 3:00 P.M.,
New York City time, on the related calculation date, the rate on the
Interest Determination Date published in H.15 Daily Update, or another
recognized electronic source used for the purpose of displaying the
applicable rate under the caption "Bank Prime Loan", or
(3) if the rates referred to in clauses (1) and (2) are not so published by
3:00 P.M., New York City time, on the related calculation date, the
rate calculated by the calculation agent as the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the
Reuters Screen US PRIME 1 Page (as defined below) as the particular
bank's prime rate or base lending rate as of 11:00 A.M., New York City
time, on the Interest Determination Date, or
(4) if fewer than four rates described in clause (3) by 3:00 P.M., New York
City time, on the related calculation date as shown on Reuters Screen
US PRIME 1, the rate on the Interest Determination Date calculated by
the calculation agent as the arithmetic mean of the prime rates or base
lending rates quoted on the basis of the actual number of days in the
year divided by a 360-day year as of the close of business on the
Interest Determination Date by three major banks, which may include
affiliates of the agents, in The City of New York selected by the
calculation agent, provided, however
(5) if the banks selected by the calculation agent are not quoting as
mentioned in clause (4), the Prime Rate in effect on the Interest
Determination Date.
"Reuters Screen US PRIME 1 Page" means the display on the Reuter Monitor
Money Rates Service or any successor service on the "US PRIME 1" Page 5 or other
page as may replace the US PRIME 1 Page on such service, for the purpose of
displaying prime rates or base lending rates of major United States banks.
TREASURY RATE. Treasury Rate Notes will bear interest at the rates,
calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any, specified in the Treasury Rate Notes and in any pricing
supplement.
"Treasury Rate" means:
(1) the rate from the auction held on the Interest Determination Date (the
"Auction") of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified in the pricing supplement
under the caption "INVESTMENT RATE" on the display on Bridge Telerate,
Inc. or any successor service on page 56 or any other page as may
replace page 56 on that service ("Telerate Page 56") or page 57 or any
other page as may replace page 57 on that service ("Telerate Page 57"),
or
(2) If the rate described in clause (1) is not published by 3:00 P.M., New
York City time, on the related calculation date, the Bond Equivalent
Yield (defined below) of the rate for the applicable Treasury Bills as
published in H.15 Daily Update, or other recognized electronic source
used for the purpose of displaying the applicable rate, under the
caption "U.S. Government Securities/Treasury Bills/ Auction High", or
(3) In the event that the rate referred to in clause (2) is not so
published by 3:00 P.M., New York City time, on the related calculation
date, the Bond Equivalent Yield of the auction rate of the applicable
Treasury Bills announced by the United States Department of the
Treasury, or
(4) in the event that the rate referred to in clause (3) is not announced
by the United States Department of the Treasury, or if the Auction is
not held, the Bond Equivalent Yield of the rate on the Interest
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<PAGE> 26
Determination Date of Treasury Bills having the Index Maturity
specified in the pricing supplement published in H.15(519) under the
caption "U.S. Government Securities/Treasury Bills/Secondary Market",
or
(5) if the rate referred to in clause (4) is not so published by 3:00 P.M.,
New York City time, on the related calculation date, the rate on the
Interest Determination Date of the applicable Treasury Bills as
published in H.15 Daily Update, or other recognized electronic source
used for the purpose of displaying the applicable rate, under the
caption "U.S. Government Securities/Treasury Bills/ Secondary Market",
or
(6) if the rates referred to in clause (5) are not so published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on
the Interest Determination Date calculated by the calculation agent as
the Bond Equivalent Yield of the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 P.M., New York City time, on
the Interest Determination Date, of three primary United States
government securities dealers, which may include the agents or their
affiliates, selected by the calculation agent, for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity
specified in the pricing supplement, or
(7) if the dealers selected by the calculation agent are not quoting as
mentioned in clause (6), the rate in effect on the Interest
Determination Date.
"Bond Equivalent Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
Bond Equivalent Yield = D x N x 100
-------------
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the interest period for which interest is
being calculated.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to an issue of notes, including the
determination of one or more Interest Rate Bases, the specification of one or
more Interest Rate Bases, the calculation of the interest rate applicable to a
floating rate note, the interest payment dates, the stated maturity date, any
redemption or repayment provisions or any other matter relating to the notes may
be modified by the terms as specified under "Other Provisions" on the face of
the notes or in an Addendum relating to the notes, if so specified on the face
of the notes and in the pricing supplement.
ORIGINAL ISSUE DISCOUNT NOTES
HomeSide may from time to time offer notes at a price less than their
redemption price at Maturity, resulting in the notes being treated as if they
were issued with original issue discount for federal income tax purposes
("Original Issue Discount Notes"). Original Issue Discount Notes may currently
pay no interest or interest at a rate which at the time of issuance is below
market rates. Additional considerations relating to any Original Issue Discount
Notes will be described in the pricing supplement.
AMORTIZING NOTES
HomeSide may from time to time offer notes ("Amortizing Notes"), with
amounts of principal and interest payable in installments over the term of the
notes. Interest on each Amortizing Note will be computed on the basis of a
360-day year of twelve 30-day months. Payments with respect to Amortizing Notes
will be applied first to interest due and payable on the Amortizing Notes and
then to the reduction of the unpaid principal amount of the Amortizing Notes.
Further information concerning additional terms and conditions of any issue of
Amortizing Notes will be provided in the pricing supplement. A table setting
forth repayment information in respect of each Amortizing Note will be included
in the note and the pricing supplement.
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<PAGE> 27
INDEXED NOTES
HomeSide may from time to time offer notes ("Indexed Notes") the principal
value of which at Maturity will be determined by reference to:
(a) one or more equity or debt securities, including, but not limited to,
the price or yield of such securities,
(b) any statistical measure of economic or financial performance,
including, but not limited to, any currency, consumer price or mortgage
index, or
(c) the price or value of any commodity or any other item or index or any
combination,
(collectively, the "Indexed Securities"). The payment or delivery of any
consideration on any Indexed Note at Maturity will be determined by the decrease
or increase, as applicable, in the price or value of the Indexed Securities. The
terms of and any additional considerations, including any material tax
consequences, relating to any Indexed Notes will be described in the pricing
supplement. See also "Risk Factors."
BOOK-ENTRY NOTES
HomeSide has established a depository arrangement with the depository with
respect to the book-entry notes, the terms of which are summarized below. Any
additional or differing terms of the depositary arrangement with respect to the
book-entry notes will be described in the applicable pricing supplement.
Description of the Global Securities
Upon issuance, all notes in book-entry form having the same date of issue,
Maturity and otherwise having identical terms and provisions will be represented
by one or more fully registered global notes (the "Global Notes"). Each Global
Note will be deposited with, or on behalf of, The Depository Trust Company as
depository registered in the name of the depository or a nominee of the
depository. Unless and until it is exchanged in whole or in part for notes in
certificated form, no Global Note may be transferred except as a whole by the
depository to a nominee of the depository or by a nominee of the depository to
the depository or another nominee of the depository or by the depository or any
such nominee to a successor of the depository or a nominee of the successor.
DTC Procedures
The following is based on information furnished by the depository:
The depository will act as securities depository for the notes in
book-entry form. The notes in book-entry form will be issued as fully registered
securities registered in the name of Cede & Co., the depository's partnership
nominee. One fully registered Global Note will be issued for each issue of notes
in book-entry form, each in the aggregate principal amount of the issue, and
will be deposited with the depository. If, however, the aggregate principal
amount of any issue exceeds $200,000,000, one Global Note will be issued with
respect to each $200,000,000 of principal amount and an additional Global Note
will be issued with respect to any remaining principal amount of the issue.
The depository is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The depository holds securities that its participants deposit with the
depository. The depository 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 the depository include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
The depository 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 the depository's system is
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also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a direct
participant, either directly or indirectly. The rules applicable to the
depository and its participants are on file with the SEC.
Purchases of notes in book-entry form under the depository's system must be
made by or through direct participants, which will receive a credit for those
notes in book-entry form on the depository's records. The ownership interest of
each actual purchaser of each note in book-entry form represented by a Global
Note is, in turn, to be recorded on the records of direct participants and
indirect participants. Beneficial owners in book-entry form will not receive
written confirmation from the depository 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 the beneficial owner entered
into the transaction. Transfers of ownership interests in a Global Note
representing notes in book-entry form are to be accomplished by entries made on
the books of participants acting on behalf of beneficial owners. Beneficial
owners of a Global Note representing notes in book-entry form will not receive
notes in certificated form representing their ownership interests therein,
except in the event that use of the book-entry system for the notes in
book-entry form is discontinued.
To facilitate subsequent transfers, all Global Notes representing notes in
book-entry form which are deposited with, or on behalf of, the depository are
registered in the name of the depository's nominee, Cede & Co. The deposit of
Global Notes with, or on behalf of, the depository and their registration in the
name of Cede & Co. effect no change in beneficial ownership. The depository has
no knowledge of the actual beneficial owners of the Global Notes representing
the notes in book-entry form; the depository's records reflect only the identity
of the direct participants to whose accounts the notes in book-entry form 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 the depository 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 the depository nor Cede & Co. will consent or vote with respect to
the Global Notes representing the notes in book-entry form. Under its usual
procedures, the depository mails an omnibus proxy to HomeSide as soon as
possible after the applicable record date. The omnibus proxy assigns Cede &
Co.'s consenting or voting rights to those direct participants, identified in a
listing attached to the omnibus proxy, to whose accounts the notes in book-entry
form are credited on the applicable record date.
HomeSide will make principal and any premium and interest payments on the
Global Notes representing the notes in book-entry form in immediately available
funds to the depository. The depository's practice is to credit direct
participants' accounts on the applicable payment date in accordance with their
respective holdings shown on the depository's records unless the depository has
reason to believe that it will not receive payment on the applicable payment
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 the applicable participant and not of the
depository, the trustee or HomeSide, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and any
premium and interest to the depository is the responsibility of HomeSide and the
trustee, disbursement of payments to direct participants will be the
responsibility of the depository, and disbursement of payments to the beneficial
owners will be the responsibility of direct participants and indirect
participants.
If applicable, redemption notices shall be sent to Cede & Co. If less than
all of the notes in book-entry form of like tenor and terms are being redeemed,
the depository's practice is to determine by lot the amount of the interest of
each direct participant in the issue to be redeemed.
A beneficial owner will give notice of any option to elect to have its
notes in book-entry form repaid by HomeSide, through its participant, to the
trustee, and will effect delivery of the applicable notes in book-entry
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form by causing the direct participant to transfer the participant's interest in
the Global Note notes in book-entry form, on the depository's records, to the
trustee.
The depository may discontinue providing its services as securities
depository with respect to the notes in book-entry form at any time by giving
reasonable notice to HomeSide or the trustee. In the event that a successor
securities depository is not obtained, notes in certificated form are required
to be printed and delivered.
HomeSide may decide to discontinue use of the system of book-entry
transfers through the depository or a successor securities depository. In that
event, notes in certificated form will be printed and delivered.
The laws of some states may require that certain purchasers of securities
take physical delivery of securities in definitive form. These laws may impair
the ability to own, transfer or pledge beneficial interests in Global Notes.
So long as the depository, or its nominee, is the registered owner of a
Global Note, the depository or its nominee, as the case may be, will be
considered the sole owner or holder of the notes represented by such Global Note
for all purposes under the indenture. Except as provided below, beneficial
owners of a Global Note will not be entitled to have the notes represented by a
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of the notes in definitive form and will not be
considered the owners or holders thereof under the indenture. Accordingly, each
person owning a beneficial interest in a Global Note must rely on the procedures
of the depository and, if that person is not a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights of a holder under the indenture. HomeSide understands that under existing
industry practices, in the event that HomeSide requests any action of holders or
that an owner of a beneficial interest in a Global Note desires to give or take
any action which a holder is entitled to give or take under the indenture, the
depository would authorize the participants holding the relevant beneficial
interests to give or take the desired action, and the participants would
authorize beneficial owners owning through the participants to give or take the
desired action or would otherwise act upon the instructions of beneficial
owners.
The depository's management is aware that some computer applications,
systems, and the like for processing data ("Systems") that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." The depository has informed its participants and
other members of the financial community (the "Industry") that it has developed
and is implementing a program so that its Systems, as the same relate to the
timely payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within the
depository, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, the depository's plan includes a testing phase, which is expected
to be completed within appropriate time frames.
However, the depository's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as the depository's direct and indirect participants and third
party vendors from whom the depository licenses software and hardware, and third
party vendors on whom the depository relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. The depository has informed the Industry that it is contacting
(and will continue to contact) third party vendors from whom the depository
acquires services to: (i) impress upon them the importance of such services
being Year 2000 compliant; and (ii) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, the depository is in the process of developing such contingency plans
as it deems appropriate.
Exchange for Notes in Certificated Form
If:
(a) the depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by HomeSide
within 90 days,
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(b) HomeSide executes and delivers to the trustee a company order to the
effect that the Global Notes shall be exchangeable, or
(c) an Event of Default has occurred and is continuing with respect to the
notes,
the Global Note or Global Notes will be exchangeable for notes in certificated
form of like tenor and of an equal aggregate principal amount, in denominations
of $1,000 and integral multiples of $1,000. The certificated notes will be
registered in the name or names as the depository instructs the trustee. It is
expected that instructions may be based upon directions received by the
depository from participants with respect to ownership of beneficial interests
in Global Notes.
The information in this section concerning the depository and the
depository's system has been obtained from sources that HomeSide believes to be
reliable, but HomeSide takes no responsibility for the accuracy of the
information.
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
HomeSide may not
- consolidate with or merge into any person or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety
to any person, or
- permit any person to consolidate with or merge into HomeSide, or convey,
transfer or lease its properties and assets as an entirety or
substantially as an entirety to the Issuer,
unless, among other things,
- in the case of the first clause above, that person is a corporation or
limited liability company organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and expressly assumes the payment of the notes and the performance of
HomeSide's obligations under the indenture and the notes, and
- immediately after giving effect to the transaction, no Event of Default
and no event which, after notice or lapse of time or both, would become
an Event of Default has occurred and is continuing.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each of the following is an Event of Default with respect to the notes,
regardless of the reason for its occurrence:
- default in the payment of any interest on any note when due, and
continuance of the default for 30 days;
- default in the payment of principal of or any premium on any note, when
due;
- default in the deposit of any sinking fund payment when due;
- default in the performance or breach of any covenant or warranty of
HomeSide contained in the indenture for the benefit of the notes or in
the notes, and the continuance of the default or breach for 60 days after
written notice has been given;
- any event of default with respect to any Indebtedness (as defined below)
of HomeSide or any of its subsidiaries which results in Indebtedness of
more than $25,000,000 in principal amount being accelerated, unless the
acceleration is rescinded or annulled within 10 days after written notice
has been given;
- failure of HomeSide or any of its subsidiaries to pay, bond or otherwise
discharge within 60 days any uninsured judgment or court order for the
payment of more than $25,000,000, unless the judgment or court order is
stayed on appeal or is otherwise being appropriately contested in good
faith; and
- certain events in bankruptcy, insolvency or reorganization of HomeSide or
any of its subsidiaries.
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The term "Indebtedness" with respect to any person means all of the
following, without duplication,
- any liability of that person:
- for borrowed money, or under any reimbursement obligation relating to
a letter of credit, or
- evidenced by a bond, note, debenture or similar instrument, or
- for payment obligations arising under any conditional sale or other
title retention arrangement, including a purchase money obligation,
given in connection with the acquisition of any businesses, properties
or assets of any kind, or
- for the payment of money relating to a capitalized lease obligation;
- any liabilities of others of the type described above that the person
has guaranteed or that is otherwise its legal liability; and
- any amendment, supplement, modification, deferral, renewal, extension
or refunding of any liability of the types referred to above.
If an Event of Default, other than an event in bankruptcy, insolvency or
reorganization, occurs and is continuing, either the trustee or the holders of
at least 25% in principal amount of the outstanding notes may declare the
principal amount of all outstanding notes, to be due immediately. At any time
after a declaration of acceleration has been made, but before a judgment or
decree for payment of money has been obtained by the trustee, the holders of a
majority in aggregate principal amount of the outstanding notes may, in some
circumstances, rescind and annul the acceleration. The principal amount of and
accrued interest on the notes will become immediately due, without any
declaration or other act by the trustee or any holder, upon an Event of Default
resulting from an event in bankruptcy, insolvency or reorganization.
Within 90 days after the occurrence of any event which is, or after notice
or lapse of time or both would become, an Event of Default, the trustee must
give notice of the default to the holders of the notes unless the default has
been cured or waived. However, except in the case of a default in the payment of
principal of, or any premium or interest on, or any sinking fund or purchase
fund installment with respect to, the notes, the trustee may withhold the notice
if the board of directors, the executive committee or a trust committee of
directors and/or responsible officers of the trustee in good faith determine
that the withholding of notice is in the best interest of the holders of the
notes. Moreover, no notice will be given to holders until at least 30 days after
the occurrence of an Event of Default resulting from the acceleration of more
than $25,000,000 of Indebtedness of HomeSide or any of its subsidiaries.
If an Event of Default occurs and is continuing, the trustee may, in its
discretion, proceed to protect and enforce its rights and the rights of the
holders of notes by judicial proceedings. Except for its duty during a default
to act with the required standard of care, the trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders of notes, unless the holders offer
the trustee reasonable indemnity. Subject to the provisions for the
indemnification of the trustee, and subject to applicable law and certain other
provisions of the indenture and the notes, the holders of a majority in
aggregate principal amount of the outstanding notes will 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.
HomeSide must furnish the trustee annually a statement as to performance by
HomeSide of certain of its obligations under the indenture and as to any default
in performance. HomeSide must also deliver to the trustee written notice within
five days after its occurrence of any Event of Default or any event which, after
notice or lapse of time or both, would constitute an Event of Default.
MODIFICATION AND WAIVER
The indenture may be modified and amended by HomeSide and the trustee with
the consent of the holders of not less than a majority in aggregate principal
amount of the outstanding notes. However, except as
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otherwise permitted in the indenture, no modification or amendment may, without
the consent of the holder of each outstanding note affected:
- change the Stated Maturity of the principal of, or any premium or
installment of interest on, any note,
- reduce the principal amount of, or the rate (or modify the calculation of
the rate) of interest on, or any premium payable upon the redemption of,
any note,
- reduce the amount of the principal of a Discount Note that would be due
upon acceleration of Maturity, or the amount provable in bankruptcy,
- change the redemption provisions of any note or adversely affect the
right of repayment at the option of any holder of any note,
- change the place or currency of payment of the principal of, or any
premium or interest on any note,
- impair the right to institute suit for the enforcement of any payment on
any note, reduce the percentage in principal amount of the outstanding
notes, the consent of whose holders is required in order to take certain
actions,
- reduce the requirements for quorum or voting by holders of notes in
Section 15.4 of the indenture,
- modify any of the provisions in the indenture regarding the waiver of
past defaults and of certain covenants by the holders of notes, except to
increase any percentage vote required or to provide that certain other
provisions of the indenture cannot be modified or waived without the
consent of the holder of each note affected, or
- modify any of the above provisions.
The holders of a majority in aggregate principal amount of the notes may,
on behalf of the holders of all notes, waive compliance by HomeSide with certain
restrictive provisions of the indenture. The holders of not less than a majority
in aggregate principal amount of the outstanding notes may, on behalf of the
holders of all notes, waive any past default and its consequences under the
indenture with respect to the notes, except a default in the payment of
principal of, or any premium or interest on, the notes, or a default in respect
of a covenant or provision of the indenture that cannot be modified or amended
without the consent of the holder of each note.
Without the consent of any holders of notes, HomeSide and the trustee may
enter into supplemental indentures for any of the following purposes:
- to evidence the succession of another Person to HomeSide and the
assumption by the successor of the covenants of HomeSide contained in the
indenture and in the notes;
- to add to the covenants of HomeSide, for the benefit of the holders of
the notes, or to surrender any right or power of HomeSide;
- to add any additional Events of Default;
- to add or change any of the provisions of the indenture to the extent
necessary to permit or facilitate the issuance of debt securities in
bearer form, which may be registrable as to principal, and with or
without interest coupons;
- to amend or supplement any of the provisions of the indenture or any
supplemental indenture, so long as such amendment or supplement does not
materially adversely affect the interests of the holders of any notes
then outstanding;
- to establish the form or terms of debt securities, including the notes,
of any series;
- to provide for the acceptance of appointment under the indenture by a
successor trustee with respect to one or more series of debt securities
issued under the indenture and to add to or change any of the provisions
of the indenture necessary to provide for or facilitate the
administration of the trusts by more than one trustee;
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- to secure the debt securities including the notes, issued under the
indenture;
- to cure any ambiguity, to correct or supplement any provision in the
indenture which may be defective or inconsistent with any other provision
of the indenture, or to make any other provisions with respect to matters
or questions arising under the indenture which do not adversely affect
the interests of the holders of the notes in any material respect; or
- to modify, eliminate or add to the provisions of the indenture in order
to qualify the indenture under the Trust Indenture Act of 1939, as
amended, and to add to the indenture such other provisions as may be
expressly required under the Trust Indenture Act.
In determining whether the holders of the requisite principal amount of
outstanding notes have given any request, demand, authorization, direction,
notice, consent or waiver, or whether a quorum is present at a meeting of
holders of the notes,
- the principal amount of a Discount Note that is deemed to be outstanding
is the amount of the principal that would be due as of the date of the
determination upon declaration of acceleration of the maturity thereof,
- the principal amount of an Indexed Note that is deemed outstanding is the
principal face amount of the Indexed Note at original issuance, unless
otherwise provided in or pursuant to the indenture, and
- notes owned by HomeSide or any other obligor or any affiliate of HomeSide
or of the other obligor are disregarded.
A meeting of the holders of notes may be called at any time by the trustee
and also, upon request, by HomeSide or the holders of at least 10% in principal
amount of the outstanding notes. Except for any consent that must be given by
the holder of each note affected by certain modifications and amendments of the
indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding notes.
However, except as referred to above, any resolution with respect to any action
that may be taken by the holders of a specified percentage, which is less than a
majority, in principal amount of the outstanding notes may be adopted by the
affirmative vote of the holders of the specified percentage. Any resolution
passed or decision taken at any meeting of holders of notes will be binding on
all holders of notes. The quorum at any meeting called to adopt a resolution,
and at any reconvened meeting, will be Persons holding or representing a
majority in principal amount of the outstanding notes.
Nevertheless, if any action is to be taken at a meeting of holders of notes
with respect to any action that the indenture expressly provides may be taken by
the holders of a specified percentage in principal amount of outstanding debt
securities, there will be no minimum quorum requirement for the meeting and the
principal amount of the outstanding notes that vote in favor of the action will
be taken into account in determining whether the action has been taken.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
HomeSide may discharge certain obligations to holders of notes that have
not already been delivered to the trustee for cancellation and that either have
become due or will become due within one year, or scheduled for redemption
within one year, by depositing with the trustee, in trust, funds in U.S. dollars
in an amount sufficient to pay the entire indebtedness on the notes with respect
to principal, any premium and interest, to the date of the deposit, if the notes
have become due and payable, or to maturity, as the case may be.
HomeSide may elect either
- to release and be discharged from any and all obligations with respect to
the notes, except for certain obligations including, among other things,
obligations to register the transfer or exchange of the notes, to replace
temporary or mutilated, destroyed, lost or stolen notes, to maintain an
office or agency with respect to the Notes and to hold moneys for payment
in trust ("defeasance") or
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- to be released from its obligations with respect to the notes under the
covenants described under "Consolidation, Merger and Transfer of Assets"
above, and any omission to comply with those obligations will not
constitute a default or an Event of Default ("covenant defeasance").
Defeasance or covenant defeasance, as the case may be, are conditioned upon the
irrevocable deposit by HomeSide with the trustee, in trust, of an amount in U.S.
dollars or Government Obligations, or both, which through the scheduled payment
of principal and interest in accordance with their terms will provide money in
an amount sufficient to pay the principal of, and any premium and interest on,
the notes on the scheduled due dates and any mandatory sinking fund payments.
Such a trust may only be established if, among other things,
- the defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the indenture or any other
material agreement or instrument to which HomeSide is a party or by which
it is bound,
- no Event of Default or event which, with notice or lapse of time or both,
would become an Event of Default with respect to the notes to be released
has occurred and is continuing on the date of such deposit and, with
respect to defeasance only, at any time during the period ending on the
123rd day after that date, and
- HomeSide has delivered to the trustee an opinion of counsel to the effect
that the holders of the notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of the defeasance or
covenant defeasance and will be subject to U.S. federal income tax in the
same amounts, manner and times as would have been the case if the
defeasance or covenant defeasance had not occurred, and, in the case of
defeasance, the opinion of counsel must refer to and be based upon a
letter ruling of the Internal Revenue Service received by HomeSide, a
Revenue Ruling published by the Internal Revenue Service or a change in
U.S. federal income tax law occurring after the date of the indenture.
"Government Obligations" means, with respect to the notes, securities which
are direct obligations of the United States of America for the payment of which
its full faith and credit is pledged, or obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, where the timely payment or payments thereunder are unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, and which, in each case, are not callable or redeemable at the option
of the issuer or issuers. In addition, the term "Government Obligations" also
includes a depository receipt issued by a bank or trust company as custodian
with respect to any such Government Obligation or a specific payment of interest
on or principal of or any other amount with respect to any such Government
Obligation held by such custodian for the account of the holder of such
depository receipt, as long as, except as required by law, the custodian is not
authorized to make any deduction from the amount payable to the holder of the
depository receipt from any amount received by the custodian with respect to the
Government Obligation or the specific payment of interest on or principal of or
any other amount with respect to the Government Obligation evidenced by such
depository receipt.
If HomeSide effects covenant defeasance with respect to any notes and the
notes are declared due because of the occurrence of any Event of Default or with
respect to any other covenant as to which there has been covenant defeasance,
the amount of Government Obligations on deposit with the trustee will be
sufficient to pay amounts due on the notes at the time of the Stated Maturity
but may not be sufficient to pay amounts due on the notes at the time of the
acceleration resulting from the Event of Default. However, HomeSide would remain
liable to make payment of the amounts due at the time of acceleration.
BEARER SECURITIES
HomeSide also may offer debt securities in bearer form ("Bearer
Securities") outside the United States at varying prices and terms. Offerings of
Bearer Securities may be separate from, or simultaneous with, offerings of
registered notes in the United States. The Bearer Securities are not offered by
this prospectus and may not be purchased by U.S. persons other than foreign
branches of certain U.S. financial institutions. For
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purposes of this prospectus, "U.S. person" means a citizen, national or resident
of the United States, a corporation, partnership (other than a partnership that
is not treated as a United States person under any applicable Treasury
regulations), or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or a trust if a court within
the United States is able to exercise primary supervision of the administration
of the trust and one or more United States persons have the authority to control
all substantial decisions of the trust, or an estate which is subject to United
States income taxation regardless of its source of income. In addition, certain
trusts treated as United States persons before August 20, 1996 may elect to
continue to be so treated to the extent provided in regulations.
GOVERNING LAW
The indenture and the notes are governed by, and construed in accordance
with, the laws of the State of New York.
REGARDING THE TRUSTEE
The trustee is permitted to engage in other transactions with HomeSide and
its subsidiaries and affiliates from time to time. However, if the trustee
acquires any conflicting interest, it must eliminate the conflict upon the
occurrence of an Event of Default, or else resign. The trustee also acts as
trustee under HomeSide International, Inc.'s indenture.
UNITED STATES FEDERAL INCOME TAXATION
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change, including changes in effective dates, or possible differing
interpretations. It deals only with notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers, except where otherwise specifically
noted. Persons considering the purchase of the notes should consult their own
tax advisors concerning the application of United States Federal income tax laws
to their particular situations as well as any consequences of the purchase,
ownership and disposition of the notes arising under the laws of any other
taxing jurisdiction.
As used in this prospectus, the term "U.S. Holder" means a beneficial owner
of a note that is for United States Federal income tax purposes:
(1) a citizen or resident of the United States,
(2) a corporation or a partnership (including an entity treated as a
corporation or a partnership for United States Federal income tax
purposes) created or organized in or under the laws of the United
States, any state thereof or the District of Columbia (unless, in the
case of a partnership, Treasury regulations are adopted that provide
otherwise),
(3) an estate whose income is subject to United States Federal income tax
regardless of its source,
(4) a 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, or
(5) any other person whose income or gain in respect of a note is
effectively connected with the conduct of a United States trade or
business.
Certain trusts not described in clause (4) above in existence on August 20, 1996
that elect to be treated as a United States person will also be a U.S. Holder
for purposes of the following discussion. As used herein, the term "non-U.S.
Holder" means a beneficial owner of a note that is not a U.S. Holder.
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U.S. HOLDERS
PAYMENTS OF INTEREST. Payments of interest on a note generally will be
includable in income of U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular method of tax accounting).
ORIGINAL ISSUE DISCOUNT. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of notes issued with original issue discount
("Discount Notes"). The following summary is based upon final Treasury
regulations (the "OID Regulations") released by the Internal Revenue Service on
January 27, 1994, as amended on June 11, 1996, under the original issue discount
provisions of the Code.
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of 1%
of the note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date or, in the case of a note
providing for the payment of any amount other than qualified stated interest (as
defined below) before maturity, multiplied by the weighted average maturity of
the note). The issue price of each note of an issue of notes equals the first
price at which a substantial amount of the notes has been sold (ignoring sales
to bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents, or wholesalers). The stated
redemption price at maturity of a note is the sum of all payments provided by
the note other than "qualified stated interest" payments. The term "qualified
stated interest" generally means stated interest that is unconditionally payable
in cash or property (other than debt instruments of the issuer) at least
annually at a single fixed rate. In addition, under the OID Regulations, if a
note bears interest for one or more accrual periods at a rate below the rate
applicable for the remaining term of the note (e.g., notes with teaser rates or
interest holidays), and if the greater of either the resulting foregone interest
on the note or any "true" discount on the note (i.e., the excess of the note's
stated principal amount over its issue price) equals or exceeds a specified de
minimis amount, then the stated interest on the note would be treated as
original issue discount rather than qualified stated interest.
Payments of qualified stated interest on a note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of the U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is the
sum of the daily portions of original issue discount with respect to the
Discount Note for each day during the taxable year (or portion of the taxable
year) on which the U.S. Holder held the Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between
- the product of the Discount Note's adjusted issue price at the beginning
of such accrual period and its yield to maturity (determined on the basis
of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual
period) and
- the amount of any qualified stated interest payments allocable to such
accrual period.
The "adjusted issue price" of a Discount Note at the beginning of any
accrual period is the sum of the issue price of the Discount Note plus the
amount of original issue discount allocable to all prior accrual periods minus
the amount of any prior payments on the Discount Note that were not qualified
stated interest
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payments. Under these rules, U.S. Holders generally will have to include in
income increasingly greater amounts of original issue discount in successive
accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the sum of all amounts payable on the Discount Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the Discount Note at an "acquisition premium". Under the acquisition
premium rules, the amount of original issue discount which such U.S. Holder must
include in its gross income with respect to such Discount Note for any taxable
year (or portion thereof in which the U.S. Holder holds the Discount Note) will
be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes
(hereinafter "Variable Notes") are subject to special rules whereby a Variable
Note will qualify as a "variable rate debt instrument" if
- its issue price does not exceed the total noncontingent principal
payments due under the Variable Note by more than a specified de minimis
amount and
- it provides for stated interest, paid or compounded at least annually, at
current values of:
- one or more qualified floating rates,
- a single fixed rate and one or more qualified floating rates,
- a single objective rate, or
- a single fixed rate and a single objective rate that is a qualified
inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than .65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than .65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the Variable Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable Note's
issue date) will be treated as a single qualified floating rate. Notwithstanding
the foregoing, a variable rate that would otherwise constitute a qualified
floating rate but which is subject to one or more restrictions such as a maximum
numerical limitation (i.e., a cap) or a minimum numerical limitation (i.e., a
floor) may, in some circumstances, fail to be treated as a qualified floating
rate under the OID Regulations unless such cap or floor is fixed throughout the
term of the note. An "objective rate" is a rate that is not itself a qualified
floating rate but which is determined using a single fixed formula that is based
on objective financial or economic information. A rate will not qualify as an
objective rate if it is based on information that is within the control of the
issuer (or a related party) or that is unique to the circumstances of the issuer
(or a related party), such as dividends, profits, or the value of the issuer's
stock (although a rate does not fail to be an objective rate merely because it
is based on the credit quality of the issuer). A "qualified inverse floating
rate" is any objective rate where such rate is equal to a fixed rate minus a
qualified floating rate, as long as variations in the rate can reasonably be
expected to inversely reflect contemporaneous variations in the qualified
floating rate. The OID Regulations also provide that if a Variable Note provides
for stated interest at a fixed rate for an initial period of one year or less
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Variable Note's issue date is
intended to approximate the fixed rate (e.g., the value of the variable rate on
the issue date does not differ from the value of the fixed rate by more than 25
basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
lf a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, and if
the interest on a Variable Note is unconditionally payable in cash or property
(other than
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debt instruments of the issuer) at least annually, then all stated interest on
the Variable Note will constitute qualified stated interest and will be taxed
accordingly. Thus, a Variable Note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof and that qualifies as a "variable rate debt instrument" under the OID
Regulations will generally not be treated as having been issued with original
issue discount unless the Variable Note is issued at a "true" discount (i.e., at
a price below the Variable Note's stated principal amount) in excess of a
specified de minimis amount. The amount of qualified stated interest and the
amount of original issue discount, if any, that accrues during an accrual period
on such a Variable Note is determined under the rules applicable to fixed rate
debt instruments by assuming that the variable rate is a fixed rate equal to
(1) in the case of a qualified floating rate or qualified inverse floating
rate, the value as of the issue date, of the qualified floating rate
or qualified inverse floating rate, or
(2) in the case of an objective rate (other than a qualified inverse
floating rate), a fixed rate that reflects the yield that is
reasonably expected for the Variable Note.
The qualified stated interest allocable to an accrual period is increased
(or decreased) if the interest actually paid during an accrual period exceeds
(or is less than) the interest assumed to be paid during the accrual period
pursuant to the foregoing rules.
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
Note with a fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed rate
that reflects the yield that is reasonably expected for the Variable Note. In
the case of a Variable Note that qualifies as a "variable rate debt instrument"
and provides for stated interest at a fixed rate in addition to either one or
more qualified floating rates or a qualified inverse floating rate, the fixed
rate is initially converted into a qualified floating rate (or a qualified
inverse floating rate, if the Variable Note provides for a qualified inverse
floating rate). Under those circumstances, the qualified floating rate or
qualified inverse floating rate that replaces the fixed rate must be such that
the fair market value of the Variable Note as of the Variable Note's issue date
is approximately the same as the fair market value of an otherwise identical
debt instrument that provides for either the qualified floating rate or
qualified inverse floating rate rather than the fixed rate. Subsequent to
converting the fixed rate into either a qualified floating rate or a qualified
inverse floating rate, the Variable Note is then converted into an "equivalent"
fixed rate debt instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. For each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. On June 11, 1996, the Treasury Department
issued final regulations (the "CPDI Regulations") concerning the proper United
States Federal income tax treatment of contingent payment debt instruments. In
general, the CPDI Regulations would cause the timing and character of income,
gain or loss reported on a contingent payment debt instrument to substantially
differ from the timing and character of income, gain or loss reported on a
contingent payment debt instrument under general principles of current United
States Federal income tax law. Specifically, the
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CPDI Regulations generally require a U.S. Holder of such an instrument to
include future contingent and noncontingent interest payments in income as such
interest accrues based upon a projected payment schedule. Moreover, in general,
under the CPDI Regulations, any gain recognized by a U.S. Holder on the sale,
exchange, or retirement of a contingent payment debt instrument will be treated
as ordinary income and all or a portion of any loss realized could be treated as
ordinary loss as opposed to capital loss (depending upon the circumstances). The
CPDI Regulations apply to debt instruments issued on or after August 13, 1996.
The proper United States Federal income tax treatment of Variable Notes that are
treated as contingent payment debt obligations will be more fully described in
the pricing supplement. Furthermore, any other special United States Federal
income tax considerations, not otherwise discussed herein, which are applicable
to any particular issue of notes will be discussed in the pricing supplement.
HomeSide may issue notes which;
- may be redeemable at the option of HomeSide before their stated maturity
(a "call option") and/or
- may be repayable at the option of the holder before their stated maturity
(a "put option").
Notes containing such features may be subject to rules that differ from the
general rules discussed above. Investors intending to purchase notes with such
features should consult their own tax advisors, since the original issue
discount consequences will depend, in part, on the particular terms and features
of the purchased notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
FOREIGN-CURRENCY NOTES. The United States Federal income tax consequences
of the purchase, ownership and disposition of notes providing for payments
denominated in a currency other than U.S. dollars will be more fully described
in the applicable pricing supplement.
SHORT-TERM NOTES. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S. Holder is not
required to accrue such original issue discount unless the U.S. Holder elects to
do so. If such an election is not made, any gain recognized by the U.S. Holder
on the sale, exchange or maturity of the Short-Term Note will be ordinary income
to the extent of the original issue discount accrued on a straight-line basis,
or upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including banks and
dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
MARKET DISCOUNT. If a taxpayer, such as a U.S. Holder purchases a note,
other than a Discount Note, for an amount that is less than its stated
redemption price at maturity) [or, in the case of a Discount Note, for an amount
that is less than its adjusted issue price as of the purchase date,] such U.S.
Holder may be treated as having purchased the note at a "market discount",
unless such market discount is less than a specified de minimis amount. (Market
discount is the deficiency, if any, between the amount paid for the note and the
original issue price of the note increased by the aggregate amount of original
issue discount includible in the income of all holders for periods before the
taxpayer's acquisition of the note.)
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any
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gain realized on the sale, exchange, retirement or other disposition of, a note
as ordinary interest income to the extent of the lesser of:
- the amount of such payment or realized gain, or
- the market discount which has not previously been included in income and
is treated as having accrued on the note at the time of such payment or
disposition.
Market discount will be considered to accrue ratably during the period from the
date of acquisition to the maturity date of the note, unless the U.S. Holder
elects to accrue market discount on the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a note with market discount until the maturity of the note or
certain earlier dispositions, because a current deduction is only allowable to
the extent the interest expense exceeds an allocable portion of market discount.
A U.S. Holder may elect to include market discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income of gain upon
the disposition of the note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included market discount is treated as ordinary interest for United
States Federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the taxable
year to which such election applies and may be revoked only with the consent of
the IRS.
PREMIUM. If a U.S. Holder purchases a note for an amount that is greater
than the sum of all amounts payable on the note after the purchase date other
than payments of qualified stated interest, the U.S. Holder will be considered
to have purchased the note with "amortizable bond premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the note and may offset interest
otherwise required to be included in respect of the note during any taxable year
by the amortized amount of such excess for the taxable year. However, if the
note may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of the note. Any election to amortize bond premium applies to
all taxable debt obligations then owned and thereafter acquired by the U.S.
Holder and may be revoked only with the consent of the IRS.
DISPOSITION OF A NOTE. Except as discussed above, upon the sale, exchange
or retirement of a note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
the U.S. Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax
basis in a note generally will equal the U.S. Holder's initial investment in the
note increased by any original issue discount included in income (and accrued
market discount, if any, if the U.S. Holder has included such market discount in
income) and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with respect to
the note. Such gain or loss generally will be long-term capital gain or loss if
the note were held for more than one year. Long-term capital gains of
individuals are subject to reduced capital gain rates while short-term capital
gains are subject to ordinary income rates. The deductibility of capital losses
is generally subject to certain limitations. Prospective investors should
consult their own tax advisors concerning these tax law provisions.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount or market discount, if any) on a note, unless such non-U.S. Holder is a
direct or indirect 10% or greater shareholder of HomeSide, a controlled foreign
corporation related to HomeSide, a bank receiving interest described in section
881(c)(3)(A) of the Code, or in individual present in the United States for 183
days or more in the taxable year in which premium (if any)
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is paid. To qualify for the exemption from taxation, the last United States
payor in the chain of payment prior to payment to a non-U.S. Holder (the
"Withholding Agent") must have received in the year in which a payment of
interest or principal occurs, or in either of the two preceding calendar years,
a statement that (1) is signed by the beneficial owner of the note under
penalties of perjury, (2) certifies that such owner is not a U.S. Holder and (3)
provides the name and address of the beneficial owner. Absent receipt of such
statement the Withholding Agent must generally withhold U.S. tax at the rate of
30%. The statement may be made on an applicable IRS Form W-8 or a substantially
similar form, and the beneficial owner must inform the Withholding Agent of any
change in the information on the statement within 30 days of such change. If a
note is held through a securities clearing organization or certain other
financial institutions, the organization or institution may provide a signed
statement to the Withholding Agent. However, in such case, the signed statement
must be accompanied by a copy of the applicable IRS Form W-8 or the substitute
form provided by the beneficial owner to the organization or institution. The
Treasury Department is considering implementation of further certification
requirements aimed at determining whether the issuer of a debt obligation is
related to holders thereof.
In October 1997, the Treasury issued new regulations (the "New
Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
2000, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes capital gain upon retirement or
disposition of a note, provided the gain is not effectively connected with the
conduct of a trade or business in the United States by the non-U.S. Holder and,
if the non-U.S. holder is an individual, such non-U.S. Holder is not present in
the United States for 183 days or more in the taxable year of the sale. Certain
other exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The notes will not be includible in the estate of a non-U.S. Holder who is
not domiciled in the United States unless the individual is a direct or indirect
10% or greater shareholder of HomeSide or, at the time of such individual's
death, payments in respect of the notes would have been effectively connected
with the conduct by such individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information,
such as the registered owner's taxpayer identification number, in the required
manner.
Generally, individuals are not exempt recipients, whereas corporations and
certain other entities generally are exempt recipients. Payments made in respect
of the notes to a U.S. Holder must be reported to the IRS, unless the U.S.
Holder is an exempt recipient or establishes an exemption. Compliance with the
identification procedures described in the preceding section would establish an
exemption from backup withholding for those non-U.S. Holders who are not exempt
recipients.
In addition, upon the sale of a note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either:
- the broker determines that the seller is a corporation or other exempt
recipient or
- the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. Holder, certifies that such
seller is a non-U.S. Holder (and certain other conditions are met).
Such a sale must also be reported by the broker to the IRS, unless either:
- the broker determines that the seller is an exempt recipient or
- the seller certifies its non-U.S. status (and certain other conditions
are met).
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Certification of the registered owner's non-U.S. status would be made normally
on an IRS Form W-8 under penalties of perjury, although in certain cases it may
be possible to submit other documentary evidence. In addition, prospective U.S.
Holders are strongly urged to consult their own tax advisors with respect to the
New Withholding Regulations. See "United States Federal Income
Taxation -- Non-U.S. Holders".
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
HomeSide is offering the notes for sale on a continuing basis through the
agents, who will purchase the notes, as principal, from HomeSide, for resale to
investors and other purchasers at varying prices relating to prevailing market
prices at the time of resale as determined by the agents, or, if so specified in
a pricing supplement, for resale at a fixed public offering price. If agreed to
by HomeSide and an agent, the agent may utilize its reasonable efforts on an
agency basis to solicit offers to purchase the notes at 100% of the principal
amount of the notes, unless otherwise stated in a pricing supplement. HomeSide
will pay a commission to the agent, ranging from .125% to .750% of the principal
amount of a note, depending upon its stated maturity or, with respect to a note
for which the stated maturity is in excess of 30 years, a commission as agreed
upon by HomeSide and the agent at the time of sale, sold through the agent. In
addition, the expenses incurred by HomeSide in connection with the offering and
sale of the notes, including reimbursement of certain of the agents' expenses,
is currently estimated to be $ .
Unless otherwise specified in an applicable pricing supplement, any note
sold to an agent as principal will be purchased by such an agent at a price
equal to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a note of
identical maturity. The agents may sell notes they have purchased from HomeSide
as principal to other dealers less a concession equal to all or any portion of
the discount received in connection with such purchase. The agents may allow,
and such dealers may reallow, a discount to certain other dealers. After the
initial public offering of notes, the public offering price, in the case of
notes to be resold at a fixed public offering price, the concession and the
discount allowed to dealers may be changed.
HomeSide reserves the right to withdraw, cancel or modify the offer made by
this prospectus without notice and may reject orders, in whole or in part,
whether placed directly with HomeSide or through the agents. The agents will
have the right, in their discretion reasonably exercised, to reject in whole or
in part any offer to purchase notes received by the agent.
Unless otherwise stated in a pricing supplement, payment of the purchase
price of the notes will be required to be made in immediately available funds in
U.S. dollars in New York City on the date of settlement.
No note will have an established trading market when issued. Unless
specified in the pricing supplement, HomeSide will not list the notes on any
securities exchange. The agents may from time to time purchase and sell notes in
the secondary market, but the agents are not obligated to do so, and there can
be no assurance that there will be a secondary market for the notes or liquidity
in the secondary market if one develops. From time to time, the agents may make
a market in the notes.
The agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended. HomeSide has agreed to indemnify the agents
against or to make contributions relating to certain civil liabilities,
including liabilities under the Securities Act, or to contribute to payments the
agents may be required to make in respect thereof. HomeSide has agreed to
reimburse the agents for certain expenses.
From time to time, HomeSide may issue and sell other securities described
herein and the amount of notes that HomeSide may offer and sell under this
prospectus may be reduced as a result of such sales.
In connection with the offering of notes purchased by one or more of the
agents as principal on a fixed price basis, such agents are permitted to engage
in certain transactions that stabilize the price of the notes.
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These transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the notes. If the agents create a short
position in the notes in connection with the offering, i.e., if they sell notes
in an aggregate principal amount exceeding that set forth in the pricing
supplement, then the agents may reduce that short position by purchasing notes
in the open market. In general, purchases of notes for the purpose of
stabilization or to reduce a short position could cause the price of the notes
to be higher than in the absence of these purchases.
Neither HomeSide nor the agents make any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the notes. In addition, neither HomeSide nor the agents
make any representation that the agents will engage in any such transactions or
that such transactions, once commenced, will not be discontinued without notice.
The agents and their affiliates may be customers of, engage in transactions
with or perform services for, HomeSide or its affiliates in the ordinary course
of business and have engaged in and may in the future engage in investment
banking transactions with HomeSide and its affiliates. HomeSide has entered into
an arrangement in the ordinary course of business with an affiliate of Merrill
Lynch & Co. to sell to such affiliate, and provide ongoing lending services and
subservicing for, certain mortgage loans originated by HomeSide. Chase
Securities Inc. ("CSI") is an affiliate of The Chase Manhattan Bank, which is
administrative agent and a lender under the amended and restated credit
agreement among HomeSide, Honolulu Mortgage Company, Inc., the lender parties
thereto and The Chase Manhattan Bank (the "bank credit agreement"). CSI, The
Chase Manhattan Bank and/or certain of their affiliates have engaged in and may
in the future engage in general financing and banking transactions with HomeSide
and certain of its subsidiaries and affiliates in the ordinary course of
business. In addition, Bank of America Corp., Morgan Guaranty Trust Company of
New York, and UBS AG, Stamford branch, affiliates of Banc of America Securities
LLC, J.P. Morgan Securities Inc. and Warburg Dillon Read LLC, respectively, are
lenders under the bank credit agreement. CSI is also a dealer with respect to
HomeSide's commercial paper program. If the proceeds from any offering of notes
are used to repay indebtedness under the bank credit agreement, such offering
will be made in accordance with the provisions of Rule 2710(c)(8) of the Conduct
Rules of the National Association of Securities Dealers, Inc., if applicable.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the SEC covering
the notes and other securities. For further information on HomeSide and the
notes, you should refer to our registration statement and its exhibits. This
prospectus summarizes material provisions of contracts and other documents that
we refer you to. Because the prospectus may not contain all the information that
you may find important, you should review the full text of these documents. We
have included copies of these documents as exhibits to our registration
statement of which this prospectus is a part.
We also file reports and other information with the SEC. The registration
statement and the reports and other information that we file with the SEC may be
read and copied at the Public Reference Room maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission at 7 World Trade Center, 13th Floor, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. You may obtain information on the operation of the Public
Reference Rooms by calling the SEC at 1-800-SEC-0330. Our SEC filings are also
available over the Internet at the SEC's web site at http://www.sec.gov.
HomeSide's audited annual financial statements, unaudited quarterly
financial statements and certain other reports will be furnished to the trustee
under the Indenture. Notwithstanding that HomeSide may not be required to remain
subject to the reporting requirements of Section 13 or Section 15(d) of the
Exchange Act, so long as any of the notes are outstanding, HomeSide will
continue to file with the SEC and provide to the trustee and, upon request, to
the holders of the notes, annual reports containing financial statements audited
by its independent certified public accountants and quarterly reports containing
unaudited financial statements for each of the first three quarters of each
fiscal year.
42
<PAGE> 44
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file with
them, which means:
- incorporated documents are considered part of the prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed
with the SEC under the Exchange Act:
- annual report on Form 10-K for the year ended September 30, 1998;
- quarterly report on Form 10-Q for the period ended December 31, 1998;
- quarterly report on Form 10-Q for the period ended March 31, 1999; and
- current reports on Form 8-K dated April 22, 1999.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus until this offering is
completed or after the date of this initial registration statement and before
the effectiveness of the registration statement:
- reports filed under Sections 13(a) and (c) of the Exchange Act; and
- any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by reference
in this prospectus. We have not, and the agents have not, authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not,
and the agents are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: HomeSide
Lending, Inc., 7301 Baymeadows Way, Jacksonville, Florida 32256, Attn: Investor
Relations (telephone: (904) 281-3200).
VALIDITY OF THE NOTES
Certain legal matters with respect to the securities offered hereby will be
passed upon for HomeSide by Hutchins, Wheeler & Dittmar and for any underwriters
or agents by Brown & Wood LLP, New York, New York. Hutchins, Wheeler & Dittmar,
A Professional Corporation will rely as to certain matters of New York law upon
the opinion of Brown & Wood LLP. Hutchins, Wheeler & Dittmar, A Professional
Corporation, and Brown & Wood LLP will rely as to certain matters of Florida law
upon the opinion of Robert J. Jacobs, Executive Vice President and Secretary of
HomeSide.
EXPERTS
The consolidated balance sheet of HomeSide Lending, Inc. and its
subsidiaries as of September 30, 1998 and the related consolidated statements of
income, changes in stockholder's equity and cash flows for the period from
February 11, 1998 to September 30, 1998 incorporated by reference herein have
been audited by KPMG LLP, independent certified public accountants, as indicated
in their report with respect thereto, and are incorporated in reliance upon the
authority of said firm as experts in accounting and auditing.
43
<PAGE> 45
The consolidated balance sheet of HomeSide Lending, Inc. and subsidiaries
as of February 10, 1998 and February 28, 1997 and the related consolidated
statements of income, changes in stockholder's equity, and cash flows for the
period from March 1, 1997 to February 10, 1998 and March 16, 1996 to February
28, 1997, incorporated by reference in this prospectus, have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their report with respect thereto, and are incorporated herein in reliance upon
the authority of said firm as experts in accounting and auditing in giving said
reports.
The consolidated balance sheet of BancBoston Mortgage Corporation, as of
March 15, 1996 and the related consolidated statements of operations and
retained earnings and cash flows for the period from January 1, 1996 to March
15, 1996, incorporated by reference in this prospectus, have been audited by
Arthur Andersen LLP, independent certified public accountants as indicated in
their report with respect thereto, and are incorporated herein in reliance upon
the authority of said firm as experts in accounting and auditing in giving said
reports.
The consolidated balance sheets of BancBoston Mortgage Corporation, as of
December 31, 1995 and the related consolidated statements of operations and
retained earnings and cash flows for the year then ended, incorporated by
reference in this prospectus have been audited by PricewaterhouseCoopers LLP,
independent certified public accountants as indicated in their report with
respect thereto, and are incorporated herein in reliance upon the authority of
said firm as experts in accounting and auditing in giving said reports.
44
<PAGE> 46
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$1,408,000,000
[HOMESIDE LENDING, INC. LOGO]
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
----------------------
PROSPECTUS
----------------------
MERRILL LYNCH & CO.
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
J.P. MORGAN & CO.
SALOMON SMITH BARNEY
WARBURG DILLON READ LLC
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 47
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expense in connection with the issuance and distribution of
the securities being registered are estimated as follows:
<TABLE>
<S> <C>
Registration Fee............................................ $278,000
Fees and Expenses of Accountants............................ *
Fees and Expenses of Counsel................................ *
Printing and Engraving Expenses............................. *
Rating Agency Fees.......................................... *
Trustee's Fees.............................................. *
Miscellaneous............................................... *
--------
Total.................................................. $ *
========
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 607.0850 of the Florida Business Corporation Act permits a
corporation to indemnify its directors and officers against liability incurred
in their capacity as such or by reason of service at the request of the
corporation as a director, officer, employee or agent of another corporation (i)
if such director or officer acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful; and (ii) in some
other circumstances.
Article IX of the By-laws of the HomeSide provides as follows:
INDEMNIFICATION
SEC. 1. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a Director or
officer of the corporation or served, at the written request of the
President of the corporation, as a Director or officer of another
corporation (all of whom are hereinafter in this Article referred to in the
aggregate as "indemnified persons" and in the singular as an "indemnified
person") against expenses (including attorneys' fees except as otherwise
stated in Section 3 of this Article), judgements, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, has no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by a judgement, order, settlement,
adjudication or upon a plea of nolo contenders or its equivalent, shall
not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
SEC. 2. The corporation shall indemnify any indemnified person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation
to procure a judgement in its favor against expenses (including attorneys'
fees except as otherwise stated in Section 3 of this Article) actually and
reasonably incurred by him in connection with
II-1
<PAGE> 48
the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless and only to the extent
that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
SEC. 3. The corporation will be entitled to participate at it own
expense in the defense and, if it so elects, to assume the defense of any
claim, action, suit or proceeding. If the corporation elects to assume the
defense, such defense shall be conducted by counsel of good standing,
chosen by it. In the event the corporation elects to assume the defense of
any such claim, action, suit or proceeding and retain such counsel, the
indemnified persons shall bear the fees and expense of any additional
counsel retained by them, unless there are conflicting interests as between
the corporation and the indemnified persons that are for valid reasons
objected to in writing by the indemnified persons.
SEC. 4. In discharging his duty to the corporation, an indemnified
person, when acting in good faith, may rely upon financial statements of
the corporation represented to him to be correct by the officer of the
corporation having charge of its books of accounts, or stated in a written
report by an independent public or certified public accountant or firm of
such accountants fairly to reflect the financial condition of such
corporation.
SEC. 5. Any indemnification under this Article IX (unless ordered by
a court) shall be made only as authorized in the specific case upon a
determination (1) by the Board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to such action, suit or
proceeding, or (2) if such quorum is not obtainable, or, even if
obtainable, when a quorum of disinterested Directors so directs, by
independent legal counsel in a written opinion that the indemnified person
has met the standards of conduct set forth in this Article IX or (3) by the
stockholder or stockholders.
SEC. 6. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board
of Directors in the manner provided in Section 5 of this Article IX upon
receipt of an undertaking by or on behalf of the indemnified person to
repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in this Article
IX.
SEC. 7. The indemnification provided by this Article IX shall not be
deemed exclusive of any other rights to which any indemnified person may be
entitled under any Agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office and shall inure to
the benefit of the heirs, executors and administrators of such a person.
SEC. 8. The Board of Directors shall have power on behalf of the
corporation to grant indemnification to any person other than an
indemnified person to such extent as the Board in its discretion may from
time to time and at any time determine, but in no event to exceed the
indemnification provided by this Article IX.
SEC. 9. If any part of this Article IX shall be found, in any action,
suit or proceeding, to be invalid or ineffective, the validity and the
effect of the remaining parts shall not be affected.
II-2
<PAGE> 49
ITEM 16.
<TABLE>
<C> <S>
1.1** Form of Distribution Agreement, as amended.
3.1 Certificate of Incorporation of HomeSide Lending, Inc.
incorporated by reference to HomeSide's Registration
Statement on Form S-1, No. 333-21193.
3.2 By-Laws of HomeSide Lending, Inc. incorporated by reference
to HomeSide's Registration Statement on Form S-1, No.
333-21193.
4.1 Form of Indenture incorporated by reference to HomeSide's
Registration Statement on Form S-1, No. 333-21193.
4.2** Form of Fixed Rate Medium-Term Note.
4.3** Form of Floating Rate Medium-Term Note.
5.1(a)** Opinion of Hutchins, Wheeler & Dittmar, regarding legality
of the securities being registered.
5.1(b)** Opinion of Robert J. Jacobs, Esq., regarding certain matters
relating to Florida law.
5.1(c)** Opinion of Brown & Wood LLP, regarding certain matters
relating to New York law.
8.1** Opinion of Hutchins, Wheeler & Dittmar, regarding certain
tax matters.
12.1 Computation of the Ratio of Earnings to Fixed Charges
incorporated by reference to HomeSide's Annual Report on
Form 10-K for the year ended September 30, 1998 and
HomeSide's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999.
23.1* Consent of Arthur Andersen LLP
23.2* Consent of PricewaterhouseCoopers L.L.P.
23.3* Consent of KPMG Peat Marwick LLP
23.3(a)** Consent of Hutchins, Wheeler & Dittmar (included in Exhibit
5.1 (a))
23.3(b)** Consent of Robert J. Jacobs, Esq. (included in Exhibit
5.1(b))
23.3(c)** Consent of Brown & Wood LLP (included in Exhibit 5.1(c))
25.1** Form of T-1 Statement of Eligibility Under Trust Indenture
Act of 1939 of The Bank of New York.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by Amendment.
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes that for the purpose of
determining any liability under the Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
II-3
<PAGE> 50
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
provided however, that paragraphs (c)(1)(i) and (c)(1)(ii) do not apply
if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective. For
the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-4
<PAGE> 51
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on the 27th day of
July, 1999.
HOMESIDE LENDING, INC.
By: /s/ JOE K. PICKETT
----------------------------------
JOE K. PICKETT
Chairman
We, the undersigned officers and directors of HomeSide Lending, Inc.,
hereby severally constitute and appoint Joe K. Pickett and Hugh R. Harris and
each of them singly, to sign for us and in our names in the capacities indicated
below, the Registration Statement on Form S-3 filed herewith and any and all
pre-effective and post-effective amendments to said Registration Statement, and,
in connection with any registration of additional securities pursuant to Rule
462(b) under the Securities Act of 1933, to sign any abbreviated registration
statement and any and all amendments thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, in each case, with
the Securities and Exchange Commission, and generally to do all such things in
our names and on our behalf in our capacities with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JOE K. PICKETT Chairman of the Board July 27, 1999
- ---------------------------------------------------
JOE K. PICKETT
/s/ HUGH R. HARRIS Chief Executive Officer and July 27, 1999
- --------------------------------------------------- Director (Principal Executive
HUGH R. HARRIS Officer)
/s/ KEVIN D. RACE President and Chief Operating July 27, 1999
- --------------------------------------------------- Officer
KEVIN D. RACE
/s/ W. BLAKE WILSON Executive Vice President, Chief July 27, 1999
- --------------------------------------------------- Financial Officer and Treasurer
W. BLAKE WILSON (Principal Financial and
Accounting Officer)
/s/ ROBERT J. JACOBS Executive Vice President, July 27, 1999
- --------------------------------------------------- Secretary and General Counsel
ROBERT J. JACOBS
</TABLE>
II-5
<PAGE> 52
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1** Form of Distribution Agreement, as amended.
3.1 Certificate of Incorporation of HomeSide Lending, Inc.
incorporated by reference to HomeSide's Registration
Statement on Form S-1, No. 333-21193.
3.2 By-Laws of HomeSide Lending, Inc. incorporated by reference
to HomeSide's Registration Statement on Form S-1, No.
333-21193.
4.1 Form of Indenture incorporated by reference to HomeSide's
Registration Statement on Form S-1, No. 333-21193.
4.2** Form of Fixed Rate Medium-Term Note.
4.3** Form of Floating Rate Medium-Term Note.
5.1(a)** Opinion of Hutchins, Wheeler & Dittmar, regarding legality
of the securities being registered.
5.1(b)** Opinion of Robert J. Jacobs, Esq., regarding certain matters
relating to Florida law.
5.1(c)** Opinion of Brown & Wood LLP, regarding certain matters
relating to New York law.
8.1** Opinion of Hutchins, Wheeler & Dittmar, regarding certain
tax matters.
12.1 Computation of the Ratio of Earnings to Fixed Charges
incorporated by reference to HomeSide's Annual Report on
Form 10-K for the year ended September 30, 1998 and
HomeSide's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999.
23.1* Consent of Arthur Andersen LLP
23.2* Consent of PricewaterhouseCoopers L.L.P.
23.3* Consent of KPMG Peat Marwick LLP
23.3(a)** Consent of Hutchins, Wheeler & Dittmar (included in Exhibit
5.1 (a))
23.3(b)** Consent of Robert J. Jacobs, Esq. (included in Exhibit
5.1(b))
23.3(c)** Consent of Brown & Wood LLP (included in Exhibit 5.1(c))
25.1** Form of T-1 Statement of Eligibility Under Trust Indenture
Act of 1939 of The Bank of New York.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by Amendment.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports dated
April 15, 1998, included in Homeside Lending, Inc.'s Form 10-K for the year
ended September 30, 1998, and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Jacksonville, Florida
July 27, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of our report, dated January 18, 1996, except for the second paragraph
of Note 1 and the fifth paragraph of Note 2, as to which the date is March 4,
1996, relating to the financial statements and financial statement schedules,
which appears in HomeSide Leading, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1995. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers L.L.P.
Jacksonville, Florida
July 27, 1999
<PAGE> 1
EXHIBIT 23.3
ACCOUNTANTS' CONSENT
The Board of Directors
HomeSide Lending, Inc.:
We consent to incorporation by reference in the registration statement on
Form S-3 of HomeSide Lending, Inc. of our report dated October 16, 1998,
relating to the consolidated balance sheet of HomeSide Lending, Inc. and
subsidiaries as of September 30, 1998, and the related consolidated
statements of income, stockholder's equity, and cash flows for the period
from February 11, 1998 through September 30, 1998, which report appears in the
September 30, 1998, annual report on Form 10-K of HomeSide Lending, Inc. We also
consent to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG LLP
Jacksonville, Florida
July 30, 1999
